The S&P 500 closed up 2.8% for the month and has gained 26.6% before dividends year to date. Stocks again beat a tired bond market for the month and year to date.
The stock market has risen nearly 50% without a 10% correction. This is a very unusual situation. It speaks volumes to the fact that the global Central banks have kept interest rates at historic lows.
U.S. companies are making historic earnings with record profit margins and record levels of cash on their balance sheets.
The Morgan Stanley Global Stock Market index is up about 15% year to date while Emerging markets are showing a negative 8% return.
Capital spending has yet to kick in during this abnormally slow recovery. U.S. and European CEO's remain cautious about the pace of recovery, regulation, and tax rates. The Consumer remains wary of taking on more debt.
In this environment companies buy back shares and raise dividends helping to lift the markets.
Unfortunately Washington policies have done nothing to help raise wages for the middle class or help the economy get to back 2007 employment levels.
We expect market trends to remain in place through December. Tax loss selling will be featured in a month when the market typically rises 1.5%.
In 2014 we expect additional loses in long term bond investments while global stock markets outperform both bonds and commodities. At 15.6 times forward earning the S&P 500 P/E ratio is in neutral territory.
Inventors are likely to make more positive allocations to stocks rather than bonds after they review their 2013 returns.
The Federal Reserve is expected to remain in "ease mode" long after tapering their bond buying program, likely in March 2014. We do not expect any important legislation out of Washington until after the November 2014 midterm elections nor do we expect another government shutdown or debt ceiling impasse.
As always your questions and comments are welcome.
Best wishes for a Happy Holiday Season.
Doug
December 5, 2013
Disclaimer: This communication is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any interest in any investment vehicles managed by Client First Advisors, LLC or an associated person or entity. Client First Advisors does not accept any responsibility or liability arising from the use of this communication. No representation is being made that the information presented is accurate, current or complete, and such information is at all times subject to change without notice. Opinions expressed may differ or be contrary to the opinions and recommendations of Client First Advisors. Client First Advisors does not provide legal, accounting or tax advice. Any statement regarding legal, accounting or tax matters was written in connection with the explanation of the matters described herein and was not intended or written to be relied upon by any person as definitive advice. Any discussion of U.S. tax matters contained within this communication is not intended to be used and cannot be used for the purpose of avoiding penalties that may be imposed under applicable Federal, state or local tax law or recommending to another party any transaction or matter addressed herein. Each person should seek advice based on its particular circumstances from independent legal, accounting, and tax advisors regarding the matters discussed in this e-mail.
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