“Off The Wall” Blog
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The Looming 2013 Debt Ceiling Debate
By David B. Armstrong, CFA | Jan 07, 2013 | Weekly Market Commentary
Like I said last week, I’m happy 2012 is over because I was sick and tired of watching the Fiscal Cliff count down timer on CNBC. But I suspect it will be any day now that it is replaced with a Debt Ceiling Debate count down timer.
Here’s the only countdown clock I’m watching today – the one counting down to the BCS College Football Championship. While I have great friends who are Irish fans, I have to pull for my SEC! Roll Tide.
Last week’s market return was pretty stellar. In fact, it was the best week in a long, long time – especially for small cap stocks. The Standard & Poor’s 500 (S&P 500) has hit a 5 year high and the Russell 2000 index hit an all-time record high of 879.15 by closing up a whopping 5.65%! See more return information below.
By now you know the Fiscal Cliff deal was struck and all of the details are widely reported – so I won’t bother with them here.
There was some good economic news last week with the Institute for Supply Management (ISM) Manufacturing and Non-Manufacturing December reports out. Reports with readings higher than 50 generally signify expansion & growth rather than contraction. The ISM Manufacturing reported a better than expected reading of 50.7 (vs the expected 50.5) while the ISM Non-Manufacturing reported a reading of 56.1, which is the highest reading since last February.
So, welcome to 2013. It’s important to remember that even though many investors think 2012 was a bad year for the economy, it was not a bad year for the markets. In fact, an interesting stat provided by Bespoke Investment Group is that 2012 was a year that had the S&P 500 up on a year to date basis every single day of the year. This means it never closed below the 2011 closing level once the whole year. That’s only happened 8 times in history and 1979 was the last year that it did. This has only happened back-to-back one time in history and that was 1975-1976. Last week’s market return provided a serious tailwind for that possibility to repeat itself for a second time. Stay tuned.
Are you curious about how well the S&P 500 does the year AFTER an “all up year” like 2012? Well, Bespoke provided us with that stat too… The S&P 500 gains 10.52% on average and of the 8 times, only one following year had a negative return. 1976.
We will have our 2012 Review completed soon and we’ll let you know how to access it in an upcoming blog.
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Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Monument Advisory Group, LLC, a registered investment advisor. Monument Advisory Group, LLC, and Monument Wealth Management are separate entities from LPL Financial.
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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