For all the ongoing market concerns, the 3rd quarter ended with higher asset values. At the start of the year, we felt strongly that the economy was not going to slide into a recession and the FOMC would not raise rates four times. The economy and the Fed Funds rate remained stable, but it has not been a smooth ride. The market anticipated that the FOMC would increase short term interest rates, only for the hike to be delayed time and time again. Frustration with Washington has been accelerating. S&P earnings were in a recession, falling two consecutive quarters, largely driven by lower oil prices. Typically an indicator of economic prospects, the 10 Year US Government yield hit an all-time low of 1.36% in July. Yet weeks later, the S&P 500 climbed to an all-time high of 2,193 and credit spreads painted a healthy picture of the US economy. We can take many lessons from this quarter, but most important is that buying quality assets when they are at attractive prices and having the patience to see them through can be financially rewarding.
Read our full Q3 2016 Investor LetterRelative Value Partners merged with Kovitz Investment Group Partners, LLC as of August 2024. All Insights are opinions of the author as of the posting date. Any graphs, data, or information in this publication are considered reliably sourced, but no representation is made that it is accurate or complete, and should not be relied upon as such. This information is subject to change without notice at any time, based on market and other conditions. Past performance is not indicative of future results, which may vary.