PPCA

Unlike 2013, diversification worked in the first quarter of 2014. As revealed in our 2013 market commentary, U.S. stocks dominated with a 33% return while diversifying assets like commodities lost 10%. As shown in the graph on the right, diversification into real estate and commodities was handsomely rewarded in the first quarter.

This commentary is divided into three sections. I begin with a review of current U.S. and foreign stock markets, examining the year 2013 and the past six years, including the crash of 2008. This perspective serves as a launch point into the future, specifically 2014 and the remainder of this decade. I conclude with a review of the past 88 years of U.S. stock and bond markets.

Thankfully, 2008 has become a distant memory. Weve made back its 37% loss and a lot more. Things are good, but are they going to stay that way? We still face anemic economic growth, burgeoning debt, global social unrest and more. The S&P 500 has returned 145% in the past 55 months (4.5 years).

2013 stock markets started like 2012 stock markets with a bang. U.S. stock markets kicked off 2013 with a very good 10.7% return. Also like 2012s first quarter, foreign markets didnt fare as well, earning only 3.5% in the quarter. If we merely hold onto these gains for the remainder of the year well do fine.