PARSIPPANY, N.J., Aug. 3, 2015 /PRNewswire/ -- Hennion & Walsh, a provider of investment services and an advocate for individual investors, today released their Market Outlook for Fall 2015. The latest research report provides recommendations on how investors can navigate the increased volatility between international and domestic markets due to concerns in countries such as Greece and China. Additionally, despite increased debates surrounding the timing of future interest rate hikes, the report reveals the biggest factor to likely have a significant impact on future economic and market growth will be the price of oil.
Hennion & Walsh's research suggests that the continued volatility during the second quarter in 2015 reminded investors about the value of diversifications in their portfolios. Of note, the volatility within the equities market that has taken place during the first two quarters of 2015 may continue to serve as a detour for the great rotational shift from bonds to equities that took place throughout 2013 and parts of 2014. Additionally, Small Cap stocks continued to outperform in value across all market capitalizations thus far in 2015.
"As the secular bull market cycle is expected to continue, we believe with much volatility comes great opportunity. Though we expect the U.S. stock market to post another positive year, it's likely to be outperformed by international developed markets, most notably Europe," said Kevin Mahn, Chief Investment Officer at Hennion & Walsh. "We believe having a globally diversified portfolio is critical at this juncture and to ensure long-term investment success, strategic asset allocation will play an even more significant role in the months ahead."
Moving into the second half of 2015, Hennion & Walsh's research team has identified five factors that they believe will be critical to market growth potential. These include: Greece and the Eurozone, housing, the job market, oil prices and interest rates.
- Greece and the Eurozone: Concerns involving Greece's mounting debt and potential contagion throughout the Eurozone have caused volatility across global stock markets for much of the year. However, we contend international equity strategies, particularly within Europe and certain emerging markets, can be seen as an attractive asset class for risk-adjusted return potential over the intermediate long-term.
- Housing: While the pace of the housing market recovery has slowed, we believe statistics including single-family home sales and prices, inventory and months of excess supply as well of pending home sales, should continue to present a positive picture of the market in 2015. One potential area of concern to monitor is housing inventory levels as those have decreased by 15% from 2012 as of May 2015.
- Job Market: While the declining trend in unemployment is encouraging, the labor force rate of participation is a concern as it started at 62.6% in June 2015 – the lowest since September of 1977. Still, it is fair to conclude the employment picture is brighter in the U.S., but continued new job creations, as well as improvements in wage growth, will remain critical components for the sustainability of the U.S. economic recovery.
- Oil Prices: As worldwide demand for oil remains weak and some of the world's largest producers continue to pump oil at, or even above, their existing production levels, lower oil prices should expect to continue. However, we do expect for global supply levels to moderate later this summer and the price of oil to appreciate towards more "normal" levels by year end.
- Interest Rates: The Fed is set to begin to raise interest rates in 2015, which we believe will start with a 25Bp hike in September. They will likely follow the blueprint that it utilized during the 2004-2006 tightening period when it gradually raised the Federal Funds Target on 17 different occasions. The one difference that the Fed may want to consider is also unwinding a portion of their U.S. Treasuries laden balance sheet, in conjunction with increases to the Federal Funds Target Rate.
"Given that it is no longer a question of if, but rather when the Fed will start to raise interest rates this year, now is an appropriate time to consider making adjustments to investment portfolios, especially with consideration to asset classes that have generally benefitted historically from rising interest rate market environments," said Bill Walsh, Partner at Hennion & Walsh. "For the remainder of 2015, we recommend the following to investors: look to add international equities to a diversified growth portfolio; diversify across the U.S. mid-cap and the U.S. small cap asset classes; consider REITS and the energy sector allocations; and remember bond strategies can be effective for income and growth-oriented portfolios."
A full copy of Hennion & Walsh's latest Market Outlook can be downloaded here.
About Hennion & Walsh
Hennion & Walsh, a full service brokerage firm specializing in municipal bonds, was founded in 1990 by Richard Hennion and Bill Walsh. Their mission is to be the individual investor's fiercest and most passionate advocate. Investment guides, webinars, seminars and online content are just some of the ways they help investors become better informed and make better investment decisions. The firm has built its reputation on developing strong, mutually beneficial relationships designed to last a lifetime, serving over 18,000 clients with brokerage accounts and managed portfolios. They are committed to providing individual investors with the institutional-quality service and guidance they believe they are entitled to. Additional information on Hennion & Walsh is available at www.hennionandwalsh.com. Hennion & Walsh is a member of FINRA and SIPC.
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