The big story in the economy and the financial markets this past quarter was that there was no big story. Corporate earnings and the global economy continued to improve, the U. S. economy continued to add jobs, while central bank behavior performed pretty much as expected. The stock market as measured by the S & P 500 Stock Index was up 4.5% for the quarter and 14.2% for the year reflecting the good economic performance. The stock market continued to ignore outside influences such as hurricanes, floods, earthquakes and political events. Even nuclear threats and missile tests on the part of North Korea had little market impact, as the S & P 500 Stock Index moved to a record high.
Is the stock market too high? Are stocks overpriced? Will there be a major correction? Notable economists and investors lined up on both sides of these questions; all with very rational arguments to support their case. Listening to these general discussions can easily lead to confusion and indecision. While the conversation is interesting, we find it nonproductive. These questions are always a topic of discussion, without resolve until after the fact. We have found it much more helpful to make decisions for each individual security in client portfolios, taking into account the current price and long term outlook for the company. Client investment objectives and taxes are also considered. We will continue to follow that path.