By Sherman Lee The S&P 500 Index (SPX) returned +5.24% in Q2-2014 compared to +2.92% in the same quarter last year. During the second quarter, the market continued its upward spiral breaking another all-time high as the S&P 500 index reached an intraday high of 1,964.24. Midway through 2014, the U.S. economy appears to be firing on all economic cylinders. According to media sources, real GDP growth, job growth, and corporate balance sheets are all improving and gaining steam. Job growth and the wealth effect via asset appreciation continue to spur consumer spending and home buying. Additionally, office supplies and related products should pick-up as more employees enter the labor force. To that end, spending on home, office, and everyday items should enjoy better economics over the foreseeable future. However, the stock market is painting a different picture, at least for discount variety store Walmart (WMT) and office supply chain Staples (SPLS). Since the collapse of Lehman Brothers and the bailout of the banks in September 2008, both these stocks have underperformed Home Depot (HD), SPDR S&P Retail ETF (XRT), and SPDR S&P 500 ETF (SPY) by a considerable margin. Price and Valuation Metrics as of 7/5/14:
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As we enter the third quarter, I remain cautiously optimistic in this bull market entering its sixth year, amid low volatility and no major pull backs in recent memory. According to the Wall Street Journal, the Dow Jones Industrial Average has gone 32 months without a 10% decline, the fifth-longest run on record. In my opinion, our diversified portfolio, which includes low duration bond ETFs, may be well positioned in the event of unforeseeable turbulence in the market.Additionally, the portfolio maintains a collection of businesses that are projected to grow in value over the long-term. To learn more about Prudent Value, please click here. Photo credit: JD Hancock via Flickr Creative Commons —-
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