Weekly Market Commentary
January 30, 2017
The Markets
It’s like America rolled up its sleeves, seized a big mallet, swung down hard and rang the bell.
Congratulations on hitting 20,000 (Dow Jones Industrial Average). It was the first time in
history. It has been flirting with this level since December 13, 2016, when it first closed less
than 100 point away from 20,000.
A bit of history:
• 100: Let’s start with January 1906 when the Dow first closed above 100. It was stuck below that level
until 1924 and the 1920’s bull market. It traded consistently beneath this level until 1924 and the 1920’s
bull market. After the stock market crash of the Great Depression, the Dow last traded beneath 100 on
May 26, 1942—some 36 years from the first time it closed above this level.
• 1,000: The Dow first hit the 1,000 level on an intraday basis on January 18, 1966. It didn’t officially
close above this level until November 14, 1972—nearly seven years later. It didn’t really break out
above 1,000 for another 10 years in late 1982.
• 10,000: The Dow first closed above 10,000 in early 1999. After two massive bear markets, the last time
it closed beneath the 10,000 level was another 11 years later in summer 2010.
All three milestones took place with extended valuations and after strong bull markets, which could help explain
why longer-term underperformance occurred.
• 19,000: The Dow closed above 19,000 for the first time ever on November 22, 2016, and it only took 42
more days to close above 20,000.
What does it tell us about the way ahead? From a review of past milestones broken, I fail to see a consistent
trend. The aftermath seemed to indicate business as usual. Breaking 20,000 makes good news. The Dow has
hit a new high. But there’s no magic to it. What matters are valuations, technicals and fundamentals – not big
round numbers that drive stock market prices.
One fundamental that matters is risk: risk and reward. One of our investment convictions is: risk and
reward are related. Did you know that 52% of American adults were invested in the US stock market last
year, either in personal accounts or through their retirement portfolios? It means that the other half of the US
missed out. Last year, the S&P 500 gained +12.0 %(total return), higher than the index’s trailing 50-year
average performance of +10.2% per year. (By the Numbers 01-23-17; Source: Gallup)*
No doubt, fear is a key deterrent – fear of loss. Because of it, some will never enter the market. Others entered,
but sold out in the Great Recession of 2007-2009 and never returned. We pay close attention to your riskreward profile and shape your investments to pursue prosperity yet allow for confidence.
01-27-2017
Week
Y-T-D
1-Year
3-Year
5-Year
10-Year
Dow Jones Industrial
+0.03%
+1.68%
+26.02%
+8.26%
+9.68%
+4.87%
Standard & Poor's 500 (Domestic Stocks)
-0.18%
+2.50%
+21.87%
+8.80%
+11.76%
+4.90%
+5.11 %
+26.69%
+11.50%
+14.98%
+8.80%
NASDAQ Composite
-0.08%
Notes: OUR REPORTING on DJIA, S&P 500, and NASDAQ returns to INCLUDES REINVESTED DIVIDENDS and the three-,
five-, and 10-year returns are annualized; Sources: Google Finance and Morningstar.com. Past performance is no guarantee of future
results.
Who Was The Best President For Stock Returns? Posted by LPL Research 1/25/2017
https://lplresearch.com/2017/01/25/who-was-the-best-president-for-stock-returns/
President Trump was inaugurated as the 45th President of the United States on Friday, while President Obama
went back to being a regular citizen. This brings up the question of how stocks did under President Obama, and
who was the best president for stock returns?
Turns out, the Dow gained a very impressive 150% during the eight years President Obama was in office. This
ranks as the fourth best out of the 19 presidents since 1900.
Here is the breakdown of all the presidents and Dow returns since 1900.
Note: Red signifies a Republican and blue signifies Democrat.
The best return ever was during the Roaring ‘20s and President Calvin Coolidge. The Dow gained an incredible
255% in just under six years.
The worst return ever followed the Roaring ‘20s, as the Dow crashed nearly 83% under President Herbert
Hoover. Not too surprisingly, Hoover was only a one-term president.
Weekly Focus – Think About It
I have never met an unhappy generous person.
Abundant Blessings in giving and receiving,
Erny, for the Malakoff Team
Joel, Kathleen, Peggy & Nik
P.S. Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the
list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.
*The opinions voiced in this material are for general information only and are not intended to provide specific advice or
recommendations for any individual. To determine which investments(s) may be appropriate for you, consult your
financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All
indices are unmanaged and may not be invested into directly.
*Investing involves risk, including loss of principal.
*Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be
successful.
*Portions of this newsletter were prepared by Peak Advisor Alliance
*The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by
individuals and institutional investors.
*The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of
the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major
industries.
*The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The
NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated
throughout the trading day, and is related to the total value of the Index.
*International investing involves special risks such as currency fluctuation and political instability and may not be suitable
for all investors.
*These risks are often heightened for investments in emerging markets.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance
Sources:
LPL Reseach
Sources:
http://www.barrons.com/articles/are-you-ready-for-dow-20-000-1481662531
http://www.economicshelp.org/blog/glossary/animal-spirits/
https://www.ft.com/content/bfb966b4-e3e5-11e6-8405-9e5580d6e5fb (or go to https://s3-us-west2.amazonaws.com/peakcontent/+Peak+Commentary/01-30-17_FinancialTimesTrump_Trade_Picks_Up_Speed_in_Presidents_First_Week-Footnote_3.pdf)
http://insight.factset.com/hubfs/Resources/Research%20Desk/Earnings%20Insight/EarningsInsight_012717.pdf (Page 5)
https://www.bloomberg.com/news/articles/2017-01-28/google-recalls-some-staff-to-u-s-after-trump-immigration-order
https://www.sciencedaily.com/releases/2016/12/161215175329.htm
https://www.journals.elsevier.com/journal-of-consumer-psychology/forthcoming-articles/meta-analysis-parental-styleand-consumer-socialization
http://www.press.uchicago.edu/Misc/Chicago/805328.html