If you are fortunate enough to have a company sponsored 401K plan, you will likely see some new (and potentially confusing) illustrations on your statements in the coming months. The changes are related to the 2019 Secure Act passed by congress. The mandate requires 401k administrators to provide an estimate of “guaranteed lifetime income” assuming your current 401K was completely “annuitized”.
What does it mean to “annuitize” your current 401k balance? Continue reading
“Geopolitical conflicts and/or exogenous events do more to reinforce trends already in place, rather than act as a catalyst for change (in the markets) – Strategas Research Partners.” Gold is rallying; oil is in a bull run higher; value style is besting growth while Tech is a pronounced underperformer. And Bitcoin –who’s strongest advocates claim it to be an alternative currency – is yet to offer any hedge or stability to risk assets. These trends don’t change (because of geopolitical issues), just the urgency of them. The horror and uncertainty of the Russian/Ukraine invasion is extreme; it is terrible, inappropriate, and immoral. It is most challenging to offer thoughts on how it will play out, as no one knows. We can pray that it is a temporary geopolitical event which will hurt Russians economically, and will slow Germany and Europe economies (to a lesser degree), and will marginally slow other global economies depending on their connections to Russia/Ukraine. At present, the US bond market is functioning normally (unlike March 2020 when COVID hit and the Great Lockdown was initiated). There is increased volatility in all markets, but there is not dysfunction. There is the normal, predictable flight to safety. Please read our Special Market Update, “Market BUMPS to Climb On” from February 23 on our website, at www.nvestwealth.com.Continue reading
Special Market Alerts are generally undesirable to write. That’s because we never intend to raise alarm or create uncertainty. How should investors think about the first 10% correction of this new bull market? Certainly a correction was due following 23 months since the March 23, 2020 bear market bottom. From that time, the S&P500 jumped +121.1% to its last closing high on January 3, 2022 without even a 5% pullback. Since early January, investors ramped-up their worry about everything – sticky inflation at +7.6% (highest pace in 40 years); persistent supply and demand mismatches for products, services, and workers, creating shortages. When demand is greater than supply, prices will rise. In fact, someone said “Inflation is an economic problem, and also a psychological proxy for things being out of control.”
Do green eggs really exist? Dr. Seuss’ classic children’s book, “Green Eggs and Ham” was first published in 1960. This beginner book was created to be fun and easy to read, perfect for practicing readers ages 3 to 7, and lucky parents too. Readers enjoy the terrific tongue-twisters and unmistakable characters, Seussville, and signature rhymes. Even former President Obama noted during the 60th anniversary year of the author’s books, “Pretty much all the stuff you need to know (to live your life) is in Dr. Seuss.” Do green eggs really exist? A friend who raises chickens indicated eggs are laid in a wide range of different colors and sizes – white, brown, cream-colored, even pastel blue, pink, and yes even green. We know eggs come in small, medium and large sizes, even extra-large. Did you ever eat a colored egg? If you did, you may find it appropriate to quote a favorite storyline…“I do not like green eggs and ham. I do not like them, Sam-I-am.” [March 2 is Theodor Seuss Geisel’s (1904-1991) birthday, and schools call it Read Across America Day.]
February was an overall positive month for investors of the stock market, but financial markets are getting worked up. Interest rates are rising (meaning bond prices decline) faster and more than most expected. TheContinue reading
In case you missed it as most of the media did, the Wall Street Journal (September 17, 2020) published an article by this title. In essence – “Rising economic growth lifted all classes.” The US Census Bureau reported some interesting personal income statistics:
With stock prices, even bond prices, falling faster than they rise the next day, fear is dominating many investors’ thinking about investing and many current life activities. Schools, restaurants, churches are closed, temporarily. Gatherings of even a few people are discouraged. Numerous US states are implementing business lockdowns and stay-at-home strategies to contain the spread of COVID-19. At current, there are no tools (vaccine, drug) to address this novel virus, other than shutting economic activity down to buy time for the doctors and drug scientists. Unclear is when we are going to open the economy back up (April? May?), or if we can make it through the year without shutting down again in the Fall. Closing the economy is adding to everyone’s fear of the unknown – a multi-dimensional fear not limited to just Coronavirus, and including the prospects of severe economic/financial damage. Put simply, most all news seems bad.
In pursuit of providing clients access to timely and relevant commentary to the current coronavirus market impact, below are links to research and analysis updates we are receiving. The aim is to share articles that add or enhance the understanding of the root worry (coronavirus and it’s impact on the global economy) and/or provide historical perspective on prior market corrections.
I am hopeful this will be a final Market Alert relative to the past few weeks of hysteria, fear, and market turmoil. The market spoke loudly yesterday (Thursday, March 12th) as it blasted on all areas of the financial markets – gold, bonds of greater risk orientation, and stocks around the world. We are hopeful recent action was the capitulation event for the market forming a bottom – it never feels like the bottom near the bottom. Time will tell. We do not know, we cannot model how Coronavirus will evolve and/or how it is minimized. We expect Washington will deal with the public erosion of confidence being expressed in the economic and financial markets both here and globally.
To start, one should read this following thought several times: “It never feels like a low near the low”.
Market Stress is absolutely no fun. After all these years (over 40), market drawdowns are terrible and bewildering; confounding one’s ability to comfort others when no one knows the future. We can review history (a lot of examples) to offer perspective, but providing certain future direction is not possible. We are all in it together.
Ironic – today, Monday March 9th is the 11th Anniversary of the March 2009 stock market lows, meaning this date was the start of the current bull market advance (we’re wishing it runs longer).
Generally, we are not fond of writing Market Alerts, as it often signifies market action that is unsettling to investors and clients. Further, no one knows exactly how to model a global pandemic. And, we usually don’t give a passing thought to the entity that China uses to describe its New Year, this year being called the “Year of the Rat.” Not to travel that path; yet most are well aware that rats carry all sorts of disease and illness if active pursuits of cleanliness and pest control are not followed. The global health environment appears to be actively searching for effective measures to curb the spread of Coronavirus. Additionally, Washington DC appears to be treating current events as mainly a health-policy issue.