February 13, 2012

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Written by John V. Boardman & Andy J. Reynolds | 13 February 2012

WE WANT TOR REMIND EVERYONE OF OUR FORECASTS EVENT THIS THURSDAY AT THE BOONE CENTER AT 6PM.   ALONG WITH OUR MARKET COMMENTS AND PROJECTIONS, WE HAVE INVITED THE BLUEGRASS COMMUNITY FOUNDATION TO DISCUSS RECENT DEVELOPMENTS IN PHILANTHOPY AS WELL AS A TAX CREDIT THAT CAN FAVOR DONORS.   WE LOOK FORWARD TO SEEING EVERYONE THERE! IF YOU HAVE NOT YET REPSONDED, FEEL FREE TO REPLY TO THIS EMAIL OR CALL OUR OFFICE AT (859) 226-0625.

 

Dow 17,000?

By: John V. Boardman

In its most recent edition, Barron’s discussed the possibility of the Dow Jones Industrial Average rallying to 15,000 (and possibly 17,000) within the next two years. As of this morning, the Dow sits just above 12,800, just under 1,500 points from the all-time intraday high of 14,279.96 we witnessed in October of 2007. Interestingly, according to the magazine’s analysis and on an inflation-adjusted basis with the four years passed since the all-time high, an index level of 15,000 would actually be lower in real dollars than the previous 14,279.96 mark.   In fact, it would take a close of closer to 17,000 to represent an improvement over the previous high mark.   Just when we feel as if we were getting closer, someone has to move the target!

The core purpose of the article was to analyze the likelihood of an above average returning market over the next few years.   Jeremy Siegel, an often-optimistic economist at Wharton, looked at 141 years of market history and the study concluded that “Since the past five years have been squarely in the worse-than-average category, better-than-average returns in the two-year period just begun are now likely.” Although this seems like an elementary approach to the complicated world of financial markets, history has shown market to bounce back after historically poor returning periods. Few would argue against such a result.

This year has been a welcome start for investors after the volatility in 2011.   Statistically, volatility has come down dramatically and markets are behaving more normally (less headline driven).   However, with riots in Greece and our own budget woes, we must admit that problems still exist.   Although it can be enticing, transitioning to an overly aggressive portfolio at this juncture (after a nice market run-up), is not a responsible reaction.        

 

Boardman Wealth Planning, Inc. is a Registered Investment Advisor

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