Quarterly Recap - 2010 First Quarter

Most market indexes continued to climb higher in the first quarter of 2010. While the pace of the gains has slowed somewhat, markets still managed to show positive returns across many asset classes. Continued optimism surrounding the ongoing economic recovery has been a key driver of performance. Many areas of the bond markets moved higher as well, despite the low yield environment. Some strategists are still predicting a market correction, but so far it has not occurred. In a slight reversal from recent quarters, domestic equity indexes outperformed international and emerging markets. This is likely due in part to the strong gains in international indexes in 2009. In another slight reversal from 2009, value stocks outperformed their growth peers in the quarter. Small and mid cap companies continued to outperform as well. Most international markets, both developed and emerging, posted only modest gains.

Global bond markets also performed well as investors sought out higher yields. Last year saw a flight to quality due to the economic crisis, but this trend has reversed. Areas such as corporate credit and high yield posted gains. Treasuries also managed to show positive returns, particularly those at the longer end of the yield curve.

1. Wall Street Journal 4/01/10

The views are those Cameron Lavey, Senior Investment Analyst, Research Department, Cetera Financial Group, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. All economic and performance information is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot directly invest in unmanaged indices. Please consult your financial advisor for more information.

Additional risks are associated with international investing, such as currency fluctuations, political and economic stability, and differences in accounting standards. Please consult your financial advisor for more information.

Small cap stocks may be subject to a higher degree of market risk than large cap stocks, or more established companies’ securities. Furthermore, the illiquidity of the small cap market may adversely affect the value of an investment, so that shares, when redeemed, may be worth more or less than their original cost.