The year 2011 ended on a positive note, after some of the highest market volatility on record. The S&P 500 Total Return Index gained 11.8% in the fourth quarter after dropping almost 14% in the third quarter. When the dust settled, it finished the year up a slight 2.1% thanks entirely to its dividend yield. Foreign stocks failed to rebound significantly during the quarter from their 19% third quarter decline, leaving the MSCI EAFE Total Return Index with a loss of 11.7% on the year. Bonds continued their 30 year bull market as investors sought their perceived safety, with the Barclays Aggregate Total Return Bond Index ending the year up 7.8%.
Domestically last quarter retail sales improved at the expense of the personal savings rate, and the unemployment rate declined along with the size of the work force, setting the stage for continued anemic growth. We expect volatility to endure in the financial markets as global deleveraging continues to unfold, and remains in the euro zone only a step away from turning disorderly. We continue to remain vigilant against taking undue risk and committed to the long term growth of our clients’ portfolios. Last quarter we reduced our clients’ money market holding by adding long term treasuries and small company domestic stocks to their portfolios.
You may have heard a new voice around the office. Please welcome our newest intern, Joel Brotherton. Joel is finishing his last year of college, where he is working on his physics degree. Joel comes to us with experience in management and in the banking industry. He is giving us a hand in the areas of client service and media technology. Yes, he also happens to be my middle son.
We wish you a happy and prosperous 2012