Research

The US equity market declines that started in September accelerated into October as a second wave of the financial crisis spread around the world and began to impact the global economy. While investors had appeared braced for a mild recession, the impact of the additional strains on the financial system quickly led the markets to discount a more severe recession, perhaps on par with recessions of 1973/1974 and 1981/1983.

For the third quarter of 2008, the representative Mid Cap Growth portfolio posted a negative return of 12.69%, falling considerably less than the 17.87% loss for the Russell Mid Cap Growth index. Through the end of September, the strategy’s composite year-to-date return of
-20.32% compares to returns of -23.47% for the Russell Mid Cap Growth.

For the September quarter, the representative portfolio decline of 9.2% was less than the 12.3% decline of the Russell 1000 Growth Index. For the nine months ending September 30th, the representative portfolio was down 15.1% while the Russell 1000 Growth Index declined 20.3%. The representative portfolio advanced more than the market during the advance in 2007, and has declined less than the market during its correction in 2008. 

In August US midcap equity markets turned in a gain as investors hoped for some uptick in consumer spending as energy prices
continued to retreat. Commodity prices declined in sympathy with energy and concerns over the viability of Fannie Mae and
Freddie Mac and credit market turmoil also continued.

In July, Mid Cap stocks saw increased volatility as energy stocks retreated over 20%. Share prices slumped for the first half of the month and then, led by a bounce in the financials, moved higher in fits and starts, only to meet with selling pressure again on the last day of the month.