With Dow raced 25% higher, S&P 500 zoomed 19% and Nasdaq jumped an impressive 28%, the stock market had its best year in 2017. “The index breezed through milestones”, and its momentum was carried over into 2018, when Dow soared to new high of 26000 this Wednesday. It was said that it took only eight days for Dow to rise 1000 points, an unprecedented pace compared with the shortest 23 days in the history.
Let's look at more good statistics below:
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“The S&P 500 stock index gained more than 200% in the seven years from 2009 to the month before the 2016 election. By now the total increase is more than 300%”. (WSJ 01/17/2018)
“The price/earnings ratio for the S&P 500 is now 26.8, higher than at any time in the 100 years before 1998 and 70% above its historical average.” (WSJ 01/17/2018)
It had taken the Dow 14 years to climb from 10,000 to 15,000, but just three and a half years to reach 20,000 in 2017.
At nearly nine years old, the bull market is now the second-oldest and second-strongest in history.
Trump has repeatedly bragged about roaring stock prices. "70 Record Closes for the Dow so far this year!" Trump tweeted on December 18， 2017. He added, "Wow!"
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I understand that the biggest catalyst is the sweeping corporate tax cut signed into the law at the end of 2017, which will expect to bring back the mountain of offshore cash of about $1.4 trillion to the U.S.
While “most market strategists predicted more gains in 2018, especially as the impact of the tax overhaul are felt”, Martin Feldstein, a professor at Harvard shouted out in January 17, 2018 edition of Wall Street Journal that “Stocks Are Headed for a Fall”.
I know I am a conservative person. Since the stock market crashed in 2001, I have refrained myself from investing more in the market ever since, except the roll-over 401K from the previous companies. I know I missed the ride, but at least that gave me a peace of mind. I don't know what strategy or advice we shall follow in 2018. Timing the market is not something we are good at. So the best strategy maybe is to stay put what we have in the market, and wait and see?
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Below is an article excerpt from 1/18/2018 WSJ
‘Melt-up’ powers Dow past 26000
Mood shifts to greed from fear, as investors don’t want to miss out on continuing rally.
The Dow Jones Industrial Average closed above 26000 for the first time on Wednesday, sprinting to a 1000-point milestone just eight trading days after toppling the previous one, its fastest run ever.
The most recent gains have been propelled in part by a sudden hunger for stocks among certain money managers and individual investors who have long been wary of the nearly nine-year bull market.
Some market observers have dubbed this phenomenon “Fear of Missing Out,” as stock-market records fall on a almost weekly basis. Others refer to a “melt-up” market, where the prevailing mood is shifting to greed from fear and investors stampeded in without worrying much about valuation and fundamentals.
The majority of investors who participated in a January poll said they expect the stock market to peak in 2019 or beyond. A month ago, the majority expected a top in the second quarter of 2018.
Some say the quick rise is a little too reminiscent of the tech-heavy Nasdaq composite’s run in late 199 and early 2000.
