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The second quarter ended with solid gains in both stocks and bonds, even as economic data showed mixed results.  Stocks continue to add to their gains of last year, and bonds have rebounded nicely from a difficult 2013.  While not all economic data support market gains, the economy continues to show slow, steady improvement, which the markets like to see.  A recent headline on the market asked the question, “Why is the stock market so boring?”  We will take today’s boring market over the excitement of 2008 anytime.

There is an old adage in investing that bull markets don't die of old age, something has to kill them. We think that is worth remembering now. Many people, including us, have pointed out that we have gone well over nine hundred days since the last stock market correction, and a correction at this point would be neither surprising nor unhealthy. Having said that, it is always dangerous to wait for the markets to do something. When the markets do correct, there will be a trigger, and that trigger is likely to be something unforeseen today. Markets love to surprise people and this bull market is undoubtedly no different.

In our letter to you at the end of the first quarter we talked about the geopolitical risk that was the Ukraine. That fear has largely faded. The new geopolitical risk is once again Iraq. As we know from the past forty years or so, problems in that part of the world ripple through our economy as uncertainty and oil prices both rise. It is estimated that for every ten dollar rise in the price of a barrel of oil, our GDP drops by almost one half of one percent a year into the future. In a slow growing economy like we have now, that is a significant impact. Hopefully this will fade as quickly as the Russian problem, although that seems unlikey.

Lastly, we would like to bid a fond farewell to Barb Wiram, who has been the office manager in our Terre Haute office for fourteen years. Before that Barb worked with all of us for many years before we started Wabash Capital. Barb is retiring to spend more time with her family and to spend more time at the beach. We will miss not only her industry knowledge and professionalism, but also her cheerful nature and her friendship. Please join us in wishing Barb the very best as she leaves the Wabash Capital family.