2013 Market Year In Review

2013 was a tremendous year in terms of market gains. The Fed’s plan of QE did its magic and the market rose inexorably upward.

2013_returns_full

We haven’t experienced market returns this strong since the go-go “dot-com” late 1990’s.

Marvel at the stats:

  1. The Dow rose 26.5%, it’s best return since 1995. It’s now more than 10,000 points above the 2009 Bear market low.
  2. The S&P 500 jumped up about 30%, it’s best performance since 1997. It also closed the year with a brand new high, only the 6th time in history that has occurred. It posted the most record closes in one year since 1998.
  3. The Nasdaq soared to a rocket fueled gain of 38.3%, the seventh biggest record gain and best return since the 2009 bounce from the market lows.

Markets across the board performed extremely well. The investments that didn’t fare so well were the ones people usually flock to in uncertain times, bonds, and gold.

If the S&P 500 market gains were transcribed to music, this is what the year would sound like:

With returns like this, I have to laugh at the number of times I’ve encountered people on and offline accusing Obama of being a socialist. If this is the output of his brand of “socialism”, he’s clearly doing it all wrong.

For Hedge Fund managers, the market wasn’t nearly as generous and proved to be elusive. Hedge funds returned a paltry 7.4% return for 2013. That means that someone just investing in a simple index fund walked all over hedge fund returns. This is why conventional wisdom recommends people just invest in index funds because so many professionals have trouble beating market returns.

For traders, it was a mixed bag. I know traders that had a bang up year of impressive returns. I also know traders who were certain in 2012 that 2013 was going to be a bust and likely lost big when the market failed to fall.

Personally, I had issues with my own trading. The past year favored “buy and holders” vs traders by a big margin. It’s the type of year where traders will be under attack as not being able to beat market performance. Like I always say, being a market trader is a challenge and if it were easy to do, we’d all be doing it. 🙂

But this is the wonderful thing about trading the market- it’s an endless question that’s waiting to be answered and every day you get another piece of the grand puzzle. One’s ability to answer the question on a consistent basis will determine one’s level of success.

The Fed has announced plans to cut back on QE but will base it on continued economic improvement which adds more question marks to how the market will fare this year.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s