POCKETBOOK Week Ending Jan. 25, 2019

• I’m Melting

Meltdowns appear to be the trend in this New Year as stocks prices gyrate up, melt down and then seemingly slide into a pool of yuck.

Like that Wicked Witch of the West in The Wizard of Oz, whose nastiness eventually reduced her to a puddle, the one thing that totally destroyed her was water. Yes, clear, simple, every day, everywhere water.

If only a market meltdown could be corrected by a serious splash of water we’d probably all gleefully  click our ruby slippers together. But ruby slippers aren’t in. So the best we can do is to recognize a trend when we see one and address our investing money goals and needs accordingly.

According to Daniel Pinto, co-president of J.P. Morgan Chase, the market’s performance in December is likely to continue throughout this year—and to date he has been correct.

From CNBC.com: “Over time, you will probably see several more market events like we saw in December,” Pinto said last week in an interview at the World Economic Forum meeting in Davos, Switzerland.”

Some of the things fueling the markets’ current meltdown pattern include the behavior of our leaders, changes in investor habits/beliefs and an aging economic situation. Oh, and then there’s the huge lump under the living room rug that everyone seems to not see and walk around: America’s huge debt.

 

• Market Quick Glance

Continuing up in tiny bits on year-to-date returns but that’s not the case for 1-year returns.

Below are the weekly and 1-year index performance results for the three major indices—DJIA, S&P 500 and NASDAQ — including the dates each reached new highs. Data is according to CNBC.com and based on prices at the close of business on Friday, Jan. 18, 2019.

–DJIA 6.04% YTD up from the previous week’s 5.917%.

• 1 yr. Rtn -6.2% down from the previous week -5.04%

Most recent DJIA a new ALL-TIME CLOSING HIGH was reached on Oct.3, 2018 of 26,951.81. The previous high was reached on Sept. 21, 2018 of 26,796.16.

 

-S&P 500   6.30 % YTD down from last week’s 6.54%

• 1 yr. Rtn -6.15% down from last week’s -4.55%

The S&P 500 reached a BRAND NEW CLOSING ALL-TIME HIGH on Sept. 21, 2018 of 2,940.91. The previous closing high was reached on August 29, 2018 of 2,916.50.

 

-NASDAQ 7.98% YTD a tiny bit from last week’s 7.87%

• 1yr Rtn -3.32% down from last week’s -1.90%

Nasdaq reached a BRAND NEW 52-week CLOSING HIGH on August 30, 2018 of 8,1333.30. The previous high was reached on August 24, 2018 of 7,949.71.

 

 

-Mutual funds

Repeat from early January:

Looking up.

At the close of business on Thursday, Jan. 10, 2019, the total return for the average stock fund under the broad U.S. Diversified Equity Fund heading was 4.70%, according to Lipper.

Looking at the fund types with the highest year-to-date gains under the various headings shows the following:

-U.S. Diversified Equity Funds average, 4.70%; highest Equity Leveraged Funds, 11.08%; lowest, Dedicated Short Bias Funds, -8.88%

-Sector Equity Funds average 4.88%; highest Energy MLP Funds, 11.74%; lowest Alternative Managed Funds, -2.20%

-World Equity Funds average 4.07%; highest Latin American Funds, 9.01%; lowest India Region Funds, -1.23%.

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.

 

• Forever costs more

Forget that 50-cent Forever stamp as they’ve become a thing of the past.

Beginning a couple of days ago, (January 27, 2019), the U.S. Postal Service added a nickel to the price of the Forever stamp. That means it’s not two for a buck anymore.

Here, from USATODAY.com are some of the Postal Service price hike details:

• “First-Class letter (1 ounce) will go up to 55 cents: The nickel increase is the largest percentage rise since 1991, when postage increased from 25 to 29 cents.
• Additional letter ounce costs will decrease: Each additional ounce will drop from 21 cents to 15 cents. Mailing a 2-ounce letter, a wedding invitation’s typical weight, will cost 70 cents instead of 71 cents.
• Postcard rates will remain the same: Mailing a postcard will run travelers 35 cents.
• Priority Mail prices will jump: A small box that previously cost $7.20 will rise to $7.90, while a medium box will jump from $13.65 to $14.35.
• Priority Mail Express fees will increase: Those looking to ship an envelope ASAP can expect to pay $25.50 instead of $24.70.

