The first quarter of 2023 was rocky. Most markets around the world were up significantly in January, only to drop in February, and then recover toward the end of the quarter. All in all it was not a quarter an investor would want to miss. US stocks were up 7.18%, International Developed stocks were up even more at 8.02%, and Emerging Markets Stocks were up 3.96%. Bonds were also up, despite earlier predictions that bonds were virtually guaranteed to go down in Q1 2023. The US Bond Market was up 2.96%. This was the second quarter in a row of positive returns in bonds.
Over the past 10 years, US stocks have significantly outpaced Developed International and Emerging Markets stocks. The US market is up 11.73% per year, while International Developed stocks are only up 4.91% per year and Emerging markets stocks are up 2.00% per year. Don’t forget….this trend may not continue. 10 years does not mean a trend is set in stone. For example, from 2000 – 2010, US stocks had negative returns for the entire decade at -0.33% for the total market. The DFA Emerging Markets Fund, which is broadly diversified and is a good proxy for emerging markets stocks, did 9.50% per year. That’s a spread of 9.83% per year for 10 years — interestingly very close to the the spread, in the opposite direction, that we are seeing over the past 10 years