Second Quarter 2015 Market Commentary

Second Quarter

In the later part of 2014 and in early 2015, reference was frequently made to Wall Street being ahead of Main Street. This meaning that U.S. companies were showing strong fundamental statistics to support the continuing climb in stock values while activity on “Main Street” was not consistent with this show of market strength.

In 2Q2015, evidence of strengthening on Main Street started to surface.  Indicators such as Consumer Confidence, Average Wages, Unemployment, and Job Growth all showed improvement.  The predicted volatility of the market acted to camouflage this inching forward and made it hard for investors to track its impact in the market. The continuing causes of this volatility were nervousness about the Federal Reserve increasing the short-term interest rate, the debt crisis in Greece, and the strong dollar, making it harder for U.S. companies to sell goods and services overseas.

In the quarterly final analysis, only the NASDAQ Index posted a positive 1.8%, which is its 10th consecutive positive quarterly result.   The S&P 500 Index closed +0.3% and the Dow Jones Industrial Average finished at -0.9%.  For comparison, at the same point in 2014, the S&P closed at up 6.1%. The picture wasn’t much different in the Bond market as prices continued to decline as the yield on the 10-year U.S. Treasury Bond experienced the biggest one quarter increase (+0.19%), since 2013 finishing the quarter at 2.23% and reversing a five consecutive quarter trend of declining yields.

In global investing, the MSCI EAFE Index posted a gain of 0.62% for Q2. As you may remember from our Q1 commentary, the economic easing of the European Central Bank is starting to stimulate growth in some sectors of the European economy which has created opportunity for finding bargains for investing in some foreign markets.

The forecast for the second half of 2015 is the same as for the first half – that being continued market volatility with even more choppiness. The prospect of a Fed interest rate increase in September and a strong dollar will continue to keep the stock market nervous and make growth difficult for U.S. companies. The Greece debt crisis and the weakening economy in China are also likely to fuel some volatility in the U.S. market.  In spite of this, optimism exists that, in the third quarter, we will see continuing improvements in consumer spending, job growth and increasing average wages.

In light of these conditions, we continue to believe that our investor clients should “stay the course” by maintaining a portfolio consistent with the investor’s risk tolerance and investment time horizon that is composed of a diversified portfolio weighted toward equities, including a modest amount of global equities in developed economies.


We have done our best to present the information contained in the above article fairly and accurately.  However, hypothetical investment performance is still potentially misleading.  Hypothetical data does not represent actual performance and should not be interpreted as an indication of actual performance. This data is based on transactions that were not made. Instead, the performance is simulated for illustration purposes only, based on knowledge that was available only after the fact and thus with the benefit of hindsight. Results do not include the impact of taxes, if any.  Some investors in UPAL funds may have earned more; other earned less.  A complete list of actual investment performance may be found on the UPAL Web site at under the Investments tab at the top of the screen. Past returns are not necessarily indicative of future results.  Future results will likely vary. These materials are subject to change without notice and, due to the rapidly changing nature of the security markets, may quickly become outdated. All materials and information presented are compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This information is distributed for educational purposes only, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product or service. Investments are not FDIC-insured and may lose value.