 

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POCKETBOOK Week Ending Jan. 18, 2019

 

Jack Bogle, founder of The Vanguard Group  was 89 years old when he passed away on January 16, 2018

 

• You can thank Jack

When I began selling securities in the early 1980’s, mutual funds offered investors a way to purchase a basket of stocks instead of having to select one-by-one which company’s stocks to invest in. Back then, mutual funds had been around for 50 years and little by little were gaining ground among investors and particularly those selling them.

Way back then, the draw for investors was the bundle of stock idea; the draw for brokers selling them was the sales charge (a one-time fee similar to a commission) —typically 8.75% on equity funds.

Something not always addressed back then was a mutual fund’s annual management fees that averaged as high as 1.75% per year. That fee relates to what we hear of as the cost of “active or passive management”. Or, the cost of a fund’s professional management relating to what stocks are purchased and sold in a mutual fund’s portfolio.

Additionally and more importantly, back then there were no equity funds with low sales charges funds, low management fees or index funds around to invest in.

While there are a few reasons when, why and how the sales charge costs and annual management fees have dropped on funds, there’s one man who had a huge impact on a couple of fronts on this product: John C. Bogle.

Thanks to the research, proven investment philosophy and the continued drum-beating of Bogle, Wall Street and investors learned two really important things. First, it’s hard to beat the market—the market representing the performance of an index such as the S&P 500. Second, costs matter. Cost like paying a sales charge on your fund investments and the cost of paying annual management fees on the equity funds you own.

In 1974, Bogle created the Vanguard fund family and in 1976 introduced the Vanguard 500 Index Fund, a low-cost passively managed portfolio of stocks designed to mimic the performance of the S&P 500 index.

And mimic it has done resulting in a solid track record of making money for its shareholders  as actively managed funds have had a hard time beating the performance of the S&P 500 over the long-term.

Depending upon the type of equity fund and the performance years measured, it’s difficult to come up with one figure that represents how often and by how much a passively managed fund, such as an index fund, beats the performance of an actively managed equity fund. Figures for it differ from year to year and fund type to fund type and may range as high as 90-some percentage of actively managed funds that don’t beat that of the S&P 500 in one year to underperforming actively managed ones in another. But more often than not it’s fair to say that index funds often outperform actively managed ones.

Bottom line: Jack Bogle influenced the mutual fund industry in a hugely positive way and provided a wonderful, simple approach to investing through low-cost, passively managed index fund investing. (FYI: The  symbol for various  S&P 500 index funds include: SPDR S&P 500 (ETF), SPY; Vanguard 500 Index  fund is VFIAX; Vanguard Total Stock Market fund, VTSAX; an Fidelity 500 Index fund, FXAIX.)

That said, there will always be risks to equity investing and there are no guarantees that your fund choice(s) will be financially rewarding or punishing no matter what syle of stock selection or management style  is used.

Making money, whether it be in funds or individual stocks, always depends upon two things: Your choices and the time period you’ve participated in the market.

 

• Market Quick Glance

Refreshing.

After plenty of minuses, for the second week in a row the indices are smiling.

All three made nice gains last week with the Nasdaq’s year-to-date return ending higher than the other indices and sat at nearly 8% at the close of business on Friday..

Below are the weekly and 1-year index performance results for the three major indices—DJIA, S&P 500 and NASDAQ — including the dates each reached new highs. Data is according to CNBC.com and based on prices at the close of business on Friday, Jan. 18, 2019.

–DJIA  5.91% YTD way up from the previous week’s 2.87%.

• 1 yr. Rtn -5.04% improved from the previous week -6.17%

Most recent DJIA a new ALL-TIME CLOSING HIGH was reached on Oct.3, 2018 of 26,951.81. The previous high was reached on Sept. 21, 2018 of 26,796.16.

