2014 So Far: Cautious Optimism Prevails
Posted on Monday, March 3, 2014
It’s too early in the year to make many forecasts, but in the February issue of IAS, the editors in provide a detailed analysis of various indicators to give investors some guidance. Indeed, the stock market showed considerable strength in 2013, but it’s already a mixed bag in early 2014. Rising home values and last year’s record stock prices are causing consumers to feel more confident about their assets. But the employment picture remains somewhat unclear: What are these conflicting trends telling us?
So far we are seeing solid industrial production trends, good consumer spending and a better international trade balance. These factors suggest strong underlying growth in gross domestic product, which bodes well for 2014 economic growth, but the editors remind readers we have been fooled before by early recoveries that failed to fully launch.
Stock price appreciation last year vastly outstripped growth in the economy and corporate profits, which gives us reason to be cautious about expecting another such robust year in 2014. The editors still see enough good potential from stocks — and interesting opportunities — to keep us encouraged. The key is to pay attention to heed the right signals, stay focused on selecting good companies and maintain discipline in investing decisions.