2014 – 4th Quarter Newletter

As the year drew to a close, a handful of big-picture issues dominated the investment landscape: the plunging price of oil, positive economic indicators
in the United States relative to most of the globe, and the ongoing influence of central banks (a key effect of which has been to bolster stocks and other risk assets).

Large-cap U.S. stocks continued their unusually strong and unbroken stretch of gains. The S&P 500 rose
14% and avoided even a modest 10% “correction” for the third year in a row. Most other major stock markets fared poorly in 2014. Developed international stocks lost 5% and emerging-markets stocks dropped 2%. These returns reflect the significant headwind presented by the strengthening U.S. dollar. Again, relative to history, we have seen an unusually strong stretch of U.S. outperformance relative to foreign markets.

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