 

-S&P 500   6.54 % YTD way up from last week’s 3.57%

• 1 yr. Rtn -4.55% improved from last week’s -6.19%

The S&P 500 reached a BRAND NEW CLOSING ALL-TIME HIGH on Sept. 21, 2018 of 2,940.91. The previous closing high was reached on August 29, 2018 of 2,916.50.

 

-NASDAQ  7.87% YTD way up from last week’s 5.07%

• 1yr Rtn -1.90% improved from last week’s -3.33%

Nasdaq reached a BRAND NEW 52-week CLOSING HIGH on August 30, 2018 of 8,1333.30. The previous high was reached on August 24, 2018 of 7,949.71.

 

-Mutual funds

Repeat from last week:

Looking up.

At the close of business on Thursday, Jan. 10, 2019, the total return for the average stock fund under the broad U.S. Diversified Equity Fund heading was 4.70%, according to Lipper.

Looking at the fund types with the highest year-to-date gains under the various headings shows the following:

-U.S. Diversified Equity Funds average, 4.70%; highest Equity Leveraged Funds, 11.08%; lowest, Dedicated Short Bias Funds, -8.88%

-Sector Equity Funds average 4.88%; highest Energy MLP Funds, 11.74%; lowest Alternative Managed Funds, -2.20%

-World Equity Funds average 4.07%; highest Latin American Funds, 9.01%; lowest India Region Funds, -1.23%.

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.

 

• Palladium

A while back I mentioned palladium and I’m mentioning it again. Why? Because in 2018 it beat the performance of gold and some think  it could do the same this year and going forward.

That thinking is that due to demand and supply imbalance and the fact that other commodities are being dragged down by a strong dollar and the global slowdown.

Oh…then there is the biggie: Palladium is used to make catalytic converters in gasoline automobiles.

And, as the world begins to switch from gas-fueled autos to hybrid vehicles that matters. A lot.

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POCKETBOOK Week Ending Jan. 11, 2019

 

As for the market’s direction, could it be a bear in wedding dress clothing? Time will tell.

 

• Credit Card Debt

Put aside the fact that America’s national debt has risen by huge leaps and bounds under the current administration, what may or may not surprise you is that personal credit card debt has risen too.

According to TheBalance.com, U.S. consumers now have acquired over $1 trillion in credit card debt. Divide that by the number of households in the country and that breaks down to $5,700 in debt per household.

But wait, there’s more: Look at just the households that already have credit card debt and the average debt for those households is heading for $10,000, ($9.333), according to ValuePenguin.

All of which makes me wonder about how really great is this economy that you hear so much about. Or the fabulous job numbers. Or, the low inflation.

Something does add up.

 

• Market Quick Glance

For one week there were positive signs of life on Wall Street as all three indices followed here showed some nice one week gains.

Below are the weekly and 1-year index performance results for the four major indices—DJIA, S&P 500 and NASDAQ — including the dates each reached new highs. Data is according to CNBC.com and based on prices at the close of business on Friday, Jan. 11, 2019.

–DJIA 2.87% YTD way up from the previous week’s 0.45%.

• 1 yr. Rtn -6.17% improved from the previous week -6.55%

Most recent DJIA a new ALL-TIME CLOSING HIGH was reached on Oct.3, 2018 of 26,951.81. The previous high was reached on Sept. 21, 2018 of 26,796.16.

 

-S&P 500 3.57% YTD up from last week’s 1.00%

• 1 yr. Rtn -6.19% improved from last week’s -7.05%

The S&P 500 reached a BRAND NEW CLOSING ALL-TIME HIGH on Sept. 21, 2018 of 2,940.91. The previous closing high was reached on August 29, 2018 of 2,916.50.

 

-NASDAQ 5.07% YTD way up from last week’s 1.56%

• 1yr Rtn -3.33% improved from last week’s -4.79%

Nasdaq reached a BRAND NEW 52-week CLOSING HIGH on August 30, 2018 of 8,1333.30. The previous high was reached on August 24, 2018 of 7,949.71.

 

-Mutual funds

Looking up.

