Momentum First Half Review - July 2014
Momentum First Half Review - July 2014
Momentum First Half Review - July 2014
July 2014
Financial Market Performance Summary: 2014 Year-to-Date
• Equities have posted solid gains for the first half of the year. Stocks in the US were up just over 7%, which is the type of
performance most strategists thought would take a full year to achieve. In a surprising reversal, the top performing areas of
the market were some of the worst performers in 2013. Utilities and real estate were both up more than 15% despite
trailing the stock market by more than 15% last year.
STOCKS 1Q-2014 2Q-2014 2014 Full Year
• Outside of the US, developed market stocks
US Equities (S&P 500) 2% 5% 7%
notched solid performance as well, advancing by
US Small Cap Equities 1% 2% 3%
5% for the year.
International Equities 1% 4% 5%
Emerging Markets Equities 0% 7% 6%
• Emerging market equities have turned markedly
Brazil, Russia, India, China (BRICs) -3% 8% 5%
positive, with the broad index posting gains of 6%
for the year, despite going into the 2nd quarter BONDS 1Q-2014 2Q-2014 2014 Full Year
with modest losses. Within emerging markets,
US Bonds 2% 2% 4%
the smaller “frontier markets” (countries like
Municipal Bonds 3% 3% 6%
Vietnam, Pakistan, Kuwait, Nigeria, Argentina and US Corporate High Yield Bonds 3% 2% 5%
Romania) posted gains in excess of 20% for the Emerging Market Bonds 1% 5% 6%
year.
OTHER ASSET CLASSES 1Q-2014 2Q-2014 2014 Full Year
• After posting their worst year in 20 years last
Commodities 2% -4% 2%
year, the US bond market is up 4% in 2014. The Hedge Funds 1% 2% 3%
biggest surprise has been the strong rally in Master Limited Partnerships 2% 14% 16%
treasuries. The 30 year treasury bond is up 14% Real Estate (REITs) 11% 7% 18%
for the year, defying conventional wisdom.
Data as of 6/30/14
• Commodities have been very volatility, producing significant declines in the 2 nd quarter. Within commodities, the
precious metals (gold, silver) are up more than 8%, energy is flat and agriculture is down considerably.
Several events this past quarter have tested the market’s resolve. First, the US economy surprisingly posted a (revised) 3% drop in GDP in the first
quarter. Second, there was a ton of geopolitical unrest, namely: Downing of a Malaysian Jet Liner in eastern Ukraine, escalating sanctions against
Russia, the Israeli invasion of Gaza, not to mention civil wars and islamist insurgencies in Syria, Iraq, Afghanistan, Nigeria and Mali. Third, the Federal
Reserve announced that it would formally end it’s “quantitative easing” program in the fall of 2014. At each headline, we winced, and yet watched the
market continue to march higher.
For the balance of the year, we are watching for the mid-term elections, which, so far, are predicted to be fairly quiet (despite the large number of seats
in both halves of congress up for election). And there is always the specter of full-fledged war to break out. But most importantly, there is no denying
that things are continuing to look better. Housing starts are up, vehicle sales are above average (for the first time in 6 years), home prices have
rebounded, M&A (mergers and acquisitions) activity is strong, and unemployment is finally approaching 6%.
In the long-run, our view of cautious optimism remains intact. We expect to hit some speed bumps along the way, but we are not ready to hit the braes
just yet.
As always, we appreciate the trust you place in us each day, as we watch your portfolio and sweat the details of the market.
Thank you for your business!
This is not your official monthly statement. In the event of any discrepancy between this report and your statement, the statement will govern. Some
figures contained in this report are rounded to the nearest dollar. Any historical price(s) or value(s) is as of the date indicated. Information and opinions are
as of the date of this material only and are subject to change without notice.
Performance figures were calculated by Morningstar. Morningstar uses daily time-weighted returns to calculate the performance of advisory accounts.
Total portfolio performance returns, unless otherwise indicated, are calculated, net of fees, excluding the effect of taxes, for all accounts. Total asset class
returns July reflect previous investments and July not equal the sum of the returns at a product level.
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