3Q 2017 Snapshot

“There are two kinds of forecasters:  those who don’t know, and those who don’t know they don’t know.”  – John Kenneth Galbraith

The 3rd quarter of 2017 is in the books.  The best-performing asset class was Vanguard FTSE Emerging Markets ETF up 7.96% and the worst performer was iShares Core US Aggregate Bond ETF which eked out a gain of 70 bps.   US Small Cap stocks, as represented by IWM, came on strong at the end of the quarter.  IWM was up 10.5% from the low it made on August 21 (orange line).  The broad stock asset classes are all up double digits on the year.


The table below shows the 3rd quarter performance for benchmark portfolios with different levels of stock and bond exposure.  Markets continue to reward aggressive investors as the spread between the All Equity Portfolio and the All Bond portfolio for the quarter was 4.20%.

3Q2017 GAP TableThe performance of Stocks are represented by iShares All Country World ETF (ticker:  ACWI), the performance of Bonds are represented by iShares US Core Aggregate Bond ETF (ticker:  AGG), and the performance of Cash is represented by SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (ticker:  BIL)

For example, the Moderate portfolios are invested in  50% “ACWI”, 48% “AGG”, and 2% “BIL”.  If you had this portfolio at the start of the quarter, you would be up 2.87% on a pre-tax basis.

A Look Ahead to the 4th Quarter

According to LPL Research, the fourth quarter is historically the strongest from a return perspective for the S&P 500.


The S&P 500 Index has already passed Wall Street’s consensus year-end target.  Everyone keeps waiting for a meaningful pullback in the stock market as the market continues to make all-time highs.  Pundits who keep calling for tops have some egg on their face but seem to wipe it off before their next TV appearance.  Watch at your own risk.

LPL’s Research:  Here Comes the Fourth Quarter

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.
Past performance is no guarantee of future results.
The economic forecasts set forth in the presentation may not develop as predicted.