What will the markets do in 2014?

by Reginald A.T. Armstrong, CPWA®

This is probably the most common question I get from clients. Many are asking because they hope the recent uptrend will continue; others are asking because they fear a pullback.

So here is the answer…are you ready? I will echo the words of J.P. Morgan himself when he was asked about a century ago about what the market would do. He said…

It will fluctuate!

Now, I know you think I am being silly here. But JP was on to something. Anyone who thinks they know what the market will do is lying. Even guesses are worth less than nothing. The market has been called “The Great Humiliator” for a reason. Think about it—how many so called “experts” a year ago were calling for US stocks to do as well as they did in 2013? How about in January of 2008? How many were calling for a disaster of a year?

The truth is that the market is unpredictable and this is one reason we recommend clients develop a solid, well-diversified strategy. While far from a panacea, it is a lot better than guessing what the market will do.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

#stocks #market #diversification #strategy