Tuesday, September 17, 2013

stock performance on the way up

In six weeks, the trailing five-year figures on investments will change dramatically. Today's numbers support the nation's Great Investment Funk.

[For example, U.S. large growth gained 0.70% for the five years ending August 31, 2013]

Once October 2008 disappears off the trailing five-year period, however, the picture will greatly improve.  While I can't provide the figures through Oct. 31, 2013 (that would be a neat trick, wouldn't it?), we can measure the first 58 months of the upcoming 60-month period. They have been kind to stock funds.

[For example, U.S. large growth gained 13.07% for the period November 1, 2008 to August 31, 2013.]

Barring a sudden market collapse, all standardized performance time periods for mutual fund advertisements will soon look strong: one year, five years, and 10 years. (The latter remains burdened with 2008 but no longer carries any trace of the 2000-02 bear market.) In other words, it will become much easier to sell stock funds. When the performance numbers are good across the board, they give the overwhelming visual impression of consistent success.

That strikes me as mixed news. On the one hand, investors could use probably use more stock funds (although recent market action has helped to boost their stock exposure.) Also, I am relatively bullish on long-term stock prospects. But I do admit to feeling a bit nervous about embracing stocks now--especially U.S. stocks. It's been a great run, but, I suspect, the stock market may need to catch its figurative breath. I worry that U.S. stock funds will once again be fashionable just as alternative funds finally become the better performers.

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