As we enter
the new-year, it may be worthwhile to reflect on 2012. Please see the article below written by
Weston Wellington, Vice President with Dimensional Fund Advisors, entitled “2012:
The Year It Didn’t Happen.” The article reminds us that, as is so
often the case, earning the rewards offered by the world’s capital markets
requires a combination of discipline and detachment from the ominous headlines
that we are bombarded with daily. I hope
that you find the article worthwhile.
We at
Portfolio Advisors wish you the very best that 2013 can offer, and we remain
here to serve you.
Warm
Regards
The
Portfolio Advisors Team
January 5, 2013
2012: The Year It Didn’t Happen
Weston Wellington
Down to the Wire
Vice President, Dimensional Fund Advisors
Judging by the headlines in the financial
press, investors spent much of the past year anxiously awaiting one calamity
after another that failed to occur. The plunge off the so-called fiscal cliff
was averted. The euro zone did not fall apart. China’s economy and stock market
did not crash. The bond market did not implode. The re-election of President
Barack Obama did not derail the US market. The “flash glitch” in early August
did not lead to further trading disruptions. Doomsday did not arrive on
December 21, as some interpreters of the Mayan calendar suggested it would.
Instead, the belief that owning a share of
the world’s businesses is a sensible idea appears to be alive and well, despite
suggestions from some observers that the “cult of equity” is dead. For the
year, total return was 16.42% for the MSCI World Index in local currency, and
16.00% for the S&P 500 Index. Among forty-five global stock markets tracked
by MSCI, only three posted negative results in local currency (Chile, Israel,
and Morocco), and twelve markets had total returns in excess of 25%, with
Turkey leading the pack at 55.8%. Although much of the financial news over the
past year highlighted Europe’s fragile financial health, most of the region’s
equity markets outperformed the US, including Austria, Belgium, Denmark,
France, Germany, the Netherlands, Sweden, and Switzerland. For US dollar-based
investors, results were further enhanced by a modest decline in the US dollar
relative to the euro, the Danish krone, and the Swiss franc.
As is so often the case, earning the
rewards offered by the world’s capital markets may have required a combination
of discipline and detachment that eluded many investors.
2012 Index and Country
Performance
Total return (gross dividends) for 12-month
period ending December 31, 2012.
|
MSCI Index
|
Local Currency
|
USD
|
|
WORLD
|
16.42%
|
16.54%
|
|
WORLD ex USA
|
16.73
|
17.02
|
|
EAFE
|
17.89
|
17.90
|
|
EMERGING MARKETS
|
17.39
|
18.63
|
|
EMERGING + FRONTIER MARKETS
|
17.15
|
18.35
|
|
TURKEY
|
55.80
|
64.87
|
|
EGYPT
|
54.66
|
47.10
|
|
BELGIUM
|
38.56
|
40.72
|
|
PHILIPPINES
|
38.16
|
47.56
|
|
THAILAND
|
30.84
|
34.94
|
|
DENMARK
|
30.37
|
31.89
|
|
GERMANY
|
30.07
|
32.10
|
|
INDIA
|
29.96
|
25.97
|
|
HONG KONG
|
28.01
|
28.27
|
|
POLAND
|
27.05
|
40.97
|
|
AUSTRIA
|
25.07
|
27.02
|
|
SOUTH AFRICA
|
25.07
|
19.01
|
|
COLOMBIA
|
23.87
|
35.89
|
|
SINGAPORE
|
23.54
|
30.99
|
|
NEW ZEALAND
|
23.28
|
30.38
|
|
CHINA
|
22.85
|
23.10
|
|
JAPAN
|
21.78
|
8.36
|
|
FRANCE
|
20.93
|
22.82
|
|
AUSTRALIA
|
20.77
|
22.30
|
|
MEXICO
|
20.09
|
29.06
|
|
PERU
|
19.73
|
20.24
|
|
THE NETHERLANDS
|
19.35
|
21.21
|
|
SWITZERLAND
|
18.91
|
21.47
|
|
SWEDEN
|
17.11
|
23.41
|
|
USA
|
16.13
|
16.13
|
|
FINLAND
|
14.71
|
16.50
|
|
KOREA
|
12.89
|
21.48
|
|
TAIWAN
|
12.84
|
17.66
|
|
HUNGARY
|
11.86
|
22.79
|
|
INDONESIA
|
11.83
|
5.22
|
|
ITALY
|
11.72
|
13.46
|
|
NORWAY
|
11.63
|
19.70
|
|
UNITED KINGDOM
|
10.24
|
15.30
|
|
MALAYSIA
|
10.23
|
14.27
|
|
BRAZIL
|
10.14
|
0.34
|
|
RUSSIA
|
9.73
|
14.39
|
|
CANADA
|
7.46
|
9.90
|
|
IRELAND
|
4.66
|
6.29
|
|
GREECE
|
4.11
|
5.73
|
|
PORTUGAL
|
3.36
|
4.98
|
|
SPAIN
|
3.12
|
4.73
|
|
CZECH REPUBLIC
|
0.26
|
3.48
|
|
CHILE
|
–0.14
|
8.34
|
|
ISRAEL
|
–6.24
|
–3.91
|
|
MOROCCO
|
–12.63
|
–11.48
|
