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January 15, 2013

Equities Outlook Good as Economy Slowly Recovers

The S&P 500 Stock Index gained 15.9% in 2012, including dividends, and the Barclays Intermediate U.S. Treasury Bond Index increased slightly, by 1.7%, after several strong years for bonds.  

The equity markets dropped slightly during the fourth quarter, but the gains of the first nine months gave investors quite a good result for the full year.  Additionally, common stocks have mostly been moving upward since early 2009, compounding at annualized rate of 14.6% over the last four years.  Those gains helped the market recover from a very difficult 2008.  While the prior decade was relatively poor for stocks and good for fixed income, we continue to believe the current decade will be a good one for equities and a lackluster period for bonds.  Corporate earnings, cash flows and balance sheets of our companies continue to look healthy, especially in light of low interest rates, the fiscal difficulties faced by governments around the world, and the slow pace of the overall economic recovery.


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