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Mark on the Markets
August 2023

Is the Stock Market up 7%? Or 37% this year?

Well, it depends. According to one major index, the market is up a respectable 7%. That’s not bad following last year’s dismal performance, but contrast that with another well-known index, and we might conclude that the stock market is up nearly 20%.

Sounds great, right? Well, it is, unless we compare it to a third index, which has soared 37% since the start of the year.

That said, let’s name some names. The Dow Jones Industrial Average is up 7%, the S&P 500 is up almost 20%, and the tech-heavy NASDAQ Composite is up 37%.

That’s a huge disparity. Which one is correct? They all are, but performance is based on how the indexes are constructed.

Let’s start with the Dow. The Dow Jones Industrial Average is the oldest and best-known index. It debuted in 1896. Today, it is made up of 30 large companies.

In order to get today’s value, you simply total the 30 stock prices and divide by what’s called the Dow Divisor.

Why not divide by 30? The purpose of the index divisor is to maintain the continuity of the index amid stock splits, mergers, spinoffs, and more, which have complicated the arithmetic.

As of a month ago, the divisor was 0.15172752595384.

From a practical standpoint, you can quickly see how a high-priced stock, which might rise or fall by 10%, will have a larger impact on the Dow than a lower-priced stock, which rises or falls by 10%.

Additionally, the index includes blue-chip companies that tend to be slower-growing but more established. The Dow typically doesn’t decline as much in a down market, as we saw last year. It may not rise as much in a bull market.

But 2023’s discrepancy between the major indexes is unusually large.

That leads us to the S&P 500 Index, which is comprised of about 500 firms and covers about 80% of the market. Market professionals commonly use the S&P 500, rather than the Dow, as a benchmark and when discussing overall stock market performance.

Unlike the Dow, the S&P 500 is a market-capitalization-weighted index, which means that the larger companies, determined by their respective market capitalization (the number of shares outstanding x share price), have a greater impact on the index.

For example, the top ten stocks account for about 30% of the index.

This year’s impressive performance can be attributed to the significant contribution of super-sized tech giants, including Apple (AAPL), Microsoft (MSFT), and Nvidia (NVDA), which have performed particularly well.

This dovetails into the NASDAQ Composite, which is heavily skewed toward technology stocks. Like the S&P 500, it is also a market-capitalization-weighted index, and the big tech names have driven this year’s stellar performance.

There are about 3,500 securities on the NASDAQ, but just two, Apple and Microsoft, account for a whopping 25% of the NASDAQ Composite. Technology accounts for 55% of the index.

The importance to you the investor

Simply put, the Dow isn’t as exposed to technology as the S&P 500 and NASDAQ. While we’ve experienced quite a run-up in tech this year, since June, the rally has broadened, which is healthy.

As we move forward, much will depend on interest rates and economic growth, though let’s not discount that unexpected events could influence shares, too.

Key Index Returns




Dow Jones Industrial Average



NASDAQ Composite



S&P 500 Index



Russell 2000 Index



MSCI World ex-USA**



MSCI Emerging Markets**



Bloomberg US Agg Total Return



Source: Wall Street Journal, MSCI.com, MarketWatch, Bloomberg 
MTD returns: May 31, 2023–July 31, 2023 YTD returns: December 30, 2022–July 31, 2023

Mark on the Charts

The S&P 500 continues to move higher and is getting close to the previous high that was hit at the end of 2021. Along with the S&P 500, most of the longer-term averages remain in an uptrend. It’s important to remember that 30% of the S&P 500’s return comes from a handful of stocks right now. In my opinion, looking at a broader index is always a good benchmark at what the true market sentiment is revealing, which is why I show the Value Line Geometric Index in addition to the S&P 500.

The Value Line Geometric Index, a much broader index of around 1,700 stocks, where each stock is given an equal weight of the index, is also climbing higher. This index, in my opinion, is a better representation of the entire stock market at the present moment.


There are several economists that I have followed over the years, and one of my favorites is Martin Armstrong.

I went to his World Economic Conference in Orlando in 2018 and find myself coming back time and time again to read his commentary. I find his thinking and logic to be clear and concise – he does not buy into the latest distortion of societal facts and issues. You can read Martin’s blog at https://www.armstrongeconomics.com/blog/.

How the World Economy is Expected to Grow

Jul 31, 2023 / By Martin Armstrong, Statista data journalist

The latest estimates from the International Monetary Fund (IMF) indicate that globally, economic growth is expected to slow to the end of 2024. Representing a slightly more optimistic view than that offered in April—plus 0.2 points for 2023—the IMF expects global real GDP to grow by 3.0% in both 2023 and 2024 after an estimated increase of 3.5% in 2022.

Looking at the picture regionally, the highest growth rates are forecast for emerging and developing Asia, where output is expected to go up by 5.3% and 5.0% in 2023 and 2024, respectively. The United States, on the other hand, is projected to see faster-declining growth over this period, going from 2.1% in 2022 to just 1.0% in 2024—a pattern mirrored in advanced economies generally, where the rate is expected to go from 2.7% in 2022, down to 1.4% in 2024.

Contributing to this slowing growth is Germany, where a decline in GDP of 0.3% is forecast for 2023. According to the IMF, this contraction is due to “weakness in manufacturing output and economic contraction in the first quarter of 2023.”

Mark's Timely Tax Tidbits

The 10-Year Rule: In late 2019 congress passed the SECURE ACT and curbed a popular strategy for inherited IRAs - The Stretch IRA. Before the SECURE ACT, IRA owners who died were able to leave their account to their children or grandchildren, and their heirs could stretch the required minimum distributions over their lifetimes. Congress saw this as a loophole for the rich (go figure) and banned it. The stretch is still available for the spouse, but now all other beneficiaries are subject to the 10-Year Rule. Under the new 10-year rule, distributions are optional for the nine years after the participant’s death, and the account must be fully distributed by the end of the 10th year.

Our recommendation is to review your tax planning strategy and evaluate if your income will be lower during this 10-year period. IRA distributions are considered ordinary income. The key is to keep the distribution(s) in potentially lower income tax brackets and reduce the tax bite.

Heat Wave Blues: In 2023 the credit for adding energy-efficient improvements to your home was revamped. There is now a 30% credit for the cost of certain types of air-conditioning systems, windows, doors, etc. to your principal residence. The annual credit limit is $1,200. We recommend keeping receipts for all energy-efficient improvements and discussing these with your CPA prior to filing your return.

Gift Tax Exclusion: You likely saw this in our annual “Key Financial Data” card. The annual gift tax exclusion increased to $17,000 per donee in 2023. We recommend using this strategy if you are considering gifting part of your estate to avoid estate taxes. Keep in mind that the annual lifetime estate and gift tax exemption for 2023 jumped to $12,920,000.

TD Ameritrade & Schwab: Account Transition

The Charles Schwab/TD Ameritrade will take over the Labor Day weekend. You should now be receiving account letters providing details about the transition.

With this merger, there is very little that will be changing for you. And we’re here to make this a smooth experience.

What’s not changing: 

Is your relationship with us. We remain committed to providing sound guidance built on a foundation of trust. And we will continue to provide investment management from both a performance focus, as well as selecting securities that meet moral values that we all believe in.

There are a few small changes: 

There is a series of communication letters you will be receiving from Charles Schwab.

  • Expect to receive a packet in the mail in the next few days. You will be given a new account number at Schwab. Remember, your assets will be moved into your Schwab account over the Labor Day weekend, so the Schwab account will show a “0” balance until then. So do not panic. You will still be able to view your holding at TD Ameritrade for now.
  • Your new eight-digit Schwab account number will replace your TD Ameritrade Institutional account number.
  • All standing letters of authorization (SLOA) and instructions that you have, such as money movements and wires, will transfer to your new Schwab account.
  • Schwab also has a client portal, just like TD Ameritrade, to view your account. Details will be provided on how to set this up.
  • There is a blackout period during the Labor Day weekend. Account information will be unavailable from 8:30 p.m. ET on Friday, September 1, 2023, to 5:00 a.m. ET on Tuesday, September 5, 2023.
  • If you viewed your account online with TDA, you used Client Access. The Schwab site is similar and is called Schwab Alliance. I recommend that you set establish your credentials with Schwab Alliance as soon as you get your new account number in the mail. This will ensure can view your accounts and approve anything that may be required. You will need the account number mailed to you. Enter that information after clicking New Schwab user.
  • You will receive two statements next month, one for your TD Ameritrade Institutional account (with a 0 balance and no positions) and one for your new Schwab account. If you have residual activity, such as dividend payments, you may continue to receive a statement from TD Ameritrade Institutional.

Again, remember, your assets and money will be at TDA until the conversion over Labor Day. Your Schwab account will show a “0” balance until then.

We will be diligent in checking everything during the conversion process.

We remain your trusted advisor to help and answer any questions you have along the way.

I hope you’ve found this review to be educational and helpful. Life comes in seasons. Our goal is to be a guide to you as you run the race and keep the faith.

" There is a time for everything, and a season for every activity under the heavens: a time to be born and a time to die, a time to plant and a time to uproot, a time to kill and a time to heal, a time to tear down and a time to build, a time to weep and a time to laugh, a time to mourn and a time to dance, a time to scatter stones and a time to gather them, a time to embrace and a time to refrain from embracing, a time to search and a time to give up, a time to keep and a time to throw away, a time to tear and a time to mend, a time to be silent and a time to speak, a time to love and a time to hate, a time for war and a time for peace. "

Ecclesiastes 3:1-8

Financial Cornerstones is a Registered Investment Adviser. This newsletter is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Financial Cornerstones and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Financial Cornerstones unless a client service agreement is in place.

This commentary in this newsletter reflects the personal opinions, viewpoints and analyses of the Financial Cornerstones employees providing such comments and should not be regarded as a description of advisory services provided by Financial Cornerstones or performance returns of any Financial Cornerstones Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Cornerstones manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results

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