GPM Investing Insight: The Global Rally in 2017

From a quick view of the financial section in the news, one can see the rally in U.S. stocks in 2017: the S&P 500 up 20% year-to-date (YTD), led by Technology (+36%), and the Dow Jones Industrial Average over 24,750 after starting the year below 20,000. However, this is just a slice of a major global rally occurring.

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To begin with, according to Jeffrey Kleintop at Schwab, the global stock market (measured by the MSCI AC World Index) is up every month in 2017, marking the first time in the 30-year history of the index. Poland (PLND) is the biggest gainer of the year, up 55%. Qatar (QAT) is the only country in the red, down 13%. The Organization for Economic Cooperation and Development (OECD) tracks the world's 45 largest economies, and its latest report shows each economy is growing in 2017 and is predicted to continue growing into 2018. This would be the first occurrence of two straight years of growth since 2006 and 2007. 

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How are these stock market gains happening given the amount of negativity and worry portrayed in the news every day? South Korea (EWY), for example, is up 45% YTD as tensions with North Korea dominate headlines. This is possible because there are real companies that are growing strongly in these countries around the world. For South Korea specifically: Samsung (+43%), SK Hynix (+71%), KB Financial (+48%), and POSCO (+31%). 

In the United States, amidst the political tension and negative events, there is Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Facebook (FB), and Google (GOOGL) leading the way, all up between 36% to 58%. Not only are the companies' stock values up significantly, the business growth backs it up, with all five producing solid GAAP (Generally Accepted Accounting Principles) earnings and providing jobs to hundreds of thousands of workers. The S&P 500 finished up every month in 2017 for the first time in stock market history. The index is up 21 out of the last 24 months.

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Concluding, one needs to put in perspective the growth seen, and further growth expected, worldwide to understand why stock prices and volatility are where they are today. Sometimes it can be difficult for one to look past news headlines and understand the underlying data that drives stocks. GPM remains focused on its Investment Process and Stock Selection Criteria, which includes selecting growing, high-ROE companies that we think trade at a reasonable price. Visit our new About Us pages to see how we can help you and Contact Us today.