From Tyler: One Rough Day

tylerIt was a rough day for stocks today. But so far 2013 has basically been a walk in the park. The Dow’s better than 10% gain for the first quarter so far easily whips last year’s 7.2% total return. So far this year, the Dow has traded higher seven out of every ten sessions, and it’s only had one loss of greater than 1%.

That day (-1.5%) came on Feb. 25 around the Italian elections. There have been all-time records, multi-day win streaks and no losing streak longer than two days for the Dow.

True, the Miami Heat have a better win streak going, but they’ve got LeBron James.

Tonight on NBR, we step back and take a look at whether U.S. stocks can continue to move higher, or whether now is a time of market consolidation.

Cyprus gave investors something to worry about, though it seems doubtful that country’s banking woes will spell deep long-term pain for world markets. But who knows? The failure of one brokerage in one country – Lehman Brothers – certainly rocked the investing world for months.

Of greater worry to me, frankly, is whether stocks can move higher given today’s level of economic growth (low) and overall profit growth. Estimates of profit growth for the first quarter are running about 1%. That’s paltry. In the long run, profits drive stock prices. As my friend the mutual fund pioneer Jack Bogle taught me, stock returns are produced over time by three components: the rate of profit growth, the dividend payout and the speculative premium investors are willing to pay for each dollar of earnings per share.

Also tonight, Phil LeBeau, our man on autos, explains why minivans – once one out of every 12 vehicles sold in America are now about one out of every 25. What’s taken their place? The answer may surprise you.

Thanks for watching NBR, Tyler.

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