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News & Resources

May 10, 2013

Financial Strength of Companies Improve and Continue to Offer Potential for Gains

The S&P 500 Stock Index has gained 10.7% this year, including dividends, and the Barclays Intermediate U.S. Treasury Bond Index increased ever so slightly, by 0.1%, after several strong years for fixed income.

The equity markets have begun the New Year in very fine fashion, and the S&P 500 and the Dow Jones Industrial Average have set new all-time highs recently. However, when factoring in inflation over the past five years, on a “real dollar” basis we are still somewhat below the highs of October 2007. The earning power and financial strength of our companies have improved, however, and we consequently still feel many stocks are reasonably valued and offer the potential for additional gains. We have been making judicious and opportunistic adjustments to portfolios recently, since, as Shakespeare noted, “Discretion is the better part of valor.”

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