Well that is what Morningstar is saying in it quarterly review. As I write this post the SPX is up 1.7% for the quarter. That is certainly better than being down but was that really good?
I’m not sure if they are trying to spin something or if the author really thinks 1.7% is good.
I don’t think this is the best way to look at things if you are investing with any sort lengthy time horizon. The market averages 10% per year. That takes into account good, bad and flat. If you are managing your own portfolio all you need to do is stay reasonably close most of the time. I have written many times about taking steps to avoid down a lot. I think it is a sure bet there will be a couple of ugly down a lots over the next 20 years. Missing a big chunk of one of them could add a couple of hundred basis points to your average annual return and spare a lot of mental anguish.
There are three things I look at to warn down a lot may be coming; the SPX goes below its 200 DMA, the yield curve inverts or the market averages a 2% loss three months in a row. These are obviously not infallible but they are simple to understand and as I have chronicled in the past you should not go to 100% cash the instant one of them triggers.
This was the case when the SPX recently went below its 200 DMA. I tweaked accounts a little bit and was ready to take more action that thankfully was not needed.
For most folks, getting caught up in how a particular three month period went is probably not necessary. Its a little different for someone that manages other peoples money for a living. An investment manager needs to add some value more often than not. I have had a good run lately but there will be time periods where I will lag. This is true of just about every manager. This is also true of do-it-yourselfers.