Warning: Use of undefined constant user_level - assumed 'user_level' (this will throw an Error in a future version of PHP) in /nfs/c04/h03/mnt/164519/domains/cleatlindsey.com/html/wp-content/plugins/ultimate-google-analytics/ultimate_ga.php on line 524

Lindsey Report February


Warning: Use of undefined constant user_level - assumed 'user_level' (this will throw an Error in a future version of PHP) in /nfs/c04/h03/mnt/164519/domains/cleatlindsey.com/html/wp-content/plugins/ultimate-google-analytics/ultimate_ga.php on line 524

Erratic and volatile is one way to describe the equity markets the first five weeks of 2015 (as measured by the Dow Jones Industrial).  As of 2/9/15, the Dow is basically flat for the year; however, we have experienced almost as many 1% daily swings in the first five weeks, as we did in the previous six months (Reuters).  It has been quite common to see multi-day-swings of 500-700 points in either direction.

On the other hand, many investors own income producing investments like bonds or money markets, etc….  One reason is to receive some consistent income, as well as to diversify their portfolios in an effort to mitigate risk.  A diversified portfolio typically has an allocation to fixed income.  Well, it is hard to get enough income there to keep up with inflation.  For instance, a 10-year U.S. Treasury note is yielding 1.8% per year and a shorter 2-Year note has a whopping ½% per year return (Bankrate.com).

In years past, one might have liquid monies sitting in a money market and expect to get some decent return.  This is where you might park some short-term monies to be used as a slush fund or maybe waiting to find the right investment.  It may not have been a lot of return, but at least it seemed like the account was noticeably growing.  Per Ratecatcher.com, the best money markets yield less than 1%.

Arguably, the big swings in the equity markets coupled with the historically low fixed income rates reflect a lack of conviction as to where we will go from here.  The Commerce Department Reported that 4th quarter GDP returned to a modest growth level (2.6% – MSN Money).  This followed a strong 3rd quarter where there was growing optimism that the economy would show real strength in 2015.

While 2.6% growth is not robust, it is still growth and better than the alternative.  Nonetheless, the picture is a bit murky, not bleak, but murky for 2015.  Many believe that factors like the improving labor market and lower oil prices will help the U.S. consumer, which in turn should help the overall economy and corporate profitability.  Regarding employment, the Labor Department has reported that our economy added the most jobs over the past three months since any three-month-period since before the Great Recession, averaging over 300,000/month (Reuters).  Although many people remain unemployed or underemployed, the recent jobs growth numbers are surely a very positive sign for the economy.

On the profitability front, Yahoo Finance reports that at just past the half-way mark in the fourth quarter earnings season, “seven out of 10 big companies have turned in higher profits”.  So we do have some positive signs, but I would expect to see more volatility and continued low rates in the coming months.

 

The opinions voiced are for informational purposes only and are not intended to provide specific advice to any individual. To determine which investments are appropriate for you, consult myself prior to investing. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.  The economic forecasts set forth in this commentary may not develop as predicted and there can be no guarantees that strategies promoted will be successful.

Share This Post

Related Articles

Leave a Reply

© 2020 Cleat Lindsey. All rights reserved. Site Admin · Entries RSS · Comments RSS
Powered by WordPress · Designed by Theme Junkie

Warning: Use of undefined constant user_level - assumed 'user_level' (this will throw an Error in a future version of PHP) in /nfs/c04/h03/mnt/164519/domains/cleatlindsey.com/html/wp-content/plugins/ultimate-google-analytics/ultimate_ga.php on line 524

Warning: Use of undefined constant user_level - assumed 'user_level' (this will throw an Error in a future version of PHP) in /nfs/c04/h03/mnt/164519/domains/cleatlindsey.com/html/wp-content/plugins/ultimate-google-analytics/ultimate_ga.php on line 524