First Half of 2015
As we enter 2015, there are numerous issues and concerns many investors have regarding the stock and bond markets. This is nothing new. There are always concerns each and every year, yet over the long term, stocks have generally proven to be a good asset class. The past 14 years have been a great example, as the S&P 500 had two major corrections of over 50%, yet made all-time highs in 2014.
We expect the volatility in the market that began in the fourth quarter of 2014 to continue. Many income producing areas of the market, i.e. utilities, REITs and telecommunications are beginning to look a little expensive to us. Meanwhile many growth sectors like technology, biotech and select industrials look relatively attractive on a valuation basis. It will be interesting if or when the "value" stocks may pass the baton to "growth" stocks should the economy accelerate. We are gradually moving in this direction for clients, where appropriate.
Our call to add to tax-free municipal bonds last year worked very well while developed international stocks were a disappointment. The EAFE Index (Europe, Australia, Far East) actually rose about 7% in EURO currency terms but the recent major weakening of the EURO in the second half turned in a loss of nearly 5% in dollar terms for 2015. We still like developed international long term, especially Northern Europe, due to negative sentiment, low valuations and a 50% higher dividend payout versus the U.S.
Probably the top issue on client's minds is the collapse in oil prices and what it means to oil stocks, the U.S. and world economies and where the bottom may be for the commodity. We have our opinions for this year and longer term and look forward to sharing our thoughts with you.
Finally, we continue to receive positive feedback from our retirement planning software "Goal Planning and Monitoring." My team and I look forward to meeting with you to share some of our new ideas. We greatly appreciate and value our client relationships and their continued trust and confidence. We also value your referrals this past year and the new relationships that we have developed. We continue to look forward to the future with optimism.
Best regards,
Ken
S&P 500 - The S&P 500 is an unmanaged index of 500 widely held stocks. It is not possible to invest directly in an index.
The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. These international securities involve additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability.
Views expressed are not necessarily those of Raymond James & Associates and are subject to change without notice. Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Past performance is not indicative of future results. There is no assurance these trends will continue or that forecasts mentioned will occur. Dividends are not guaranteed and will fluctuate. Companies engaged in business related to a specific sector are subject to fierce completion and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification. Biotechnology companies are affected by patent considerations, intense competition, rapid technology change and obsolescence, and regulatory requirements. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success.
