July 2014 Some simple words of wisdom: Know what you own, and know why you own it. - Peter Lynch Summary As June 30th marks the mid-point of the year, we thought it would be a perfect time to look back at the markets movements since January, and review where we expect equities and other asset classes to head in the coming months. While we are optimistic for the second half of 2014 and beginning of 2015, we are cautious about exposure in the market. Currently (July 20th), the stock market is fully valued as the Dow Jones Industrial Average and the S&P 500 are at record levels. The NASDAQ is at levels not seen in over a decade. Investors should not expect too much more in regards to price appreciation, as we think significant additional returns may be a stretch. US Stocks Earlier in the year, high-flying Internet and Biotech stocks that led the markets for much of 2013 and the beginning of 2014 began to decline. This move began toward the end of the 1st quarter and into the second quarter, mainly affecting valuation-rich growth companies. Growth indexes started to substantially lag in performance against value indexes, especially for small-cap companies. However, Large and Mid-cap stocks are significantly outperforming these small companies year to date. Even as these high growth companies declined the stock market continued to move higher. International Stocks International stocks are higher for the year, but volatility has increased substantially as the crisis in Ukraine came back into focus and a new risk in Gaza has come into play. In spite of these events international markets have plowed higher but lagged the US markets. Emerging market have also seen increased volatility as concerns about the spillover effect from the Fed tapering and the slowing economy in China continues. Emerging market stocks had largely shrugged these factors off and are higher year to date ( +5% YTD). Going into the second half of the year we believe it would be wise for investors to make sure they are properly diversified across the appropriate sectors, industries and asset classes. Fixed Income Bonds are up significantly from the start of the year, but investors should not expect much more price appreciation throughout the second half of the year. After double digit losses in 2013, long dated maturity bonds have surged to double digit gains this year. High yield bonds have also done well and tend to be more correlated to the equity markets. Additionally, while investors were concerned last year about Puerto Rico and Detroit, municipals have rallied this year, adding mid single digit gains as money flowed back into the category. Investors expect the Federal Reserve to end their bond purchase program by the end of the year and raise rates by mid 2015. One wildcard for the fixed income market in the second half could be any deviation from the Feds previous guidance. The Next Six Months While investors may not experience dramatic returns from equities or fixed income in the second half of 2014, its important to stay the course and work with your advisor to review risk-tolerance levels and to ensure that your portfolio is meeting your objectives. We would advise investors to remain long-term focused and stay diversified across appropriate asset classes. Index Q1 YTD DJIA 2.83% 2.68% S&P 500 5.23% 7.14% Nasdaq Composite 4.98% 5.54% EAFE 4.34% 5.14% Emerging Markets 6.71% 6.32% Barclays Agg US Bond Index 2.04% 3.93% Barclays Cap Muni Index 2.59% 6.00% CS High Yield Index 2.41% 5.55% J.P Morgan Emg. Market Bond 4.76% 8.66% Figures as of June 30th 2014. Past performance cannot guarantee future results. This chart is for illustrative purposes only and does not represent the performance of any specific security. You cannot invest directly in an index. Fortius Financial Advisors is an independent registered investment advisory firm serving the needs of individual familys, foundations and small business retirement plans since 2003. We pride ourselves on providing investment solutions that are tailored to meet the needs of our clients while being flexible enough to adapt to our ever changing world. We hope you enjoy this edition, please contact us to discuss any aspect of this material or to find out more about how we can help you secure your financial future. Sincerely, Vielka Burey-Jacas CFP, CDFA Fortius Financial Advisors Investment Advisor
Posted on: Wed, 23 Jul 2014 19:23:58 +0000
Trending Topics
Recently Viewed Topics
© 2015