Description
Given the geopolitical and energy market uncertainties worldwide and the weakness in emerging
markets and Europe, investors are incentivized to direct capital flows to the U.S. This is also
supportive of the dollar and may drive equity market performance as valuations favor equity over
debt. U.S. residential real estate may similarly benefit.
A strong dollar may also create some economic headwinds as U.S.
exports become more expensive to foreign buyers and imports from abroad may rise, thus redirecting GDP growth from the domestic economy. A stronger dollar may also result in a drag on corporate earnings due to currency losses upon conversion of unhedged operations into U.S. dollars for financial reporting purposes.
Finally, the collapse in oil prices may result in reduced capital expenditures in the coming year, a negative for the economy, but may also provide a larger stimulus to U.S. and global discretionary consumer spending. Reading the Tea Leaves In uncertain times, the importance of sound portfolio construction is paramount. Investing in the 30 year bond at the outset of 2014 would have yielded a return near 30% but the risks were great and could have resulted in a large loss if interest rates rose. The valuation thesis for Europe seemed enticing but the European economy suffered a setback.
Although small cap stocks have a history of outperforming larger companies, the large caps attracted capital due to worldwide uncertainties and depressed bond yields. Our goal is to participate in the high performing sectors of the capital markets while balancing the downside risks. We therefore continue to fully diversify client portfolios while deploying our best judgment with respect to asset class and sector allocations. Best Wishes for the New Year All of us at KLS greatly appreciate the confidence and trust that our clients have in our firm.
We are mindful that we must earn this each and every day. We wish you and your loved ones a Happy, Healthy and Prosperous 2015. The above commentary represents the economic and market views of our firm. We remind you, however, that each client’s portfolio is managed individually.
Please speak with your KLS advisor with respect to your personal circumstances and individual portfolio performance. December 30, 2014 6 .
exports become more expensive to foreign buyers and imports from abroad may rise, thus redirecting GDP growth from the domestic economy. A stronger dollar may also result in a drag on corporate earnings due to currency losses upon conversion of unhedged operations into U.S. dollars for financial reporting purposes.
Finally, the collapse in oil prices may result in reduced capital expenditures in the coming year, a negative for the economy, but may also provide a larger stimulus to U.S. and global discretionary consumer spending. Reading the Tea Leaves In uncertain times, the importance of sound portfolio construction is paramount. Investing in the 30 year bond at the outset of 2014 would have yielded a return near 30% but the risks were great and could have resulted in a large loss if interest rates rose. The valuation thesis for Europe seemed enticing but the European economy suffered a setback.
Although small cap stocks have a history of outperforming larger companies, the large caps attracted capital due to worldwide uncertainties and depressed bond yields. Our goal is to participate in the high performing sectors of the capital markets while balancing the downside risks. We therefore continue to fully diversify client portfolios while deploying our best judgment with respect to asset class and sector allocations. Best Wishes for the New Year All of us at KLS greatly appreciate the confidence and trust that our clients have in our firm.
We are mindful that we must earn this each and every day. We wish you and your loved ones a Happy, Healthy and Prosperous 2015. The above commentary represents the economic and market views of our firm. We remind you, however, that each client’s portfolio is managed individually.
Please speak with your KLS advisor with respect to your personal circumstances and individual portfolio performance. December 30, 2014 6 .
