Market Commentary – Happy New Year

By Michael Hardy, CFA, SVP, Senior Wealth Investment Advisor/SPM, Bell State Bank & Trust

That’s a wrap, 2013 comes to a close following a year of events that gripped the globe, politics, financial markets and our imagination. Equity markets surged to new all-time highs while fixed income posted losses for the first time in 14 years. We need to look back to 1999 to find the last time the Barclays Aggregate Bond index posted an annual loss, a loss of -0.82% vs. 2013’s YTD loss of -1.92%. Equity markets exceeded expectations with the S&P 500 up 32.2% and the tech heavy NASDAQ 100 gaining 36.7%. Additional performance data will be in our January FOCUS newsletter.

To appreciate the strength of the equity market it is insightful to look back at the top financial media stories of the year and understand what market participants navigated throughout the year. The following list represents the most read stories of 2013 as published by Bloomberg. By order of viewership the top worldwide headlines of 2013 were:

1. Boston Explosions Kill 3, Injure Scores at Marathon’s Finish (4/16/13)
2. EU Officials Pressing for Cyprus Bank Tax Signal Flexibility (3/18/13)
3. Morgan Stanley Said to Plan 1,600 Investment-Bank Job Cuts (1/9/13)
4. Boston Marathon Bombing Suspect’s Arrest Closes Weeklong Manhunt (4/20/13)
5. U.S. Stocks Tumble Most Since November as Euro Slumps on Italy (2/25/13)
6. U.S. Stocks Pare Losses After Japan Leads Global Slump: Yen Jumps (5/23/13)
7. Euro Falls With Stocks as Treasuries, Bunds Advance on Cyprus (3/18/13)
8. U.S. Stocks Fall With China in Bear Market; Treasuries Pare Drop (6/24/13)
9. Morgan Stanley Said to Defer Bonuses to Top Bankers, Traders (1/15/13)
10. Apple Tumbles After Posting Slowest Sales Growth Since 2009 (1/24/13)
11. Traders Said to Rig Currency Rates to Profit from Clients (6/12/13)
12. Gold Sinks Most Since 1980 as Stocks Post Worst Tumble of Year (4/15/13)
13. Cyprus Salvaged After EU Accord Shuts Bank in Euro Bailout (3/25/13)
14. Stocks Rally Most Since January, Bill Rates Fall on Debt Talks (10/10/13)
15. Fed Tapers QE Pace to $75 Billion as Job Market Outlook Improves (12/18/13)

Notice that the first positive headline didn’t appear until the bottom of the list, meaning readers/investors tend to be pulled into negative stories which keep the positive news in the shadows. Despite it all, we find ourselves on the eve of the sixth year of a bull market where March 6, 2014 will mark the five year anniversary. This rally is soon to be in rare company as there have been only four other bull markets since 1903 that have ran six or more years in length. As we enter 2014 we are optimistic this rally will continue as economic data continues to improve. Happy New Year!

This article has been written for the general information of clients and friends of Bell State Bank & Trust. It is not intended, nor may it be relied upon, as legal, tax or investment advice with respect to any matter. This article also cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by the Internal Revenue Service or other taxing authority.

 

If you’d like to talk more about market commentary, call Michael Hardy to start the conversation.

701-451-3008
800-709-5781

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