Concerns over the European debt crisis, extent of a possible global economic slowdown and continued political gridlock in the U.S. and abroad converged to produce one of the most difficult quarters for the equity markets in decades. The S&P 500 lost approximately 14%, while the Russell 2000 index of small companies and MSCI EAFE international index lost 21.9% and 19.6%, respectively. Emerging-market stocks fared even worse, losing 24% for the quarter. Investors running from riskier assets flooded into Treasuries, forcing yields to record lows. The quarter was marked by significant volatility, with many trading days experiencing large intra-day market swings. These short term swings could continue for some time into the future as macro challenges produce market moving headlines on a daily basis. Uncertainty is not a friend to financial markets and often drives investor behavior. As we head through the fourth quarter, looking at the glass half full, we continue to see strong U.S. corporate earnings and a sense out of Europe that they realize the scope and magnitude of what must be done in relatively short order to avert a more damaging scenario from unfolding.
On a planning note, as year-end approaches, a reminder to coordinate with your advisors to address tax planning; including any charitable giving, tax loss harvesting or IRA distributions, if applicable. As always, please contact us with any questions or concerns. We appreciate your continued confidence and wish you a wonderful holiday season.