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Five Years After the “Flash Crash” Answers Still Elusive

May 6th marks the 5 year anniversary of the “Flash Crash” when the Dow Jones Index plunged almost 10 percent in a matter of minutes for seemingly no reason. Computer driven trading accelerated the anomaly sending some stock prices to a penny and others to $99,999.  Just this month, a trader working out of his basement in London is being accused of setting the whole fiasco into motion utilizing an illegal trading strategy called “Spoofing”.  Seems unlikely that he is the real cause, but five years on, it looks like we may never find out the truth.        

Nasdaq Back to All-time Highs…sort of

The Nasdaq Composite Index finally caught up with its counterparts, the S&P 500 Index and the Dow Jones Industrial Average, in revisiting all-time high levels.  It happened to take 15 years, but the Index accomplished the feat nonetheless.  Today’s Nasdaq is very different than the one from the manic days of the Dotcom era as you can see from the graphic below from Reuters.  Additionally, if you take inflation into account, Nasdaq would have to climb another 39% to reach its previous peak according to Bespoke Investment Group.  

Asian Stock Market Dangers

The Hang Seng Index contunied it's tear higher today.  Gains are being fueled by the easing of restrictions of mainland Chinese assets which have now found their way to Hong Kong after sending the Shanghai Composite 91% higher over the past 12 months. Trading volume is 230% of the 30-day average.

The Biggest Bull Yet - 15% Upside Prediction for US Stocks in 2015

Market Strategists' 2015 S&P 500 Index Price Targets (from Business Insider)

February was the Strongest Month Ever for Stock Buybacks

We are believers in a concept called Shareholder Yield.  It is a number that tries to accurately capture how much cash is being returned to investors by a company.  To do that, you simply combine the dividend yield with stock buybacks.  Companies who are returning a lot of cash to investors are essentially providing them with a higher “yield”.  As Birinyi Associates point out in the chart below, buybacks are at an all-time high.  This is good for investors.

From Birinyi via the Financial Times:

"Happy Birthday, Bull Market!"

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Source: Business Insider