By The Numbers - December 2018

S.F. Ehrlich Associates |

Source: Direxion Funds

December 31, 2018

  • LONG-TERM - The S&P 500 has gained an average of +9.8% per year (total return) over the last 50 years (i.e., 1969-2018). The index was down in 2018 but has been positive in 14 of the last 16 years. Over the long-term, the S&P 500 has been up during 39 of the last 50 years, i.e., 78% of the time (source: BTN Research).
  • UP vs. DOWN - The split between “up” and “down” trading days for the S&P 500 over the last 50 years (i.e., 1969-2018, encompassing a total of 12,611 trading days) is 53% “up” and 47% “down.” The split during the calendar year 2018 (there were 251 trading days last year) was also 53/47 (source: BTN Research).
  •  OIL PRICES - The price of oil ended 2018 at $45.41 a barrel, down 24% from its 2017 close of $60.12. As of 10/03/18, oil was trading at $76.41 a barrel before falling $31 a barrel (off 41%) by year-end (source: CME Group).
  •  BROAD-BASED BOND INDEX - The taxable bond market was up a minuscule +0.01% in 2018 (total return) but has gained +5.1% per year (total return) over the last 25 years (1994-2018). The Bloomberg Barclays US Aggregate Bond Index (created in 1986), calculated using publicly traded investment grade government bonds, corporate bonds and mortgage-related bonds with at least 1 year until final maturity, was used as the bond measurement. The index is a major benchmark for US bond investors (source: Bloomberg Barclays).
  • BARELY - The YTD total return for the Bloomberg Barclays US Aggregate Bond Index was negative every trading day in 2018 except for the final day of the year (12/31/18). If the index had been down for the year (it gained +0.01% for 2018) it would have been the 1st time in history that stocks (using the S&P 500) and bonds (using the Bloomberg Barclays US Aggregate Bond Index) were negative in the same calendar year (source: BTN Research).
  • TEN-YEAR NOTE - The yield on the 10-year Treasury note ended 2018 at 2.68%, up 0.27 percentage points from the 2.41% it finished at on 12/31/17. The 10-year note yield was 2.57% on 8/05/11, the day that the rating agency S&P downgraded the USA from a top-rating that our nation had held for 70 years (source: Treasury Department).
  • HOUSING - The average interest rate nationwide on a 30-year fixed rate mortgage was 4.55% at the end of 2018. The record low national average was 3.31% as of 11/22/12 or just over 6 years ago (source: Freddie Mac).
  • BAILOUT NOT NEEDED - No US bank failed in 2018, the first calendar year to achieve that result since 2006 (source: Federal Deposit Insurance Corporation).
  • OVERSPENDING - The national debt of the United States was $21.867 trillion as of Friday 12/28/18, an increase of $11.3 trillion over the last 10 years (source: Treasury Department).
  • THEN WHAT DO THEY DO? - As many as 60% of American households will be unable to generate retirement income equal to at least 75% of their pre-retirement income, i.e., retirement income from Social Security, employer-sponsored retirement plans and non-qualified accounts established with after-tax money (source: Adam Bee and Joshua Mitchell 2017 study).
  • NEXT BUBBLE? - A study of student loan debt and historical repayment data that was released in October 2017 projects that nearly 40% of student loan borrowers will default within 20 years of entering the repayment phase of their student loans (source: Department of Education).
  • NOT THE DREAM JOB - 43% of college graduates are underemployed with their first job selection out of school, i.e., the job involves work that does not make full use of the graduates’ skills, abilities and educational credentials (source: Burning Glass Technologies).
  • USE TIME TO YOUR ADVANTAGE - $522 invested at the beginning of every month for 40 years earning 6% per year will accumulate to $1 million. $1,021 invested at the beginning of every month for 30 years earning 6% per year will accumulate to $1 million. The calculations ignore the impact of taxes and are for illustrative purposes only and are not intended to reflect any specific investment alternative (source: BTN Research).
