Don’t Abandon Broad Global Diversification as Market Climbs

Main content

There is lots of excitement in the market today with the launch of one of the biggest IPO’s of the year and widespread relief that Scotland voted not to upset the economic apple cart, opting instead to stay unified with Britain. As the stock market continues higher some investors are worried that complacency is urging excessive risk taking and could spell trouble for the market. Widespread stimulus and artificially low rates do create potential for bubbles. On the other hand, fundamentals are strengthening and providing support for higher equity market levels. As of yesterday’s close the S&P 500 is trading at 15.6 times 12 month forward earnings, well within historical averages. Additionally, according to Factset analysts expect earnings growth for the S&P 500 “to be much higher through the middle of 2015. For Q4 2014, Q1 2015, and Q2 2015, analysts are predicting earnings growth rates of 9.2 percent, 10.2 percent, and 10.9 percent, respectively.” So how should investors take advantage of climbing stock indices while remaining cognizant of the risks? Glad you asked. Broad global diversification is the key. It may not be as exciting as the latest and greatest IPO, but over time it helps investors weather market cycles and build wealth. Please review the latest Global Perspectives monthly commentary for our latest views on the market.

Footer content