Going over the 3 major indices, how they are different, and why it is important to distinguish between them with Wealth E&P
June 7, 2021
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the markets this past week. We missed you last week for the holidays, so I'm going to give you a two-week update to start the week.
As you can see, the indices were up about 1% over the two-week period. After a dip on Thursday, we had a really nice rebound on Friday, so all the indices were up about 1%.
Speaking of all the indices, this week I want to talk to you about whether all indices are created equally. As you can see here, our Equity Income strategy, going back to inception, was up about 232% versus the DOW at 227%.
Most importantly though, you can see the lines and the graphs are pretty similar, with the same direction up and down, and a pretty similar performance over about the 10 year period.
Now if I look at the same chart, but I add the S&P 500 and NASDAQ to the picture, it becomes an unfair race, with the S&P up almost 288% and NASDAQ about doubled the DOW at 447%.
But, what's interesting is, when I talk to people, they tend to talk about the indices interchangeably or they just look at one benchmark and look at that as representative of the market; they often look at the DOW because that's what they see across the TV.
I would recommend that you match your risk profile with the right benchmark, and if you do want to look at just one benchmark, we would recommend the S&P 500 because it's far broader than the DOW Jones.
If you have any questions for us about the financial markets, please feel free to reach out or head to our website at www.wealthep.com. Otherwise, stay tuned for our next Market Minute next week!
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