Why stocks have lost most of their 2014 gains in the last 4 weeks

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Despite stocks’ recent declines and the rocky road ahead, Russ explains why he still prefers equities over bonds.

In the past few weeks, we’ve witnessed a shift in market sentiment amid more evidence of a slowing global economy; and concerns about Chinese growth only added fuel to the selloff fire.

Market declines continued on Monday and I expect market volatility to last through the summer as investors remain uncertain about the future of monetary policy and the strength of the global recovery. That said, I wouldn’t advocate abandoning stocks, as I write in my latest weekly commentary.

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Market Realist – The graph above compares the price returns of the S&P 500 (SPY)(IVV) and the iShares MSCI ACWI ex- U.S. year-to-date. Although the former has outperformed the latter—with returns 1.6% and -7.3%, respectively—global equities (QWLD)(ACWI) have been slumping since mid-September due to evidence of slowing growth in Europe (EZU) and mixed numbers in China (FXI).

Although the S&P 500 was up by about 8% for the year up to September, global cues have managed to wipe out almost all the index’s gains.

Please read the next part of this series to learn why you should still stick with stocks rather than bonds.

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