NEW YORK, July 18, 2013 /PRNewswire/ — Zaim Hajdari, a New York City-based wealth manager, has taken a look back at second-quarter market results. The first quarter was good, but was there a follow-up on the second? "To a certain extent, yes—the second quarter was also a success," says Hajdari. "However, there was some considerable hesitancy, and investors need to know the whole story."
In the first quarter, the DJIA rose more than 11%. The second quarter had a tough June, but still finished up about 2.3%, for a 13.78% overall first half. "Generally, it's been a case of a rising tide lifts all boats," said Hajdari. To a large extent, many sectors have moved in lockstep: In fact, all sectors have contributed to the DJIA's rise and all had a better first quarter than second. However, the balance wasn't consistent from one quarter to the next. In the second quarter, consumer services, financials and healthcare together were much more responsible for gains than they were in the first quarter. But it was different for other sectors: For example, technology was a first quarter leader, but had a negative second quarter.
What about the S&P 500? It was very much the same story. Overall, the index had a terrific first half—indeed, the best since 1998. But then second quarter was up only 2.4%—most of the power came in the first quarter. The first half was up 12.6%
There were no surprises for international either. The MSCI World Index had a good first half, up 8.79%, but the second quarter by itself was up only 0.85%, and in June, it fell -2.42%.
"June was the 'bad boy' for the indexes," said Hajdari. "Although the losses were not enough to damage the first six months or even just the second quarter, they do indicate a need for caution." Perhaps indications that the Fed isn't going to be as aggressive in helping the economy made investors nervous. The CBOE Volatility Index (VIX), a de facto measure of market fear, hit its highest six-month level in mid June—although if fell sharply thereafter.
Many look at these results and see lessons in the need for continued government props—or conversely, the danger of relying on the government. But Hajdari sees broader, and ultimately more useful lessons. "First, we see how dangerous it can be to make short-term forecasts and rely on short-term changes for investing. Long-term planning is best, rather than investing just quarter-by-quarter." And a subtler, and perhaps even more important lesson, is the need for an uncorrelated mix of investments. The fact that multiple indexes, and to a large extent their components, moved up and down together, shows how difficult it is to balance a portfolio. Investors have to be careful in creating a good balance, so not everything goes up and down together, creating unwelcome volatility.
Despite what happened in the first half, and second quarter, Hajdari says he will continue to work with his clients relying on the principles of long-term investing with properly balanced portfolios.
About The Hajdari Group
The Hajdari Group ( www.thehajdarigroup.com ) is an independent firm in New York City. President and founder Zaim Hajdari is a Chartered Retirement Planning Counselor with 18 years experience. Our advisors provide financial planning and investment management services to high-net-worth individuals and families. Other services include 401(k) rollover advice, retirement planning, college planning and estate planning.
Securities offered through Raymond James Financial Services, Inc., member FINRA/ SIPC. Hajdari is also the Branch Manager. Hajdari was formerly an investment manager with JPMorgan Chase where he oversaw over $3 billion in client assets.
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