The winners and losers of an improving economy

• Published in: Professional Adviser p. 31
• Main Author: Vaillancourt, Jason
• Format: Trade Publication Article
• Language: English
• Published: London Incisive Media Limited 27.03.2014
• Subjects: Capital expenditures; Credit risk; Economic development; Economic growth; Emerging markets; Federal Reserve monetary policy; Interest rates; Monetary policy; Profits; Securities markets; Stock exchanges; Volatility; United States > US
• ISSN: 1743-3339

US outlook for financial markets this year is mixed. They are optimistic on the economy and corporate profits but more cautious on interest rate strategies, as the US Federal Reserve navigates an uncharted course in pulling back on quantitative easing measures. Stocks in developed markets significantly outperformed government and other rate-sensitive bonds in 2013. Stocks should continue to be in favor over the year ahead, although gains of a similar magnitude are unlikely. In setting an equity strategy for 2014, it is important to recognize that most stocks are trading at a price/earnings ratio of about 15. Valuations are, essentially, the same across industry sectors. Given this lack of disparity valuation criteria matter less than the ability of companies to deliver growth.