Where to Put Your Money in a Bull Market
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Here's your money briefing for Wednesday, March 6th. I'm J.R. Whalen for The Wall Street Journal. So far, 2024 is the year of the bull, as in a bull market. Through last Friday, the S&P 500 has closed at a new record 15 times.
There is this chance that stocks keep going higher and higher from here. And since records happen in clusters, it could be that tomorrow we get another record or the day after that we get a low. So even if it's a record, you should still continue to invest.
We'll talk to Wall Street Journal markets reporter Hardika Singh about where some individual investors are putting their money after the break.
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The S&P 500 has climbed almost 8% since the start of the year. Wall Street Journal markets reporter Hardika Singh joins me to discuss ways to invest in the current bull market. Hardika, what has propelled stocks higher?
How did the S&P 500 perform at the start of 2024 and why does it matter to investors?
Last October was really the turning point for stocks and the stock market. It seemed like inflation had finally started to ease off and artificial intelligence was potentially going to become a very real thing. And that fueled all these bets that the Fed is almost done with raising interest rates. We're potentially going to see rate cuts come very soon. And AI will also soon generate revenue and profit for a lot of these big tech companies. And it's not just this buzzword anymore. And that really helps stocks just skyrocket higher and higher.
Traditionally, how does the return on the S&P 500 compare to having money in things like treasuries and other investments?
Over time, you cannot stop the roll of stocks. Data from Ned Davis' research shows that annually, including dividends, the S&P 500 has returned over 10% going back 100 years, whereas corporate bonds and treasuries return about 5% each and gold returns 4.7%. So as you can see, the S&P 500 is around double that.
And you spoke to several individual investors who've put money into the market during the current rally. What types of stocks have they bought?
It's across the board. One investor I spoke with, Zachary Esters, he's a 33-year-old recording artist and reality TV cameraman in Tennessee. And he has this portfolio where he has your regular tech stocks like your Adobe, your Alphabet. He also has shares of the S&P 500 tracking ETFs. But in addition to that, he has started to diversify his portfolio into value stocks. Now, what are value stocks? Value stocks are basically those shares that trade at really low multiples of their book value. That means they're not as expensive as your big tech stock. They're undervalued. But the thing is that with a value stock, you expect its earnings to grow over time. They tend to belong to like really steady companies like banks, oil companies, industrial conglomerates.
So Zachary, he has started to buy some value stocks and he has allocated one fifth of his portfolio into that. So he's buying shares of gold, gold mining companies. He's buying some realty trust and they all pay a hefty dividend.
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