Byron Moore, CFP® and Mike Jones

Investment Insights: 2nd quarter, 2014 review

By Mike Jones, posted July 25th, 2014

After stumbling in early April, U.S. stocks continued their upward trajectory as realized last year and posted gains in the second quarter of the year.  Stock markets around the globe advanced despite the troubling environment demonstrated by escalating violence in various corners of the globe, including Russia's seizure of Crimea. Stock performance was fairly uniform, with no clear leadership emerging. 

U.S. Stocks    
  Total Return  
Index Second Quarter 2014 Year-to-Date
DJIA 2.83% 2.68%
S&P 500 5.23 7.14
Nasdaq Composite 4.98 5.54
S&P MidCap 400 4.33 7.50
Russell 2000 2.05 3.19

The following is a recap from T. Rowe Price.  Many of you will recognize this name as Argent employs several of the T. Rowe Price funds in its portfolio models.

The Commerce Department sharply lowered its assessment of first-quarter economic growth from an earlier reading of -1.0% on an annualized basis to -2.9%, surprising most analysts who expected a less severe revision. The sluggish reading was attributed to shrinking business inventories, awful winter weather throughout much of the nation, and a decline in health care spending.

Many analysts, regard the contraction as an aberration-something of a payback for the unsustainable 3.4% advance in the second half of 2013. T. Rowe Price, for example, expects stronger U.S. economic growth in the neighborhood of 3% in the second quarter of this year. Total annual growth of 3% for the year, however, is probably unlikely. 

Intermediate- and long-term U.S. Treasuries rallied during the quarter, driving their yields significantly lower and confounding market expectations for higher interest rates. The Treasury yield curve flattened as shorter-term rates held relatively steady or ticked upward slightly. The yield on the benchmark 10-year Treasury note fell nearly 20 basis points (a basis point is 0.01 percentage point) over the course of the quarter to finish at 2.53%. The rally in U.S. government debt helped most fixed income sectors generate strong returns.

For most of the portfolio models in Momentum Select, the 2014 allocations have remained fairly stable.  

With respect to fixed income, we remain primarily invested in corporate bonds. We have complimented these positions with adjustable rate holdings and have stayed away from long term maturities.

With respect to equities, we are still tilting the equity portfolios toward value oriented large cap stocks. At the beginning of this quarter we added a representation of global stocks as well as more dividend oriented equities.

Mike Jones is Managing Director / Investing Group of Argent Advisors, Inc. Email him at Write to him at 500 East Reynolds Drive, Ruston, LA 71270 or call him at (318) 251-5844. The opinions of any single advisor do not necessarily reflect the opinions of Argent Advisors, Inc.  No forecasts can be guaranteed.  Argent Advisors, Inc. does not offer tax, insurance or legal advice.  The information contained in this column should not be construed as a substitute for personalized investment, tax, insurance or legal advice.

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