Investment Management – Fourth Quarter 2014

January 02, 2015

Despite a year where the U.S. economy finished on a very strong note, there is still considerable debate over the validity of the economic recovery.  Proponents observe a slow healing process after the financial crisis while opponents note that we are being inflated by massive stimulus from the Federal Reserve.  Notwithstanding a few bumps, the U.S. economy has been improving and equity markets continue to deliver generous returns.

2014 was the third consecutive year of double-digit gains for the S&P 500, with the index posting 54 record closes during the year.  Though mid and small-cap stocks made a big comeback during the fourth quarter, both indices trailed the S&P 500 for the year. Though mid and small-cap stocks made a big comeback during the fourth quarter, both indices trailed the S&P 500 for the year.

In the last three months, the total return for the large-capitalization S&P 500 was 4.93%.  Mid and small-cap indices, represented by the S&P 400 and S&P 600, returned 6.35% and 9.85%, respectively.  International stocks, tracked by the MSCI EAFE, fell 3.57%.  A strong U.S. dollar coupled with a weak European economy weighed on international stock performance.

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