This Week :
Our Prayers go out to all those who were affected by last weeks’ weather events…ending in this past weekend’s storms; tornadoes to the south of us, and white-out snow blizzards to our north. We in coastal Virginia had quite the early season thunder/lightning storm last evening, but nothing like those other effected areas. Stay safe.
Bull market's tenth birthday. The S&P 500 bull market will celebrate its tenth birthday on Saturday, March 9, 2019. During that period, the S&P 500 has increased more than fourfold in value including dividends, producing a total return of 409% (17.7% annualized) while rising 313% in price*. Based on current economic data, without unforeseen headwinds, I believe we may continue to be talking about the length of this bull market as we approach year 11 of the economic expansion.
Earnings picked up a bit of ground last week. With 484 S&P 500 Index companies having reported (10 more companies report this week), fourth quarter 2018 earnings growth is tracking to +16.7% year over year, which is 2.5 percentage points (ppt) above mid-January analyst estimates, and a 0.4 ppt increase over the prior week. Energy has produced by far the biggest upside surprise for the quarter, with communication services a distant second*.
As a matter for comparison, for the S&P 500 index to achieve 3000 this year (a 7% increase from the 1 March close 2803 level); with the current forward earning estimate of 167.93, we would have to see the Price-Earnings (PE) ratio market multiplier expand to 17.8 from the 31
January PE of 15.7. As a matter of background, the Price-Earnings Ratio has a 25-year average of 16.1; and had achieved approximately 18.0 in 2018 prior to the stock market retraction in the 4th quarter 2018**. (1)
Have a Brilliant, and Blessed week!
James Anthony Pavik Sr.
President / Chief Wealth and Investment Officer
ChFEBC℠ - Chartered Federal Employee Benefits Consultant
Pavik Wealth Management, Inc.
Historic Foster-Faulkner Building
138 Main Street, Suite 104
Mail: P.O. Box 145
Mathews, Virginia 23109-0145
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* LPL Research 3/4/19
** JP Morgan Guide to the Markets 1/31/19
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.