On June 15, 2022, the Federal Reserve’s Open Market Committee (FOMC) raised the federal funds rate to 1.65 percent. They vowed to “undertake open market operations as necessary to maintain the federal funds rate in a target range of 1.5-to-1.75 percent.” Let’s call it 1.75 percent for today’s discussion, which is in line with the usual commentary. According to Bloomberg data, the bond market is pricing in that short-term interest rates will hit 3.6 percent. How might short-term interest rates reach 3.6%? Let’s plot how the Fed could drive short-term interest rates to 3.6 percent. As of June 15, 2022,…
Insights & Advice
BMM Articles
Money in Motion Part 2: Family Matters
In marriage and divorce, through life and death, your money is in motion. Making the right financial decisions can feel downright impossible when relationships and emotions come into play, but protecting your family and future is especially critical during these times. Here are five moments when your family may set your money in motion and what to look out for when they do: Getting married You probably already know that nearly 50% of all marriages in the U.S. end in divorce or separation, but did you know that arguing about finances every week increases the likelihood of divorce by 30%?…
Unpopular opinions in the face of a bear market
Recently I had the honor of presenting at the 36th Private Wealth Management Summit. My audience was a few hundred-ish other investment advisors. The event was described as “an invitation-only, premium summit bringing leading private wealth management investors and innovative fund managers and consultants together.” Although I was given the role of advising other advisors, I certainly wouldn’t describe myself as “leading.” Perhaps “innovative,” if, in this case, innovative means “social pariah.” Let me tell you the story of how Allen Harris made about 600 eyeballs roll. It’s too late to make defensive moves in your portfolios My presentation was titled…
New data reveals how American values impact financial choices
Charles Schwab’s sixth-annual Modern Wealth Survey revealed that people with money do have a heart. Almost three-quarters of the American respondents (73 percent) say that their values govern their life decisions. And almost as many (69 percent) say their top financial considerations support causes they care about. When deciding where to place investment dollars, Americans consider such things as the company’s reputation (91 percent). Corporate values (81 percent) are nearly as crucial as traditional factors. The company’s financial performance (96 percent) and the price (93 percent) still mattered the most, but barely. These values carry over to the workplace. More than 8…
Your Money is in Motion – Don’t Get Left Behind
Families and individuals have the most to gain – or lose – when money is in motion. Whether you’re building wealth or spending it, one thing is for certain: this is a critical moment for good financial choices. Here are five common situations where you will find that your money is in motion, and what to look out for in each one: Leaving your job American workers leave their jobs, on average, once every 4.1 years, which means your money may be in motion due to a job change as many as 10 to 12 times in your lifetime! Whether…
June begins with a significant rally. What’s next?
In last week’s Capital Ideas column, I reminded readers that I had been betting there would be a “rip-your-face-off” rally after May 22, 2022. One week does not a rally necessarily make, but the week after that column was published, the S&P 500 spiked 6.58 percent. That was the 53rd rally of 5 percent or more for the index since World War II (1945). Let’s be clear — I ain’t bragging. There’s way more luck in this line of work than I’d like to admit. The best I can do, at times, is to work hard enough to get lucky sometimes….
US economy today: is this a recession or just a growth scare?
On May 19, 2022, I attended an invitation-only webinar. It was hosted by FSInsight and presented by DeMARK Analytics. Fundamental portfolio managers check their work through FSInsight. Technical analysts check their expectations through DeMARK Analytics. Early in 2022, FSInsight nudged me to rotate some of my growth positions to value when they predicted that the first half of the year would be “treacherous” for stocks. DeMARK did their followers a solid by calling the bottom of the COVID-19 crash not just to the day but to the hour. Given the pedigree of these research services, it is worthwhile to share their findings with…
Want to predict tomorrow’s stock market? Watch corporate insiders today.
