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What Worked for September 2015

Here’s a look at trends in September: Quality, large cap companies performed better than market as a whole, and dramatically better than companies with weak fundamentals.<1>

  1. Why? “Risk-off” securities were in favor most of the month. (This is no longer true in October).Higher quality bonds continued to outperform lower quality bonds of similar duration.

  2. Why? Fear of defaults continues to grow.Capitalization-weighted indices beat equal-weighted indices with the same objective Asia outperformed Europe.

  3. Why? The immigrant crisis affected European cohesiveness, leading to a modest sell-off.Frontier markets outperformed emerging markets.

  4. Why? Both did poorly, but Brazil specifically was the reason Emerging markets averages were worse. Again, there has been a bounce over the last three trading days.Foreign funds that hedge currency exposure beat un-hedged foreign funds.

  5. Why? The dollar had modest relative strength in September largely due to the refugee crisis in Europe. However, the weak U.S. employment report on 10/2/2015 ended that.Large company stocks out-performed midcap stocks, which in turn did better than small cap stocks.

  6. Why? There was a clear performance advantage for “risk off” industries like utilities and consumer staples.Growth slightly under-performed value for the second month in a row, which became MORE pronounced after the unemployment report.  A trend change could be at hand.

  7. Why? Health care led the way on the down side last month, hurting growth funds a lot more than value funds. Certain sectors that are more associated with the value side – energy, industrials, and financial services – have benefited from the flow of funds out of health care. August’s S&P 500 low was re-visited in September, but that bottom held.  See Chart 1.  Investors have clearly been heartened by that fact.  It has climbed above 2000 with impressive breadth, though only modest volume.  Price action is now trading above its 50 day moving average.  If it closes the week above 2000 the implication would be for a run back to the all-time highs above 2100.  Note that the 2000 level was broken on September 16, and we actually hit 2028 intraday on the 17th, before a decisive fall.  It can be dangerous to anticipate a trend change. Chart 1

<1> Since the weak employment report on October 2nd, which effectively took Federal Reserve tightening off the table for the foreseeable future, low quality companies have done quite well.

Past performance is no assurance of future results. Trademark Financial Management, LLC (“Trademark”) is a registered investment adviser with its principal place of business in the State of Minnesota. Trademark and its representatives are in compliance with registration requirements imposed upon investment advisers by those states in which Trademark operates. Trademark may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration. This newsletter is limited to the dissemination of general information pertaining to its investment advisory/management services. Any subsequent, direct communication by Trademark with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A complete list of all recommendations will be provided if requested for the preceding period of not less than one year.   It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list.  Opinions expressed are those of Trademark Financial Management and are subject to change, not guaranteed and should not be considered recommendations to buy or sell any security. For information pertaining to the registration status of Trademark please contact Trademark at (952) 358-3395 or refer to the Investment Adviser Public Disclosure web site ( For additional information about Trademark, including fees and services, send for our disclosure statement as set forth on Form ADV from us using the contact information herein or by calling 952-358-3395. Please read the disclosure statement carefully before you invest or send money. Any reference to a chart, graph, formula, or software as a source of analysis used by Trademark Financial Management staff is one of many factors used to make investment decisions for your portfolio.  No one graph, chart, formula, or software can in and of itself be used to determine which securities to buy or sell, when to buy or sell them, or assist any person in making decisions as to which securities to buy or sell or when to buy or sell them.  Any chart, graph, formula, or software used is limited by the data entered and the created parameters. The data was obtained from third parties deemed by the adviser to be reliable. Nonetheless, the adviser has not verified the results and cannot be assured of their accuracy. 

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