When we think about roller coasters in the summertime, images of amusement parks and carnivals typically come to mind – not ups and downs in the stock market. As I write today, the Dow Jones Industrial Average has hit an all time high, topping 17,000 points. This comes just six months after we hit the 16,000 mark, which was a record at the time. While we usually don’t think of these big highs happening in the summer, there are a couple of reasons why we’re seeing this now:
- The June jobs report came in much better than expected. Unemployment fell to 6.1% (the lowest rate since September, 2008), and 288,000 jobs were added. These kinds of numbers make investors optimistic.
- Bond yields are continuing to inch up. This is also a sign to investors that the economy is improving as less investors are seeking the safety of bonds and are turning to more risky investments such as stocks because they are optimistic about the future.
- The Federal Reserve continues to keep interest rates relating to lending at historically low levels, which is helping to boost home purchases and consumption.
- Earnings have largely outperformed expectations as companies continue to increase earnings per share by cost cutting, growth, and massive share buyback plans.
While these record milestones are great news, overall performance for 2014 comes in at around 3% as of this writing. As I’ve been saying all year, we’ll continue to focus on rebalancing client portfolios, as well as diversifying into alternative investments such as real estate investment trusts (REITS) and business development companies, both of which don’t correlate to the stock market.
The primary focus for stock market investors in the near future is going to be the 2nd Quarter public company earnings reports, the first estimates for the 2nd Quarter Gross Domestic Product (GDP), and continued concerns regarding geopolitical risks in the Middle East and in the Ukraine. So far 2014 has seen equity prices rise modestly, but we could be in for a choppy few weeks as the marketplace begins to digest more economic data.
I want to thank everyone who came out on Monday, June 9th for our annual golf tournament to benefit Just Because We Care. We had a great day of golf and fun, and raised much needed funds for our children in Honduras. KPLR’s Dan Gray joined me again this year for the oral auction. His support, and that of KPLR and KTVI Fox 2, have really helped us to share our story and make more people aware of the great work Just Because is doing for the children. Stay tuned for details on the upcoming Honduran “One-Club” Golf Tournament that will be held on Friday, September 5th at Bear Creek.
Before closing, I wanted to make everyone aware that on Thursday, July 10th from 4:00 – 8:00 PM the Streets of St. Charles business and residential community is hosting a StreetsFest! The event will feature local musicians, street performers, a photo booth, and great food and drinks from the restaurants of Streets of St. Charles. Please drop by and check out the Wamhoff and Just Because We Care booths! We hope to see you there!
Until next time, stay healthy, wealthy and wise, and certainly, stay tuned.