Possible Changes Ahead
Not to be a broken record, but we continue to believe that the equity market will be up higher by the year-end than the current level. Admittedly there will be some bumps along the way. Because of what appears to be a slow improvement in economic news, discussion is still floating around about a December tapering by the Fed. This could create an initial market reaction, but we feel the direction the market is traveling through the end of the year will still be higher. However, what I want to share with you today is we are beginning to see a rotation of sorts in the large investment sectors that we believe will influence changes we will make in client in the future. Those changes are two-fold. One is in the large-cap value sector. That is the area which has brought growth and a solid dividend yield. That sector is not going away, but we are seeing the growth piece slow down. With the economy slowly strengthening and if tapering occurs we believe the large-cap growth sector will begin to move ahead of performance over its large-cap value partner. This is not to say we will abandon the value sector with its dividends, but we will begin to reallocate some of the value position to growth.
Second, in the value sector, Europe is beginning to be place to consider capturing opportunity. We believe Europe and major countries are beginning to finally climb out of their recessionary woes. They still have a long way to go, and there are several areas we do not want to be in now, but with Europe, China, Japan, and Australia, companies that have world driven revenues pay solid dividends and are on solid financial footings, here lies a new opportunity. So you might just see an additional position with international value inside your portfolio to help keep the growth and dividend momentum going.
Certainly we are continuing to add to our mid-cap and small-cap positions plus we see energy and health care as areas of opportunities .
The big questions remain: Will this be a big Holiday spending season? Will the Federal Reserve start tapering? Can Congress work together in 2014? Wat is the world is Obama Care going to do to the economy? All of these are factors we must and will consider as we make our recommendations, but for now we see the chances for growth ahead .
Thanksgiving is around the corner I hope each of you has a happy and safe time with friends and family. We here at HMC wish you the best and will keep working hard on your behalf.
• 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.
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• 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.
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