In 2014 equity markets returns slowed to a crawl. For example the The Global Dow index increased less than five percent for the whole of 2014.
We continue to believe most of the market hesitation was caused by the Federal Reserve’s conservative posture with respect to interest rates and monetary policy.
Although last year was not anything to write home about, this year is the third year of the U. S. President’s term and that has historically been a slight positive for equity markets.
We continue to overweight stocks versus bonds because we believe most of the slowdown in economic activity has passed as lower energy prices provide consumer relief at the gas pump.
Car buying and home purchases remain strong in December and we believe this will help the markets next year.
Looking forward, we continue to believe fourth quarter earnings for 2014 will be solid and may be a catalyst to move the markets higher before the end of 2015.
Our investment approach is to buy companies with consistent earning power, high return-on-equity while employing little or no long-term debt and to purchase at reasonable prices.
We have a system that filters thousands of stocks on a weekly basis using the Sparrow multi-point checklist that screens the highest quality companies, which are then reviewed and considered for purchase in your portfolio.
DISCLAIMER: The investments discussed are held in client accounts as of December 31, 2014. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.