All That for Nothing

This week has provided a good lesson in why it's foolish to follow the stock market's ups and downs too closely, unless you want to give yourself a good bout of nausea. The week started off looking disastrous: As of noon on Tuesday, the S&P 500 index was down more than 4 percent from where it had ended 2014, in less than three trading days. It was the worst start to a year since the disastrous 2008.

But then things turned around. The S&P stabilized on Tuesday afternoon, and Wednesday was a strong day, with the index up 2.2 percent. That trend continued yesterday, when the S&P gained back a further 1.8 percent.

After all that turmoil, the S&P finished Thursday - concluding the first trading week of 2015 - up an almost imperceptible 0.16 percent for the year. All that nausea from the roller coast ride of earlier this week was for virtually nothing.

Could You Deal With a Financial Emergency?

How prepared are you to deal with a financial emergency? Most American's aren't very well equipped to do so, according to a new survey from Bankrate. More than 60 percent of all Americans say they wouldn’t even have enough money in their savings accounts to pay for an unexpected car repair or medical emergency.

Only 38 percent said they could cover a $500 repair bill or a $1,000 emergency room visit with funds from their bank accounts. Such an unexpected bill would cause 26 percent of Americans to reduce spending elsewhere, 16 percent say they'd have to borrow from family or friends, and 12 percent would put the expense on a credit card.

Interestingly enough, the same survey found that 82 percent of all Americans keep a household budget. The most popular budgeting tool is a simple pencil and paper, used by 36 percent of those surveyed. The same percentage use a computer budgeting program as keep all the numbers in their heads - 18 percent in both cases.

A Good Year for 401(k)s

According to research just published by the Employee Benefit Research Institute, 2014 was a very good year for most of our 401(k) plans. Those nearing retirement got a big boost to their plans: Participants aged 55 to 65 who had been with their current employer for more than 20 years gained an increase in plan balances of more than 14 percent over the course of 2014.

Younger workers, who are starting from a lower base than older workers, saw the highest percentage increases in their 401(k)s. Workers aged 25 to 34 who had been with their current employers just one to four years saw their balances jump by an average of 47.9 percent.

You see that trend throughout the numbers, where newer workers make much more impressive percentage gains than older ones. Workers with between 10 and 19 years of service with their employers saw their balances rise on average by 16.7 percent, while those with 5 to 9 years of service did even better at 20.9 percent, and those with  just 1 to 4 years of service saw their balances gain 25.7 percent. With those trends in mind, 14 percent gains for older workers look pretty good.

Biggest Losers of 2014

Yesterday, we looked at the S&P's strongest stocks for 2014. Here are the ten stocks in the index that did the worst last year; notice that many of them are energy stocks, which suffered when the price of oil fell:

• Transocean Ltd., down 62.9 percent
• Noble Corp., down 55.8 percent
• Denbury Resources, down 50.5 percent
• ENSCO Plc, down 47.6 percent
• Avon Products, down 45.5 percent
• Genworth Financial, down 45.3 percent
• Freeport McMoRan Copper & Gold, down 38.1 percent
• Range Resources, down 36.6 percent
• Diamond Offshore Drilling, down 35.5 percent
• Mattel, down 35.0 percent

Biggest Winners of 2014

So 2014 is in our collective rear-view mirror now, with the S&P 500 ending the year up a solid 11.4 percent. Here are the S&P's biggest winners for 2014:

• Southwest Airlines, up 124.6 percent
• Electronic Arts, up 104.9 percent
• Edwards Lifesciences, up 93.7 percent
• Allergan, Inc., up 91.4 percent
• Avago Technologies, Inc., up 90.2 percent
• Mallinckrodt, up 89.5 percent
• Delta Air Lines, up 79.1 percent
• Keurig Green Mountain, up 75.3 percent
• Royal Caribbean Cruises, up 73.8 percent
• Kroger, up 62.4 percent

The January Barometer

Today is the first trading day of 2015, and it's also the beginning of the January trading period. There is a stock-market adage that says the whole year will go as January goes. If this month is an up month, the whole year should be up.

That's held up pretty well in the past. Since 1950, January has served as an accurate barometer for the remainder of the year 77 percent of the time. But be warned: One of those anomalies happened just last year. The S&P 500 dropped by about 3 percent in January, on its way to a 7 percent gain for the year.

Even more accurate as a barometer for the rest of the year are the first five days of January. The first five trading days of the year have predicted the direction of the market for the year as a whole a whopping 85 percent of the time.

Thoughts for New Year's Day

“For last year's words belong to last year's language/
And next year's words await another voice.”
~ T.S. Eliot

“Any new beginning is forged from the shards of the past, not from the abandonment of the past.”  ~ Craig D. Lounsbrough

“Each New Year, we have before us a brand new book containing 365 blank pages. Let us fill them with all the forgotten things from last year—the words we forgot to say, the love we forgot to show, and the charity we forgot to offer.” ~ Peggy Toney Horton