A Downright Ugly Q3

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

What can you say about a third quarter that witnessed the worst decline in the major domestic averages since 2011?

You call that a downright ugly Q3.

Just about everywhere you looked among domestic and global equities, it was easy to see a whole lot of red.

The table below of the top 10 domestic equity funds by year-to-date performance shows that even the best funds in 2015 saw a lot of bloodletting in Q3.

TICKER NAME 2015 Q3  YTD%
PNQI PowerShares NASDAQ Internet -5.80 2.97
RFG Rydex S&P Midcap 400 Pure Growth -6.57 1.49
MTUM ISHARES MSCI USA MOMENTUM -4.52 0.22
PWB PowerShares Dynamic Large Cap Growth -4.53 0.14
RZG Rydex S&P Smallcap 600 Pure Growth -10.27 -0.01
MNA IQ Arb Merger Arbitrage ETF -3.13 -0.36
FV FIRST TRUST DW FOCUS 5 FUND -10.31 -0.45
PBP PowerShares S&P 500 BuyWrite -3.07 -0.80
JKE iShares Morningstar Large Growth Index -5.65 -1.06
IVOG VANGUARD S&P MID-CAP 400 GRO -7.09 -1.09

Things were even worse internationally, as the table below of the top 10 global equity funds by year-to-date performance shows.

TICKER NAME 2015 Q3  YTD%
GWX SPDR S&P International Small Cap -9.83 0.77
RXI iShares S&P Global Consumer Discretion -6.51 0.25
FNDC SCHWAB FUNDAMENTAL INTL S/C -8.46 -0.66
KXI iShares S&P Global Consumer Staples -1.20 -0.84
SCHC SCHWAB INTL SMALL-CAP EQUITY -8.82 -1.07
IXJ iShares S&P Global Healthcare Sector -9.43 -1.09
ACWV ISHARES MSCI ALL COUNTRY WOR -3.92 -2.73
DBEF DB-X MSCI EAFE CURRENCY-HEDG -8.87 -3.41
GQRE FLEXSHARES GLOBAL QUALITY REAL ESTATE -3.32 -4.14
PSP PowerShares Listed Private Equity Portfolio -9.40 -4.37
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There is not much winning going on, either at home or abroad, in equity land in the third quarter.

We can attribute these declines to a toxic combination of global growth concerns fueled by China’s economic slowdown and the uncertainty of what the Fed is going to do about monetary policy.

Until both of these headwinds begin to tame, I suspect markets are in for a tough slog in Q4.

As for the major market exchange-traded funds (ETFs) we monitor every day, it was a familiar tale of woe.

TICKER NAME Q3% YTD%
DIA SPDR DJIA TRUST -7.51 -8.58
SPY SPDR S&P 500 ETF TRUST -6.91 -6.77
QQQ POWERSHARES QQQ TRUST -4.96 -1.44
VTI VANGUARD TOTAL STOCK MKT -7.76 -6.87
EFA ISHARES MSCI EAFE ETF -9.72 -5.79
EEM ISHARES MSCI EMERGING MKT -17.26 -16.57
FXI ISHARES CHINA LARGE-CAP ETF -23.06 -14.78
IEV ISHARES EUROPE ETF -8.99 -6.42
EWJ ISHARES MSCI JAPAN ETF -10.77 1.69

The only market segment that did reasonably well was bonds, as you can see by the table below of three prominent bond ETFs.

TICKER NAME 2015 Q3% YTD%
TLT ISHARES 20+ YEAR TREASURY BO 5.18 -1.89
AGG ISHARES CORE U.S. AGGREGATE 0.74 -0.49
TFI SPDR NUVEEN BARCLAYS MUNI 1.64 -0.21

Yes, with the exception of bonds, Q3 was downright ugly, and there is just no putting lipstick on this third-quarter pig.

Fortunately, subscribers to my Successful ETF Investing newsletter were out of the market for most of Q3, as our proprietary Fabian Plan gave us the signal to step aside in domestic and international stocks well before the worst of the selling.

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If you want to put the power of the Fabian Plan on your side, then please check out my Successful ETF Investing advisory service today!

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Free Webinar! Join me for my special event, “Investing in the Solutions to Global Cybersecurity Threats,” Tuesday, Oct. 6, 4:30 EDT. Sign up by clicking here now! I will have cybersecurity experts to help me explain this growing threat and how best to profit from the situation.

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Wisdom on Picking Battles

“He who knows when he can fight and when he cannot, will be victorious.”

— Sun Tzu, “The Art of War”

We all know that sometimes, the best thing to do in a difficult situation is just walk away. That’s true of conflict with others, and it’s also true of investing. In fact, knowing when to get in the fight and when to stay away is one of the biggest lessons investors need to learn — but often don’t. If you want to succeed, then learn when to fight and when the fight is not worth it. Doing so will help you be victorious.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

In case you missed it, I encourage you to read my e-letter column from last week on Eagle Daily Investor about the implications of Janet Yellen’s speech at the University of Massachusetts. I also invite you to comment in the space provided below my commentary.

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