November 2008
The month of November, historically a good one for stock returns, proved to be quite volatile and disappointing for most investments. For the month, the major stock indices recorded declines ranging from 4.9% - 10.8%. Economic news was generally downbeat, as weakening conditions grew pervasive across a broad swath of industries. Consequently, many investors sought safety in lower risk assets. The ‘flight to quality' that has been notable in the bond market for several months, continued as prices of US Treasury securities rose sharply and yields declined significantly. Conversely, the prices of non-treasury taxable bonds fell, and in certain cases declined to ‘fire sale' type levels. It is clear that a greater appreciation for risk has reentered the financial markets, having been largely absent for the past several years. From a longer term perspective, we believe this shift will prove to be positive, though in the near term market conditions are very unsettled and a most difficult economic environment seems inevitable.
