It's a small world after all

Feb 4, 2014 | Wealth Management

To understand investing today, you must familiarize yourself with the magical words from Mickey’s Kingdom: "It’s a small world after all." Much of the recent downturn in the market has been fueled by challenges overseas as emerging markets continue to suffer from concerns about 1) downward pressure on their currencies resulting in higher interest rates, 2) assets being moved to stronger currencies adding further headwinds to already fragile economies, and 3) a downturn in Chinese manufacturing reducing demand for commodities exports which are vital to emerging market countries. All of which in turn hurts U.S. stocks, particularly large cap stocks, that derive an ever growing portion of their revenues from overseas.

However, take a deep breath. Investors enjoyed a great ride in 2013. 2014 will present more challenges but also many opportunities. U.S. companies are more profitable than ever both in terms of profit margins as well as overall total earnings. It has been a strong fourth quarter earnings season and we forecast continued domestic economic growth. In addition, Europe seems to be climbing out of their long-lived recession which will be an additional shot in the arm for global economic growth. Be sure to review your portfolios and rebalance as necessary as the run up in stocks last year may present more risk than you’re willing to assume. Remember not to ignore the bond side of your portfolio as risk can be found there as well, especially as the Fed continues to taper their bond purchases. If you would like me to review your current portfolio and help you identify and analyze the risks, give me a call.

Again, take a deep breath. Relax and enjoy your day. Football is only seven short months away.

It’s a world of laughter, a world of tears
It’s a world of hopes and a world of fears
There’s so much that we share that it’s time we’re aware
It’s a small world after all

Jeff Schriefer
Wealth Management
859-233-8929 Office
859-252-0304 Fax

Bank of the Bluegrass & Trust Co.
215 Southland Drive
Lexington, KY 40503

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