2014 mid-year market outlook summary | Has the market come too far, too fast?
It's been a record-breaking year so far with the Dow Jones Industrial Average closing over 17,000 for the first time ever. Factors contributing to this rise include a bounce back in consumer confidence, an increase in business spending, low inflation and an indication from the Fed that interest rates will remain low. In light of the fact that the U.S. equity market is pushing valuations beyond current earnings, we think earnings need to catch up and we continue to believe we won't have the double-digit returns we saw in 2013.
Our outlook for 2014 has essentially remained the same as it was in January. We still think risk will be rewarded and well-structured portfolios can achieve realistic investment goals. We expect the equity markets to continue along the current path for the second half of the year. In the bond space, we do expect a different marketplace in the second half of the year with rates rising.
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