Stocks rose a little over the past week, while bonds stayed flat. That improves my confidence in stocks somewhat. Interest rates are low and inflation expectations aren’t too high, so there’s very little chance that bonds will suddenly earn or lose much money. Stocks, on the other hand, may do quite well, but with the proviso that some will do much better than others.

Chinese stocks (FXI) continue to lead the way. Other stocks have quite limited momentum, which is part of why I think that positive performance will be concentrated in a relatively small number of stocks, not generalized.

Market Outlook August 18, 2014

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