Can’t the Whole Year Be Like This?
A shortened week and record closes on both the Dow Jones Industrial Average (Dow) and the Standard & Poor’s 500 (S&P 500) indices…I’ll take it! Last week there was the feared taper news and the market actually went up making every talking head on CNBC who was doom and glooming the subject look pretty stupid. With year-to-date returns of almost 24% for the Dow and 28% for the S&P 500, maybe I’ll get all the presents I’ve asked for this year. Except a Tesla – I scratched that gift off the list and asked for a cord of firewood instead.
Below are our two standard charts that review the previous week’s performance across the major benchmarks and for the ten sectors of the S&P 500 index.
The below chart shows how well each sector did vs. the S&P 500 (rather than its actual total return). Once again, it’s worth pointing out that the cyclical sectors are outperforming the traditional defensive sectors.
More Pictures – Fewer Words
I’m behind on my shopping this week, so I’ll leave you with a few charts and some comments this week.
Here’s a few from Bespoke Investment Group. The first puts the recovery since the 2008 crisis into perspective. Yes, there were some sell-offs that had everyone scared, but when you look over the past five years, that’s a steady climb up. Lots of people are still scared that Dow 16,000 is a top and are scared of buying…but a lot of people said that at 14,166 also. Remember, it’s about valuations not index level.
Last week, someone asked where he could park money for six months and get 3-5%… given the graph below, my guess would be in a short-term loan to a Colorado Medical Marijuana dispensary.
Third quarter GDP was also revised in a report last week. The 4.1% reading was much higher than the 3.6% that economists were predicting and was the highest reading since the last quarter of 2011.
When the Dow ‘SURGES’ 100 points, it’s really not a big deal anymore… a 100-point move only equates to a 0.60% move in the index. 100-point moves are so…how can I put this…Dow 7000…snore. The chart below shows the percent change of a 100-point move on the left (purple) and the DJIA index level (green) on the right.
Have a great holiday. I’m taking next week off so look for more in the New Year.
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Investment advice offered through Monument Advisory Group, LLC a Registered Investment Advisor (RIA).
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. The 2, 10 and 30 year Treasury is simply the yield at the close of the day.
(1) West Texas Intermediate crude spot price is as of end of week.
(2) London Bullion Market Association; gold fixing pricing at 3 p.m. London time.
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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