Two Weeks in a Row – A New Bull Market High
Investors pushed the Standard & Poor’s 500 (S&P 500) to another bull market high (but not all time high) last Thursday. See last week’s blog for comments about the previous week’s record close. So far this year, markets around the world are doing well, while here in the U.S., small caps are beating large caps and growth is beating value. Financials, Health Care, Materials and Industrials are leading the 10 sectors of the S&P 500 so far this year while Utilities, Telecom and Technology are lagging.
Here’s how markets did last week, in case you were watching football and not reading Barron’s. Oh, and I guess I’ll pull for the Ravens along with Julia Louis-Dreyfus (She’s a big Ray Rice fan on VEEP)
As we have been writing about in blogs and over social media the past few weeks, a lot of investors do not feel good about the markets after the devastating blow dealt by the 2008 market drop. But the fact remains that we have been in a bull market since the S&P 500 hit a low on March 9th, 2009. Since then, the S&P 500 has returned over 117%.
Over this time period, there has been a tremendous return in some of the 10 S&P 500 sectors which are worth pointing out. The Consumer Discretionary sector, a favored sector here at MWM, has experienced a 208% return. Financials are up 175% (NOT a favorite of ours, and we are fine being wrong on this one), Industrials are up 155%, Technology is up over 137% and Materials are up over 126% (all data according to FactSet).
Consumer Discretionary is up over 208% – go ahead, you can write that down. (Props to MakinSenseBabe…and Van Wilder)
Want some more nice-to-know data to write down? Ok, the Farmer’s Almanac reports that 34 of the past 40 Januaries that experienced a “first 5 day” positive return go on to have a positive year. Guess what we just had? Yes, that.
Oh, want some more? Ok, the average performance in a post-election year is +6.75%. Nice huh?
But the real curious person will ask “Ok Hotrod, what about a combo post-election year and ‘first 5 days in January’ positive return?” Well, turns out the average gain in a combo year like that is +22.8%.
So you can write that down right next to 208%…unless that big number took up the whole page.
None of that really weighs in on what will actually happen in 2013. In fact, I have no idea what’s going to happen in 2013. Neither do you. Neither does anyone.
Well, wait, I kinda do know one thing that will happen. The popular press will shove myriad reasons things could go horribly wrong in the equity markets right square in your face every chance it gets. Remember – they sell advertising based on viewership and it’s not their stellar investing advice that draws in the eyeballs.
So while I will do a little prognosticating in our 2012 Review (still to come) about the forthcoming year, my one solid prediction is this – it will take a lot of bravery for investors to stay invested and not whip in and out of the market at every sign of apocalypse in 2013.
We will have our 2012 Review completed soon and we’ll let you know how to access it in an upcoming blog. Read it, yes – there will be a test.
Write that down.
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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. 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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