Last
year, equities were up significantly. Some wondered what would happen this
year. As I am writing this, the S&P 500 was back to the December 19th level
of 1805. On January 15, 2014, the S&P hit a record high of 1848. Interestingly,
this record high for 2014 is the same as the closing point of the S&P at
the end of the last year, meaning that the S&P is down about 2.5% since the
end of 2013. Given that the stock market was up 28% last year, this change is
barely a blip on the radar screen. So where is the money that is leaving the
stock market going? Bonds are up in value! As I always say, the three rules of
investing are: diversify, diversify, diversify. You never
know which asset class is going to do the best. As an investor, the idea is not
to hit home runs but to make money. After increasing so much last year, a
correction, with the market dropping about 10%, would not be unusual. I believe
that, in the long run, stocks will do very well.
Ed Mallon
