POCKETBOOK: Week ending Jan. 12, 2018

 

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Thank You, Dr.King.

 

  • A Rich Market

No two ways about it, last week stock prices continued on their upward tear.

With that fact behind us, consider the following SeekingAlpha.com piece from Victor Dergunov of Albright Investment Group:

  • U.S stocks are quite expensive relative to most other countries by historical standards.
  • The S&P 500s Shiller P/E ratio is about 34, more than double its median ratio of 16 and has only been higher one time in history—at the height of the dotcom boom.
  • The price-to-sales ratio for the S&P 500 is at an all-time high, 2.35—the media is 1.44 “suggesting that stock prices are rising relative to revenue growth faster than at any other time throughout history.”

We all know stock prices, indices, charts don’t always go up and that that upward trend will turn south sometime. But until it does, do enjoy the ride.

 

  • Market Quick Glance

And it was another extremely rewarding week for equities. Of the four indices followed here, all reached new highs—each gaining roughly 2 percent! That’s a remarkable start for any year.

Below are the weekly and 1-year index performance results for four major indices— including the dates each reached new highs—according to CNBC.com based on prices at the close of business on Friday, Jan. 12, 2018.

DJIA +4.39% YTD up lots from last week’s 2.33%

  • 1 yr Rtn +29.72% up from last week’s 27.12%

A new high for the DJIA was reached on January 12, 2018 of 25,810.43. Its previous high was reached one week earlier, on January 5, 2018 of 25,299.79.

 

-S&P 500 +4.21% YTD up lots from last week’s 2.60%

  • 1 yr Rtn +22.72% up from last week’s 20.92%

A new high for theS&P 500 Index was reached on January 12, 2018 of 2,787.85. Its previous high was reached one week earlier on January 5, 2018 of 2,743.45.

 

-NASDAQ +5.18 YTD up a heap from last week’s 3.38%

  • 1yr Rtn +30.89% up a pinch from last week’s 30.04%

Nasdaq its second new high of this year on January 12, 2018 of 7,265.26. Its previous new high was reached on January 5, 2018 of 7,137.04.

 

-Russell 2000 +3.68%YTD up lots from last week’s 1.60%

  • 1yr Rtn +16.97% upa lot from last week’s +13.71%

The Russell 2000 reached a second new all-time high of January 12, 2018 of 1,598.18. Its previous high was 1,560.84 reached on January 4, 2018.

 

-Mutual funds

More gains.

On Thursday, January 11, 2018, the year-to-date average cumulative total reinvested returns for equity funds that fall under the broad U.S. Diversified Equity Funds heading was 3.33%. That’s up a hike from the previous week’s figure of 1.64%.

Three fund types not enjoying a positive new year include:

-Dedicated Short Bias funds, down on average -5.69%

-Real Estate Funds, -3.75%

-Utility Funds, -2.32%

Place your bets now as to whether that trend will continue for each knowing in advance that the direction of interest rates plays a big part in the relative performance of both real estate and utility funds.

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.

 

  • Compound It

As a big fan of dividend-paying stocks, I can’t think of any reason not to reinvest the dividends the stocks in your portfolio pay back into those companies.

Remember, compounding works the same no matter how much money you are working with—a few bucks or millions.

Its rewards come to you based on percentages and time—the percentage rate that’s paid and the amount of time the security is held hence allowing the reinvested dividend to work for you.

 

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