Lindsey Report – January 2018

Happy New Year: here’s wishing that 2018 will be prosperous for you and yours.

As you are likely well aware, the equity markets performed at a high level in 2017 (as measured by the Dow, the S&P 500 and the Nasdaq). The S&P 500 approached a 20% return, while the Dow (+25%) and the Nasdaq (+28%) surpassed this level (1stock1.com). The tech-heavy Nasdaq was the biggest winner, as major, household technology names lead the charge.

Although the Dow is comprised of only 30 stocks, it still remains a popular index for investors to follow, so it is being highlighted this month. Within the first few days of 2018, the Dow surpassed the 25,000 mark for the first time, taking only 23 trading days to move from 24,000 (Marketwatch). Keep in mind that this 1000-point move represents just a 4.2% increase, so it’s not like the move from 5000-6000 back in the mid 90’s (a 20% increase).

In 2017, the Dow notched 71 record, closing highs. This bested the previous record of 69 set back in 1995 (MarketWatch). I like this reference to 1995, as back then the Dow was up 33% that year, but more encouragingly, the Dow was up 26% in ’96 and had great gains in ’97-’99. Although, I’m not suggesting that history will repeat itself, it is notable to remember that the Dow “can” and “has” followed up a great year with more great year(s) (1.stock1.com).

Looking forward to 2018, the economy has grown 3%+ for two consecutive quarters and we will learn shortly if that pattern continued in the 4th quarter. The holiday shopping season appears to have been a strong one, which is a good sign for the U.S. consumer.

Although the tax law changes have received ample, bad publicity, lower corporate taxes should be good for the economy and corporate profits. Moreover, if the majority of people see more money in their paychecks, they will likely spend it (also good for the economy). For the past 70 years, the U.S. economy grew at an average rate of 3.3%/ year: therefore, it seems reasonable that we should be able to return to these levels…at a minimum (Trading Economics).

 

 

The opinions voiced are for informational purposes only and are not intended to provide specific advice to any individual. To determine which investments are appropriate for you, consult myself prior to investing. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. The economic forecasts set forth in this commentary may not develop as predicted and there can be no guarantees that strategies promoted will be successful.

 

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