Market Commentary 
 Volatility was widespread in October, as oil realized sharp declines, the U.S. ended its quantitative easing program, global bond yields fell on deflation concerns, and Ebola caused a global health scare. These macro events led to dispersion amongst asset classes, with U.S. equities generally coming out on top. All sectors of the S&P 500 except for energy posted positive results and small caps rebounded strongly from summer weakness, while global equities continued to suffer from low growth in Europe. Bonds experienced abnormal volatility as credit markets experienced selling pressure early in the month caused by outflows from a large fixed income complex (Pimco) and de-leveraging hedge funds.

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Global stock markets generally fell in the third quarter. In the U.S., larger-company stocks dominated, with the S&P 500 gaining +1.1% while smaller-company stocks were down -7.4%. Year to date, large-cap stocks have gained +8.2% versus a decline of -4.3% for the small-cap benchmark. Our view has been that while U.S. stocks, broadly speaking, are not cheap relative to companies’ earning potential, small caps have been slightly overvalued and are more vulnerable in market sell-offs.