Succinct Summation of Week’s Events for 8.28.20 (plus the Peter Lynch strategy)

Below please find the usual weekly summation, the main positive being the Fed's new statement that interest rates will not be raised for the foreseeable future (though I think "never, ever, ever" is a bit of an overstatement.)  The negatives remain the same: continued social unrest and jobless claims rising (and does anyone not think that those two are related?)  The bonus this Sunday is another AAII article, this one another very good primer on investing but based on the strategies of one of history's most successful investors -- Peter Lynch.  There follows a bit of a promo for AAII's proprietary advisory subscription "A+ Investor." Hope everyone enjoyed this beautiful weekend.  

Picking ETFs and mutual funds.

For your reading pleasure this weekend I have discovered an article from this week's AAII which talks about one of our favorite topics -- ETFs. Since most of us favor ETFs, this should provide a very good review and primer regarding the process of selecting ETFs and mutual funds.  Enjoy the beautiful weekend. 

Tech powers S&P 500 to record closing high, Dow now positive for the year

It was another 3-digit day for the Dow with the continuing rotation to value helping to put the blue chip index finally in the black for the year. All three major indexes had gains which put the S&P at its sixth record high since August 18^th and the Nasdaq at still one more record, putting the latter two in their fifth consecutive weekly gains.  The rally was driven by better than expected consumer confidence (spending) though savings, an indicator of uncertainty, remained well above pre-pandemic levels. Other good news included the Fed’s new acceptance of higher inflation, word from the White House that Trump is willing to sign the $1.3 trillion pandemic relief bill, and reports that Hurricane Laura did not cause as much damage as initially feared.  Volume is still below the 4-week average at just over 8 billion. 

S&P, Dow close higher on new Fed inflation stance, COVID test hopes

The Dow and S&P once again advanced but the Nasdaq took a step back as the markets took another rotation out of growth (tech) and into value. The Fed’s remarks again validated a dovish stance but at least investors got the wanted news of a steepening of the yield curve, something the Fed minutes last month backed away from. With new jobless claims still above the 1 million mark for the week, Powell announced a strategy for full employment but that appears currently destined for the long haul.  But the Dow picked up enough steam today to jump from 4% shy of its February record to today just 3.6%  shy of that goal. Volume remains below average at just under 9.2 billion, but at least it’s just a tad below the 4-week average of just under 9.4 billion. 

Wall Street closes higher as momentum stocks push S&P 500, Nasdaq to new highs

As has been the case for quite some time, the tech companies continue to do well and have pushed the Nasdaq to its 39^th closing all-time high for the year and the S&P to its fourth consecutive record high.  These are all companies that have proven to be open for business and profitable regardless of the pandemic. The Dow remains 4.1% below its pre-pandemic record but just 0.7% below a YTD gain. Volume remains below average at 8.5 billion. 

S&P 500, Nasdaq close at record highs on trade, vaccine developments

It was still another record setting day for both the Nasdaq and S&P even though the Dow took a modest dive as Apple’s stock sank almost 1% after a few days of impressive gains over its upcoming stock split this Friday. Apple’s split has triggered a reshuffling of the blue chip average with Salesforce replacing Exxon, Amgen Pfizer and Honeywell Raytheon creating sufficient dilution to bring the Dow down 60 points.  The good news for the day is Astra Zeneca beginning trials for its COVID-19 drug and new home sales surging to a 13 year high.  The concern remains that the stock market does not seem to currently reflect our economic problems but today’s expert was quick to point out that the market always reflects investors’ views of the future, not the present.  “Wall Street believes in a year from now the economy is going to improve.” But for now it is true that the market and the economy are in opposite directions. Uncertainty remains which is reflected in the continuing below average volume of 8.3 billion. 

S&P, Nasdaq close at new highs as Wall Street rides bull momentum

It was another great day for all three indexes with the S&P and Nasdaq reaching new records on pandemic optimism and all global markets boosted by Friday’s upcoming 4 to 1 split on Apple stock. A new bull market has again been confirmed though the Dow, with today’s 378 point boost, remains 4.2% below its record. But since it was down 5% as recently as last Wednesday, being today just over 4% is pretty good progress.   Besides Apple, the big positives today were newly announced vaccine progress and the emergency authorization of a new plasma treatment for COVID-19.  But uncertainty being what it is, volume remains below average at 8.9 billion.