Except fear itself, and a bunch of other things.
Looking out over the investment horizon, there’s a lot to feel good about as we head into 2015. While identifying winning investments in commercial real estate and the stock market in 2015 may be more challenging than it was a few years ago, it looks like both markets still have some giddy-up.
A strengthening job market and U.S. economy, lower oil prices, a rising dollar and reinvigorated consumer spending should boost investor confidence and asset values.
The consensus outlook for the U.S. economy, and the commercial real estate sector, in 2015 is based on expectations of continued economic growth; nothing too exciting, just a moderate uptick from current fundamentals. Prognosticators are using phrases such as “sustained momentum,” “broadening recovery” and “better than 2014 — but not by much.”
Stock market prognosticators are also being somewhat guarded and conservative in their pronouncements. While most are cautiously bullish, the fact remains that the stock market has climbed nearly 200 percent since it bottomed in March 2009 and reached record highs in late 2014. Six-year bull runs, however, tend to make investors a little nervous, as does the prospect of rising interest rates.
Uncertainties still to watch include the possibility of Europe falling back into recession, as well as the geopolitical ramifications of the conflict between Russia and Ukraine, and the omnipresent tensions in the Middle East. A misstep on any of these stages could destabilize world financial markets and put a damper on the feel-good economic story in the United States.
Also worth watching: It’s pretty much a given that the Federal Reserve will raise interest rates in 2015, although the timing and measure remain a mystery. Hopefully, investors will have enough confidence in the economy to take the rate increase in stride and not succumb to “the sky is falling” mentality that has been exhibited with recent Fed announcements.
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Larry Gray is vice president and editorial director at Institutional Real Estate, Inc.
