|Dow Monthly Closes Through February, 2013|
Close, but No CigarOn Wednesday, the Dow closed at a new 52 week & five-year high, and less than 100 points from a new all-time high -- even in the face of onrushing sequestration. It turns out Wall street was not afraid of the big bad sequestration. While the market did in fact retreat on the final day of the month, there was little indication of impending doom. Rather, it appeared to be little more than the normal caution that often accompanies approaches to major milestones such as all-time highs.
Weren't those cuts originally designed to be so intolerable that they would force congress to compromise on a more reasonable solution? Now, the conventional wisdom seems to be that cuts that were being called draconian only a month ago are actually a miniscule percentage of the economy, and will likely do little damage. Some are even arguing that the arbitrary cuts may actually be better than what Congress would have negotiated!
In short, so much for February's manufactured-by-Congress crisis; onward to their March crisis.
Bottom line? The DJIA (Dow Jones Industrial Average) closed February at 14,054.49, up 1.4% for the month. (See chart above. Click to expand.)
Where Are We Now? February 2013, Quarter/Year & Recovery-To-Date Results
Here's where we stand vs some key dates and milestones.
- From Prior Month Close of 13,860 the Dow is up 194 points (1.4%)
- From the new 52-Week High of 14,075 onFebruary 27: we're down 21 points (0.1%)
- From 4th Quarter/ 2012 Close of 13,104: Up 950 points (7.3%) for the year
- From 52-Week Low of 12,101 on June 4, 2012: Up 1953 points (16.1%)
- From One Year Ago Close of 12,952 at end of February, 2012: the Dow is up 1102 points ( 8.5%).
- From Crash Low of 6547 on March 9, 2009: Up 7507 points (114.7%)
- From All-Time High of 14,165 on Oct 9, 2007: the Dow is down only 110 points (0.8%) !
Note: At the end of the crash, the Dow had lost about 54% of its value (from the all-time high). For an explanation of how it can be up well over 100% since then and still be below the all-time high, see The Importance of Avoiding Large Losses.
The Next 10 YearsMy model for projecting 10-year stock market returns is currently projecting 10-year returns below 5%. Since my model is earnings based, this is a preliminary number. I'll have to wait for 2012 earnings data before finalizing the projection. I'll post interim updates monthly, and the "official" update after the end of the first quarter.
Interest RatesU.S. Treasury constant maturity interest rates decreased during the month. Five year treasury yields went from 0.88% at the end of last month to 0.77% this month; ten year yields decreased from 2.02% to 1.89%. My interest rate forecasting model continues to forecast increasing rates over the next five years. That model forecasts 1-year rates rising from the current 0.17% to 2.25% (down from 2.4% last month), and 5-year rates rising from 0.77% to 3.02% (down from 3.2% last month).
Related Post100 Years of Stock Market History: Bigger perspective on "Where are we now?" Includes 100-year chart and discussion of the long flat periods.
Dow Yearly Returns: bar graph of yearly total returns (i.e., including dividends)
What has the range of returns (minimum & maximum) been for 1,2, 3, ... 100-year periods?
10-Year Stock Market Projection The most recent "official" projection. Comparison of projections to actuals.
100 Years of Interest Rate History: graph of Treasury Note interest rates since 1900.
Who's Afraid of a Sideways Market?: Interesting perspective on long flat periods from Morningstar.
Why Fund Investors Earn Lower Returns Than the Funds They Own(!): the impact of timing.
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Copyright © 2013 Last modified: 3/30/2013