Super Week – 18 Weeks of Stronger Economic Data
It was a Super Week to go along with the Super Bowl. The failed two-point conversion at the end allowed me to rejoice in “Square Victory” for those of you who understand.
Last week marked the 18th week in a row that we have seen stronger economic data but this last week in particular was astounding. In fact, I’m already starting to see economists that we like to follow start to raise their estimates for 2012 Gross Domestic Product (GDP) growth by 0.5% and lower their estimates for unemployment. It was encouraging to see both European and US bank stocks rally alongside U.S. homebuilder and retail stocks. The Goldman Sachs Commodity Index (GSCI) didn’t rally much, which probably signals that the specter of inflation remains in check.
For the week, the Dow Jones Industrial Average (DJIA) rose 1.59% to 12,862, the Standard & Poor’s 500 Index (S&P 500) rose 2.17% to 1,345 and the Nasdaq Composite Index rose 3.16% to 2,906. The Russell 2000 Index, which tracks the performance of small capitalization stocks, rose 4.04% to 831.
We are a long way off from the fear of a double dip recession that seemed to have every talking head on TV in a complete panic. We stuck to our guns, followed the indicators that we have watched for many years, and held our allocations tilted towards the cyclical sectors rather than getting defensive. We have been rewarded.
This just goes to further strengthen our position that investors that have a solid financial plan along with an investment strategy that corresponds to that plan are often spared the whipsaw of the market and the anxiety that goes along with it.
Generally, unless your need for short term liquidity has changed, it never makes sense to trade or invest around emotion.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index. The Russell 2000 is an unmanaged index generally comprised of companies with lower price-to-book ratios and lower forecasted growth values.
David B. Armstrong, CFA
President & Co-Founder
Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....
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