Pretty much every time I talk with a client these days they tell me about how so and so on TV, on-line or in the paper is sure the market is due for a correction.
How do they know? Can they predict the future? Will averages, or valuations or indicators that have been right some percentage of the time in the past be right again?
We did get a dip in markets the second half of January (still positive returns for the quarter), but we didn’t break the general pattern the market has been following since late summer of 2011.
U.S. markets finished Q4 and 2013 on a high.
The S&P 500 rose a bit over 32% in 2013, the best annual return since 1997. The best U.S. stock fund we own rose over 43% while our best international stock fund was also up over 32%.
The big news for the 3rd quarter of 2013 was a historic move in interest rates as the market anticipated the Fed would start tapering stimulus bond buying. Bonds got dumped across the globe causing prices to drop and yields to rise.
The big news in the markets for the quarter was the huge move higher for interest rates. Interest rates experienced the biggest move since April of 1987.
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