Market Volatility Returns: Fireworks in Greece and China
Investors are rightfully concerned about events in China and Greece, but don’t let a Trojan Horse through the gates that secure a well-founded investment plan and a properly diversified portfolio.
We hope you had a happy July 4th holiday, and that you spent your time enjoying barbecues and bottle rockets rather than thinking about the ongoing fireworks in Greece and China. Indeed, fears about a recent market correction in China, and about the impact that Greece’s troubles might have on global growth, triggered a selloff in the stock market in June. Those concerns have intensified in early July.
The Vanguard Total Stock Market Index (the best proxy for the overall domestic stock market) dropped 1.7% in June, and it has returned 1.7% so far this year. Large and small cap growth led domestic equities, each with a 4.2% return so far this year. Large cap value stocks brought up the rear with a marginal loss; the value index is weighted toward dividend paying stocks, which can be interest rate sensitive, and which have under-performed this year because investors figure that interest rates will rise in the U.S. Read Full Letter