POCKETBOOK: Week ending March 26, 2016

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  • It’s a bunny market. Really.

Jim Paulsen, chief market strategist at Wells Capital Management, went on record last week referring to current market conditions as neither bearish nor  bullish but bunny-like. You know, hopping up and down in place.

“Unlike an enthusiastic bull or a scary bear, a bunny market hops about a bit but really doesn’t go anywhere, and bunnies have often dominated the stock market during the latter stages of past economic recoveries,” Paulsen wrote in a letter to his clients.

Okay…

 

  • Market Quick Glance

-Indices:

There were only four trading days last week as the markets were closed on Good Friday.

Below are year-to-date performance figures for the major indices through March 24, 2016, according to Bloomberg. To provide a longer performance perspective, 1-year returns have been added.

Dow Jones +1.22% YTD

1yr Rtn -0.20%

-S&P 500 +0.15% YTD

1yr Rtn +0.92%

NASDAQ -4.34%YTD

1yr Rtn -1.12%

-Russell 2000 -4.66% YTD

1yr Rtn -11.75%

-Mutual funds

Through Thursday, March 24, 2016 the average U.S.Diversified Equity Fund was down 2.03 percent year-to-date, according to Lipper. That’s 50 basis points worse than the previous week’s performance improvement.

Small-Cap Growth Funds were last week’s worst performing category again, down on average 7.93 percent.

Precious Metals Funds lost ground  too but continue to be the high scorer under the Sector Equity Funds heading. They were up on average 38.43 percent y-t-d.

Health and biotech funds are that category’s worst performers. There are 95 Health/Biotechnology Funds that Lipper tracks with an average y-t-d performance of -15.74 percent. The y-t-d average performance of the 42 Global Health/Biotechnology Funds was -12.99 percent.

Visit www.allaboutfunds.com for weekly updates to see how equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

Lipper’s weekly performance figures for stock and fixed-income funds are at www.allaboutfunds.com in the left column on the home page.

 

  • There’s more junk in today’s corporate debt issuance

While we’ve seen positive upward trends within the housing market, the number of people with jobs  and stock prices have made up for a lot of their losses that were a result of The Great Depression, the ratings on corporate bonds haven’t been as fortunate.

According to CNNMoney.com, since 2012, 75 percent of the companies seeking a rating from S&P on their debt securities have walked away with a single-B rating. That’s only “one notch up form the triple-C, a rating given to companies with a high probability of default.”

Throw that into the mix of all things corporate and debt related and the result is that the average rating on U.S. corporate debt has not seen lows like this in nearly 15 years.

Investors looking for the juicy yields found on lower rated bonds need to look further than a company’s bond yields and into how sound the company actually is before investing.

 

  • Boat lovers have short attention spans

Who hasn’t dreamed about owning a boat—any sized boat from dingy to a sailboat to a yacht? Getting out on the open seas whenever you’d like conjures up all sorts of  magical images.

But even if you can afford the purchase price, upkeep and cost of fuel, here’s the sad reality: Boat owners only spend an average of 10 to 14 days a year on their vessels, according to a study from the Delta Protection Commission, a California-based state organization.

Now that’s sad.

 -30-

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