Bits and pieces about our rip-roaring stock markets
By Dian Vujovich
The performance tear the stock markets have been on thus far this year has truly been rewarding. So if you’re experiencing more zing in your step these days it might be because your portfolio is plumper than it’s been in years.
After 11 months, the DJIA is up 23 percent, the S&P500 up 29 percent, NASDAQ ahead 34 percent, the Russell 1000 Value Index up about 26, and the Russell 3000 ahead nearly 28 percent. But it is the Russell 2000 Growth Index with the biggest hold-on-to-your-hat year-to-date results: It’s up 39.6 percent.
And who knows, with any lucky at all there could be a Santa Claus rally on its way.
One year really can make a big difference when it comes to counting your investment money. But don’t forget, while these index averages are for 2013, look back five years and the returns are considerably lower.
Take the S&P500, for instance. BTN Research reports that 18 percent of the 500 stocks in it have increased in value by 50 percent or more through November 22. Too bad the same can’t be said for the previous three years. Looking at that performance time period, the average annual return for the S&P500 was about 17.7 percent, according to Morningstar.
My what a difference a bull market rally can make.
How the indices will end 2013 is anybody’s guess. Should you be so inclined to wager a guess, however, consider the following three points. First, margin debt, a reflection of how much investors borrow to buy stocks, is 50 percent higher now than it was in January 2012. Pros say that could be considered both good and bad.
On the plus side it’s an indication of investor confidence and their willingness to keep borrowing to buy stocks during a bull market. On the other hand, it’s an indication of investor confidence and a willingness to take risk.
Either way, a high level of margin debt comes with its risks.
Second, millionaires appear to be skeptical about the ability of the stock markets to keep soaring.
The Spectrem Group’s Millionaire Investor Confidence Index, while up in November, is still below its September levels. Apparently those in the seven-digit plus club have concerns about the economy, unemployment and the Fed’s easing strategy.
Finally, and perhaps more valuable than the previous two points, is this market tidbit: Trees Don’t Grow to the Sky.
To read more articles, please visit the column archive.