Ruffles in the Market
To say the year for markets begins not as it ended is palpable. Stocks have lost up to 2% for the year to date with the Nasdaq index being the greatest loss as it was the largest gainer in 2023. The 10-year US Treasury is yielding over 4% again with shorter rates holding steady. Today, inflation numbers fell short of expectations with the wholesale inflation numbers due tomorrow. Analysts expect these numbers to not alter the Feds plan for cuts later in the year. The January indicator is causing ruffles in the market but like any other indicator it works when it is correct and does not work when it is wrong. Unfortunately, this kind of analysis contributes to the thinking that the stock market is a gambling casino. Historical analysis says that even if you view the stock market as a casino, as an investor in the stock market, you are acting as the “house”. Why, because the 50 and 100 year and even 10-year analysis provide a return in excess of inflation of 3-4% with an absolute return higher than 6%. Who does not want to be on the house side of a casino, and we need to pay attention to the fact that the stock market provides returns that are better than inflation. 40% of that return consists of dividends. Here is a link to annual returns for different asset classes for investors: Historical Returns on Stocks, Bonds and Bills
Another link to average SP500, 10-year US Treasury and 3-month T-Bill:
Historical Stock and Bond Returns – Predict Future Investment Performance
50 year return on 60/40 portfolio:
Historical Stock and Bond Returns – Predict Future Investment Performance
Any casino that provides returns 3-4% above your bet could be a full-time job-it is for the casino.
With the new year and another reset for decisions and behavior change, remember to not bite off more than you can chew. Focus on one goal that is realistic and can be accomplished slowly. The gym is crowded as are all the weight loss programs. Be patient and approach behavior change with a plan. Then, of course, stick to the plan. That is the hardest part. Make sure you have resources to support your decision and to reward you for the small/incremental progress you make.
In the News
New Year’s Resolutions for Dealing With Anxiety - The New York Times (nytimes.com)
Buying Home and Auto Insurance Used to Be Routine. It’s Becoming a Nightmare. (msn.com)
How to organize your fridge to reduce food waste and carbon emissions - The Washington Post
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