Nothing is happening.

How okay are you with a period of time in which nothing much is happening in the markets?

Your answer to that question probably says a lot about the way you think about investing.

Many market participants have gotten into a mindset lately in which they expect either rallies or sell-offs to be occurring at all times. This year, the broader US stock market is doing absolutely nothing and it seems to be frustrating lots of people I talk to.

The major trends this year, as I see them, are as follows:

* Larger-cap, higher quality global stocks are doing just fine. The Dow hit a new all-time high the other day, the S&P 500 is up about 2 percent, Europe is terrific, Japan not so good – but large caps from these two developed regions are balancing each other out.

* Small caps are hurting people. I just spoke with Jeremy Siegel, he chalks it up to mean reversion – small caps outpaced large caps by some ten percentage points last year and this year they are merely giving it back. “Rotations are almost always healthy.”

* Tech sentiment has shifted significantly. Those of us who watched in envy as a cadre of technology momentum stocks went vertical between October and February are now wiping our brows and even giggling a bit – rubbernecking is almost always accompanied by schadenfreude. Those of us who were in that game and chasing questionable stocks are now either blown out or hoping to get back to even.

* The bond market has bedeviled the majority of market participants this year (myself included). Whether it’s Putin-related or a function of the yields we’re seeing elsewhere, it’s definitely been the toughest component of the investable universe. Even for those of us who keep a portion of our assets in bonds permanently, as most asset allocators do.

* The things that are working in 2014 are quite disparate – Indian equities, peripheral European bonds, Canadian and British stocks, REITs and utilities. Oh – and agricultural commodities, this year’s surprise breakout. It’s a weird mix of asset classes and geographies atop the leader board this year.

Other than these five major themes, markets are – for the most part – doing very little. After a rollicking year like 2013, I’m not so sure that’s such a bad thing.


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