The third quarter of 2012 ended with optimism. The S&P 500 was up 6.35% for the quarter and up 30% for the past 12 months. According to the Conference Board Consumer Confidence Index, the index had declined in August to 61.3 but is up for September to 70.3. Consumers are feeling optimistic about current economic conditions and the immediate future despite market volatility.
Investors seemed to be feeling equally optimistic about growth and value stocks in the third quarter. Performance for growth stocks was up 6.11%, close to value’s 6.51%. As shown in the chart below, historically growth and value take turns being in and out of favor with investors not giving the advantage to either style over long periods of time.
Additionally, large stocks have performed well for the quarter, beating small stocks, 6.31% to 5.25%. As illustrated in the chart below, large stocks have had a tight run with small stocks for all of 2012, finally pulling ahead this quarter.
Finally, the last chart compares the performance of fixed income (represented by the Barclays US Aggregate Bond Index), international stocks (represented by the MSCI EAFE Index), and the total broad market (represented by the S&P 500). Fixed income reported a quarterly return of 1.58% behind international stocks and the broad market at 6.98% and 6.35%, respectively. And, while the chart illustrates fixed income as being less volatile than stocks, it is important to remember that all investments are subject to risk, including possible loss of principle.