Quarterly Recap - 2010 Second Quarter

In a reversal from the first quarter, most market indexes moved lower in the second quarter of 2010. Several indexes entered into “corrections,” generally defined as drops of more than 10%. Concerns over sovereign debt loads, particularly in Europe, were the main driver of the weak performance. Some strategists are predicting further declines while others see the recent correction as a buying opportunity. International and emerging markets indexes underperformed domestic indexes as most of the problems were centered outside of the U.S. There was little differentiation in the performance of value versus growth stocks as both categories suffered in the recent downturn. Similarly, stocks across the market cap spectrum (small, mid, and large cap) performed in a similar fashion.

Several sectors within the bond markets experienced different results. Higher risk areas with more exposure to individual corporations, such as high yield and corporate credit, generally saw small declines as investors pared back their risk exposure. Treasuries, however, saw small gains as the flight to quality returned.

1. Wall Street Journal 7/01/10

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.