HFG Perspective: May

May 3, 2014
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So far, the stock market in 2014 has been one with a lot of churn and not a lot of return. On the bright side, there hasn’t been much in the way of loss either.

What do we mean by, “a lot of churn and not a lot of return?” Specifically, there are a lot of individual stocks that have either gone way up or way down this year. The major stock indexes like the S&P 500, however, have been bouncing around between slightly up and slightly down all year, but for the most part, have remained in virtually unchanged territory for much of the year.

Indeed, many of the high flying and speculative sectors that were so strong in 2013—social networking, biotech, internet—have come back to earth in 2014, with many names suffering substantial declines. At the same time, many more boring and stable sectors like consumer staples, utilities and energy have done fairly well so far.

Some have won and some have lost, but the overall market has not changed much. Of course, we would be remiss if we didn’t remind you of the fact that our major domestic indexes like the Dow Jones Industrial and the S&P 500 are sitting very near all-time highs.

Is this a peak, or is this a pause? We can never know, but a quick look at the major economic and corporate data can help us hypothesize. Is the economy expanding or contracting? Are corporate earnings growing or falling? Are things getting better or worse for the consumer and manufacturing? In all cases, things are getting better, and that gives us no reason to believe that we are at a major turning point in the market.

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