Extend
January 12 , 2024
Money market funds were at an all-time high of $5.6 trillion as of September last year. Ultra short duration fixed income investments are attractive when yields are above 5% and risk is essentially zero. Because the duration is very short, changes in interest rates do not have much impact on the bond values. What does change as yields decline is the yield on the short-duration “cash” instruments fall as bonds roll-over in a portfolio.
Statistics
January 5 , 2024
The S&P 500 returned 26% in 2023 and ended the year just short of the all-time high of 4796. Components of the 2023 return included +6.32% from better earnings, +17.91% from expansion in forward P/E multiple to ~20x, and +2.06% from dividends. Since 1950, the S&P 500 Index is positive the following year 80% of the time. In the presidential election years dating back to 1960, the S&P 500 index has been positive 81% of the time (13 out of 16 years).