SECURITIES MARKET RETURNS UPDATE
Through August of 2004

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Market Comment:

August was mixed for the equity markets, with the S&P 500 showing weakness during the first week or two, then rebounding later to finish the month up 0.4%. Value stocks outperformed growth, and large-caps beat small-caps. Bonds did very well, gaining roughly 2% as interest rates dropped amid concerns the economy is losing some of its momentum. Natural resource and energy stocks lost some ground as oil prices subsided. Real estate and utility stocks each also gained during August.

 Current Asset Class Observations:

  • US Equities - Large growth stocks lost 0.3%. Value stocks gained 1%. Small cap and mid cap stocks lost 0.5% each. Stocks of publicly traded real estate companies (REITs) gained 7% and utilities gained 3% as investors were eager to purchase dividend paying stocks. Financial and health care stocks appreciated slightly while technology shares lost more than 4%.
  • Foreign Equities - European stocks gained less than 1%. Pacific Rim stocks gained 4% and Japanese stocks increased 0.5%. Latin American stocks rose 4% and emerging market stocks gained 4% as companies in these markets experienced larger than expected earnings with higher exports to China.
  • Bonds - Bonds appreciated in value as investors felt that economic sluggishness would keep the Federal Reserve from raising interest rates. US bonds gained 1.6% during the month. Global bonds also rose 2%. High yield bonds gained 1%. Inflation indexed bonds gained 2%. Commodities rose in value about 0.5%.

 

 

Best Worst
August 2004
One
Month
Three
Months
Twelve
Months
REIT
Funds
6.94%
REIT
Funds
10.82%
Natural
Resources
29.26%
Emerging
Markets
3.92%
Natural
Resources
6.01%
REIT
Funds
28.84%
Bonds

1.67%
Bonds

2.83%
Foreign
Stocks
22.64%
Large
Value Stocks
1.08%
Large
Value Stocks
1.31%
Emerging
Markets
17.10%
Foreign
Stocks
0.44%
Emerging
Markets
1.29%
Large
Value Stocks
16.08%
S&P
500
0.40%
Foreign
Stocks
-0.57%
S&P
500
11.45%
Large
Growth Stocks
-0.29%
S&P
500
-1.03%
Small
Stocks
11.36%
Small
Stocks
-0.51%
Small
Stocks
-3.30%
Large
Growth Stocks
6.93%
Natural
Resources
-1.41%
Large
Growth Stocks
-3.38%
Bonds

5.08%
NASDAQ
Composite
-2.61%
NASDAQ
Composite
-7.48%
NASDAQ
Composite
-1.53%
 
Consumer
Price Index
+0.10%
Consumer
Price Index
+0.30%
Consumer
Price Index
+2.50%
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 9/23/2004
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