It’s a fool’s errand to try and stick the landing and call the end of a bear market down to the exact day. Nonetheless, on February 7, 2022, this fool argued that there was a six-in-10 chance the stock market would bottom on May 22, 2022. I’m dying to find out if I’m right (or close to being right). If I am wrong, the stock market is in for a world of hurt. I assigned a two-in-10 chance that the stock market would drop 20% by September 2022. If the downdraft continues, in part, it will be because investors expect…
Turning lemon returns into lemonade in the S&P 500
From Point A to Point B, the S&P 500 stock market index is essentially flat from roughly one year ago. That’s the good news. I mean, it ain’t great news, but that still leaves the index up about 35% from two years ago. But still … ugh! The S&P 500 stock market is off to its worst start to a new year since 1939. From peak to trough, it’s been down 17.8% (possibly more by the time you read this). Talk about leaving a sour taste in your mouth! When the stock market drops, it’s an opportunity to sell investments…
Always looking forward
by Kimberly Kirchner, Sponsored Content Editor, The Berkshire Eagle 21 years in business is no small achievement, but Berkshire Money Management CEO and Chief Investment Officer Allen Harris prefers to measure his company’s success with a different metric. “I’ve worked with folks in this area, with businesses that are literally going on a century. And there’s something to be said for that kind of longevity,” Harris said. “But I’ll also say that longevity isn’t the only reason business should be celebrated.” Harris is focused less on the last 21 years of BMM’s history, and more on the next 5 years…
Make up your mind, already!
Hey, stock market. Are you going up, or are you going down? Pick one side of the 200-day moving average and stick with it, would ya? What is the 200-day moving average? The 200-day moving average (DMA) is a key indicator that investors (traders?) use to gauge whether an investment is in an uptrend or a downtrend. The 200-DMA is typically represented by a line chart and represents the average price of the past 200 days. When the price of an investment is above the 200-DMA, it’s considered in an uptrend. And, when it’s below the 200-DMA, it’s considered…
A dud of a stock market
“If stocks don’t fall, the Fed needs to force them.” —Bill Dudley, former NY Federal Reserve Bank President (2009–2018), on how far the Fed should go to get inflation under control, in his Bloomberg op-ed. Dudley may no longer be a member of the Fed, but I believe he is communicating a message from them. It is not that a stock market crash would deflate inflation. Dudley refers to a concept I introduced in a previous column describing the death of the “Fed put.” As I said in January 2022, and as Dudley noted on April 6, 2022, the Federal Reserve…
Can the Federal Reserve engineer a soft landing?
Can we talk about how crazy the first quarter of 2022 was? From Volodymyr Zelensky to Will Smith. The so-called “Don’t say gay” bill and the woefully mislabeled “Billionaires’ tax.” From the vetting of Ketanji Brown Jackson to the Olympics (well, maybe not the Olympics), the world was buzzing about serious news and outright nutso news. Perhaps that’s why many people didn’t realize that the S&P 500 fell more than 10% from a closing high during that quarter. Later, the index traded 10% higher than its intra-quarter closing low. But it did. Since World War II, there have only been…
College Planning Glossary
Berkshire Money Management’s 2022 College Planning Glossary Our college planning glossary is designed to help students and their families navigate the complex college financial aid process. Click here to download the glossary and start making sense of college financial aid today. Our team of experienced planners and advisors at Berkshire Money Management is here to help you uncover opportunities to save on tuition and create custom strategies for tackling the costs of higher education. Don’t just save for college, save on college! Learn more about college planning at Berkshire Money Management. This communication is distributed for informational purposes. Nothing…
Beware an inverted yield curve
An inverted yield curve is one of Wall Street’s most closely watched recession indicators, because it works. The inversion of the 2-year/10-year Treasuries has been a reliable predictor of recessions. Since 1976, there have been 10 such inversions that preceded four slowdowns and six recessions. It’s getting scary, people, because it is getting closer to an inversion. The yield curve is a graph that plots a line depicting the yield of bonds against their time to maturity. Typically, the longer the maturity, the higher the yield. But when a shorter maturity bond, like the 2-year note, yields more than a…
College Planning: Where to start?
Does the word “college” give you heart palpitations? You’re not alone. In fact, far from it. Data from Statista says there are approximately 17,245,000 high school students across the U.S. in 2022. That’s a LOT of students. And a lot of stressed parents and family members. Whether you’ve gone through the college application process yourself or this is your first brush with it, know that you will be okay. You just need a plan. Ok…where do I start? You may have more than one child but for simplicity’s sake, let’s assume you have one daughter. What grade is she in?…