Jul. 5--After two devastating quarters as the stock market tanked, the Buffalo Portfolio of locally based stocks really needed a big shot in the arm.

And that's just what it got in the second quarter.

The stocks of companies based in the Buffalo Niagara region had their best quarter in 12 years this spring, shooting up by 17.6 percent.

But the big second-quarter gain erased only a small portion of the pain that investors have endured since the financial crisis hit with full force last September and the recession began to exact a greater toll on the overall economy.

Since the end of September 2008, a portfolio that owned a single share of each locally based stock still has lost a third of its value, even with the second-quarter rebound.

"Basically, what we're seeing is a big bounce," said Christopher Carosa, who manages the Bullfinch Funds' Greater Western New York Series mutual fund that invests in companies with operations in the Buffalo and Rochester areas.

The question that investors

everywhere now are contemplating is whether the spring rebound is the start of a prolonged recovery by stocks, or just a short-term bounce that has begun to give back some of its gains since mid-June.

"As bad as things were in the previous two quarters, they're probably not as good as we saw in the second quarter," Carosa said. "It's probably just evening things out."

And there was a lot of evening out to do. By the end of March, the Buffalo Portfolio had lost 43.5 percent of its value during the previous six months. All but four of the 21 locally based stocks are down at least 10 percent since the end of last September, and more than half have lost a minimum of a quarter of their value.

Lancaster-based environmental services firm Ecology & Environment is the only local stock that has actually gone up over the last three quarters, with an impressive 26 percent gain during that nine-month span.

But the good news was more widespread in the second quarter. Just three of the 21 locally based stocks lost value during the quarter, and nearly three-quarters of the local firms turned in gains of 10 percent or more.

A third of the local stocks posted whopping gains of 45 percent or more, led by Warsaw- based banking company Financial Institutions, which rebounded from a brutal 62 percent drubbing during the previous two quarters to rebound by 79 percent in the second quarter. But even that spike left the stock of the parent company of Five Star Bank 32 percent lower than it was at the end of last September.

Financial Institutions is "back on track," said Damon DelMonte, an analyst at Keefe, Bruyette and Woods.