Friday, October 1, 2010

Market Thoughts Starting the Fourth Quarter

According to Nigel Tupper of Merrill Lynch, global equities in the month of September 2010 were up +9.4%, which marked the fifth best month for the MSCI World Index since the inception of the index in 1988.

Small cap US stocks did even better: Steve Desanctis (also of Merrill) notes the following:

September's rise of 12.5% was by far the best ever for the Russell 2000 and second best when we use small-cap returns going back to 1926. Only September 1939 was better and when we have had a strong ninth month of the year, subsequent performance for the fourth quarter tends to be better than average at 4.3% versus 2.9%.

Last week I wrote a post discussing why the consensus might be wrong, and why we might still see a fourth quarter rally. If you missed it, here's the link:

Random Glenings: 10 Reasons to be Bullish on Common Stocks

There is no question that the economic data remains subdued, and unemployment remains depressingly high. However, given the dearth of interesting investment alternatives, US common stocks may surprise on the upside.