Kentucky wealth management advisers see the likelihood of a seventh consecutive year of the stock market gains, although more modest in 2015 than the remarkable year-on-year returns since 2009. Advisers forecast gains for the year will be under 10 percent.
Despite weaknesses and lingering uncertainty that prevent long-term planning, the U.S. economy is the strongest in the world and its equity market continues to attract investment from foreign as well as domestic sources. The Federal Reserve is expected to begin increasing interest rates in the second half of the year, and continued strengthening of the U.S. will weaken overseas income for multinational corporations. Markets are likely to remain reactive and volatile, which increases the need to exercise care to invest in strong, well-managed companies.
Michael Weiner, Chief Investment Officer, Unified Trust Co.: “Two big-picture themes should dominate the investment landscape for 2015, namely, the price of oil and the relative value of the U.S. dollar. If a barrel of oil falls 10 to 15 percent more in price, producers and oil-producing nations will be in serious trouble and the consequences could be dire. We believe oil prices will be higher this time next year. The U.S. dollar is likely to appreciate versus its partners, and that will help keep interest rates low in the United States and provide a serious headwind for developing nations.”
James R. Allen, Chairman and CEO J.J.B. Hilliard, W.L. Lyons LLC: “Moderate economic growth, low inflation and an accommodative Federal Reserve have pushed stock prices to record highs while keeping interest rates near historic lows. These conditions have many investors in a quandary as they look to allocate new capital. Will the Fed finally begin to push rates higher late in 2015? Will the likelihood of higher interest rates thwart some of the euphoria for U.S. equities? The answer to both questions is likely to be “yes.” We can expect slightly higher interest rates, lower bond prices and modestly (4 percent to 6 percent) higher stock prices by the end of 2015.”
Dave Harris, Senior Partner, MCF Advisors: “The United States will maintain its position as the world’s economic leader through 2015. Global growth concerns, deflation, geopolitical threats and a stronger dollar could take our rates to new lows in 2015, but we view this as unnatural and unsustainable. We expect the Fed to increase interest rates, though not until later in the year. We continue to emphasize quality in both equity and debt portfolios as volatility likely will remain or increase in 2015. This market volatility could provide an opportunity to increase international allocations as improving fundamentals and the European Central Bank’s loose monetary policy may boost international markets.”
Ernest Sampson, CEO, Private Client Services: “Don’t expect your investment portfolio to have a double-digit return in 2015. Depending upon your portfolio’s asset mix of equities and fixed income, you might do well to break even despite improving unemployment rates and generally positive economic conditions. The Federal Reserve will most likely inch up interest rates by year-end, pushing bonds in an opposite direction along with other fixed-income securities. Equities would have to offset this, which would require a seventh consecutive year of positive returns, which hasn’t occurred before. Lower oil prices will pay an economic dividend throughout the year, pleasing long-term investors.”
Todd P. Lowe, President, Parthenon LLC:“Taking into account slow global growth but modest and steady U.S. growth, broad domestic markets should experience lower returns than in the past two years. The strong U.S. dollar will provide headwinds for multinational companies, further dampening returns in 2015. Interest rates should rise modestly in the second half of the year. Investors should position their portfolios to take advantage of opportunistic situations in both equity and fixed-income markets. It will be a ‘stock pickers’ year.”
Marty H. Ruby, CEO, Stonewood Financial Solutions:“In 2015, one word will likely drive our economic outlook: uncertainty. The stock market will stay volatile. Foreign events will have a significant impact on domestic markets. One of the most interesting areas of uncertainty this year is taxes. As the president’s budget proposal showed, Washington is looking for creative ways to raise revenue, including targeting savings products many American rely on, like 529 plans and 401(k)s. There’s also pressure to squeeze more taxes from gross adjusted income. Between taxes, the stock market and an economy that still struggles, many people will rightfully feel economically unsettled as we push through 2015. ?