At the close of business on Thursday, Jan. 10, 2019, the total return for the average stock fund under the broad U.S. Diversified Equity Fund heading was 4.70%, according to Lipper.

Looking at the fund types with the highest year-to-date gains under the various headings shows the following:

-U.S. Diversified Equity Funds average, 4.70%; highest Equity Leveraged Funds, 11.08%; lowest, Dedicated Short Bias Funds, -8.88%

-Sector Equity Funds average 4.88%; highest Energy MLP Funds, 11.74%; lowest Alternative Managed Funds, -2.20%

-World Equity Funds average 4.07%; highest Latin American Funds, 9.01%; lowest India Region Funds, -1.23%.

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.

 

• Banking on banks

Turns out, 2018 was a great year for banks if being a great year means that none failed.

CNBC reported “ 2018 was the first year since 2006 and only the third since the Federal Deposit Insurance Corporation (FDIC) was created in 1933 that a calendar year passed without a bank failure, according to Bloomberg.”

FYI, the peak year for failures was 2010 when 157 institutions bellied up. And during the savings and loan crisis, in 1989 there were 534 lenders that failed.

 

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POCKETBOOK Week Ending Jan. 4, 2019

• Loving the Dogs

In 2018, the Dogs of the Dow beat the DJIA average–albeit not by much, 1.5%. The pros will tell you it would have been a lot more if only GE’s price had not fallen by 57% last year. But, so what? If only’s are the stuff of dreams.

So as last came to a close, the Dogs of the Dow beat the performances of both the DJIA and the S&P 500. Each ended the year down 6 and 6.2 percent respectively.

Given the concerns about our market and of those around the world—and our huge growing deficit— the 10 new 2019 Dogs look pretty attractive to me. Particularly, if dividend income is your thing. All 10 have yields considerably higher than that of money-market funds, and Treasury securities of all maturity dates.

So chow down people, if this is an investment strategy you’d go fetch for.

The 2019 Dogs of the Dow, (the list begins with the stock with the highest yield).

1.	IBM	International Business Machine	5.5%
2	XOM	Exxon Mobil Corporation	4.8%
3	VZ	Verizon Communications	4.3%
4	CVX	Chevron Corporation	4.1%
5	PFE	Pfizer	3.3%
6	KO	Coca-Cola Company	3.3%
7	JPM	JP Morgan Chase & Co.	3.3%
8	PG	Procter & Gamble Company	3.1%
9	CSCO	Cisco Systems	3.0%
10	MRK	Merck & Co.	2.9%

Source: FactSet Get the data Created with Datawrapper

 

• Market Quick Glance

Thank heavens for new years. At least, this one.

Looking back over the last week, all three indices followed here have 1-week returns resting in positive territory. The biggest gains? Nasdaq with its 1.56% return.

Below are the weekly and 1-year index performance results for the four major indices—DJIA, S&P 500 and NASDAQ — including the dates each reached new highs. Data is according to CNBC.com and based on prices at the close of business on Friday, Jan. 4, 2019.

–DJIA 0.45% YTD up from the previous week’s -6.70%.

• 1 yr. Rtn -6.55% also up from the previous week -7.15%

Most recent DJIA a new ALL-TIME CLOSING HIGH was reached on Oct.3, 2018 of 26,951.81. The previous high was reached on Sept. 21, 2018 of 26,796.16.

 

-S&P 500 1.00% YTD up from last week’s -7.03%

• 1 yr. Rtn -7.05% up from last week’s -7.51%

The S&P 500 reached a BRAND NEW CLOSING ALL-TIME HIGH on Sept. 21, 2018 of 2,940.91. The previous closing high was reached on August 29, 2018 of 2,916.50.

 

-NASDAQ 1.56% YTD up from last week’s -4.62%

• 1yr Rtn -4.79% up from last week’s -5.26%

Nasdaq reached a BRAND NEW 52-week CLOSING HIGH on August 30, 2018 of 8,1333.30. The previous high was reached on August 24, 2018 of 7,949.71.

 

-Mutual funds

More to come at a later date.

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