Insights & Advice
BMM Articles
Flashing lights for the stock market
I made some trades last week. I did different things in different portfolios. I believe that readers will be best served with a summation rather than a specific list of what I did in each. The result is that I got more conservative. I shifted about 4-8 percentage points from position to position. I did not raise cash. I reduced (but didn’t eliminate) my small-cap and homebuilder stock positions and shifted back toward large-cap stocks and high-yield corporate bonds. In last week’s column, I teased out this consideration in the “You’re Too Happy” sub-heading. I cited there, “I have some holdings…
Wild week for stocks
In just one week, the major averages have had a 3% swing from lows to highs. These gyrations go hand in hand with the high level of indecision investors are feeling right now. Can you blame them? Last week, and into the end of the day on Monday, the S&P 500 Index registered a 3% decline. In the next few days, all of those losses were recouped and then some. While investors breathed a sigh of relief, I don’t think we are out of the woods just yet. Most strategists blame the decline in stocks on the free fall in…
What’s that smell?
Imagine opening your laptop or cell phone and catching a whiff of your favorite perfume. Scroll back to last summer’s Maine vacation photos and smell the pine forest at your campsite. Digital scent technology can make that happen sooner than you think. Digital scent technology, also called olfactory technology, is an engineering discipline that enables media, such as video games, movies, music and web pages, to sense, transmit, and receive scent-enabled content. Simply put, the day when you can smell through the internet is almost upon us. The market is tiny right now, with less than $20 million in sales,…
Video: In the Beginning
Things are heating up
“Don’t touch me; I’m too hot! Y tu lo sabes!” —Usnavi, In the Heights Ouch! Inflation is heating up enough to burn my fingers. Some quick numbers, and then I’ll try to avoid any more percentages. (Emphasis on “try.”) The Labor Department reported that inflation in June 2021, as measured by the Consumer Price index (CPI), increased 5.4 percent, year-over-year. That is the highest 12-month rate since August 2008. For context, commodity prices were booming then; oil prices hit a record $150 per barrel. The so-called “core rate” was up 4.5 percent during that same time. The core rate excludes items…
The labor gap
All over America “help wanted” signs proliferate. Radio and television ads promise big bonuses, satisfying benefits, and career advancement. There are fewer takers than anyone expected. Is this simply anther pandemic supply dislocation, or is there something deeper going on within the American labor force? As of last week, there were 9.2 million unfilled U.S. job openings, according to the U.S. Bureau of Labor Statistics, while the number of unemployed stood at 9.5 million. And contrary to the hysterical claims of Republican politicians, enhanced Federal unemployment benefits are not the cause of this imbalance. A month ago, I wrote a…
What is causing the labor shortage?
There has been much conjecture, but little evidence, as to why the U.S. is experiencing a labor shortage. Some say it’s because people are lazy and are exploiting the system. Some say it’s because greedy employers aren’t paying enough. Many people have made up their minds about “why” there is a labor shortage before enough evidence has been gathered to support any hypothesis. I possess a third consideration, but I’ll try to stay out of that ideological dog fight and report the facts (and maybe a few opinions). If we are intellectually honest about it, we know that people have…
A week of surprises keeps investors hopping
There were plenty of reasons why the stock market was a bit jumpy this week. Let’s go through them. Two weeks ago, I wrote that I was worried “that we could suddenly see a spike in new Delta variant cases that impacts economic growth. Remember that less than half of all Americans are fully vaccinated. President Biden, his Chief Medical Advisor, Anthony Fauci, and the Fed are all sounding warnings over this risk, yet the markets are ignoring it.” Investors finally caught on this week and began to realize the risk presented by the Delta variant and its impact on…
China’s red hand of regulation
Over the past several decades, investors, investing in China, have gotten used to the dichotomy of China’s Communist-run, centralized government and its free-for-all stock market. That situation appears to be ending. The latest (and most controversial) sign of China’s increased interest in regulating and extending control of its largest companies came over the weekend. Fresh off the heels of a global $4.4 billion initial public offering, Didi, China’s ride-hailing giant, was ordered to cease accepting new users, and to close down its app by China’s internet regulators. By mid-week, the newly, U.S.-listed share price of Didi fell by well over…
How much does health care cost in retirement?!
Let’s not bury the lead. According to the Fidelity Retiree Health Care Cost Estimate, an average retired couple aged 65 in 2021 may need approximately $300,000 saved (after tax) to cover healthcare expenses in their retirement. Fidelity has been tracking this data for years. I cover how retirees can prepare for this in my still-untitled second book. (It will probably be printed sometime in late 2021.) I devote considerable time to healthcare costs because it can change the way retirees prioritize spending in their golden years. If you have a $10 million portfolio, the cost of health care may not…
Markets grind ever higher
The S&P 500 Index is up 14% so far this year. Most other averages have similar double-digit gains. July is normally a fairly positive month (in general) for equities. Does that mean we can expect equities to continue their bull run through the summer? It certainly looks that way. Any pullbacks in stocks will likely be met by dip buyers. That could limit declines to a manageable level. A sustained rise in interest rates will likely wait until investors know—with certainty—the Fed’s next move. The thinking is that there will be an announcement on tapering bond purchases, which may not…
Will SALT be repealed?
The state and local tax cap, called SALT, has been the bane of many high-tax states since its passage as part of the 2017 Tax Cuts and Jobs Act. It created an effective tax hike for many high earners in high tax states, as well as many middle-class workers. That may be about to change, at least for some income earners. Last week, the Senate Budget Committee, chaired by Vermont Senator Bernie Sanders, presented a draft outline of a $6 trillion budget resolution. It included $120 billion for SALT relief over five years. Readers may recall that the controversial tax…
The market will likely rise in the second half of 2021
Good news, everyone! The stock market will probably rise in the second half of 2021. Over the last 125 years, if the Dow Jones Industrial Average (DJIA) rose in the first half of the year, it was up 72.4% of the time in the second half. That’s more than the 66.9% of the time it’s usually up in the second half. The Dow is up 64.5% of the time in the second half of a President’s first year in office. If you can’t pick it up in my writing, there’s some sarcasm in my jubilation. But, yeah, I guess it’s…
Beware the delta variant
Airplanes are full, parkways are bumper to bumper, and restaurants are packed. The summer is in full swing, and for many, the coronavirus is a thing of the past. Let’s hope it stays that way. The last thing I want to do is spoil the re-opening party. Afterall, we deserve to feel good, go out, meet family and friends without a mask, even chance a hug now and then. The one fly in all of our ointments may be the onset of an extremely contagious, and virulent coronavirus mutation dubbed the “delta variant.” You have probably read about this super…
High risk, high reward?
Inflation has been high, based on the Consumer Price Index, or CPI. The Bureau of Labor Statistics reported that the CPI was up 0.6 percent in May 2021 and rose 5 percent over the previous 12 months. Both are big numbers and well above historical trends. The Federal Reserve has repeatedly said that the high inflation is “transitory.” Others expect high inflation to continue unabated. I don’t understand why people argue either/or. I suspect some forces will push inflation consistently higher but not to a ruinous level. (I do believe that continuing at a 5 percent rate would be ruinous.) Let’s…