Statistic of the Week:
The “buy and hold” strategy of investing has been steadily on the decline for the past 40 years. In 1976, the average holding period for an investor owning publicly traded shares was 5.1 years. Today, it has fallen all the way down to 7.3 months.
GDP numbers across the world were positive, but low, for the first quarter. The US grew at an annual rate of 0.7%, while the UK expanded at a rate of 1.2%. The eurozone was a standout, climbing at 2% for the first quarter. Many investors are betting on a synchronized global expansion.
Market Moving Events:
Tuesday: Wholesale Trade Wednesday: Import Export Prices Thursday: Jobless Claims, Producer Price Index Friday: Consumer Price Index, Retail Sales, Business Inventories, Consumer Sentiment
Many indicators are showing that the US economy is humming along, and the equity markets have taken note. The S&P 500 topped an all-time high on Friday, after moving slightly lower and sideways for the past two months.1 The DJIA finished the week 109 points away from its record high.2 While the indices moved into record territory, the moves last week were largely marginal. The DJIA rose 0.33% while the S&P increased 0.66%.3 Volatility has been virtually non-existent in the markets; the CBOE Volatility index has fallen to 10.1 – its lowest level in a decade.4 However, yields on Treasury bonds have been creeping higher. The yield on the 10-year has moved up to 2.36%.5 Yields appear to be range-bound, yet the fluctuation does warrant attention. With markets at or near record highs, volatility at a nadir, fixed income yields stable, and economic indicators flashing positive, the trader’s adage “sell in May and go away” is being tossed around quite a bit. The saying implies that investors should liquidate in the month of May, and return to the markets after seasonal weakness seen through the summer abates. However, a study from JP Morgan shows that over the past 25 years, had investors followed that advice, they would have significantly underperformed those that stayed the course.6 Volatility may in fact pick up, but prudent asset management should allow portfolios to successfully weather potential storms. - Dan McElwee, CFP®
Chart of the Week: