Markets “In a Nutshell” for January 2, 2020
Investment Week at a Glance
Stocks were up last week. The Dow Jones Industrial average gained 0.7% while the S&P 500 was up 0.6%. The New York Stock Exchange Composite (2,000 stocks) rose 0.4%. The “average investor’s index” (Value Line index) was up 0.07%. Foreign stocks (EAFE index) were up 0.70%. Bond yields rose (bond prices down) as the 10 year Treasury ended at 1.87%. (Data sources: Barron’s Financial, Wall Street Journal)
Master Investor Peter Lynch Sees Value in Energy
Barron’s (12/22) interviewed legendary investor Peter Lynch to get his views on the investment markets. Lynch, the former star manager of Fidelity Magellan, was one of the more prolific money managers in history, racking up annual returns of 29% from 1977-90. Lynch is still a believer in growth stocks and also looks for stocks which are not being recognized for their growth potential. One area of the market Lynch is looking is oil and energy stocks. He says while oil is up 25% the past year, energy stocks have dropped as investors remain sour on the sector. While over the very long term alternate energy sources may overtake oil as a primary energy source, demand for oil and natural gas is likely to remain strong over the next decades.
What’s Ahead in 2020?
2019 is now in the books. A good year as stocks, bonds, gold, and oil all marked positive returns for the first time since the 1980’s. Many see stocks continuing to rise in 2020 as the Fed and other central banks keep interest rates low and the money spigot on (the Fed has initiated a monthly printing of $60 billion a month into the economy). Foreign stocks, which have lagged the U.S. for years, may be due for a year of outperformance as Europe recovers from economic weakness. Bonds can be steady returners as rates stay steady. Read on…
Ahead in 2020?
As noted above, energy stocks may be ready to rebound in 2020 as oil prices rise with recovering world economies. Some see gold rising in anticipation of a rise in inflation (central banks printing money can be inflationary). Central banks have been big buyers of gold the past year, buying 651 tons, the most since 1971. Dividend stocks and REITS can benefit as investors seek yield above savings accounts, checking accounts, CD’s and money markets.
Quiz:
Since 1944, there have been 19 presidential election years. How many of those years produced positive stock returns?
Answer is below.
Have a good week!
Answer to quiz: 4. 17. Only 2000 and 2008 were negative years.