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Kent Thune

Stocks Still in Black For Year: Gearing Up for Strong Holidays

By November 19, 2012

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With Black Friday coming at the end of this week, I thought it timely and noteworthy to see how stocks have performed year-to-date, especially post-election, mid-fiscal cliff anxiety, and pre-holidays.  How do you think the S&P 500 has performed thus far in 2012?  Would you guess a decline in value?  Break-even?  Single-digit gains at best?

How about none of the above?  From the opening price of the first trading day of the year, January 3, to the close of the market, November 19, 2012, the S&P 500 Index has risen in price 10.28%.  This impressive gain includes a recent decline of roughly 6.00% in the past month in the wake of a cliffhanger presidential election and heightened worries over the fiscal cliff of 2013.

Stocks have received a 2.00% boost this week by increasing confidence that a deal will be struck in Congress to avert the fiscal cliff.  Also, investors know that the biggest lynchpin of the economy, the housing market, is consistently showing signs of recovery.

Adding to potential for short-term good news, Congress is out of session for the remainder of the week and one of the best years in recent retail history is about to kick off on Black Friday.

Perhaps the lesson to be learned by observing year-to-date market performance is that market timing is difficult in this environment and the buy-and-hold model is still best for the average investor.  The bullish technical analysts are happy to be above 1380 on the S&P 500 again and the fundamental investors are happy to see historically low P/E ratios on stock valuations.  At the moment, there seems to be good deals for all shoppers to begin the 2012 holiday season.

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