As we round the final curve into the end 2013, the story for the year has been and continues to be U.S. Equities. As one would expect the relative strength of the dollar, slipping commodity prices and the looming threat of rising interest rates has left many balanced portfolios somewhat behind the curve.
In times like these, where a single asset class outperforms, it is important to remember that balanced portfolios typically provide the best risk-adjusted returns over time. We anticipate that given the strength of the current economic environment and the continued support of the Federal Reserve that this trend in U.S. equities may continue for some time.
As we move into 2014 we are expecting a re-synchronization of global economies and a return of strength to many assets that have struggled to find their footing recently. We also expect to see a continued increase in market volatility due to the government’s inability to find a solution to our current budget woes.
The inevitable decrease in government stimulus and increase in budget sequestration will result in economic headwinds for the U.S. economy. The question is whether or not the recovery that is underfoot has the strength to carry us through. Because of the nature of monetary policy changes; we will continue to be subject to the effects of the past and current stimulus actions for some time.
We continue to be relentless in our search for value and fundamental justification when purchasing investments. We are committed to the search for opportunity in all market environments while working to limit volatility, manage risk, and participate prudently.
Stocks offer long-term growth potential, but may fluctuate more and provide less current income than other investments. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations. Past performance does not guarantee future results.
Wells Fargo Advisors Financial Network did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Wells Fargo Advisors Financial Network or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.