April 17, 2019

Good morning!

At 2907, the S&P 500 closed last Friday (4/12/19) at a 2019 calendar year high.  The stock index now has to gain less than +1% to eclipse its all-time closing high (2931) set just under 7 months ago on 9/20/18.  But success in the stock market has historically been best enjoyed over the long haul.  The split between “up” and “down” time periods for the S&P 500 since 1950, i.e., over the last 69 years, is 54/46 when the investing time horizon is measured by days, 60/40 for months, 66/34 for quarters, 72/28 for years, 78/22 for rolling 5-year periods, and 88/12 for rolling 10-year stretches (source: BTN Research).       

American home builders began construction on 876,000 single-family homes in 2018, the 7th year of increasing home starts since this measurement bottomed at 431,000 in 2011.  The all-time US record for home starts in a single year was 1.72 million in 2005, a total achieved during a period that saw at least 1.36 million new home starts for 5 straight years through 2006 before the real estate market collapsed (source: Census Bureau).  

As of today (4/15/19), the US banking system has gone 16 months since our nation’s last bank failure took place on 12/15/17.  That’s the longest stretch without a bank bailout in our country since February 2007 or more than a dozen years ago.  Over the last 10 years, 480 banks failed nationwide, including 157 during calendar year 2010 alone (source: Federal Deposit Insurance Corporation).

Notable Numbers for the Week:

1.     IMPACTS THE SIZE OF CONTRIBUTIONS - The average assumed rate of return, i.e., the discount rate, used by the pension plans maintained by state and local governments has dropped from 7.9% in 2010 to 7.3% today (source: National Association of State Retirement Administrators). 

2.     LOWEST IN YEARS - The percentage of Americans that are unemployed or are working part-time only because they are unable to find full-time work has fallen to 7.3% of the civilian labor force as of March 2019, the lowest percentage reported for this statistic since December 2000 (source: Department of Labor). 

3.     ONE FOLLOWS THE OTHER - From the end of 2018 to the close of trading last Friday 4/12/19, the price of a barrel of oil has increased +41% (from $45.41 to $63.89 a barrel) and the price of a gallon of gasoline has increased +24% (from $2.266 to $2.811 a gallon) (source: NYMEX, AAA).

4.     IN LESS THAN A GENERATION - The average cost of 1-year of college at an average 4-year public institution (including tuition, fees, room and board) has tripled over the last 22 years, rising from $7,142 for academic year 1996-97 to $21,370 during academic year 2018-19 (source: College Board). 

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Joshua DandurandComment