Monthly Real S&P 500 Price from 1881 thru March 2017: Chart

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The S&P 500 closed at 2,402.32 on price basis today. Year-to-date the index is up a decent 7.30%. In the past 10 years it has grown by 4.81%. Over the long run the index has beat inflation. The Monthly Real Return of S&P 500 from 1881 thru March, 2017 is shown below:

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Source: Keep calm and carry on, Retirement Investing Today

Though it is very rare for investors to hold stocks over 100 years,  the above chart shows that in the long-run the US market as measured by the benchmark S&P 500 goes higher.

Related ETF:

  • SPDR S&P 500 ETF (SPY)

Disclosure: No Positions

Number of US Stocks vs. Indices: Chart

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The number of stocks listed on US markets continue to decline. However the number of indices created based on US stocks has soared and now excess the number of stocks according to an article at Bloomberg.

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Source:

This situation is similar to the one related to the number of US stocks and mutual funds. A few years ago I wrote that the number of mutual funds has exploded while the number of companies listed has declined. In fact, back in 2010 there were over 7,500 mutual funds compared to around 5,00o stocks.

Today there are over 5,000 indices. But the total number of listed US stocks stood at just 4,331 at the end of 2016 according to World Federation of Exchanges.

From an investment point of view, rising number of indices and mutual funds relative to the number of listed companies is not good.

Updated:

 

Source: Bloomberg

Related:

Which Canadian Banks Have High Exposure To The US Market?

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The Canadian banking industry is saturated as the market is small. So large domestic tend to diversify among other markets The US is one of the obvious choices for these banks due to close proximity and the size of the market. Among the six major Canadian banks, TD has the most exposure to the US followed by BMO. National Bank of Canada depends on the domestic market for most its revenues. Of the other large five banks CIBC is most exposed to the local market. Hence CIBC is acquiring Illinois-based PrivateBancorp(PVTB) in order to expand in the US.

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Source: CIBC’s Close Call Is Cold Comfort for Canadian Banks, Bloomberg

Outside of Canada, Bank of Nova Scotia generates more of its revenues from regions other than the US. Much of this revenues comes from the Caribbean and Latin American countries where the bank has a large presence.

The five major Canadian banks listed on the US exchanges are shown below with their current dividend yields:

1.Company: Bank of Nova Scotia (BNS)
Current Dividend Yield: 4.16%

2.Company: Bank of Montreal (BMO)
Current Dividend Yield: 3.76%

3.Company: Canadian Imperial Bank of Commerce (CM)
Current Dividend Yield: 4.86%

4.Company: Royal Bank of Canada (RY)
Current Dividend Yield: 3.82%

5.Company: Toronto-Dominion Bank (TD)
Current Dividend Yield: 3.89%

Note: Dividend yields noted above are as of May 12, 2017. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: Long all five banks listed above.

On The Impact of Political Events on Stocks

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Politics generally does not have a strong impact on the stock market especially in the long-run. Major political events such as the unexpected outcome on election may have a short-term impact but over the years politics does not determine the performance of stocks.

Since 2016 major political events have had negligible impact on stocks. The MSCI World Index has continued to move higher despite negative events such as the Brexit as shown in the chart below:

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Source: A political checklist for stockmarket investors, Schroders

From the above article:

Since a post-Brexit low of 6,105.5 on 27 June, the MSCI World index – a broad measure of global stockmarkets – has risen by nearly 20%.

$1,000 invested in global shares on a total return basis, if we include dividends, on 27 June 2016 would now be worth $1,200. This is with inflation taken into account.

The key takeaway for investors from the above chart is that politics does not drive the performance of stocks. When political shocks such as the Brexit or the outcome of the recent US elections do occur, investors should not get carried away. Instead they should focus on their long-term goals and try to take advantage of any short-term dislocation in equity prices.

Related ETFs:

  • iShares MSCI Emerging Markets ETF (EEM)
  • Vanguard MSCI Emerging Markets ETF (VWO)
  • SPDR S&P 500 ETF (SPY)
  • Vanguard Dividend Appreciation ETF (VIG)
  • SPDR S&P Dividend ETF (SDY)
  • iShares Dow Jones U.S. Select Dividend ETF (DVY)

Disclosure: No Positions