For some reason (perhaps media coverage) many investors believe that 2018 is another solid year for investment returns. This is simply not true. Year to date most asset categories are in the red. The normal safety of bonds is not holding true for 2018. As interest rates have risen, bond prices are down for the year. The Bloomberg Barclays aggregate bond market index is down (2.25%) including interest earned for the year.
The various stock market averages show little, if any, gains. The Dow Industrial Average is up just 2%. The Dow Transport average is down (.60%) for the year. The only average showing a reasonable rate of return is the NASDAQ Composite. It is up 7.6% for the year. However; to earn this return an investor would need to be 100% invested in the riskiest of NASDAQ stocks. Not prudent for most all investors. The KBW Bank index is down (6.4%) on the year. The energy indexes are also unchanged to down slightly. Any exposure to markets outside the U.S. is brutal. Germany is down (11%), France (4.25%), England (8.70%), Japan (2.17%), China (22.5%), Canada (4.95%). Performance in the emerging market countries is also a sea of red ink.
How media has created an impression of big gains for 2018 is a mystery. The attached table shows the rate of return earned by various blends of assets. All are negative.
| October 31, 2018 Year to Date Returns | ||
| INDEX | Returns | Returns with Dividends |
|---|---|---|
| Bloomberg Barclays US Agg Bond Index | -4.3355% | -2.3280% |
| Dow Jones Industrial | 1.6042% | 3.4035% |
| S&P 500 | 1.5567% | 3.1603% |
| NASDAQ Composite | 5.8306% | 6.7496% |
| Dow Transport | -3.9681% | -2.8920% |
| Dow Utilities | 1.4474% | 3.9835% |
| Russell 2000 | -1.5694% | -0.5304% |
| KBW Bank Index | -7.2156% | -5.8698% |
| XLE, Energy Sector ETF | -7.0578% | -4.9640% |
| MSCI World ex USA | -14.3917% | -11.7033% |
| S&P/TSX Composite (Canada) | -7.2784% | -4.8618% |
| MEXBOL (Mexico) | -10.9170% | -9.4005% |
| IBOV (Brazil) | 14.0486% | 14.0486% |
| IPSA (Chile) | -8.2713% | -8.2713% |
| COLCAP (Columbia) | -8.0250% | -5.6304% |
| MERVAL (Argentina) | -1.5681% | -1.5681% |
| SPBLPGPT (Peru) | -4.6878% | -4.6878% |
| Euro Stoxx 50 (Europe) | -8.7458% | -5.5536% |
| FTSE100 (UK) | -7.2800% | -3.8583% |
| CAC40 (France) | -4.1246% | -1.2445% |
| DAX (Germany) | -11.3808% | -11.3808% |
| Nikkei (Japan) | -3.7096% | -1.9973% |
| Hang Seng (Hong Kong) | -16.5094% | -13.2177% |
| CSI300 (Shanghai Shenzhen, China) | -21.7580% | -19.8106% |
| AS51 (Australia) | -3.8717% | 0.7644% |
| Portfolio Allocations | ||||||
| Portfolios | Fixed Income | Equities S&P | Equities NASDAQ | International | Total Portfolio Return | Total Portfolio Return with Dividends |
|---|---|---|---|---|---|---|
| Conservative | 75% | 25% | -2.8625% | -0.9559% | ||
| Moderate Growth | 60% | 40% | -1.9786% | -0.1327% | ||
| Growth | 50% | 25% | 15% | 10% | -2.3432% | -0.5318% |
| Aggressive | 30% | 30% | 25% | 15% | -1.5347% | 0.1816% |