Increase Your Profit Potential In 2014
2013 was a tremendous year for investors who were able to ignore the “fear” and the noise in the stock markets, and just hang on and enjoy the ride. Both the Dow and the S&P 500 enjoyed record earning years, with the S&P 500 up 30% and the Dow seeing earnings of 26.5% throughout the year. The record level of performance in these indices was surpassed only by gains in the Nasdaq, which enjoyed a bull run in 2013, putting it up an astounding 38% for the year. In spite of the amazing year enjoyed by the markets, the gains were amid a lot of chatter that hampered the mood by adding in significant fear and concern for future performance.
Economic Noise Causes Concern For Investors In 2013
In spite of the tremendous performance by stock markets in 2013, economic “noise” created significant concerns for the markets, stealing some of the “joy” for investors. One of the primary concerns causing constant turmoil for investors, was whether or not a Fed Taper would begin on the Fed’s current stimulus program. Because of the influx of capital in the market, market performance had been directly correlated with the Fed’s economic stimulus. A taper could create a significant contraction in the markets. Additionally, 2013 was characterized by the debt ceiling debate, the government shutdown, the hype in Cyprus, and concerns about the stability of the economies in China and Europe. Surprisingly, the markets survived these concerns with unabated success, but the “noise” was enough to keep many market bears out of the earning potential.
How To Invest For 2014 In Spite Of The Economic Noise?
In spite of the “noise” in 2013, market performance was the strongest we had seen in years. Those who were able to tune out the chatter and focus on the earning potential in the markets, enjoyed tremendous gains and successes. The question moving forward is whether or not 2014 will continue on the same trajectory as 2013 and how to invest the earnings made in 2013 for an even stronger return. Economic data showed strong growth in Q3. Although, Q4 data has not yet been released, the Q3 growth of 4.1% is indicative that we won’t see an immediate cessation of market performance in 2014. Thus, investors may be wise to stay the course in the markets and ignore the concerns of market bears, until real economic data points to a pullback in performance.
Bond Markets To Have Higher Interest Rates In 2014
For decades, the 10-year treasury note was considered an extremely safe investment as the U.S. enjoyed very low borrowing costs. Interest rates on bonds dropped from 15% in 1981 to the low interest rates we enjoyed most of this last year. Unfortunately, the time for bonds as a safe and easy investment may be coming to an end. With the slow taper of the Fed’s bond buying program, interest rates are starting to rise, and investors had their share of losses this last year. Interest rates are likely to keep going up in 2014, making bonds a less “safe” and attractive investment for investors seeking that safe haven.
Don’t Give Up On Gold In 2014
If you’re still looking for that safe haven investment in 2014, don’t forget about taking a closer look at gold. Gold has gotten a bad rap over the last couple years, as prices have taken a bit of a tumble. However, buying low and selling high has always managed to help out Warren Buffet and other successful investors. Unfortunately, for investors who continued to ride gold down to the bottom in 2013, finding that absolute bottom can be very difficult to ascertain. While investors can usually benefit from some diversification in gold, it’s also very important to make sure you keep an eye on that bottom before you make the decision to jump fully on the gold wagon. That being said, how low can it go? Keep close tabs on gold for potential future investment potential.
After enjoying such a tremendous year in 2013, investors would be wise to examine their investments to determine the best way to reinvest to compound their earnings in 2014. For more information on which direction to go with investments in 2014, speak to a Redhawk Wealth Advisor near you today.