The stock market has exhibited a remarkable lack of volatility in 2013 and 2014, so the fact that September was a down month seems more painful than it really should be. US Large Company stocks were down about 1.5% in September, overall not a big deal, but most other stock categories including US small companies and REITs and international stocks were down in 4% to 7% range. Ouch, but again not unusual on a monthly basis.
The biggest issue to know and understand is the dramatic difference in performance between US and international stocks. According to data compiled by Bloomberg, the Standard & Poor’s 500 Index is returning almost six times as much as the broadest gauge of global equities thru early September 2014 and has kept that edge since the US stock market boom started in March 2009. The annualized return of the S&P 500 has been 24% since March 2009 compared to 19% for global equities. This wide performance difference has never been so wide since data on the world stock market began in 1969. That was so long ago that it was the year Richard Nixon took office as President!
Remember that “the stock market”, as we all vaguely refer to it, is not just the Standard & Poor’s 500 Index or Dow Jones Industrial Average. These benchmarks of US large company stocks are about 70% of the US stock market and the US stock market is only about 45% of the global stock market, so the S&P 500 is only about one-third of the global stock market. Referring to the S&P 500 as “the stock market” is a habit that we all need to break.
Increasing employment and, more importantly, more middle-skill, good paying jobs, is an essential requirement for stronger economic growth. USA Today and The Cincinnati Enquirer just published an optimistic analysis. By 2017, an estimated 2.5 million new, middle-skill jobs will be added to the workforce, accounting for 40% of all job growth. Cincinnati is expected to be in the top onethird among 125 U.S. metro areas for mid-skill job growth. Among the 34 fastgrowing, mid-skills jobs in Cincinnati, 1 in 6 of the current positions are held by someone at least age 55, resulting in more opportunity for millennial and Gen X job seekers as baby boomers head into retirement. Middle-skill jobs pay in the $40,000 to $80,000 per year or more range and do not require a college degree but typically require an associate degree or specialized training. Construction workers, truck drivers, plumbers, HVAC technicians and natural gas and oil industry workers are in high demand. Of the 34 top growing, medium skill jobs, 16 are health care related. Medium skill job growth is good news for all of us!