The market continued to roll along to new heights this past week, despite some profit taking on Friday. In all, the Dow Industrials ended the holiday-shortened week up 1.6% to 16,478.41. The S&P 500 and the NASDAQ both advanced 1.3%. And the yield on the 10-year Treasury bond closed above the 3% mark for the first time in more than two years. With two more trading days left in 2013, the Dow is up 26% on the year and the Standard & Poor’s 500 has returned nearly 29% – the thirteenth best year in the history of the index, while the NASDAQ provided more tech-savvy investors with a 37.7% gain. These gains exclude the addition of dividends, too. It looks as if portfolio income candidate Johnson & Johnson (NYSE: JNJ – $92.35) may be closing in on a sale of its blood-testing unit to the Carlyle Group for a sum of $4 billion, which will be a nice coup for the healthcare giant. JNJ was up 31.7% over the past twelve months – a bit better than the averages – plus a nearly 3% average yield and I expect further upside in 2014 as the company is uniquely situated in the global healthcare market with a strong drug pipeline, a solid position in medical devices and a turnaround in its consumer businesses.
The market will be closed again on Wednesday as we bring in the New Year and then we will be off to the races for 2014. I do not expect the spectacular returns of the past year to repeat itself, but from what I see the year should be positive. Over the next few days I will look back on the various buttonwoodproject portfolio picks and see where we made some headway and where we went wrong.
“Invest at the point of maximum pessimism”. Sir John Templeton