Previous | The Ins and Outs of a Cash-out Refinance Next | Is Mobile Banking Safe for My Business?
December 27, 2019 / The Merrill Anderson Company
Investment Outlook

Investment Outlook

Here’s an interesting nugget that was buried on page R5 of the October 1, 2019, Wall Street Journal: If you invested just $1,000 in the S&P 500 index on January 1, 1970, today you would have $138,908. That’s the power of long-term compounding. Of course, you would have needed considerable courage to not sell that holding during the several market corrections that have occurred since 1970. The Journal also revealed that if you missed only the 15 best trading days of that 49-year period, your accumulation would be cut by well over half, to $52,246.bar graph

Stock prices have been quite volatile recently. Happily, much of the volatility in 2019 has been on the upside, as the S&P 500 rose 19% through the first three quarters of the year. The question investors must reckon with is how much upside is left? The cyclically adjusted price-earnings ratio calculated by economist Robert Shiller stands at 28.95, quite high by historical standards. The ratio peaked at 32.56 in 1929, before the great crash, and at 44.20 in 1999 before the bursting of the dot-com bubble. P/Es this high don’t necessary mean that a correction is coming, but they do suggest that there is not much room left for price growth absent some remarkably good earnings news.

Interest rates are falling, thanks to two rate cuts from the Federal Reserve. One wonders just how far they may fall. Some $15 trillion of government debt now has negative yields—that means lenders are paying borrowers to take the money. That is not a sign of a healthy global economy. Yields on U.S. government debt remain positive, but they have been falling. The benchmark 10-year Treasury note yield, which was at 2.0% at the end of the second quarter, fell to 1.675% by the end of the third quarter. Investors looking for more yield have to turn to riskier securities, such as corporate bonds or high-risk municipal bonds. 

Somehow, there never seems to be a moment when investing is easy and the choices obvious. If you would like help with your portfolio management, call on us.

© 2019 M.A. Co. All rights reserved. (October 2019)

Recent Articles
Is Mobile Banking Safe for My Business?
Is Mobile Banking Safe for My Business?

Is Mobile Banking Safe for My Business?

September 30, 2022 / Cynthia E. Marconi

Grandparent Scams Can Cost Victims Thousands of Dollars
Grandparent Scams Can Cost Victims Thousands of Dollars

Grandparent Scams Can Cost Victims Thousands of Dollars

September 22, 2022 / F&M Trust

Passkeys and the Future of Estate Planning
Passkeys and the Future of Estate Planning

Passkeys and the Future of Estate Planning

September 15, 2022 / The Merrill Anderson Company

The biggest financial mistakes business owners make
The biggest financial mistakes business owners make

The biggest financial mistakes business owners make

September 08, 2022 / Rich Best

Green Practices are Good for Nature and for Business
Green Practices are Good for Nature and for Business

Green Practices are Good for Nature and for Business

September 01, 2022 / F&M Trust

Planned giving in 2023
Planned giving in 2023

Planned giving in 2023

August 25, 2022 / The Merrill Anderson Company

Student Loan Scams
Student Loan Scams

Student Loan Scams

August 18, 2022 / Ray Wills

Unconventional Ways to Fund a Small Business
Unconventional Ways to Fund a Small Business

Unconventional Ways to Fund a Small Business

August 11, 2022 / Arla Wallace

Fear of Missing Out is not a sound investment philosophy
Fear of Missing Out is not a sound investment philosophy

Fear of Missing Out is not a sound investment philosophy

August 04, 2022 / The Merrill Anderson Company

Join our e-newsletter

Sign up for our e-newsletter to get new content each month.

NOTICE: YOU ARE LEAVING F&M TRUST!

You are now leaving the F&M Trust website. Links to third-party sites are provided for your convenience. Such sites are not within our control and may not follow the same privacy, security or accessibility standards as ours. F&M Trust neither endorses nor guarantees offerings of the third-party providers, nor is F&M Trust responsible for the security, content or availability of third-party sites, their partners or advertisers.