was pure demand as investors poured recordamounts into equities. The second week of January saw the largest inflow to equity fundssince 2008.On the negative side was a lower than ex-pected GDP report for the Q4/2012. But
even that didn’t slow the bulls for long as the
details showed that some of the decline wasdue to slowed government spending followinga more robust Q3.Investment Outlook
I believe the long term investment outlook re-mains positive. Earnings are beating expecta-tions, the economic recovery continues to im-
Stock Market Commentary
February 9, 2013
Lane Asset Management
“The future ain’t what itused to be,” said Yogi
Berra, and I think thatmight apply to the stock market, as well. Assummarized in my 2013Fearless Forecast, anumber of analysts werepredicting 2013 equityreturns of 10%, more or less. Since Januarybrought us nearly half way there, I think it would be optimistic, tosay the least, to expectthe current pace to con-tinue. So, the questionbecomes. is there goingto be a period of drift or might we see a moresignificant correctionalong the way. My feel-ing is the latter sincethis has been the histori-cal pattern going back over many years.Should you be con-cerned? That dependson your long term out-look and your tolerancefor volatility.
prove (even if not as fast as we would like), andgovernment policy makers have proven that theyare not quite ready to take away the punchbowl. We might even anticipate something good comingout of the sequestration (spending, or lack thereof)debate, though not without a certain degree of drama.The fact is, this seems to be a good market for both equities and income-oriented investments,though not all segments of either. The ultimatedriver of equities, corporate earnings, continues tobe positive and P/E ratios appear reasonable(though not so much for the normalized 10-year Shilling P/E ratio). On the income side, while gov-ernment bonds are in bubble territory and invest-ment grade bonds are sputtering, there are other
income “plays” that remain quite attractive.
The biggest concern facing investors today seemsto be the pace of the market over the last 2 1/2months, where the S&P 500 has gained nearly 12%,and the likelihood is of some steam coming out of the market in the coming weeks or months. No, I
don’t want to forget our friends in Washington.
They are sure to trip things up along the way. But I
don’t expect those problems to be long
-lived.For now, I would stick very close to broad equityindexes, both domestic and international. On theincome side, I would look into preferred stocks,floating rate corporate debt and municipals.
The charts on this and the following pages use exchange-traded funds (ETFs) rather than market indexes since indexes cannot be invested in directly. The ETFsare chosen to be as close as possible to the performance of the indexes while representing a realistic investment opportunity. Prospectuses for these ETFs canbe found with an internet search on their symbol. Past performance is no guarantee of future results.