September was another down month for every asset category that we track, although not as much as August. We have officially entered "Correction" territory for three of the asset categories (as defined as a 10% decrease from their highs.) Statistically speaking a correction happens once a year on average. It has been a few years since we have had a correction so maybe it's hard to remember but this is what markets do - they go up and down. It's good to know we are in such a normal market, don't you think?
Let's take a look at the numbers. All of the US stock categories were down between 2% and 5%. US large cap stocks, core and value, were down (2.58%) and (2.27%), respectively. US small cap stocks were hit a little harder, small cap value was off (3.92%) and small cap core off (4.87%).
International stocks performed even worse, with China and emerging markets still causing most of the worry. International large cap stocks both core and value were down about 6-7%. International small cap stocks, both core and value, were down about 3.5%. Note, International small cap core stocks are still up year-to-date albeit less than 1%.
Last but not least, emerging markets were down just over 3% in September which isn't that bad considering they were down over 9% in August.
Short-term bonds continued their steady climb, up just over 1% year-to-date, giving us a perfect example of why we stay short term with our bond allocations. The rest of the world could be in a depression but your bonds, which are used to preserve your retirement and other cash flows, are staying steady.
Jim, what do you think about another month of market turmoil?
"Well, I recently read that investors added $91billion dollars to Money Market Funds. I know a lot of this money is coming from stocks and can mean only one thing....people are panicking. Maybe it's because we haven't seen a correction for multiple years so people aren't used to it but these corrections happen and are a normal part of the market. It breaks my heart because I know a lot of these investors are hard-working individuals without millions of dollars. They really just need someone to tell them the market is not crashing, everything will be ok, and that the stock market is still the best place in the world to grow their wealth."
Thank you, Jim, you have a big heart.
Now let's look at the monthly return numbers with stock charts:
September Returns By Asset Class
US Large Cap Core: (2.58%)
US Large Cap Value: (2.27%)
US Small Cap Core: (4.87%)
US Small Cap Value: (3.92%)
International Large Core: (5.58%)
International Large Value: (6.98%)
International Small Core: (3.64%)
International Small Value: (3.54%)
Emerging Markets: (3.26%)
Short Term Bonds: 0.34%
(Data from MSCI and Morningstar)