  • WASHINGTON POWER STRUCTURE - In 2019 America will have a Republican in the White House, Democrats will control the House of Representatives and Republicans will control the Senate. That’s the first time we’ve had that combination in Washington since 1981-86, a period that covered the first 6 years of Ronald Reagan’s 8 years in the White House (source: BTN Research).
  • EDUCATION - Outstanding student loan debt in the USA was $360 billion as of 3/31/05, doubled to $720 billion as of 12/31/09 and now has doubled again to $1.44 trillion as of 9/30/18 (source: Federal Reserve Bank of NY).
  • ONE YEAR LATER - The average 30-year fixed rate mortgage was 3.92% at Thanksgiving 2017, representing a $473 monthly principal and interest payment per $100,000 borrowed. The average 30-year fixed rate mortgage was 4.81% at Thanksgiving 2018, representing a $525 monthly principal and interest payment per $100,000 borrowed (source: Freddie Mac).
  • BIG BEARS - Since the end of World War II (1945), the S&P 500 has suffered 3 bear markets that sustained losses of at least 40%. The 3 bears are: (1) 48% drop in 1973-74; (2) 49% drop in 2000-02; and (3) 57% drop in 2007-09 (source: BTN Research).
  • IN VOGUE AGAIN - Credit card debt in the USA peaked at $1.02 trillion in May 2008 before falling off during the global real estate crisis, eventually hitting a low of $832 billion in April 2011. However, credit card debt has now climbed all the way back to a record level of $1.04 trillion as of August 2018 (source: Federal Reserve).
  • LOTS AND LOTS OF LAND – John Malone (cable industry billionaire) is the largest private property owner in the USA, owning 2.2 million acres of land. Ted Turner (cable media mogul) is #2 on the “land-owning” list with ownership of 2.0 million acres of land (source: Quartz).
  • BEST RESULT IN YEARS – 195,559 homes have been repossessed by lenders in the United States YTD through 10/31/18. 291,579 homes were repossessed in 2017, the lowest nationwide since 2006. Repossessions peaked at 1,050,500 in 2010 (source: Attom Data Solutions).
  • HEARING FOOTSTEPS – 30 years ago (1988), the Chinese economy was just 6% of the size of the US economy, i.e., $312 billion to $5.306 trillion. 10 years ago (2008), the Chinese economy was just 31% of the size of the US economy, i.e., $4.598 trillion to $14.715 trillion. Today (2018), the Chinese economy is 63% of the size of the US economy, i.e., $13.1 trillion to $20.66 trillion (source: Trading Economics).
  • BIG CITY PEOPLE - 50% of the US population lives in just 143 counties in the USA, i.e., just 4.6% of the 3,142 counties throughout the nation are home to half our citizens (source: Census Bureau). 2/12/18 #11
  • MORE WITH LESS - After adjusting for inflation, manufacturing output in the United States is up +62% over the last 30 years, i.e., 12/31/87 to 12/31/17. However, the number of manufacturing jobs in the United States have declined 29% over the same 30 years, falling from 17.8 million to 12.6 million (source: Department of Labor). 4/02/18 #7
  • MORE OUT THAN IN - The total cost of the Social Security program in 2018 ($1.003 trillion) is projected to exceed its total income ($1.001 trillion), resulting in the program’s first deficit since 1982 (source: Social Security). 9/17/18 # 14
  • NOT READY - 30 of 50 US states do not have sufficient reserves set aside today to absorb the financial impact of an economic recession, forcing them to raise taxes/fees or reduce benefits (source: S&P Global). 10/01/18 #9
  •  LOTS AND LOTS OF PEOPLE - There are 102 cities in China with a population of at least 1 million, the largest Chinese city being Shanghai (22 million). There are 10 cities in the USA with a population of at least 1 million, the largest American city being New York City (9 million) (source: Census Bureau, The Guardian). 10/15/18 #13

 

 

 

 

“By The Numbers.” Direxion ETFs & Funds, 20 August 2018 through 24 September 2018.  
 
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