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Market Databank

3rd Quarter 2014

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Since 1900, only three of 23 bull markets have lasted six years or longer. Chances of a bear market — a correction of at least 20% — increase as the bull market grows older. But economic conditions that  accompanied bear markets in the past were not present as the end of 2014 neared.


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Europe’s slower than expected growth cast new doubt on the strength of the global economy caused  periodic jitters over the Federal Reserve’s “taper” — the winding down of longstanding monetary policy liquefying economy. But the stream of improving economic data continued.

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“American exceptionalism,” the theory that the U.S. is different from all other nations because of it a unique traits — like freedom, entrepreneurship and an abundance of natural resources — was bolstered again last quarter as US stocks outran foreign again.

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Over the past five years, cumulative returns on consumer discretionary stocks led the 10 S&P 500 industry sector indices, followed by health care and technology stocks, as growth investors were rewarded. Utilities trailed  as income oriented investments remained weak. No industry was hit for a loss over the period.

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Looking at the cumulative return on broad group of 12 asset classes for the five years ended September 30, 2014 shows master limited partnerships at the top of the heap. But second best was the return on U.S. stocks. Stocks tied to commodities prices and foreign equity markets trailed.

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Red squares show expected earnings on the S&P 500 index of blue-chip companies, based on a 10/2/2014 forecast of Wall Street analysts, for $118 per share in 2014 and $133 in 2015. Unless there’s a crisis or sudden and surprising bad news, the trajectory of earnings growth could continue to propel stocks higher.


Past performance does not indicate future results.   ± Indices and ETFs representing asset classes are unmanaged and not recommendations for any specific investment. Foreign investing involves special risks, including political or economic instability and currency fluctuation. Bonds offer a fixed rate of return while stocks fluctuate. ¥ Estimated bottom-up S&P 500 earnings per share as of October 2, 2014 was $118.28 for 2014 and $132.91 for 2015. Sources: Yardeni Research, Inc. and Thomson Reuters I/B/E/S survey of consensus estimates. Standard and Poor’s for index price data through October 7, 2014; and actual earnings data through June 2014.  


2nd Quarter 2014
1st Quarter 2014
4th Quarter 2013
3rd Quarter 2013
2nd Quarter 2013

This article was written by a professional financial journalist for Clark Planning & Investment Advisory and is not intended as legal or investment advice.
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