A New Year With a Similar, Yet Slightly Different Start to Last Year

Excluding dramatically lower gasoline prices, 2015 is starting off not much differently than last year as it relates to the stock market.

      2015 2014
            1/1 - 1/21               1/1 - 1/21      
Dow Jones Industrials     -1.51% -0.95%
S&P 500     -1.30% -0.11%
NASDAQ                                               -1.95%                   1.58%        
U.S. Indices Average     -1.59%  -0.17%
         
 ARTKX (1)     0.85% -1.46% 
 ODVYX (2)                                           1.55%                 -1.22%         
International Funds Average               1.20%                -1.34%       

 

 

 

 

 

 

 

 

 

 

 

(1) ARTKX is an international value stock fund that invests in stocks of large companies outside of the U.S. and is currently closed to new investors.

(2) ODVYX is an international stock fund that invests in emerging and developing market stocks.

I am including these international funds because long-term they are highly rated and performed well in comparison to their peers and corresponding international indexes. Basically, they give us a measuring stick to compare how the U.S. stock market did compared to international stock markets.

That being said, both 2015 and 2014 started the year with a whimper, and not a bang, as it relates to stocks overall. In 2014 the U.S. stock indices finished in positive territory, whereas their international counterparts experienced losses for the year.

2015 still looks optimistic for stocks due to low energy prices, tame inflation, economic growth in the U.S. and reasonable stock valuations as compared to historical averages. However, the European Central Bank agreed on Thursday to embark on another quantitative easing (QE) program, which together with its existing schemes will pump 60 billion Euros a month into the euro zone economy from this March until September next year.

As a result of this quantitative easing program, lower interest rates and stock valuations overseas, as compared to the U.S., we may see international stocks give the U.S. a run for its money in 2015. Not because of better economic conditions overseas, but based upon them lagging the U.S. considerably over the last few years and now considered a bargain in comparison.

Bottom line, other than the extremely low prices at the gas pump and much lower heating bills, there is not much to report as we start the year. In retrospect, 2014 was a good year for investors who focused solely on large company U.S. stocks, outside of the energy sector (i.e., oil and natural gas exploration, production or service providers). Whereas small company stocks, U.S. and international bonds, international stocks and even balanced investments paled in comparison and many, even though they showed quite desirable returns long-term, logged negative returns.

In addition, interest rates have confounded most bond experts and continue to stay low, even in the face of the Federal Reserve ending their quantitative easing program here in the U.S. and contemplating rate increases. Since U.S. government bond rates are higher in the U.S. compared to their overseas counterparts, and the U.S. dollar is crushing other countries currencies, many foreign investors are buying bonds and stocks in the U.S. It appears that thus far this is not only keeping interest rates low in the U.S., but providing a floor for any market corrections we've seen.

Barney FifeNot to downplay any of the global economic events going on in the world, but currently I would tell investors (in the words of Barney Fife of The Andy Griffith Show), "nothing to see here....move along."

U.S. Oil: Increased Production Promotes Energy Independence

The following video clip is brief, but very insightful regarding oil prices and their impact on the United States. 

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2015.

Quotes    

"It takes considerable knowledge just to realize the extent of your own ignorance."

                    Thomas Sowell

"Laugh and the world laughs with you, snore and you sleep alone."

                    Anthony Burgess 

Quotes selected by the IAG staff

"The best thing about the future is that it comes only one day at a time."

                    Abraham Lincoln 

"I can't change the direction of the wind, but I can adjust my sails to always reach my destination."

                    Jimmy Dean

   

Tony Moeller, CPA

The information listed in this commentary is a compilation of various publicly available sources and is for informational purposes only. It is not a recommendation or solicitation of any particular investment or strategy. A risk of loss is involved with investments in the stock and bond markets.

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