A Q1 Letter to Clients: Bernanke, Buffett and Siegel on the Prospects Ahead

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives. Dan Richards

Each quarter since 2008, I have posted a template for a letter to serve as a starting point for advisors looking to send clients a summary of what’s happened in the past 90 days and the outlook for the period ahead.

Advisors have told me that they’ve got a great response to these quarterly letters. The templates rank among my most popular articles. This letter goes into more depth on global growth forecasts than past templates; if this is more detail than you think your clients will be interested in, you can easily delete this section.

 Just a reminder that if you’re going to use this letter, take the time to customize it and put it into your own words, so that it truly does represent your point of view.

An overview of Q1 2012 markets: Bernanke, Buffett and Siegel on the prospects ahead

The first quarter of 2012 represented the strongest start for the U.S. stock market since 1998, with Japan turning in its best first quarter gains in 24 years.  This was largely driven by a reduction of fears about an extremely negative outcome in Europe, as well as stronger economic data in the U.S. 

Of course, there are some formidable issues still to be addressed. This letter provides perspective on some of these issues and outlines some thoughts on what we can expect for the balance of 2012 and beyond. As part of that, I have tapped into recent comments from Ben Bernanke and Warren Buffett, as well as Christine Lagarde, managing director of the International Monetary Fund and the Wharton School’s Jeremy Siegel, today’s leading market historian.   

Before getting into their views, here’s a summary of market performance in the first quarter, all in local currency so as to exclude currency fluctuations. Even with strong first quarter returns, most markets with the exception of the United States are underwater over the past 12 months.

 

US

Europe

Japan

Emerging

Markets

Global

Returns

January

+5%

 +4%

+4%

 +7%

 +5%

February

+2%

 +5%

+11%

+5%

 +5%

March

 + 4%

0%

+3%

 (1%)

 +2%

Q1 2012

+13%

 +9%

+19%

+11%

+12%

Last 12 months

 +7%

(4%)

 1%

 (4%)

 +1%