The run-up in stocks this year has been quite compelling so far. The S&P 500 is up +19.7% on the year as of August 51, and global stocks as measured by the MSCI World Index aren’t far behind at +14.34%.2 This strong performance has many investors asking: what is the probability of a stock market correction occurring sometime soon? Are there strategies to handle market corrections? Should I take some profits now as a short-term market timing strategy, so as to avoid any downside of a market correction? In a series of posts on stock market corrections, we’ll address these questions one at a time. What is the Probability of a Stock Market Correction Sometime Soon? Stock market corrections are normal occurrences in the markets. In fact, over the last 33 years the average intra-year decline for the S&P 500 is -14.7%.3 Using history as a guide offers some insight into a few examples of past stock market corrections (click on the chart for a larger version): [+] Read More

US stocks have been outperforming international stocks for nearly all of the current bull market. From March 9, 2009 – August 5, 2013, the S&P 500 (SPY) has risen 124.34% compared to just 76.32% for the rest of the world (MSCI All Country World Index ex-United States: CWI). It follows that if you have a globally diversified portfolio, you may have noticed your US stocks outperforming your international holdings recently. Considering that Europe is still in the mire and China is showing signs of slowing, it’s possible this trend could continue. Would it be wise, then, to move some money away from your international equity strategy and rebalance towards a more US-based strategy? Before diving into that question, it’s important to consider how one should approach constructing an appropriate portfolio. Investing isn’t about putting all your money in the best performing asset class so as to generate the highest returns. This would likely result in a very concentrated and risky portfolio diversification strategy. Instead, since investors don’t know which sector, country, or category will outperform moving forward, it’s important to consider having exposure to various sectors and countries as part of a well-diversified portfolio. [+] Read More

WrapManager’s Weekly Summary of Market and Economic News Eurozone Recession Showing Signs of Ending In a sign the eurozone recession may finally be over, Germany posted robust 3.8% growth in factory orders from May this week, far outstripping estimates for 1.1% growth and marking the best growth in 8 months. Italy added good news into the mix as well, in reporting that their GDP fell by only 0.2% in the second quarter, versus a 0.4% expected contraction. They’re inching towards positive GDP growth, as their GDP in the first quarter was -0.6%. Economic activity is picking up.1 The UK Reporting Strong Numbers in Services and Retail The UK is also seeing a nice economic boost. The services sector expanded last month at its fastest pace in more than six and a half years, and retail sales also posted strong gains as total sales grew 3.6% in July, marking the best July growth since 2006.3 [+] Read More

Will the Fed continue the quantitative easing program, and who will replace Ben Bernanke? Louis Navellier answers these questions and more. [+] Read More

Should you overweight or underweight your portfolio to equities? Nuveen's Chief Equity Strategist Bob Doll answers with his thoughts. [+] Read More

In response to the 2008-2009 financial crisis and global recession, the Federal Reserve (Fed) and other central banks across the world lowered interest rates and implemented asset purchase programs meant to drive down borrowing costs for banks and consumers. What is the Federal Reserve Trying to Accomplish? It works in two ways. First, by lowering short-term interest rates, the Fed and other central banks give traditional banks easier access to cheap capital, which policymakers hope will spur economic activity by increasing the amount of loans banks make to businesses and consumers. Second, the asset purchase programs, which are referred to here in the US1 as “quantitative easing,” has the Fed currently purchasing $85 billion per month of securities - divided between mortgage-backed securities and Treasury securities.i This serves two main purposes: [+] Read More

Bob Doll expects choppiness in the equity market over the short term for several reasons. [+] Read More

Louis Navellier believes Bernanke will continue its quantitative easing program in the face of slower economic growth. [+] Read More

Federated Investors reviews the economy and their Strategic Value Dividend strategy during the second quarter of 2013. [+] Read More