Mitchell Clark: The S&P 500 index really hasn’t done much since the beginning of the year but churn…but then again, why shouldn’t it?
For stocks, 2013 was an exceptional year. If we get another positive year on top of dividends, then it’s total gravy.
The capital gains over the last several years have been highly unusual, representative of the gains often seen after a major financial crisis.
There are no bandwagons to jump on in this stock market. Investor sentiment finally had a bit of an awakening over the last several weeks. Big investors booked some profits after the big price recovery in February, which occurred because of verbal reassurances by the new Fed chair, Janet Yellen. If there wasn’t further hand-holding from the Fed, stocks likely would have continued January’s sell-off into a full-blown correction, helped by events in Ukraine.
I’m of the mind that the stock market may take an extended break over the next two quarters, as it’s so often done in the past—probably more of a price consolidation over a correction; top-line growth is still pretty modest.
I’m still a big fan of dividend income and also a higher weighting given to cash within a portfolio context. Very little stands out in this stock market as an exceptional buy. There are some exciting innovations in the marketplace, but valuations for many of these stocks are still way off the charts.
Precious metals continue to prove themselves as an unreliable asset class. Spot prices are stuck and all-sustaining mining costs per ounce are still going up. It’s a tough road ahead for precious metals stocks.
But this is always the case with resource stocks. They trade in their own manias, peppered with long periods of nonperformance.
Goldcorp Inc. (NYSE:GG) is a top-notch, well-managed gold miner, but the stock is now trading where it was at the beginning of 2006. Comparatively, Colgate-Palmolive Company (NYSE:CL) is up around 140% on the stock market, not including dividends, during the same period.