Click image to enlarge 4Q2014’s hefty profit was especially surprising following the market’s sharp run-up during the previous nine months. For 2013, the S&P 500 price index appreciated an astounding 29.6%!
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The U.S. led the global economy out of recession, and that’s reflected in the stunning outperformance of U.S. versus foreign stocks. Emerging market stocks, with far more risk, ran a distant second.
Click image to enlarge The 10 S&P 500 industry sectors showed a wide dispersion in Q4 2013 returns—about a 10 percentage point spread between the winning and losing sectors. This indicates why it is so important to enforce a rebalance discipline.
Click image to enlarge With the market breaking all-time highs in recent months, talking heads on financial TV are likely to sound more fearful or become greedier. Tune it out and stay focused on making long-term strategic decisions.
Click image to enlarge Master Limited Partnerships, a new asset class, outpaced everything else by a wide margin. Economy-sensitive high-yield bonds and stocks were also five-year leaders. U.S. Treasury bonds plunged in the rankings as global-crisis-inspired fear subsided.
Click image to enlarge The forecast of Wall Street analysts for earnings on the S&P 500 index, as of 12/26/2013, was for $121 per share in 2014 and $134 in 2015. At the recent valuation levels, that could propel stock prices to follow the trajectory shown in the markers in red in 2014 and 2015.
Past performance does not indicate future results. ± Indices and ETFs representing asset classes are unmanaged and not recommendations for any specific investment. Foreign investing involves special risks, including political or economic instability and currency fluctuation. Bonds offer a fixed rate of return while stocks fluctuate. ¥ Estimated bottom-up S&P 500 earnings per share as of December 26, 2013 was $109.13 for 2013, $120.88 for 2014 and $133.91 for 2015. Sources: Yardeni Research, Inc. and Thomson Reuters I/B/E/S survey of consensus estimates. Standard and Poor’s for index price data through December 31, 2013; and actual earnings data through September 30, 2013.