Market Commentary & Analysis

Quarterly Market Overview

U.S. stock markets finished the first quarter of 2014 near record highs. However, returns that on the surface appear tranquil, masked trading that was actually a bit choppy. Investors contemplated a variety of issues throughout the quarter, including the Federal Reserve's unwind of stimulus under new chief Janet Yellen, the economic implications of harsh winter weather in the U.S., Russia's actions in Ukraine, and China's economic slowdown. All in all, capital markets seemed to have, by the end of the quarter, digested most matters without repercussions.

Market Pulse Report

Make no mistake, we are long-term investors. In our opinion, developing and adhering to a strategic allocation policy are key determinants to achieving investment goals. That being said, there are environments when a dynamic approach to asset allocation, rather than relying solely on static models, gains added importance. We believe that we are in just such an environment, characterized by lower-than-typical expected returns (as a result of rising equity valuations and rock-bottom bond yields) and potentially heightened market sensitivity to macro events.

Market Pulse Report

U.S. stock markets are celebrating their five-year anniversary of the credit crisis lows (the S&P 500 bottomed out on March 9, 2009) by hitting record highs. But emerging market stocks are facing difficulties, leading many to question whether it makes sense to invest in those regions. Our answer is a resounding "Yes!", with the caveat that we are in it for the long haul and not attempting to make short-term timing decisions.

Market Pulse Report

If 2013 was a boom for stocks, January was a blip. The S&P 500 posted its first monthly loss since August of last year, and worst month since May of 2012. A stock market correction (if this even formally turns into one) is usually uncomfortable and to some degree unavoidable for active investors. But, with only a little over a month in the books, investors should not draw any conclusions. The best course of action is to hold tight and wait for the discomfort to pass—it almost always does.

Quarterly Market Overview

U.S. stock markets finished off 2013 with the S&P 500 closing at a record high and posting its best annual return since 1997. Small cap stocks did even better, as investors jumped back into domestic equity markets. Neither the government shutdown that kicked off the fourth quarter, nor the Federal Reserve finally announcing their plans to scale back bond purchase programs (after much bond market angst throughout the year) was enough to stop the unrelenting rally.

Market Pulse Report

That's a wrap. Believe it or not, 2013 was great year for some asset classes (developed equities, in particular) and tough on others (emerging markets, bonds, and commodities). What will 2014 bring? Our outlook is perhaps best illustrated by reviewing our current positioning.

Market Pulse Report

Another year is nearly in the books, and U.S. stocks, as measured by the S&P 500, are poised to post their fifth consecutive calendar year of gains. Depending on how December concludes, it may even end up being the best calendar year in over a decade. Through the first eleven months of the year, the index is up a stellar 29%. The question many ask is, "Can stocks continue their run, or is the equity bull market getting long in the tooth?" In our opinion, the answer to both parts of the question is likely, "Yes."
 

Market Pulse Report

After lagging U.S. stocks meaningfully in the first half of the year, international equities are making a comeback. The S&P 500 dominated the first six months of 2013, gaining 14% through June versus the 4.5% advance for the MSCI EAFE Index of developed international companies. The MSCI Emerging Markets Index was doing even worse, staggering to a 9% loss at the year's mid-point.

Quarterly Market Overview

Stock markets marched higher in the third quarter on the back of a recovering global economy, ongoing monetary stimulus, and reasonable valuations in most regions. The S&P 500 hit a record high in late September before pulling back on government shutdown and debt ceiling worries. Since the market lows in March 2009, the index has rallied nearly 150%. Retail investors are starting to participate as evidenced by strong flows into stock funds. Investors are also apparently willing to take on some additional risk, as small cap and international stocks bested U.S.

Market Pulse Report

Washington politics continue to be contentious. For the first time in 17 years, a budget impasse has forced the government to be partially shut down. Mandatory spending programs and critical services, which account for the bulk of the budget, remain intact. Stock markets seem to be taking the shutdown in stride thus far, as the actual impact of a partial shutdown on the economy is likely to be minimal—even if it continues for several weeks. The last time the government shutdown (in 1995 for 28 days), stocks were also relatively unfazed.

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