Friday, April 24, 2015

Finally!

Finally, fifteen years after setting its previous all-time high, the Nasdaq market closed at a new record yesterday. Thursday's finish at 5056 just barely nosed out the 5048 set on March 10, 2000, at the peak of dot-com-mania.

It's been a pretty uninspiring 15 years. Since March 10, 2000, the S&P 500 has generated an average return of 4.78 percent annually, even with the crash of 2008-09. But the Nasdaq Composite has returned less than 1 percent on an annual basis over that time frame.

Of course, many of the high-tech companies that fueled the Nasdaq's rise have gone out of business since then, but the bigger stocks have suffered too. Yahoo has lost more than half its market cap since March 2000, and Cisco’s stock has fallen by two-thirds.

Thursday, April 23, 2015

A Casualty of Gas Prices

We've talked a lot about the effects that the falling price of oil has had on various aspects of the economy. It's been good for drivers filling up at the gas pump, not so good for energy stocks. But there's new evidence of one corner that's been hurt by the drop in gas prices: Electric cars.

According to car-buying site Edmunds.com, about 22 percent of the people who traded in their hybrid and electric cars so far in 2015 have bought a new SUV. That's up from 19 percent last year, and just 12 percent three years ago. Less than half of this year’s hybrid and electric trade-ins have gotten another alternative-fuel vehicle.

Just as people are feeling more comfortable buying gasoline, gas prices have started to tick up a bit. Nationwide, they're at $2.48 a gallon this week, up from $2.42 a gallon a month ago. On the other hand, they were at $3.67 a gallon a year ago.

Wednesday, April 22, 2015

A Snapshot of Earnings Season

We're far enough into this quarter's earnings season to get a pretty realistic picture of what it's going to look like. We've had 77 companies in the S&P 500 report so far, and by the end of the week, that number will be up to 146.

In one sense, it hasn't been so good. Among those 77 companies, first-quarter earnings are on track to fall by 4.2 percent from a year ago, according to data compiled by FactSet.

But in another sense, those falling earnings have already been incorporated into stock prices. Analysts had already reduced their earnings estimates on many companies - and those companies are beating them. About 79 percent of the S&P 500 companies that have reported so far have outpaced those lowered earnings estimates.

Tuesday, April 21, 2015

Do You Wish You Had Retired Earlier?

There aren't very many of us who get to the end of our lives without any regrets. According to a new survey of retirees from New York Life, one of the most common regrets is waiting so long to retire. On average, a currently retired person wishes he or she had retired four years earlier, according to the survey.

Not surprisingly, the older the person was when they retired, the more likely they are to wish they had retired earlier. The survey found that, overall, 46 percent of current retirees wish they had retired sooner, but among those who were 60 or older when they stopped working, it rises to more than half.

There's one caveat to all these responses, though. The retirees got to include the stipulation that they would have the same amount of money in retirement no matter when they quit working - which is not usually realistic.

Monday, April 20, 2015

Return to Commodities

When the price of oil was dropping like a stone last year, it caused an exodus from commodity investments generally. Investors pulled a net $20 billion out of commodity investments like oil and precious metals last year. That continued a trend from 2013, when commodity investments dropped by a net of $47 billion.

But things are turning around this year. In the fist quarter of 2015, investors have poured $6.6 billion into commodities. That could just be the result of bargain-hunting, though, since so many commodity prices have fallen in recent years.

On the other hand, it could be a signal that we are returning to a more normal environment, where commodities are a regular part of many portfolios. Investors pumped a net of $23 billion into commodities in 2012, and $14 billion in 2011.

Friday, April 17, 2015

CEOs Get a Healthy Raise

If you were at the top of the company ladder, you probably did pretty well last year. The annual pay for CEOs rose by 12.1 percent last year, according to an analysis by professional services firm Towers Watson & Co. of 500 Standard & Poor’s 1500 companies. That accounts for their total compensation package, including such things as bonuses and stock options.

That's the highest increase in CEO pay since 2010. In 2013, the median increase in a CEO's pay was just 1.6 percent. Interestingly enough, the biggest increase was seen by CEOs at small-cap companies, who got an average raise  of 13.7 percent. CEOs at large-cap companies got an average raise of 11.6 percent, and those at mid-caps got 10.6 percent.

Meanwhile, the workers didn't fare as well. Towers & Perrin reports that the average raise for all workers last year was just 3 percent.

Thursday, April 16, 2015

China Owns a Little Less of Us

There has been a lot of talk in recent years about how China was taking charge of the American economy by buying up all our Treasury debt, but there's a new sheriff in town. In February, Japan surpassed China to become the largest foreign holder of U.S. Treasurys for the first time since 2008, according to Treasury International Capital.

Japanese holdings of Treasurys actually fell by $14.2 billion to $1.224 trillion in February. But China’s declined even more, by $15.4 billion, to end up at $1.223 trillion. On a year-over-year basis, Japan’s holdings increased $13.6 billion, while China’s declined $49.2 billion.

The third biggest holder of U.S. Treasurys may be a bit of a surprise: It's a group of countries known as the Caribbean Banking Centers. That group, which includes the Bahamas, Bermuda, Cayman Islands, Netherlands Antilles, and Panama, collectively held  $350.6 billion of our debt in February.