Week in Review

capture Stocks continued to push higher into record territory this week, with major averages up about 1%. Those in the know, believe that positive earnings are driving equities higher. With few exceptions, the earnings season so far has been positive and companies are providing guidance that is, at least, in line with expectations.

       While crude prices remained virtually unchanged, they appear to be leveling off at $54.00/bbl. However, energy stocks were the only drag on markets this past week, surrendering 0.7%. All other sectors were positive, led by consumer stocks, industrials and technology. Gold prices spiked $16/oz. to $1,234.40 as the inflation gauge ticked higher. And while job growth is trending up, wage growth is not. Therefore, it is unlikely that the Federal Reserve will change course anytime soon. Things are less settled overseas, where a more confrontational approach is being taken by Washington on trade, immigration and military matters. For now, global markets are taking it all in stride.

       This week we will get fiscal first quarter earnings from Applied Materials with consensus of $.66 per share vs. $.26 a year ago, and from Deere & Co. ($0.58 compared to $0.80). The bulls are still in charge, as good news on the economic and earnings fronts, the potential for lower taxes and reduced regulation remain popular on Wall Street. The good news, however, would seem to be adequately reflected in the generous price-earnings multiples now in place, suggesting that while stocks could still go higher, the possibility of a retracement cannot be ruled out.

trivia   Here is the answer to last week’s trivia question: Super Bowl commercials can fetch upwards of $5 million for a thirty-second spot. Which company over the years has aired the most Super Bowl commercials? PepsiCo., Anheuser-Busch InBev, Walt Disney Co., or Pizza Hut. Answer: Anheuser-Busch InBev (Budweiser and Bud Light brands combined for 36 commercials).

Today’s Trivia Question: 2014 marked the record high for initial public offerings (IPOs) for a total of 383. How many IPOs came to market in 2016? 128, 187, 209 or 266.

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3 Comments

  1. Cathy

    In the link below, can you read the three bullet points under the section: How to Get Started Investing With Just $100 (for kids) and tell me which one would make a $100 investment, just $100, grow over 10 years? I was told there is no way to predict that, but I can ask you. Also, if you have a better suggestion, let me know. Here’s the link: https://www.thebalance.com/best-mutual-funds-for-kids-2466347
    I appreciate your adivce. Thanks.
    Cathy from New Jersey

  2. Cathy from New Jersey:

    First off, each of the three Charles Schwab funds are highly rated and would make a great initial investment for anyone entering the stock market. Your sources are correct: There is no way to determine which will do best going forward, so the main thing is to just “get started”. I make it a policy not to recommend individual stocks or funds, and even the one’s I have in my three portfolios are “candidates for consideration”, not “buy” recommendations.

    That being said, I believe a good start for children would be an S&P 500 Index choice either from Schwab or other investment companies that provide for similar tracking. And, as you mentioned in your question, SWPPX can be purchased with as little as $100, so it’s a good place to start. It also has very low expenses, so one gets a big bang for the buck. The fund generally invests at least 80% of its net assets in stocks that are included in the S&P 500 Index and is weighted by market capitalization. So, large positions include such names as: Apple, Microsoft, Exxon Mobil, Johnson & Johnson and JPMorgan Chase.

    The other two choices are fine, too, but for kids I think SWPPX makes the most sense. A balanced fund like the SWOBX has 35% in bonds, which at an early stage of investing, would not – in my opinion – be all that appropriate. The international fund (SICNX) invests strictly in foreign stocks and may have a bit more risk associated with currency fluctuations. The SWPPX, on the other hand, includes large multi-nationals that are based in the U.S. and have significant exposure to world markets.

    The key to getting started is to take the plunge and to add equal amounts of funds on an anniversary date to provide an ongoing “Dollar-Cost-Average” over time. I hope this response helps and best of luck.

    • Cathy from New Jersey

      Thank you for taking the time to provide an in-depth answer. We now have a plan.

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