May 2012 Market Update

Although still positive for the year, the S&P 500 index declined 6% during the month of May as tensions increased over European debt problems.  Both developed international and emerging markets stock indexes declined sharply in May and they have both experienced a more than 20% decline in the past 12 months.  Many emerging countries (China for example) are very dependent upon selling their exports to Europe, so concerns about further economic weakness across Europe has led to the decline in stock prices.  Just as we saw in April, out of the five financial market indices represented below, only the two bond indexes posted positive gains for the month.

Financial Market Indices as of May 31, 2012
May 2012
Last 3 Months
Year-to-Date
Last 12 Months
S&P 500 Total Return (US stocks)

-6.0%

-3.5%

5.2%

-0.4%

MSCI Developed EAFE (foreign stocks)

-11.4%

-13.3%

-3.4%

-20.1%

MSCI Emerging Mkt. Equities (emerging country stocks)

-11.5%

-15.9%

-0.9%

-22.3%

Barclays Capital Aggregate Bond – Intermediate Term

0.4%

1.0%

1.9%

5.1%

Barclays Capital Municipal Bond Index

0.8%

1.3%

3.8%

10.4%

 

Investment Portfolio

We manage your family wealth with inspiration, as opposed to desperation.  This means using sound research, solid judgment and many years of experience to set appropriate risk-based asset allocation strategies and then select investments we believe offer a good trade-off between risk and reward.

Over the past three months we have made some short-term tactical changes to our asset allocation strategies and investments held in portfolios to reduce risk and be slightly more defensive.  We have become increasingly concerned about the possibility of Greece leaving the European monetary union.  If this occurs we could see significant capital dislocations around the world with money leaving riskier assets.  Today, we have targeted a cash position of 10% across all investment portfolios.  With interest rates at historically low levels we don’t earn any return from holding cash, but on the flip-side, cash will not drop in value.  We like the idea of having some cash on the sidelines to invest at lower prices should the global markets become more volatile.

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The information in this material is only as current as the date indicated, and may be superseded by subsequent market events or for other reasons. While all information prepared in this document is believed to be accurate, any statements of opinion constitute only current opinions of Payne Wealth Partners, Inc., which are subject to change and which Payne Wealth Partners, Inc. does not undertake to update. Accordingly, you should not put undue reliance on these statements. The information does not attempt to examine all the facts and circumstances that may be relevant to an individual’s financial needs. Payne Wealth Partners, Inc. is not soliciting any action based on these statements.

Contact Our Offices

Payne Wealth Partners, Inc.
Keystone Financial Consulting
601 N Cross Pointe Blvd
Evansville, IN 47715
Phone: 812-477-6221
Toll Free: 888-477-6221
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