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    Markets "In a Nutshell" for December 12, 2017

    Dec 12, 2017

    Investment Week at a Glance

    Stocks were mixed last week. The Dow Jones Industrial average was up 0.4%, the S&P 500 rose 0.4%, the New York Stock Exchange Composite (2,000 stocks) gained 0.2%. The “average investor’s index” (Value Line index) dropped 0.1%. Foreign stocks (DJ Global ex U.S.) were down 0.2% and bond prices (Barclays Aggregate Bond index) dropped last week as the 10 year Treasury yield ended at 2.38%. (Data sources: Barron’s Financial, Wall Street Journal)

     

    More stock gains ahead in 2018?  

    Investment strategists see 7% U.S. stock gains in 2018. In a Barron’s Financial survey (12/11), strategists cite rising corporate profits, a growing global economy and low interest rates as fuel to push the bull stock market through its ninth straight year. To be sure there are some threats to the market such as expensive stock valuations, potentially higher interest rates, and a possible failure of the tax overhaul. But barring a major shock, it is looking positive for stocks in 2018.

     

    Bitcoin mania: “Even Grandma is Buying!”

    How could we write a ‘‘Nutshell” without chatting about Bitcoin? Bitcoin (a form of digital currency) has taken speculative investment mania by storm by skyrocketing 1000% in price this year. “Even Grandma Is In,” read a headline from the Wall Street Journal (11/30) as it explained that a Bitcoin investor’s grandmother invested a few hundred dollars in Bitcoin (although mistakenly thinking it was a “big coin” and she was investing in a piece of literally a large sized coin). So should you jump in and plow your life savings into Bitcoin? Probably better suited at this time for small amounts of “speculation” money as any investment that jumps 1000% can also plunge quickly. However, the concept of digital currencies is likely one that will grow over time and the new technology is something to keep a close eye on.

     

    Jobs aplenty in November and U.S. economy continues to grow

    The Labor Dept. reported that 228,000 new jobs were created in the U.S. in November while the unemployment rate dropped to a 17 year low of 4.1%. The good jobs news added to already good economic news as the U.S. economy logged in another 3%+ annualized growth rate.

     

    Quiz:

    We wrote above of the astounding 1000% gain of Bitcoin this year. This gain marks the largest increase of any of the more recent investment manias. Which of the following had the 2nd largest increase at 500%? a. Dot com/tech stocks 1994-2000 b. Gold prices 2001-11 c. Japanese stocks 1983-89 d. U.S. home prices 2001-06. Answer is below…

     

    Have a good week!

     

     

     

    Answer to quiz: 

    a. Dot com/tech stocks soared about 500%.