- FOR THE ENTIRE YEAR – The S&P 500 was positive on a total return basis during all 12 months in calendar year 2017, gaining +21.8% for the year. The raw index rose +19.4% and the impact of reinvested dividends made up the difference. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).
- THE LONG-TERM AVERAGE – The S&P 500 stock index has gained an average of +10.1% per year (total return) over the last 50 years (i.e., the years 1968-2017). The index has been positive for each of the last 9 years (tying the record for consecutive “up” years set previously between 1991-99) and in 14 of the last 15 calendar years. The S&P 500 has been up during 40 of the last 50 years, i.e., 80% of the time (source: BTN Research).
- UP vs. DOWN – The split between “up” and “down” trading days for the S&P 500 over the last 50 years (i.e., 1968-2017, a total of 12,586 trading days) is 53% “up” and 47% “down.” The split during calendar year 2017 (over a total of 251 trading days) was 57/43 (source: BTN Research).
- THERE HAVE BEEN BETTER – In spite of gaining +21.8% (total return) in 2017, the S&P 500’s performance last year is just the 8th best performance for the stock index in the last 25 years (1993-2017). The best performance of the last 25 years: a gain of +37.6% (total return) in 1995 (source: BTN Research).
- INSIDE THE INDEX – 147 of the individual stocks (i.e., 29% of the stocks) in the S&P 500 gained at least +30% in 2017. 51 stocks (i.e., 10% of the stocks) gained at least +50%. 125 stocks (i.e., 25% of the stocks) finished the year with a stock price lower than where it started the year (source: BTN Research).
- MISSING THE BEST – The total return for the S&P 500 was a gain of +21.8% (total return) in 2017. If you missed the 5 best percentage gain days last year, the +21.8% gain falls to a +15.3% gain (source: BTN Research).
- AVOID THE WORST – The total return for the S&P 500 was a gain of +21.8% (total return) in 2017. If you avoided the 5 worst percentage days last year, the +21.8% gain rises to a +30.6% gain (source: BTN Research).
- FROM THE MARCH 2009 LOW – Since dropping to a bear market low on 3/09/09 (i.e., approximately 106 months ago), the S&P 500 stock index has gained +378% (total return) through the close of trading on Friday 12/29/17 or an average gain of +19.4% per year over the near 9-year bull run (source: BTN Research).
- SMALL-CAPS – The small-cap Russell 2000 stock index gained +14.7% (total return) in 2017. The small cap index has gained +10.2% per year over the last 35 years (1983-2017). The Russell 2000 closed at an all-time high on Thursday 12/28/17 (1549). The Russell 2000 index is an unmanaged index of small-cap securities which generally involve greater risks (source: Russell).
- FOREIGN STOCKS – The international stock index EAFE gained +25.0% (total return) in 2017. The EAFE index is an unmanaged index that is generally considered representative of the international stock market. These international securities involve additional risks including currency fluctuations, differing financial accounting standards and possible political and economic volatility (source: BTN Research).
- THE TEN-YEAR NOTE – The yield on the 10-year Treasury note ended 2017 at 2.41%, just 0.03 percentage points lower than the 2.44% it finished at as of 12/31/16. The yield on the 10-year note was 2.57% on 8/05/11, the day S&P downgraded the USA’s top-rating that it had held for 70 years (source: Treasury Department).
- BROAD-BASED BOND INDEX – The taxable bond market was up +3.5% (total return) in 2017 and has gained +5.0% per year (total return) over the last 20 years (1998-2017). The Bloomberg Barclays US Aggregate Bond Index (created in 1986), calculated using publicly traded investment grade government bonds, corporate bonds and mortgage-related bonds with at least 1 year until final maturity, was used as the bond measurement (source: Bloomberg Barclays).
- HOUSING – The average interest rate nationwide on a 30-year fixed rate mortgage was 3.99% at the end of 2017. The record low national average was 3.31% as of 11/22/12 or just over 5 years ago (source: Freddie Mac).
- OIL PRICES – The price of oil ended 2017 at $60.12 a barrel, up +12% (and $6.40 a barrel) from its 2016 close of $53.72. The $60.12 price was the first daily close above $60 a barrel since 6/24/15 (source: CME Group).
- OVERSPENDING – The national debt of the United States was $20.493 trillion as of Thursday 12/28/17, an increase of $11.4 trillion (from $9.121 trillion) since 12/28/07 or 10 years ago (source: Treasury Department).
IMPORTANT DISCLOSURE: The information contained in this material has been prepared for informational purposes only and does not constitute investment advice. Any mention of particular stocks or companies does not constitute and should not be considered an investment recommendation. Past performance is not a guarantee of future results. Any forward-looking statements presented in this material are inherently uncertain and cannot be relied upon as statements of actual performance.
Reproduction Prohibited without Express Permission – Copyright © 2018 Michael A. Higley. All rights reserved.
