Front Street Investment Management LLC

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As we mentioned in our Winter 2014 Blueprint Quarterly, we simply need to see more data to prove to ourselves that the positive trends in late 2013 are going to persist. Due to the weather, the first quarter GDP looks to be very weak. Like others, we would expect a pickup in GDP growth for the second quarter as certain activity was simply delayed. Yet, for good reason, we remain cautious about the consensus expectation for much faster growth in 2014. GDP: Fourth quarter real GDP was revised down to 2.6% from its advance estimates of 3.2%.

We made a couple of new equity investments this past quarter and did not eliminate any positions. On balance, we increased our allocation to stocks by a small amount. Over the past month or so, the stock market has been experiencing increased volatility and lower prices, especially in the high-flyer stocks. We’d like to see much more of this and look for opportunities to increase our investments in stocks. Bond Strategy: Our bond portfolios are still generally structured to benefit from a moderately improving economy.

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