Where We Stand: Investing

HERE ARE THE LATEST NUMBERS from the world of investing:

  • The S&P 500 slipped 1.2% in 2018’s first quarter, after gaining 19.4% in 2017. These figures don’t include dividends. Since the market bottomed on March 9, 2009, the shares in the S&P 500 have climbed 290%, though they remain just 73% above their March 24, 2000, peak.
  • While 2018’s first quarter saw the return of volatility after a notably calm 2017, it left market indices largely unchanged. U.S. growth stocks posted modest gains in 2018’s first three months, while value stocks had modest losses. U.S. smaller-company stocks fared better than large-cap stocks, but there wasn’t much in it. Similarly, developed foreign markets posted a slight loss and emerging markets notched gains, but the indices were only separated by a few percentage points.
  • The benchmark 10-year Treasury note finished 2018’s first quarter at 2.74%, up from 2.41% at year-end 2017. In early July 2016, the 10-year yield hit a record low of 1.37%.
  • Short-term interest rates climbed in 2018’s first quarter, pushing up taxable money-market mutual fund yields to an average 1.2% and one-year certificate of deposit yields to 2%. Matters should continue to improve: The Federal Reserve raised its target for the federal funds rate in March, June and December 2017, and again in March 2018.
  • Real assets had mixed results. Oil, which finished 2017 at $60, was $5 higher three months later. Real estate investment trusts lost money in 2018’s first quarter, after posting subdued returns in both 2016 and 2017. Gold, which ended 2017 at $1,305, stood at $1,330 at the end of 2018’s first quarter.
  • Bitcoin was hammered in the first quarter, falling to below $7,000 from above $14,000 at year-end 2017.
  • In March 2018, the Federal Reserve projected that the U.S. economy will expand 2.7% in 2018, with unemployment dipping to 3.8% and inflation running at 1.9%. Since the economic contraction of 2008 and 2009, real (after-inflation) gross domestic product has grown fairly steadily. But the pace of growth has been modest, averaging 2.1% a year over the eight years through 2017, including growth of 2.3% in 2017 and 1.5% in 2016.
  • As of 2016, 51.9% of U.S. families were invested in the stock market, up from 48.8% three years earlier, but below the 53.2% peak recorded in 2007, according to the Federal Reserve’s latest Survey of Consumer Finances. The survey is conducted every three years.
  • Figures from the Investment Company Institute show that stock index mutual funds accounted for 24.9% of stock mutual fund assets at year-end 2016, up from 11.4% a decade earlier. Moreover, mutual funds aren’t the only way to index. If you go the indexing route, you can choose between index mutual funds and exchange-traded index funds. Over the past 10 years, index mutual funds and exchange-traded funds that focus on U.S. stocks have together attracted $1.4 trillion in net new cash from investors, even as actively managed U.S. stock funds lost $1.1 trillion.

Want to get a handle on stock and bond market valuations? Check out the chapter on financial markets.

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