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HERE ARE THE LATEST trends in the world of investing:

  • The S&P 500 climbed 14.7% in 2021’s first nine months, adding to 2020’s 16.3% gain. These figures don’t include dividends. Despite the handsome stock market performance of the past dozen years, the shares in the S&P 500 remain just 182% above their March 24, 2000, peak—a modest gain over a turbulent two-decade stretch.
  • Amid the stock market’s healthy gains through 2021’s first three quarters, we saw a change in market leadership. After years of disappointing performance, U.S. value stocks fared better than growth, particularly among small- and mid-cap shares.
  • Foreign stock markets—especially emerging markets—once again lagged behind U.S. shares. One reason: The dollar strengthened in the currency markets, trimming gains for U.S. investors who own foreign stocks.
  • Treasury bond yields rose during 2021’s first nine months, with the benchmark 10-year Treasury note yielding 1.52% as of Sept. 30, up from 0.92% at year-end 2020. That meant sharp losses for those in longer-term bonds. In early August 2020, the 10-year yield hit a record low of 0.52%.
  • The Federal Reserve slashed short-term interest rates in 2020, as it sought to prop up the slumping economy, and continues to keep them at rock-bottom levels. One consequence: One-year Treasury bills were yielding just 0.08% as of Sept. 30.
  • Real assets had mixed performance in 2021’s first nine months. Oil prices stood at $75 a barrel on Sept. 30, up from $48 at year-end 2020. Real estate investment trusts posted healthy gains, despite rising interest rates. But during 2021’s first nine months, gold slid to $1,757 from $1,902 at year-end 2020.
  • In September, the Federal Reserve projected that the U.S. economy would grow 5.9% in 2021, after shrinking 3.5% in 2020. What about unemployment? The Fed expects it to finish 2021 at 4.8%, while core inflation runs at 3.7%.
  • As of 2019, 52.6% of U.S. families were invested in the stock market, up from 51.9% three years earlier, but below the 53.2% peak recorded in 2007, according to the Federal Reserve’s Survey of Consumer Finances. The survey is conducted every three years.

Want to get a handle on stock and bond market valuations? Check out the chapter on financial markets.

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