What Can an Investor Learn From a Chart of the 2014 Stock Market?


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An investor reviewing charts of the 2014 stock market takes away various lessons, including better-than-average results for the most popular indexes; unexpected sectors leading the gains; the under-performance of foreign stocks, which may signal future risks; and a small group of stocks accounting for a large portion of the gains, reports Fortune. These observations indicate a healthy if unpredictable market for 2014, and that warrants caution abut investors using the 2014 chart for predictions abut future performance.

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The Standard & Poor's 500 and Nasdaq showed 14 percent gains, while the Midcap 400 and Dow showed gains of close to 10 percent, according to Fortune. Foreign stocks, which are part of most portfolios, considerably under-performed, which is important because the advice trend of most analysts had been focused on moving toward global diversification. Unexpected sectors showed some of the biggest gains, such as the healthcare sector with 27 percent growth and utilities with 23 percent growth, something that almost no analyst had foreseen and that should lead to caution in predicting which sectors may continue with such growth.

Another worrisome trend was that five stocks, Apple, Berkshire Hathaway, Johnson & Johnson, Microsoft and Intel, accounted for 20 percent growth, reports Fortune. This top-heavy success cast doubt on the apparent health of the market as a whole and suggests that a more comprehensive analysis of the charts may lead to better decisions in the future.

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