The Bull is Here to Stay
Continued economic information is building that suggest that the stock market still has room to rise in the coming year. Now before I share with you the sources of this information, let me say again as we have been saying and will always say the stock market is a creature that has ups and downs, highs and lows, and is moved sometime by the most clearly understood factor but is sometimes jolted by unforeseen events. In plain words, the stock market you and I will be investing in will be and is volatile. The key is to position your portfolio to limit or control those swings within a reasonably acceptable amount. Now here are just three pieces I have come across recently that point to the fact that the stock market still has room for growth.
1. If you review last week’s Weekly Market Commentary (#1-228434) and see the current information we presented. The Weekly Market Commentary sited the current levels and data for the M&A activity (mergers and acquisitions), IPO activity (initial public offerings), and individual’s buying or selling activity. Each showed a current trend that would indicate the potential for a continued rising market.1
2. Last week LPL Financial’s Research department posted their Current Conditions Index. This report looks at economic data. This report applies a 10-year average mathematical formula to gather the general direction of the economy. The results are positive and indicate continued economic growth.2
3. A third piece came from a newsletter that I subscribe to titled, the “Market Trend Signal.” In the reported areas of Momentum, Breadth, and Sentiment all data gathered indicated a continued bull market opportunity. However, the Sentiment Indicator is rising high on the chart which suggest a future pull back sometime into the future.3 This does not surprise us because we are of the belief and opinion the in “baseball terms” we are probably in the 7th inning of this 9 inning game. Further confirmation of this for us is with all the outside conversation Gib and I have with funds managers and their support folks we continue to hear that they believe we have about another 12-18 months of a relative bull market.
So there you have it. We believe we will continue to see the market move upwards, but through volatility. We believe new areas need to be added to one portfolio, international dividends for example. Bond investments need to be arranged so that they can adjust to rising interest rates and tapering, and alternative investment are and will play a bigger part of our planning going forward. But for now through end of the year and first quarter 2014 the equity side of the portfolio should lead.
Unknowns remain including Washington DC and geopolitical events. We can do nothing except pray for good geopolitical event outcomes and for Washington, call your representative and tell them to start acting as the people who should be representing you and this great country .
1 Weekly Market Commentary – Bubble Check. 12/9/2013. LPL Financial. Tracking ID: 1-228434
2 Current Conditions Index. LPL Financial Research. 12/10/2013. Tracking ID: 1-229187
3 Daily Market Update. Market Trend Signal. 12/10/2013. • The opinions voiced in this material are for general information only and are not intended to prove specific advice or recommendations for any individual. To determine which investments(s) may be appropriate for you, consult your financial advisor prior to investing. • Securities provided through LPL Financial. Member FINRA/SIPC. • The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. • Past performance is no guarantee of future returns. • Stock investing may involve risk including loss of principal. • The payment of dividends is not guaranteed. Companies may reduce or eliminate the payment of dividends at any given time. • International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. • Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of a portfolio. • Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise.