First Quarter of 2014 Brings Many Reversals, Regressions to the Mean
Unlike 2013, diversification worked in the first quarter of 2014. As revealed in our 2013 market commentary, U.S. stocks dominated with a 33% return while diversifying assets like commodities lost 10%. As shown in the graph on the right, diversification into real estate and commodities was handsomely rewarded in the first quarter.
2013: A Review of the Past, the Present and the Future
This commentary is divided into three sections. I begin with a review of current U.S. and foreign stock markets, examining the year 2013 and the past six years, including the crash of 2008. This perspective serves as a launch point into the future, specifically 2014 and the remainder of this decade. I conclude with a review of the past 88 years of U.S. stock and bond markets.
Pinch Yourself. U.S. Stock Markets Have Grown 145% in Four-Plus Years
Thankfully, 2008 has become a distant memory. Weve made back its 37% loss and a lot more. Things are good, but are they going to stay that way? We still face anemic economic growth, burgeoning debt, global social unrest and more. The S&P 500 has returned 145% in the past 55 months (4.5 years).
Good Start to 2013. Domestic Stocks Earn 11% In First Quarter.
2013 stock markets started like 2012 stock markets with a bang. U.S. stock markets kicked off 2013 with a very good 10.7% return. Also like 2012s first quarter, foreign markets didnt fare as well, earning only 3.5% in the quarter. If we merely hold onto these gains for the remainder of the year well do fine.