1st Quarter 2015
Global economy slows
In this past quarter volatility increased in markets throughout the globe. The Chinese economy, second largest in the world, saw its growth slow even as its equity market doubled. Germany, France, Italy and the U.K. also slowed. Even the U.S. economy, long the strongest in the world has slowed, having been battered by ferocious winter storms and a West Coast port strike. The response in the ex U.S. countries has been to cheapen their currency in an effort to grow exports and grow their economies. Interest rates have been slashed. Europe has embarked on its own version of Quantitative Easing to promote its economies. This strategy has yet to work. Meanwhile, the U.S. Federal Reserve has played with raising interest rates in the U.S., but so far has not had the courage to do so. Talk of raising rates has had the effect of increasing anticipation that interest rates will rise, and the U.S. Dollar has strengthened. Although equities in many countries have increased, the increase relative to U.S. investments has been diminished by the stronger dollar. The dollar has increased 18% against a basket of currencies in the past year and up 30% year on year to […]
4th Quarter 2014
Markets Hit Highs In 2014
Calendar year 2014 turned out to be a positive year for the markets with all indices making a strong showing. The year had its dips, with strong drops in January of 3.5% and in both July and September of 1.4% each. As December went on, the market staged a strong rally, until it ran out of steam. In the last days of December 2014, the market began to falter. By then, the markets had been in strong upturn for the year, and since March 9, 2009 up 244%. The market began to look tired, as well it might after 70 months of this bull market.
3rd Quarter 2014
Client Newsletter – Quarter Ending September 30, 2014
Last month in our Daily Journal of Commerce column, we warned that September and October could be volatile months, months with a downturn. There were many reasons for this forecast. History was one, with both September and October demonstrating a tendency to be volatile and lower. Further, the market has had an over five year run up and was due for a correction. Also, there were and are many headline events to worry about: problems in Europe, specifically Ukraine; a slowing Chinese economy, with attendant pullback in commodity prices. Then there is Ebola which has taken center stage, and ISIS. These problems persisted and in some cases grew worse. September turned out to be a volatile and down
month.
2nd Quarter 2014
Client Newsletter – Quarter Ending June 30, 2014
The second quarter of 2014 saw a return to market increases after a rough first quarter of the year. In fact, the government revised the first quarter GDP to a minus 2.9% from the positive 1% previously reported. The start of Obamacare and severe winter weather were the reasons most cited for the negative growth. Additionally, the Russian acquisition of Crimea and revolutions in the Middle East were events unsettling to the markets.
1st Quarter 2014
In 2013, the market had one of its best years ever. The broad market, as represented by the S&P 500 index, was up 29.6%. Typically, after a strong year, the market will continue on its course. After a nearly unbroken upward climb since March 6, 2009, one of the longest bull markets in history, the market was due for a pause, maybe even a correction (defined as a 10% drop). This year the market continued to reach all-time highs and then took a breather. The market appears tired, but its current pause so far appears in character and no cause to panic.
4th Quarter 2013
The market had a remarkable year last year, gaining 32.39% in the S&P 500 index. To put it in perspective, the S&P 500 has gained over 20% in a calendar year 21 times since 1945 that is 21 times out of 68 years, or almost 31 % of the time. This amazing statistic is reason enough for remaining fully invested in the market. Even when times are grim, and the market is off, one should remain invested. In the same 68 year period, the market has gained over 30% just six times. Still this almost 10% records of gains is also a strong argument for staying invested.