SECURITIES MARKET RETURNS UPDATE
Through December of 2004

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Market Comment:

Stocks finished the year with a strong fourth quarter, bringing the full-year gain for 2004 to a healthy 10.8% for the S&P 500. Small-caps did even better, gaining slightly more than 18% this year. The value indexes continued their general trend of outperforming their growth counterparts. Investment-grade bonds gained over 3% for the year despite the climb in short term interest rates engineered by the Federal Reserve. The falling dollar helped foreign stocks gain 20%during 2004. Natural resource and energy stocks lost 2% in December but gained 28% for the year. REIT stocks gained 5% in December and over 30% during the calendar year.

 Current Asset Class Observations:

  • US Equities - Large growth stocks gained 3.6%. Value stocks gained slightly less. Small cap and mid cap stocks gained about 3% in December. Utility stocks gained 3%. Financial stocks gained 4% while health care stocks gained 6% in December. Technology shares gained 3%. Commodities lost 4% as oil and natural gas prices declined.

  • Foreign Equities - European stocks gained 4%. Pacific Rim stocks gained 3% and Japanese stocks gained 5% during December. Latin American stocks gained 9% and other emerging market stocks gained 5% with a full year gain of 22% for all emerging markets.
  • Bonds - US and global government bonds rose about 1% in December. High yield bonds gained 1% with full year gains of about 10%. Inflation indexed bonds gained 1.5% in December.

 

 

Best Worst
December 2004
One
Month
Three
Months
Twelve
Months
REIT
Funds
5.39%
Emerging
Markets
16.81%
REIT
Funds
31.88%
Emerging
Markets
4.68%
REIT
Funds
15.80%
Natural
Resources
28.37%
Foreign
Stocks
4.39%
Foreign
Stocks
15.32%
Emerging
Markets
22.45%
NASDAQ
Composite
3.75%
NASDAQ
Composite
14.69%
Foreign
Stocks
20.25%
Large
Growth Stocks
3.58%
Small
Stocks
14.09%
Small
Stocks
18.33%
S&P
500
3.40%
Large
Value Stocks
9.93%
Large
Value Stocks
15.71%
Large
Value Stocks
3.26%
S&P
500
9.23%
S&P
500
10.87%
Small
Stocks
2.96%
Large
Growth Stocks
8.51%
NASDAQ
Composite
8.59%
Bonds

0.68%
Natural
Resources
4.83%
Large
Growth Stocks
6.13%
Natural
Resources
-2.33%
Bonds

0.44%
Bonds

3.04%
 
Consumer
Price Index
-0.10%
Consumer
Price Index
+0.70%
Consumer
Price Index
+3.35%
Key
Bonds - represented by Lehman Brothers Intermediate Index
S&P 500 - top 500 US stocks by market capitalization
NASDAQ Composite - all stocks traded on the NASDAQ Exchange
Large growth stocks - represented by the Barra Growth Stock Index
Large value stocks - represented by the Barra Value Stock Index
Small stocks - represented by the Russell 2000 Small Cap Index
Foreign stocks - represented by the MSCI International Stock Index
Emerging Markets - represented by the MSCI Emerging Markets Index
REIT Funds - composite of all Real Estate mutual funds
Natural Resources Funds - composite of all mutual funds
The opinions expressed in this commentary are those of Pinnacle Financial Advisors, LLC. These views are subject to change at any time based on market and other conditions, and no forecast is guaranteed. This material is derived from sources believed to be reliable, but its accuracy and the opinions based theron are not guaranteed. The opinions are for general information only and are not intended to serve as specific financial, legal, investment or tax advice.

Pinnacle Financial Advisors, L.L.C.
11000 Lincoln Drive West, Suite 8
Marlton, NJ 08053
856-797-8082

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UPDATED 2/20/2005
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