|Dow||-55.16 to 17,983.07|
|S&P 500||-10.22 to 2,080.35|
|Nasdaq||-29.47 to 4,777.44|
|10-YR Yield||-.017 to 2.19%|
|Gold||+$16.90 to $1,198.80|
|Crude Oil||+$0.04 to $53.65|
In 31 hours, give or take a few minutes, you, me and millions of other Americans will celebrate the end of 2014, and welcome in 2015.
It has been one heck of a year for investors. The best, highly rated stocks had banner gains. The U.S. dollar experienced its broadest rally in several years. Interest rates remain suppressed despite the end of U.S. QE, as several foreign central banks stepped into the breach.
Throw in an oil war with the Saudis … a Russian invasion in Eastern Europe … an ISIS takeover of widespread territory in the Middle East … the worst airline tragedies in decades … pro-democracy protests in Hong Kong … fresh fighting in Libya and Syria … and rioting here at home … and you can see: It was one heck of a tumultuous year!
|2014 has been a tumultuous year.|
I tend to get reflective at times like these, and I can’t help but share some of the thoughts I’m batting around right now. For instance …
==> Are surging start-up valuations … and the clamoring among big-money investors to get into a limited number of private equity funds … warning signs that too much dough is once again chasing too few attractive investment opportunities?
==> Paradoxically, are smart bargain hunters taking advantage of the energy sector implosion at just the right time? Monthly inflows into energy sector ETFs just surpassed the previous record set in December 2007. This came even as oil prices have slipped to five-plus-year lows.
==> What the heck happened to RadioShack (RSH, Weiss Ratings: D)? I went into their stores countless times over the years, looking for everything from adapters to cables to antennas. Now, it’s losing money hand over fist — so strapped it can’t even afford to close stores! Makes you wonder about the future of Sears Holdings (SHLD, Weiss Ratings: D-), too, considering it has lost $6 billion in the past four years and keeps selling off assets and closing stores.
|“Does it make sense that a handful of colleges are cutting merit-based aid?”|
==> And finally, amid an explosion of student loan debt that I’ve covered previously, does it make sense that a handful of colleges are cutting merit-based aid? The general idea is that dollars previously given to wealthier students with strong grades, extracurricular activities, and other attributes can be redistributed to poorer students.
If this practice becomes more widespread, I hope that it doesn’t come at the expense of academic standards. Personally, I busted my tail in high school to get good grades — then applied for and received a “merit-based” half-tuition scholarship. That’s the kind of reward that I believe all strong students deserve, regardless of the financial standing of their families.
And that, in this relatively quiet year-end trading session, is what’s on my mind. Now let’s hear more about what’s on yours.
Are you worried about stock valuations at these levels? Or do they still look reasonable to you? Does the fading out of past retail giants like RadioShack say something about the retail climate as a whole? Or is it just strategic missteps on the part of those companies? What about energy stocks, college tuition practices, and student debt?
As always, the Money and Markets website is the place where your voice can be heard — so hop on over there when you can.
|Our Readers Speak|
Meanwhile, lots of earlier topics are generating interest at the website. So let me quickly tackle a sampling of the comments out there.
Reader Bill S. said the following in regards to the latest flare up in Greece:
“Could we all please stop worrying about Greece? Greece is not relevant unless of course you have a friend or loved one on one of their ferries or were dumb enough to get stuck with one of their bonds. The European Union, of course, is very relevant — but Greece comprises a very small portion of that.”
But Reader Ian warned that a minor problem now could turn into a big headache later, depending on events. His comments: “Yes Bill, very small indeed. But with all the money poured into Greece, if it decides to say “Sod you” and leave the euro … and doesn’t want to pay back its debt … look out below!”
As for some of the other global hotspots out there, Reader David said: “Despite our ‘good intentions,’ our meddling in Libya, Egypt and Iraq has caused the whole area to be a disaster and we are several trillions of dollars poorer. Let’s hope we have more sense than to meddle further.”
Finally, Reader Billy weighed in on the wealth divide in America and how the middle class is faring. His views:
“It’s real simple. Everyone now knows it’s worldwide Global Elitism that is causing the Global Middle Class to be ‘held down’ as you state, although your choice of words are very mild indeed.
“The Global Elites include both Business and Government Elites that have concentrated the most wealth, power and control of the world’s assets, which of course include people, that we have seen in the history of mankind. Makes the historic empires such as Greek, Roman, even British Empire, etc. look like complete child’s play based on today’s massing of power, control, and wealth.”
Interesting outlooks all around. I think Greece definitely bears watching because the country appears to be finally reaching the point where the population says “Enough is enough!” See the story I link to below for more on that front.
As for the troubling gap in wealth and the benefits of the economic recovery, there’s no denying that the 1-percenters and others at the top end of the spectrum in the U.S. have done better than those further down the socioeconomic scale. The recovery needs to broaden out, and wage and job growth needs to ramp up, for more people to “feel” this expansion on the order of what we saw in the 1990s.
Want to add your voice to these discussions? Then go to the website and let ‘er rip!
|Other Developments of the Day|
It became official overnight: Wreckage from AirAsia Flight 8501 was located off the coast of Indonesia. Bodies and aircraft parts are being recovered, and the hope is that investigators will be able to piece together the reasons for the crash. It claimed 162 lives.
Home prices rose 4.5 percent year-over-year in October, the slowest rate of appreciation in the past two years, according to S&P/Case-Shiller. Gains ranged from 9.5 percent in Miami to 0.9 percent in Cleveland. I’m not surprised by the slowdown given the fact many investors who flooded the market in 2011, 2012, and 2013 are now either no longer buying or selling.
The European bureaucrats keep preaching “Austerity Now!” as the solution to economic woes in Spain, Greece, and other peripheral countries. But as the New York Times notes, citizens in those countries are getting fed up. Four years of belt-tightening have squeezed the economy mercilessly, pushing unemployment to 27percent and causing GDP to plummet at a pace similar to what happened in the U.S. in the 1930s.
How will the Greeks react when they go to the polls in January? What will the fallout be in the European debt, stock, and currency markets? Stay tuned!
Speaking of economic crises, Russia just sank into its first recession in five years thanks to plummeting energy prices, economic sanctions, and a sinking ruble. Now troubled Russian banks are getting squeezed, threatening to lead to widespread failures, deposit runs, and bailouts. One midsized lender already needed a $1.7 billion central bank backstop.
Once again, your comments are welcome at the website here.
Until next time,