Fisher Capital Management: Market Performance

Market Performance: Fisher Capital Management - Stocks closed lower in October for the first time in seven months, as investors questioned whether the huge rally off the March lows had exceeded the economy’s ability to generate growth in output and profits.

Indeed, equities capped off a volatile month (the Dow Jones

Industrial Average (DJIA) experienced triple-digit moves in ten

trading sessions!) with a volatile week, as the S&P 500 Index

experienced its worst five-day span since early July.

For the month, the DJIA eked out a fractional gain, while all the

other major equity market indices suffered losses. Small cap

stocks, which had been among the performance leaders of the

seven-month rally, experienced the worst hit, with the Russell

2000® Index falling by almost 7%. In another sign that the

market may be growing skeptical of the “higher risk, higher

reward” strategy, the NASDAQ Composite Index, dominated by

technology holdings, declined 3.6% for the month.

Market Performance: Fisher Capital Management - Yet perhaps emblematic of the struggles experienced in the

markets recently, growth stocks outperformed value in October,

contradicting the idea that the pursuit of “risk” had become out

of favor over the past several weeks. Moreover, the weakness in

U.S. markets failed to extend beyond our borders last month, as

developed markets (MSCI EAFE) experienced just a fractional

loss, while the emerging markets (MSCI EM) managed to rise

by up to 1%, adding to their impressive year-to-date (YTD)

returns.

From a sector perspective, two of the three leading performers

off the March lows (financials and materials) declined by the

largest amounts in October, as investors appeared to lock in

gains of approximately 150% for the financials sector and 75%

for the materials sector. Despite the weakness in the technologyladen

NASDAQ Composite last month, the higher-quality and

larger-cap tech names comprising the S&P 500 Index’s

information technology sector simply dropped fractionally. Rising

oil prices pushed the energy sector higher by 3%, and the

“defensive trade” was still evident within the consumer staples

sector, which held on for a 1% gain.

Market Performance: Fisher Capital Management - In other asset classes, fixed-income was mixed last month. The

yield on the 10-year Treasury note backed up by seven basis

points, as traders likely moved funds elsewhere as the Federal

Reserve concluded its $300 billion Treasury purchase program.

The dollar continued to weaken, hovering near 14-month lows,

which helped drive up the prices for oil, gold, and most

commodities.

Fisher Capital Management, Korea is a leading global financial institution holding extensive relationships with financial institutions, institutional investors and corporations across the world.

As a full service company Fisher Capital Management, Korea provides a full range of investment banking services including advanced risk management, corporate strategy and structure, plus raising capital through debt and equity markets. With this as our backbone we continue to provide a client service second to none.