Sunday, July 20, 2008

Historical Returns for the S&P 400 Midcap Index

The S&P 400 Midcap Index is the most widely-followed of all U.S. Midcap stock market indices. Midcap stocks are generally defined as those of companies with market capitalizations between $1 billion and $10 billion. ("Market capitalization" refers to the value of outstanding shares of a particular stock.")

I have previously posted about historical returns for large cap stocks, such as the S&P 500, and of small cap stocks, such as the Russell 2000. I have also posted about the long-term outperformance of small cap value stocks over long periods of time. Investors should also consider investing in Midcap stocks, as they tend to outperform large cap stocks over time with less volatility than small cap stocks. The S&P 400 Midcap Index was introduced in June 1991 by Standard & Poors to track the performance of U.S. mid cap stocks.

The table below illustrates the full year annual returns of the S&P 400 Midcap index between 1992 and 2007. As shown, the S&P 400 Midcap Index returned an annualized average of 13.26% between 1992 and 2007. Between 1992 and 2007, the index rose an impressive 633.34%. The chart below also shows five year annualized returns, starting with the fifth full calendar year of the existence of the S&P 400 Midcap Index (i.e., 1996). As shown, the highest annualized five-year return was 23.05% (between 1995 and 1999) and the lowest was 6.41% (between 1998 and 2002).

Any long-term investor should seriously consider investing money in midcap stocks, such as those tracking the S&P 400 Midcap Index (e.g., the Midcap SPDR ETF (symbol: MDY) tracks the S&P 400 Midcap Index).


** I have posted an updated chart for the period between 1992-2014.

Monday, July 14, 2008

TradingDirect Offers The Best Margin Rates For Investors

Last November I wrote a post about how Fidelity offers a low margin rate for wealthy investors. As of today, July 14, 2008, the lowest margin rate provided by Fidelity is 4.00%. An investor would need to maintain a debit balance of at least $500,000 in order to receive this low margin rate.

Although the Fidelity margin rate is quite low, I recently discovered that TradingDirect offers a far lower margin rate. TradingDirect offers a margin rate as low as 2.75% for debite balances of over $1,000,000. Here is a chart showing the TradingDirect margin rates as of today: