Fidelity 2014 Outlook

As we emerge from a blockbuster 2013 for U.S. stocks, which gained more than 30% on the way to setting all-time highs, investors have numerous opportunities to consider, along with some unique challenges.

Here are the key things to know right now, according to a range of Fidelity experts featured recently in Fidelity Viewpoints:

• Stick with stocks as economic growth solidifies. Stocks may continue to outperform bonds and cash. Focus on companies with high earnings growth potential and reasonable valuations. If it is appropriate to your goals, investment objectives, and risk tolerance, consider financial, tech, and health care stocks.
• Brace for some volatility. Stay diversified. If you’re a long-term investor and it is in line with your investment objectives and goals, consider using pullbacks to buy strong companies at reasonable prices. If you’re a trader and are willing to assume the risk of investing in options, consider strategies like calendar and other spreads.
• Rates may inch higher, not spike. Bonds still play a role for income and diversification. The Fed could keep short rates low, and much of the change in longer rates may have already happened.
• Search for income beyond conventional bonds. If maximizing income is part of your investment objectives and you are willing to assume the risk, consider a mix of high yield, floating rate, convertibles, and equity income.
• Look abroad for opportunities. Europe’s economic cycle appears to be turning positive, and many foreign companies have lower valuations than their U.S. counterparts.
• Watch for a transition in emerging markets. Emerging market countries, such as Indonesia, Turkey, and South Africa, could suffer from U.S. central bank tapering. However, others—such as Mexico—may benefit from the next phase of growth.

Source:  Fidelity Viewpoints

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The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.