HERE ARE THE LATEST trends in the world of investing:
- The S&P 500 jumped 20% in 2020’s second quarter, after slumping 20% in the first quarter. But because of the way compounding works—remember, losses hurt more than gains help—the S&P 500 was down 4% in 2020’s first six months. These figures don’t include dividends. Since the market bottomed on March 9, 2009, the shares in the S&P 500 have climbed 358%, though they remain just 103% above their March 24, 2000, peak—a modest gain over a turbulent 20-year stretch.
- While most stocks posted losses in 2020’s first half, the pattern resembled that seen in recent years: U.S. growth stocks fared better than value shares, while large-company shares held up better than smaller-cap stocks. Similarly, both developed foreign markets and emerging markets once again lagged behind U.S. shares.
- Treasury bond prices rose and yields fell sharply in 2020, with the benchmark 10-year Treasury note yielding 0.66% on June 30, down from 1.92% six months earlier. In early March 2020, the 10-year yield hit a record low of 0.54%.
- The Federal Reserve slashed short-term interest rates in 2020, as it sought to prop up the slumping economy. One consequence: One-year Treasury bills were yielding just 0.17% as of June 30.
- Real assets had mixed performance in 2020’s first six months. Oil prices plummeted to $20 a barrel in the first quarter but recovered to $40 in the second quarter, though oil prices remain well below the $61 as of year-end 2019. Real estate investment trusts fell hard during 2020’s bear market, before partially recouping their losses during the strong rally that followed. But the standout performer was gold, which climbed to $1,799 as of June 30, up from $1,520 at year-end 2019.
- In June, the Federal Reserve projected that the U.S. economy would shrink 6.5% in 2020, with unemployment finishing the year at 9.3% and core inflation running at 1%.
- As of 2016, 51.9% of U.S. families were invested in the stock market, up from 48.8% three years earlier, but below the 53.2% peak recorded in 2007, according to the Federal Reserve’s Survey of Consumer Finances. The survey is conducted every three years.
Want to get a handle on stock and bond market valuations? Check out the chapter on financial markets.
Next: Four Steps
Articles: Collective Wisdom and Investing: 10 Questions to Ask