POCKETBOOK: Week ending Feb.2, 2018



  • 2.5%—ya buy 2% milk, don’t ya?

Readers of this site know that I’ve been posting “be careful” kinds of blogs for more than a year now. Well, maybe forever. That might be making me a glass half-empty kind of gal but I see it as being realistic more than anything else.

Why? Because if anyone tells you that there is no risk to investing in equities they’d be lying and you’d be a fool to believe them.

Investing in stocks has always been risky and comes with no guarantees of making a profit no matter what the mountain charts look like.

A mountain chart,  like the one above,  is a chart that looks at say a singular stock or the stock index return such as the DJIA over an extended period of time. Often that time frame is a long one—like since 1920, or 1990 or 2000 or 2008 until now. There’s no standard begin time when designing a mountain chart but the end is typically now. The chart above looks at a very short time frame; one month.

The purpose of a long-term mountain chart is to show that yes indeedy stock prices have increased over the long haul. And, yes indeedy trends both up and down can be seen on it. And yes indeedy markets do recover. The one above shows the first major drop of the year.

That said, the 2.5% fall of the DJIA on Friday, Feb 2, 2018 is no big deal if it’s a onsey. If that fall is the beginning of a trend, well, only time will tell.

While no one knows what this week will bring,  Merrill Lynch’s bull-bear indicator —which has been correct in predicting 11 out of the 11 U.S. stock market corrections since 2002—is correct again, it’s now sending out a “sell” signal.

We sall see.


  • Market Quick Glance

All four of the indices followed here saw their year-to-date returns suffer seriously—like nearly halved– when the markets closed on Friday. The worst hit was to the Russell 2000–it lost nearly all the positive ground  made this year.

The DJIA dropped nearly 666 points on Friday, Feb. 2, 2018—a rare occasion and the sixth-worse decline in the Dow’s nearly 122 year history.

A closer historical look reveals that a decline of over 500 points for the DJIA in one day has happened 17 times since 1993, according to Kensho, a hedge fund analytics tool CNBC referenced in a recent story.

Using that same tool, the Dow rose 1.5% on average, the day after that kind of fall with a 65% chance of recovery.

If you’re looking for investment advice during uncertain times such as these here’s what I say: Plot your investment course as you would anything else in life—knowing well in advance that everything changes.

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, Feb. 2, 2018.

DJIA +3.24% YTD down seriously from last week’s 7.28%  

  • 1 yr Rtn +28.34% down from last week’s 32.42%

No new high for the DJIA. The last one was reached on January 26, 2018 of 26,616.71. The previous high was reached January 18, 2018 was 26,153.42.


-S&P 500 +3.31% YTD down seriously from last week’s 7.45%

  • 1 yr Rtn +21.10% down from last week’s 25.09%

No new high for the S&P 500 Index. The last one was reached on January 26, 2018 of 2,872.87. The previous high was reached on January 19, 2018 of 2810.33.


-NASDAQ +4.89 YTD down seriously from last week’s 8.73%

  • 1yr Rtn +28.47% down from last week’s 32.72%

Nasdaq latest new all-time high of 7,505.77 was reached on January 26, 2018. The previous high was reached on January 19, 2018 of 7,336.38.


-Russell 2000 0.77%YTD down bad from last week’s 4.72%

  • 1yr Rtn +13.99% down a pinch from last week’s +16.90%

The Russell 2000 reached its latest all-time high on January 24, of 1,615.52. The previous high was reached on January 16, 2018 of 1,604.02.


-Mutual funds

After up comes down.

As you would expect, on Thursday, Feb. 1, 2018, the year-to-date average cumulative total reinvested returns for equity funds that fall under the broad U.S. Diversified Equity Funds heading had fallen and stood at 4.44%. That’s down from the 5.32 % posted one week earlier.

To show how quickly things can change, below are the three fund types that have enjoyed positive y-t-d return so far in 2018 under the U.S. Diversified Equity Funds broad heading. Below is how their y-t-date average returns have changed from one week to the next to the next:

-Equity Leverage Funds: +9.43% (2/1/18): the week before it, +12.08%: and the week prior, +8.37 %.

-Large-Cap Growth Funds: +7.64%(2/1/18); the week before, +8.00%; and the week prior, +6.06%.

-Multi-Cap Growth Funds:+ 6.96% (2/1/18); the week before, +7.47%; and the week prior, +5.59%.

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.


  • REPEAT: Consider a stop-loss

A few weeks ago I wrote about how a falling dollar isn’t typically a great economic indicator, nor is the fact that credit card balances are increasing and savings rates declining. Throw in a rising interest rate environment and all can point to a not-so-hot performing stock market.

Last week I wrote about using stop-loss orders—and those words are worth repeating. So one more time: “When it comes to the ups and downs of investing in stocks, don’t forget that one way to protect yourself when the market turns south is to place a stop-loss on the stocks you want to preserve gains in.

“From investopedia.com:”A stoploss order is an order placed with a broker to sell a security when it reaches a certain price. Stop loss orders are designed to limit an investor’s loss on a position in a security.””

Don’t forget: Locking in the gains made from your stock investments is what equity investing is all about.