• Are you irrationally exuberant?
To be an equity investor you’ve got to have confidence in the market. Believing that it can be a financially rewarding place to invest your money is step one. But just like believing in ourselves isn’t a 100% always felt every day of our lives situation, our level of confidence in the stock market can go through huge swings over both the short- and long-term.
The Bespoke Investment Group looked at two of the four investment confidence questions that Yale’s International Center for Finance regularly surveys investors about. The four market confidence questions are about one year confidence, buy-on-dips confidence, crash confidence, and valuation confidence.
The two questions Bespoke recently addressed in a newsletter were the “one-year confidence and “valuation confidence” questions.
Yale’s survey found that individual investors are “crazy bullish on stocks”. While less than 2% of institutional investors don’t expect any gains from the Dow over the next year, individual investors have been head-over-heals bullish about the market as 90.9% think it will be providing them with future gains over the next year.
This same individual investor group also doesn’t give much of a hoot regarding market valuations.
So, two questions you might like to ask yourself are what kind of returns do ou expect from the Dow over the next year. And, how confident are you about the stock market’s performance going forward.
Once you’ve answered those questions in that order, reverse the order and ask yourself once again. Your two sets of answers may surprise you.
Market Quick Glance
Last week was a week of uppers for the major indices followed here. All made positive gains with respect to their previous week’s performance, based upon Friday, April 21, 2017 figures . And that’s the good news.
As for what’s to come, well, Friday (the 28th) brings with it the very unwelcome opportunity for a government shut down and on Saturday (the 29th), it’s time for President Trump’s 100-day performance review. Additionally, the prez has also pretty much promised a new health care bill and a tax reform presentation during the week, as well.
With all of that, and the current existing world-wide tensions, if I were an oddsmaker, I’d be suspect of those expecting grandiose returns in the market over the next few days. Expecting less might wind up being more.
Below are the weekly and 52-week performance results— including the dates each has reached its high according to data from CNBC.com. Data is based on prices at the close of business for the week ending on Friday, April 21, 2017.
-Dow Jones +3.97% YTD, up a bit from last week’s 3.49%
- 1yr Rtn +14.27% up a bit from last week’s 14.10%
The DJIA reached an all-time high of 21,169.11 on March 1, 2017.
-S&P 500 +4.91% YTD up from last week’s 4.03%
- 1yr Rtn +12.30% up from last week’s +11.82%
The S&P 500 reached an all-time high of 2,400.98 on March 1, 2017.
-NASDAQ +9.80% YTD up from last week’s +7.84%
- 1yr Rtn +19.50% up from last week’s 17.37%
The Nasdaq reached its all-time high of 5,936.39 on April 5, 2017.
–Russell 2000 +1.67% YTD% up from last week’s -0.88%
- 1yr Rtn +21.49% up from last week’s +19.20%
The Russell 2000 reached its all time high of 1, 414.82 on March 1, 2017.
At the close of business on Thursday, April 20 ,2017, the average total return for U.S. Diversified Equity Funds was 4.64%. That’s up considerably from last week’s 2.98% return, according to Lipper.
Just as World Equity Funds continue to reward equity investors, up 8.86% on average, fixed-income investors in bond funds investing around the globe have been reward too.
So, if you’re a fixed-income fan, the best year-to-date returns are in the World Income Funds arena. Lipper tracks 808 of them in five different categories.
In order of performance, year-to-date cumulative total reinvested performance for World Income Funds, as of 4/20/17, was as follows:
-Emerging Markets LC Debt Funds, +7.34%;
-Emerging Markets HC Debt Funds +5.31%;
-International Income Funds, +3.64%;
– Alt Currency Strategies, up 3.04%;
– and Global Income Funds, +2.75%.
As a comparison, the average return for the 2,511 funds under the General Domestic Taxable Fixed-Income Funds heading was 2.14%
Visit www.allaboutfunds.com for more information about how various 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.
• Uppity drug prices
Some pharmaceutical companies seem to love overdosing on raising their drug prices. Then again, if they didn’t they might not have any growth to show.
According to a recent CNBC.com story addressing a study by Credit Suisse about drug companies, “Increases in the prices of drugs added $8.7 billion to 2016 net income for 28 companies analyzed.”
The Credit Suisse report identified three companies that were most dependent on price increases for their growth: Biogen, Eli Lilly and AbbVie.
The companies that relied the least on drug price increases were BioMarin, Gilead, Novo Nordisk and Regeneron.