Near Record Small Business Optimism

Today, the National Federation of Independent Business (NFIB) reported small businesses are showing unprecedented optimism. The NFIB Small Business Optimism Index was reported at 107.6, the second highest reading in the 45-year history of the Index. The highest reading recorded was 108.0 in 1983.

According to NFIB's President and CEO, Juanita Duggan,

"When small business owners have confidence and certainty in the economy, they're able to hire more workers and invest in their business. The historically high readings indicate that policy changes - lower taxes and fewer regulations - are transformative for small businesses. After years of standing on the sidelines and not benefiting from the so-called recovery, Main Street is on fire again."

High small business optimism index readings tend to be a precursor to strong subsequent 1-year S&P 500 Index returns. The below chart shows the performance of the S&P 500 Index following top NFIB Optimism readings. Going forward, I will add the current reading to the below chart and track the subsequent equity market return for it as well.

This article was written by

HORAN Capital Advisors is an SEC registered investment advisor that manages investment portfolios for individuals and institutions. Our firm utilizes a disciplined investing approach that should create wealth for our clients over time. Our investment bias is to invest in companies that generate a steady return over time, i.e., singles and doubles. This singles and doubles approach tends to lead to investments in higher quality dividend growth/cash flow growth companies. On the other hand, there are times when a company's stock price seems to be trading below its fair valuation. Short term gains are possible in these situations. I have been managing investment portfolios for individuals and institutions for over fifteen years and believe investing is like running a marathon and not a sprint. Taking the road less traveled, more often than not, leads to higher returns. Visit: The Blog of HORAN Capital Advisors at (https://horanassoc.com/insights/market-commentary-blog)
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