Amy & Dan Smith's Planning for Life: Five Equity Market Themes for 2015

By Amy Smith

Each year I read many market forecasts for the coming year from investment experts around the globe. Accordingly, I’d like to provide you with a recent article from Jeffrey Saut, Raymond James Chief Investment Strategist titled “Five Equity Market Themes For 2015”. (Readers may find the complete 2015 Outlook from Raymond James Investment Strategy Quarterly on my website www.amysmithwealthmanagement.com under “Market Views.”)

Lower Fuel Prices

This extended period of lower fuel costs should benefit companies that are dependent upon fuel as an input, such as the airlines, trucking and cruise lines, railroads, shipper, etc. Additionally, consumers are paying less at the pump and the hope is that those savings will now flow into other areas of the economy, like the consumer discretionary sector.

Smarter Policy Makers

One of my major themes has been that we will elect smarter government policymakers and subsequently smarter policies. With the mid-term elections over, we now shall see whether these newly elected officials can help enact policies to further boost the economy and create jobs.

Interest Rate Increases

The Federal Reserve is expected to begin raising short-term interest rates in the second half of 2015. Will the market begin to anticipate this move and buck the trend of lower rates that we have seen in 2014? We believe so, with higher rates more likely in second half of 2015, because the economy is strengthening.

Immigration Reform

President Obama issued an Executive Order in November that may allow approximately five million immigrants to legally work (and pay taxes) here in the United States. This action should benefit certain companies and industries, while providing additional tax revenue for the country.

Long-Term Secular Bull Market

Equity markets tend to enter a long period of expansion after emerging from an extended period of negative returns (the lost decades of 1964-1982, or 2000-2012). Typically, these expansion periods last for about 15 years with annualized returns of roughly 16 percent per year. Using March 2009 as a starting point implies that we may have another 10 years left in the current secular bull market. Of course, there will be corrections, but they should be viewed within the context of the long-term secular bull market. To quote my departed friend Sir John Templeton, “Bull-markets are born on pessimism, grow on skepticism, mature on optimism and dies on euphoria.” We are still in the skepticism phase …

The foregoing article contains general information only and is not intended to convey investment advice. Amy V. Smith Wealth Management, an independent firm, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC. Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel.703-669-5022, www.amysmithwealthmanagement.com) Dan Smith is not affiliated with Raymond James.