Earlier this week, the Dow closed at a new all-time record high of 14,253.77. It's been 1,973 days in the making, in case you were wondering. And as for the handful of investors who hung tight through the financial meltdown, their portfolios are whole again. Finally.
So who said that buy-and-hold investing is dead?
Is It Time to Buy or Sell?
I've already dedicated an entire article to dispelling the myth that a new record high points to an imminent end to the bull market. Just for good measure, though, here's a fresh reminder from Bespoke Investment Group:
They crunched the numbers on one-month, three-month, six-month, and one-year returns following record highs for the Dow since 1900. Their conclusion? There's "not much credence to the argument that you should not be buying equities when the DJIA is trading at all-time highs."
"Not much"? How about almost none? As you can see, the Dow actually performs better, on average, following new record highs after six months and one year. So keep buying stocks. And don't quit until the Fed stops printing money.
Remember, It’s All About the Fed
I told you before that the Fed is the main driving force behind stock prices. If you doubted me, though, consider the latest proof: the performance of the S&P 500 during the course of the Fed's various quantitative easing programs.
As the Fed's balance sheet keeps growing, stock prices keep climbing. Coincidence? Not a chance!
The time to trim up our stops or reduce our equity exposure will be when central banks start meaningfully curbing their money printing. But that time is definitely not now.
Not-So-Precious Gold and Poor, Poor Hedge Funds
I know we're only two months into the year. But a quick comparison of the year-to-date returns for various investments and sectors reveals some shocking truths.
Healthcare is leading the pack right now. So it might not be a bad idea to tap into the momentum with a healthcare ETF like the Health Care Select Sector SPDR (NYSEARCA:XLV). Just a friendly investment suggestion to consider.
Hedge fund managers can't catch a break. Not only is their performance lagging behind the S&P 500 Index, but they're also losing out to (gasp) mutual fund managers. And gold is getting clobbered. It's by far the worst performer.