Outlook for 2015 - Alaska Permanent Capital Management


Outlook for 2015

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Amidst the big decline in stocks today – Dow, S&P and Europe all off close to 2% we listened to JP Morgan’s outlook for 2015. Their comments on oil were worth noting and we’ve attached two slides on supply and demand dynamics.

While oil dropped below $50 today JP Morgan believes that it will rise gradually to $90 by the end of next year – 2016. Their chief investment strategist, David Kelly, thinks a good part of the swings in oil prices are speculative (and investment driven) while production and end consumption are really not much out of balance. Furthermore low prices will discourage more production and encourage more demand – buying bigger cars etc. This dynamic will work itself out over the next few years leading to higher prices.

Check out these slides which include country winners and losers from falling oil prices.



BY the way, JP Morgan  remains bullish on stocks and would still overweight them in diversified portfolios but admits US stocks are a bit pricey and that we are probably in the 7th inning of the bull market. But the US economy looks good and earnings story is still positive. They like EM and developed country stocks a bit better as valuations are attractive – but that is a long term story. Bonds are less attractive but rates could remain low for a while. In any event they urge investors to think of 3% to 5% above inflation as a realistic long term expected return from balanced and diversified portfolios.

Jeff Pantages, CFA®
Chief Investment Officer


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