The third quarter of this year saw mostly positive results. US stocks were up 7.12%, while Developed International stocks experienced gains of 1.4%. Emerging Markets and Global Real Estate saw negative results. Year to date, US stocks are up 10.6% and International stocks are down 2.7%. International stocks have experienced positive returns in their local currencies, but the strengthening of the dollar has turned those to negative returns when converted into US dollars.
When interest rates rise, bond prices decrease. Though we are seeing an increase in the yields our bond funds are paying, prices have declined, leaving returns on bonds flat or negative for the year. We continue to hold shorter-term bonds that will have less price fluctuation as interest rates continue to rise, and that also are paying similar yields with less risk than their longer-term counterparts.
We expect to continue to see volatility in the markets. Since 1980, the average intra-year drop from peak to trough has been 13.8%. As you experience these fluctuations, know they are normal. You earn more owning stocks over the long-term to be compensated for the risk you take on.
