Last week the S&P500 hit an all-time high, throwing off years of sluggish performance.

To underline that, just compare the S&P with Britain’s FTSE100. Over most of the past seven years, the Footsie has steamed ahead of its U.S. equivalent. In the last five years the UK index has leapt 50 percent compared with 12 percent in American markets. Over the past three years, the S&P500 has returned 30 percent set against 64 in the UK.

Since 2000, the U.S. index has fallen overall by 8 percent compared with a gain of 32 percent by the Footsie.

Peter Seilern of Seilern Investment Management responds, “People talk about the trade deficit which is no worse than many eurozone countries. And if you look at valuations, the S&P500 is trading at about 18 times earnings, which is neither cheap nor expensive. America has a culture of enterprise and some of the best managed companies in the world.”

Cormac Weldon, head of U.S. equities at Threadneedle, says, “There are now sound reasons for investors to reassess their allocation to the U.S. market.”

Appropriately signed into law on Memorial Day, the Heroes
Earned Retirement Opportunities (HERO) Act allows military personnel to count tax-free combat pay when calculating whether they qualify to contribute to traditional or Roth IRAs.

Additionally, the bill is retroactive, allowing military personnel to go back to 2004 and 2005 and make IRA contributions for those years if their income was tax-free combat pay. A special extension applies to making these contributions, extending the deadline to May 28, 2009.

Contributions to IRAs normally can only be made on “taxable” income. Military personnel on active duty may not have filed tax returns for 2004 and 2005 if they received only tax-free combat pay during that time. If returns have been filed, they will need to file an amended return.

For more information, visit the IRS website.