Q1 2014 Market Summary for Clients

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.

Since that time the market has trended higher with relatively short periods of selling to the tune of something near a 6% dip. As the market has advanced the lows have stayed above previous lows and sideways action has generally felt constructive and healthy.

What the market is telling us is we’re still in slow steady recovery mode in the U.S. while much of the rest of the world continues to struggle. Europe has stabilized; Brazil is not looking great but not horrible while concerns over China’s ability to grow anything like it was remain. Japan is trying hard to get some decent growth going but they’re not there yet.

The quarter showed some added volatility with concerns about Ukraine but that volatility rapidly dissipated as markets decided all the threats and political posturing would likely wind-up have very little, to no, affect on the global economy.

Developed markets stocks outside the U.S. and emerging markets socks have been helping us as of late. U.S. stocks have helped very little, or even hurt a bit, since the beginning of the year. Sounds strange when our economy is doing the best but volatility happens, our markets have done well, and maybe things will turn or continue to look up outside the U.S.

The global economy certainly isn’t in the safe zone, and a large negative event could shift the trend to selling for some time, but the possibility also exists for the world to start growing in a more concerted fashion in the next few years which would likely have a strong positive impact on our wealth.

Our bond holdings had a rough year last year but they’re all making money this year which is certainly welcome news given their role, if any, in our portfolios. Interest rates have been pretty stable in the U.S. helping bond managers generate positive returns and would be home buyers take confident action.

Politics seem to be playing a very limited role, at present, in market direction, also welcome in my view.

As always, I truly appreciate the confidence you’ve place in me with your assets and I want you to feel free to call at any time regarding your portfolio or any personal financial matter.

Sincerely,

Erik S. Wolfers, MBA, CFP®