Markets, Economy

Weekly Kickstart (02/19/2019-02/22/2019)

2/19/19 8:00 AM

iStock-626627280.jpgStocks continued higher last week, as the S&P 500 rose by 2.50 percent to 2,775.60. That left the benchmark index up 10.72 percent 2019-to-date, and just 5.29 percent below the all-time closing high hit last September. This is also the best start to a year since 1987 and the 5th-best in history thanks to the significant rebound following December’s market tumult. In fact, on Christmas Eve only 1 percent of stocks in the S&P 500 closed above their 50-day moving average. Fast-forward to the end of last week and 92 percent of S&P 500 firms were above this level. Although this rapid, V-shaped transition from extreme oversold conditions to extreme overbought conditions could mean that a pullback may occur in the near-term, amassing a large retirement nest egg depends more on time in the market than timing the market.


For instance, if you bought the S&P 500 index in 1997 and held it for the next two decades, a period that included two recessions and the largest market crashes in over 80 years, you would have enjoyed a return of roughly 300 percent. An even better example would be to image that you are the greatest market timer ever and invest $1,000 in the S&P 500 at the lowest daily closing price each year. If you have been doing this for the past three decades your annual $1,000 investments would be worth around $155,769, according to Albert Bridge Capital. Now instead picture a situation where you are the unluckiest market timer ever and make your annual $1,000 investments at the highest closing prices each year. In this worst-case scenario your portfolio would have still grown to $121,822, meaning that not only is there no need for perfect market foresight but there also is not much of a reward for even trying.


To recap a few of the things we learned about the economy last week, the positives included that the 30-year mortgage rate slid to a 12-month low, regional manufacturing activity improved, total job openings in the United States climbed to a record high, the ratio of quits to layoffs and discharges increased, consumer confidence rebounded, and wholesale, household, and trade-related inflation pressures remained contained. As for the negatives, home purchase applications fell, industrial production decreased, capacity utilization contracted, small business owner optimism moderated, initial jobless claims rose, and retail sales unexpectedly declined. This holiday-shortened week the pace of economic data slows down considerably but there are still a few important reports on housing and manufacturing scheduled to be released, along with the potentially market-moving minutes from the last FOMC meeting due out on Wednesday.


**A more detailed snapshot of the U.S. economy can be found here.**

What To Watch:


  • U.S. Holiday: Presidents Day







Sources: Econoday, Albert Bridge Capital, Twitter, Pension Partners, FRBSL

Post author: Charles Couch