• / Free eNewsletters & Magazine
  • / My Account
Home>Research & Insights>Investment Insights>Morningstar Market Commentary: Third Quarter 2008

Related Content

  1. Videos
  2. Articles
  1. What Damage Can Rising Rates Do?

    Though some assets are more sensitive to interest rates, even a conservatively tilted diversified portfolio has historically been able to produce positive returns through rising-rate environments, says David Falkof of Morningstar Investment Management.

  2. Benz: 4 Biggest Investing Surprises of 2014

    Morningstar's director of personal finance says bond gains, oil's fall, and Bill Gross' big move topped the unexpected list this year.

  3. 4 Portfolio Checkup Traps to Avoid

    Remember to focus on the big picture, be somewhat hands on, avoid performance chasing, and consider tax-loss selling, says Morningstar's Christine Benz.

  4. Malkiel: Alternatives to U.S. Government Bonds

    Income investors concerned about heavy government - bond concentration in the Barclays Aggregate Bond Index should consider dividend payers and the bonds of countries with low debt/GDP ratios, says the Princeton professor.

Morningstar Market Commentary: Third Quarter 2008

Financials got whalloped, and they brought the market with them.

Sanjay Arya, 10/14/2008

Financial markets witnessed unprecedented turbulence in the third quarter of 2008, as many a haloed financial institution was brought down to its knees. The U.S. government took a number of initiatives to prop up the markets but failed to quell market fears and bolster investors' confidence.

The Morningstar US Market Index dropped a whopping 8.9% for the quarter and is down 18.7% for the year. The bond market put in a mixed performance, with the Morningstar Core Bond Index up 0.13% for the quarter. And commodities, which tend to exhibit low correlations with stocks and bonds, had a mighty fall. The Morningstar Long-Only Commodity Index dropped 28%.

In our quarter-end review, Travis Pascavis, director equity indexes provides insight into the market's performance.

Some of the key observations:
* An ugly quarter for stocks. The troubles of the financial sector spread across the broader economy, as cost of capital skyrocketed. Notwithstanding the terrible quarter for stocks, there was a marked difference in the performance of different style categories. Value stocks fared considerably better than growth, as the Morningstar US Value Index outperformed the US Growth Index by more than 11% for the quarter.

* Bonds eke small gains. A flight to quality contributed to modest gains for government bonds. By contrast, the Morningstar Corporate Bond Index dropped 7.32% for the quarter, as spreads in yield between corporate and government bonds were at historically high levels.

* Commodities bulls turn into bears. Prospects of slowing global growth knocked the wind out of commodities as the Morningstar Long-Only Commodity Index shed 28% for the quarter.

Sanjay Arya is director of Morningstar Indexes.

1
Upcoming Events
Conferences
Webinars

©2014 Morningstar Advisor. All right reserved.