Jan 04 2014

A Brighter 2014?

“Man is not the creature of circumstances, circumstances are the creatures of men.  We are free agents, and man is more powerful than matter.” – Benjamin Disraeli

 

So Happy New Year and hopefully the weather this January for most of the U.S. and other parts of the globe is not an indication of what we should expect in the broader economy.  Wow – it has been brutal!  I honestly don’t expect much of a correlation but it is a bit difficult to predict if 2014 will be better or worse than 2013.

 

Fortunately there were some good things that happened in 2013 despite the political nightmare that is Washington D.C.  Many of us enjoyed watching our stock portfolios increase in value (condolences to those overinvested in municipal bonds) but it is difficult to believe this rising tide can continue for another year.  My gut is telling me that a correction is coming – but when exactly?  I remain generally optimistic that 2014 can be a better year for many – assuming the political infighting does not spin out of control during the upcoming budget negotiations – BUT…caution should be a key concept in 2014 when making financial decisions.

 

For those planning to invest or rebalance this year, don’t overlook the following possible perils:

1.  Negative impact from withdrawal of monetary stimulus by the Fed.

2.  Resurgence of sovereign debt problems in Europe.

3.  Significant correction after 4.5 years of gains in the U.S. equity markets.

4.  Further Chinese stock market decline or slowdown in economy.

5.  Oil supply shocks due to Middle East unrest or terrorist disruption.

 

While most agree there is reason for optimism in 2014 and sitting on piles of cash is not a good investment strategy, the prudent humans will continue to diversify exposure.  All the best to you in 2014!

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