The Market is “Lin-ing”
I’m going to draw an analogy this week between the stock market and Jeremy Lin.
Over the past year, I’ve felt like the NBA has just shot itself in the foot. There has been so much chatter about the goings-on inside the league that it makes people want to just throw up their hands and say “I’m over it.” Then a guy like Jeremy Lin comes along, a basketball player from Harvard who got no love from the “big time” college programs, went undrafted in the pros, and was shown the door by the Golden State Warriors and Houston Rockets before landing with the New York Knicks. In case you haven’t heard, he’s become a sensation and this quick video clip on You Tube will show you why. If I watch one NBA game this year, it will be a Knicks game for sure. I’ll call it a “resurgence of interest” in the NBA.
There’s been a resurgence in the stock market as well. Last week, the Standard & Poor’s 500 Index (S&P 500) closed within a whisker of its 2011 high, the Dow Jones Industrial Average (DJIA) closed just shy of the 13,000 mark last seen on May 20, 2008 (intraday). For those wondering, the all-time high for the DJIA was 14,012 set on October 9, 2007 and the low point of the crisis was 6,547 set on March 9, 2009. Finally, the NASDAQ is trading at a level not seen since December of 2000.
For the week, the Dow Jones Industrial Average (DJIA) gained 1.16% to 12,950, the Standard & Poor’s 500 Index (S&P 500) gained 1.38% to 1,361 and the Nasdaq Composite Index gained 1.65% to 2,952. The Russell 2000 Index, which tracks the performance of small capitalization stocks, gained 1.89% to 829.
So what’s the Jeremy Lin of the market? I think it’s probably the economy. We’ve had stronger broad based U.S economic data for 20 straight weeks. Unemployment claims have declined significantly to a low not seen since March of 2008, and both housing and manufacturing have improved (see last week’s blog).
We’ll have more information when earnings season wraps up next week.
Finally, I want to point out some market data from the 2011 market high on April 29. Since that day, half of the ten S&P 500 sectors are up and half are down as of Friday, Feb 17,2012. Half and half! Remember, we saw some awful market action from April 2011 to the end of the year.
The two best performing sectors? Tech and Consumer Discretionary. The two worst? Financials and Energy. Staying the course and maintaining exposure to the cyclical sectors of the economy was hard in the second half of 2011, but for those who did, they participated in every single day of the recovery since the lows in October.
This is why, unless your need for short term liquidity changes, it generally never makes sense to trade or invest around emotion – positive or negative. People who do this run the risk of buying high and selling low – which I know a lot of people did last year.
IMPORTANT NOTE: Due to industry regulations, comments are not permitted on this blog. If you would like to contact the author, please email us at info@monumentwm.com.
Securities and Financial Planning offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC
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....
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if Monument is engaged, or continues to be engaged, to provide investment advisory services. Monument is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.
A copy of Monument’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.monumentwealthmanagement.com/disclosures. Please Note: Monument does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Monument’s website or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your Monument account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Monument accounts; and, (3) a description of each comparative benchmark/index is available upon request.
Please Remember: If you are a Monument client, please contact Monument, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.