The Big Picture

2017 was quite a year for the stock market. 2018 is picking up right where 2017 left off.  What to make of it all?

Last year started off with a bang, thanks to the election of President Trump and the sweep of both the House of Representatives and the Senate by the Republican Party. Supporting the market euphoria were hopes of a friendlier regulatory environment, tax reform and the potential for a large, national infrastructure project.

Powered by Amazon, the NASDAQ composite rose to a record high of 5487.94 on January 5, 2017.  The S&P 500 index joined in the fun on Friday January 6. 2017 closing at a record 2276.98.  The laggard of the indices, the Dow Jones Industrial Average finally got the message and closed at a record 20,068.51 on January 25th, and it was off to the races.

All in all, 2017 was the best year since 2013 for the major stick market indices.  The Dow Jones Industrial Average rose 25.1%; the S&P 500 index rose 19.4% while the NASDAQ composite rose 28.2%.  Having lagged for most of the year, the Russell 2000 index 13.1%, thanks in part to optimism regarding tax reform, but the gain was less than it’s 2016 gain of 19.5%.

The Dow managed to score 71 closing records in 2017, surpassing its 1995 record of 69 record closes.  It also marked the fastest pace of blowing through 1,000 level markers.  The S&P 500 index, on a 14-month winning streak, tallied 62 record closes last year. The NASDAQ enjoyed a 6-year winning streak and registered 72 record closes in 2017.

This is now officially the 2nd-longest bull market in recent history, surpassing the 1949-1956 bull market, and closing in on the 1987-2000 stretch.

This domestic rally isn’t isolated.  Global stocks have performed well too.  The MSCI index, a measure of global equity performance, had 61 record closes in 2017.  This in an environment of little to no volatility.  Average monthly volatility was the lowest since 1970 and it is most unusual that there has been no correction, generally defined as a move of at least 10%.

I, Investor

It should be apparent by now that you won’t get rich working for money; you must have money working for you.  According to the Bureau of Labor Statistics, for the period from December 2016 to December 2017, real average hourly earnings grew just 0.1%.  If you had an employer-sponsored savings plan or a 401(k), you benefited from the global recovery, the rise in consumer confidence and a 17-year low in the jobless rate.  That translated into year-end profits of $19,400 on a $100,000 investment in the S&P 500 index.

If you’re not invested in the stock market, you should consider it.  You must be in it to win it.

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