Overview 2014

We end the year 2014 with the US markets near a record high. The rest of the “developed” world, less the US, is down about modestly this year. Emerging markets, with a few exceptions, are down more than developed markets. One of the exceptions is Shanghai, up about 50%.

Oil prices plunged 46% thanks in part to a surge in US oil production due to “fracking.”

The US market’s recovery since March of 2009 has now lasted nearly 5 years with only a few pullbacks. There has been some concern about the market’s rise as headlines bring reasons for concern. Worries about the Middle Class, the anemic economy, an $18 trillion (and counting) national debt, plus unrest here and abroad gave worriers plenty to talk about.

But stocks are driven by corporate profits and profits are rising.

spprofits

It’s too easy to get distracted by “noise.” While the issues that get the headlines are important, they may have little or no impact on the price of any one stock or the direction of the market. And in the investment business, that’s what counts.

This recovery is a testimony to the same things that boosted growth 150 years ago, 25 years ago and boost growth today. These are entrepreneurship, innovation and creativity.

Despite the government mistakes that caused the 2008 crash and the mistakes that have retarded economic growth since then – TARP, QE, over-regulation – the U.S. entrepreneur has refused to be held back. Profits are at an all-time high and so are stocks. Yes, there are problems, but nothing that a free people and a (relatively) free market cannot overcome.

Happy New Year!

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