Tuesday, January 3, 2017

13 out of 14 ain't bad - a 93% win ratio!

My apologies to Meatloaf for somewhat borrowing his song title from 1977, “Two Out of Three Ain’t Bad”. Once again, the Standard & Poor’s Index of 500 Stocks had a double digit positive return for the year. Including the end of 2016, 13 out of the previous 14 years (reflected in the chart below) had a positive rate of return. If I were to give any of you a 93% chance of winning in Las Vegas, you would most likely all take those odds, yet every day we run across people who have not invested their cash due to their fear of losing money.

Next weekend, I will write a full report on 2016 as a whole as I have many things to talk about, including the unusual situation of growth not outperforming value. Also, I need to discuss the current valuation of the market, how the new President’s economics may affect the market as well as the rallies we saw after the presidential election. For the time being, I just wanted to get the good news out so that everyone could reflect on it over the next week before I write the full blog, along with my projections for 2017.

In my blog dated January 13, 2016, which can still be found online, I made my predictions for the 2016 year. After going through a fairly extensive calculation of estimated values, I projected that the S&P 500 would be up 6.8% for 2016. And good news for us, it was up even higher. If you will refer to my quote below from that blog, you will see that while I projected 6.8%, I realized the market had the potential to do even more.

Even though I project a 6.8% return on the S&P 500 index for 2016, I fully recognize it could be significantly higher if earnings came in at better than expected. It would not surprise me if total return for the S&P 500 index is double digits in this upcoming year.” (2016)

For the time being, I just wanted to update you on the good news and let you know that I will be writing the full blog over the next week.

As always, the foregoing includes my opinions, assumptions and forecasts. It is perfectly possible that I am wrong.

Best Regards,
Joe Rollins