THE WEEK ON WALL STREET
Stocks posted a slight gain last week amid a shortage of news and light holiday trading. The Dow Jones Industrial Average gained 0.76%, while the S&P 500 added 0.49%. The Nasdaq Composite index advanced 0.32% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, increased 1.13%.
FACT OF THE WEEK
On January 2, 1974, President Richard M. Nixon signs the Emergency Highway Energy Conservation Act, setting a new national maximum speed limit.
Prior to 1974, individual states set speed limits within their boundaries, and highway speed limits across the country ranged from 40 mph to 80 mph. The U.S. and other industrialized nations enjoyed easy access to cheap Middle Eastern oil from 1950 to 1972, but the Arab-Israeli conflict changed that dramatically in 1973. Arab members of the Organization for Petroleum Exporting Countries (OPEC) protested the West’s support of Israel in the Yom Kippur War by stopping oil shipments to the United States, Japan, and Western Europe. OPEC also flexed its new-found economic muscle by quadrupling oil prices, placing a choke-hold on America’s oil-hungry consumers and industries. The embargo had a global impact, sending the U.S. and European economies into recession. As part of his response to the embargo, President Nixon signed a federal law lowering all national highway speed limits to 55 mph. The act was intended to force Americans to drive at speeds deemed more fuel-efficient, thereby curbing the U.S. appetite for foreign oil. With it, Nixon ushered in a policy of fuel conservation and rationing not seen since World War II.
The act also prohibited the Department of Transportation from approving or funding any projects within states that did not comply with the new speed limit. Most states quietly adjusted their speed limits, though Western states, home to the country’s longest, straightest, and most monotonous rural highways, only grudgingly complied. Even after OPEC lifted the embargo in March 1974, drivers continued to face high gas prices and attempted to conserve fuel by buying revolutionary Japanese economy cars. For many, a desire for fuel-efficient automobiles became the standard until the trend toward gas-guzzling sport-utility vehicles (SUVs) emerged in the 1990s. In 1987, Congress authorized states to reset speed limits within their borders, but proponents of the national maximum speed limit law claimed it lowered automobile-related fatalities, prompting Congress to keep it on the books until finally repealing it on November 28, 1995.
Today, speed limits across the country vary between 35 and 40 mph in congested urban areas and 75 mph on long stretches of rural highway. U.S. drivers now drive almost as fast as their European counterparts, who average between 75 and 80 mph on the highway. On some roads in Italy, it is legal to drive as fast as 95 mph.
Stocks Gain To End Year
The stock market gains in the final trading days of 2023 capped an exceptional year of performance. The last-week rally also mirrored the historical tendency of stocks to rise at this time of year, a propensity known as the “Santa Claus rally.” The Santa Claus rally covers the final five trading days of the calendar year and the first two days of trading in January. The average return of the S&P 500 during this Santa Claus rally is 1.3% during the past 73 years. Remember that past performance does not guarantee future results, and individuals cannot invest directly in an index. The 2023 week’s gains, led by smaller-capitalization stocks and a handful of industry sectors, were partially erased on Friday as light volume and some profit-taking pressured stocks.
Jobless Claims Rise
Initial jobless claims increased by 12,000 to 218,000, which exceeded economists’ forecasts. The four-week moving average, which better illustrates jobless claim trends, was little changed, coming in at 212,000; this was the lowest number since late October. Continuing jobless claims, which measures the number of individuals collecting unemployment benefits, was flat from the previous week at 1.88 million.
FINANCIAL STRATEGY OF THE WEEK
Changing Unhealthy Behaviors
Most Americans know the fundamentals of good health: exercise, proper diet, sufficient sleep, regular check-ups, and no smoking or excessive alcohol. Yet, despite this knowledge, changing existing behaviors can be difficult. Look no further than the New Year Resolution, 80% of which fail by February.
Generally, negative motivations are inadequate to effect change. (“I need to quit smoking because my spouse hates it.”) Motivation needs to come from within and be positively oriented. (“I want to quit smoking so I can see my grandchildren graduate.”)
Goals must be specific, measurable, realistic, and time-related. In other words, “I am going to exercise more” is not enough. You need to set a more defined goal, e.g., “I am going to walk 30 minutes a day, five days a week.”
Permanent Change is Evolutionary, not Revolutionary As a rule, individuals travel through stages on their way to permanent change. These stages can’t be rushed or skipped.
Phase one: Precontemplation. Whether through a lack of knowledge or because of past failures, you are not consciously thinking about any change.
Phase two: Contemplation. You are considering change, but aren’t yet committed to it. To help you move through this phase, it may be helpful to write out the pros and cons of changing your behavior. Examine the barriers to change. Not enough time to exercise? How could you create that time?
Phase three: Preparation. You’re at the point of believing change is necessary and you can succeed. When making plans it’s critical to begin anticipating potential obstacles. How will you address temptations that test your resolve? For instance, how will you decline a lunch invitation from work colleagues to that greasy spoon restaurant?
Phase four: Taking action. This is the start of change. Practice your alternative strategies to avoid temptation. Remind yourself daily of your motivation; write it down if necessary. Get support from family and friends.
Phase five: Maintenance. You’ve been faithful to your new behavior. Now it’s time to prevent relapse and integrate this change into your life.
Remember, this process is not a straight line. You may fail, even repeatedly, but don’t let failure discourage you. Reflect on why you failed and apply that knowledge to your efforts going forward.