Stock Market Up 5.9% for the First Half of 2011

The bull finally won out as the US stock market turned in a 5.9 percent gain for the first six months of the year. This measurement uses the Wilshire 5000 index comprised of all US stocks trading daily. International stocks, as measured by the Vanguard FTSE All-World Ex US (VEU) fund, lagged the US turning in a 4.4% gain so far this year.

By contrast, the S&P 500 price index turned in only a 5.0 percent gain. This index measures only the largest 500 US stocks and strips out the dividends these stocks paid. Jason Zweig recently wrote in the Wall Street Journal on why using the S&P 500 index to measure the stock market is misleading.

It seems the best way to have harnessed the US stock market during this period was to own a broad index fund, such as the Vanguard Total Stock Index fund (VTI), which clocked in a 6.2 percent return - actually 0.3 percentage points above the Wilshire 5000.

What a difference the last four days made
While the history books will show the first six month return as the continuation of the bull, most of the gains came this week. Of the 5.9 percent gain, 4.1 percentage points came in the last four trading days of the six month period. That gain came as Mad Money's Jim Cramer turned bearish on the stock market last week.

The bigger picture
The US stock market is now 1.3 percent higher than it was at the end of 2007, before the market crash and its highest year end close ever. However, it is still 4.7 percent lower than its highest single day close on October 9, 2007.

So though the market is a tad below the all-time high, it is an amazing 113.0 percent higher than the March 9, 2009 bottom.

Note: image from Investmentdiv.com
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Allan Roth

Allan S. Roth is the founder of Wealth Logic, an hourly based financial planning and investment advisory firm that advises clients with portfolios ranging from $10,000 to over $50 million. The author of How a Second Grader Beats Wall Street, Roth teaches investments and behavioral finance at the University of Denver and is a frequent speaker. He is required by law to note that his columns are not meant as specific investment advice, since any advice of that sort would need to take into account such things as each reader's willingness and need to take risk. His columns will specifically avoid the foolishness of predicting the next hot stock or what the stock market will do next month.

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