Our Recent Market Commentary

With the first month of 2014 in the history books, February is opening with a noticeable rise in volatility. It seems we’re in the midst of a correction for both U.S. and International equities. As I write this piece, the DJIA is down 240 points, to 15465, after having touching it’s recent peak of 16588 on 12/31/13. That equates to a 6.70% correction.(Thomson)

U.S. bonds have showed recent strength year to date, advancing +1.40%, and tax free municipal bonds +2.40% so far in 2014.(Thomson)

There are a number of possible factors contributing to this. Growth concerns about emerging markets, questions surrounding the Federal Reserve’s tapering policy, and the uncertainty of how the Fed will be guided under Janet Yellen’s new leadership.

Keep in mind that 2013 closed out on a strong note for U.S. stocks, with the S&P500 closing up +29% for the year. (Bloomberg), with bonds selling off, down 3% for the year in 2013. That difference in returns of 32% has not happened since 1978. (Bloomberg)

Overall, I feel equity values may be a bit stretched at current levels. I would not be surprised to see this correction continue, or experience increased levels of volatility throughout 2014. Modest expectations for equity returns may be prudent in 2014.

In the meantime, I am reviewing your respective asset allocations, and am closely monitoring your individual positions. Also keep in mind, I’m continuously looking for new positions at potentially attractive prices. Recent market action may provide me the chance to add some new names to the portfolios. Stay tuned.

With tax season upon us, hopefully you have already received your 2013 form 1099’s etc. from Wells Fargo Advisors.  Please remember to wait for your 1099s, etc. from Morgan Stanley for the portion of 2013 your accounts were there. Keep in mind both sets of tax forms are required to complete your 2013 taxes.