The S&P500 Forward P/E ended March at 16.4. This is slightly above the 25-year average of 16.1%. While the current P/E looks at current Price to Earnings ratio, the Forward is just that – it is looking ahead to predicted Price to Earnings.
Interestingly, the majority of the 1-year returns of the S&P500 Forward P/E of 16.4% are positive.
Corporate earnings for 4th Quarter of 2017 were the highest when looking at data going back to the beginning of 2002.
Growth was the only style to have positive earnings to begin the year. Small Cap Growth led the way up 2.3% while Large Growth was up 1.4%. Value and Blend were negative across the board, ranging from -0.1% for Small Blend to -2.8% for Large Value.
Consumer Discretionary and Technology were the only positive sectors year-to-date with returns of 3.1% and 3.5% respectively. Telecom was the worst performing sector at -7.5%.
As a reminder, despite average intra-year declines of 13.8%, the S&P500 has been positive 29 of last 38 years.
When 10-year Treasury yields are below 5%, rising rates have historically been associated with rising stock prices. The current yield is just over 2.7%.
The average economic expansion is 47 months, when looking at data back to 1900. We are at 105 months right now, which is nearing the second-longest streak. Oh, because I know you wanted to know, the average recession is 15 months.
Projected census numbers make me nervous when it comes to the growth of the working-age labor force. From 2007-16 this population increased .6%. It is projected to increase at .3% over the next decade, with almost all of it coming from immigrant workers. Why this is important is because growth in workers is a huge part of the growth of GDP. Simply, we need more workers, whether local or foreign born.
The unemployment rate of 4.1% is well below the 50-year average of 6.2%. Wages are starting to creep up at 2.5%, but this is still significantly lower than the average of 4.2% of the last 50 years.
Emerging Market stocks were actually positive for the first quarter. Who would’ve thought EM stocks, which have typically had higher than average volatility, were a safe haven?
I’ve talked before about the power of compounding. Let’s look at what the main asset classes have returned over the last 20 years. Cash = 51%. Fixed Income = 165%. Equities = 301%.
The VIX this afternoon (April 2nd) was in the low to mid-20s. This is roughly half of what it hit in February.
Reminder on days like today, and even the past few weeks, to focus on your goals. When someone asks me what my investment performance has been I never have what they may want as an answer. My portfolios are designed in conjunction with my client’s goals. My point – why take on more risk than you want and/or need?
Worst start to the second quarter ever. Yeah, I wrote it because I have been hearing it all afternoon and you will probably be hearing it more. I would be more concerned if the data point were a little larger than the first freakin’ trading day. If one day was a trend, well, the Indians should have been on track to lose every game this season.
The software program I use to monitor my clients’ portfolios, WealthGuard, is all still in the green. WealthGuard monitors on a daily basis the performance of their individual portfolios and no losses have been such as to warrant a Review or an Alert, which is when it turns red. Well, except for one client’s restricted stock portfolio, but nothing can be done about that. The thing I really like about WealthGuard is it not only sends updates to me, but also to clients. Talk about using technology to your advantage.
Finally, I came across a great quote – “Your portfolio is like a bar of soap. The more you handle it the smaller it gets.”
Oh, final finally – I have to say I even impressed myself with getting this market commentary out the first day of the new quarter. Please don’t expect such performance in the future as I am not that good😉