Investors marked time throughout the week waiting for President-elect Joe Biden’s $1.9 trillion economic relief package to be announced on Thursday night. They were not disappointed. The size of the proposed bill was within the expectations of most market participants. As such, it was a classic ‘sell on the news” event Friday morning. The debate going forward will be how much of the new administration’s proposal will ultimately become law. That remains to be seen, since Federal funding for states and local governments and the $15/hour minimum wage will unlikely receive Republican approval. Investors aren’t really taking that on board…
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BMM Articles
Solar sector is not all green
There is one thing investors agree upon, solar stocks have skyrocketed in value over the last 12 months. The ESG (environment, social and corporate governance) crowd are ecstatic. They point to the gains as a clear example of how investors can all contribute to the greater good and still make money. But that thesis has some holes in it. So far in 2021, the frenzy to buy solar, electric, and water stocks has only increased. the incoming Biden Administration has already made clear its focus on increasing investments in renewable energy. As such, most investors expect a boatload of government…
4 Smart Money Moves for 2021
With the new year in full swing, it’s a great time to take stock of your personal finances. From building a budget and saving for retirement to getting a jump on this year’s taxes, here are some of the smart money moves to consider to help brighten your financial life in the new year. 1. Build a budget Creating a monthly budget can help you better understand your spending and identify how much money you can put toward your financial goals. First, take your monthly salary or wages after taxes are taken out. Next, tally your necessary expenses for each…
We ain’t normal
After watching the catastrophe at the U.S. Capitol building last week, it’s clear to me that we ain’t normal. But that’s not the only way to measure our lack of normalness. According to the CNN Business “Back-to-Normal” index, we ain’t normal. The Back-to-Normal index represents how close the U.S. economy is to returning to its pre-pandemic level. As I write this column, the index tells us that the economy is operating at 75 percent of where it was in early March 2020. The index was hovering around 83 percent for most of October 2020. Since then, it has been trending downward….
Democrat’s twin win in Georgia propels stocks higher
If you thought stocks couldn’t go much higher, you haven’t looked at the averages this week. January has started off with a bang in more ways than one. Can it continue? Some traders are crediting the action in financial markets this week to the Democrat’s twin win in Georgia’s Senatorial elections. Small cap stocks led the charge, as did industrial, materials, energy, financials, and other cyclical plays. The outliers that interest me also gained ground. Marijuana, clean energy stocks as well as bitcoin saw higher highs as investors bought equities that stand to benefit from policies favored by all three…
The 2021 stock market
Most Wall Street pundits are predicting another good year in 2021. That consensus view, however, differs on what areas will do the best, and what won’t. Here is my take on the new year. As a contrarian, it bothers me that so many investors are bullish. Too many sailors on one side of the rowboat tend to make the boat tip over. That said, I never simply do what others are not, unless there is a good reason to do so. Right now, I will go with the flow. Over the last decade, large cap stocks, led by the technology…
What is in the Stimulus Package?
Well, I got that one wrong. Fortunately. Yes, we got a stimulus package! I had said on November 30 that, “I am investing as if we’ll see something in the range of a $500 billion stimulus package announced by early February. (For comparison, JP Morgan is expecting a $1 trillion stimulus in March 2021.)” Fortunately, what that has meant for me is that I had been targeting a full allocation of equities for my growth-oriented portfolios. On December 27, 2020, President Trump signed into law the $908 billion COVID-19 relief bill. That is good news for the economy and should support an overextended…
Brexit at last
After four years of squabbling, and nine months of last-ditch negotiations, the United Kingdom (UK) and the European Community (EU) have come to a compromise agreement. The deal is much more an economic partnership than a true parting of the ways. The new economic system covers large areas of bilateral trade, including autos, industrial materials, manufacturing, the pharmaceutical sector, as well as professional services. It also allows the UK freedom to set new standards in areas like the environment and labor laws, as long as any changes do not overstep European standards by too much. The idea is to maintain…
What, Me Worry?
Dalton — I grew up (if you want to call it that) with Mad Magazine. Alfred E. Neuman was the fictitious cover boy of Mad. Interestingly, Alfred’s image was created before Mad, appearing in early 20th-century advertisements for painless dentistry. It was in the dentistry advertisements that we first learned of Alfred’s motto, “What? Me worry?” A Mad cartoonist named Harvey Kurtzman spotted the ad and pitched using it as the magazine’s mascot, saying that “it was a face that didn’t have a care in the world.” I, Allen Harris, hereby nominate Alfred E. Neuman to be the face of the…
Creating a Successful Business Succession Plan
An exit strategy helps business owners ensure the long-term success of their company A good succession plan creates a blueprint for ownership transfer as you exit your business. It helps you prepare for your retirement, ensuring you have the income you need. And setting a well-conceived plan into motion protects the people around you, including your heirs, employees, and customers by laying the groundwork for a smooth transition. Yet, despite these important benefits, many privately owned businesses don’t have a succession plan, leaving the business vulnerable to unforeseen circumstances. For instance, if the business owner dies or becomes incapacitated, there…
Understanding Your Retirement Income Plan
Manage cash flow in retirement with multiple income streams When you retire, you get to bid farewell to the working world. That’s the good news. The bad news? You’ll no longer have a paycheck coming in from your employer. To address that, you’ll need to piece together a steady stream of income from different retirement sources, such as Social Security, retirement accounts, and annuities. Each of these sources of income has its own benefits and tax treatments. Here’s what you need to know about how they might fit into your retirement plan. Social Security Benefits Monthly Social Security benefits provide…
The beginning of the end
As COVID-19 vaccinations get underway across the globe, it feels like the beginning of the end. However, even after the memory of the coronavirus pandemic eventually fades, the effects on the economy may persist. History provides us some lessons in navigating a post-pandemic world. This year there have been many changes, and investors must consider which will remain and which will revert to what we’re familiar with. And then we must consider how that will affect our portfolios. There are few recent pandemics (SARS in 2002, H1N1 in 2009) and epidemics (H7N9 in 2013) from which we can conclude. There…
Stimulus bill vaults stocks to new highs
A much-needed fiscal stimulus bill is expected to pass at the eleventh hour by lawmakers in Washington. Investors greeted that news by taking all three major averages skyward this week, with more gains in the offing. As I wrote last week, politicians are waiting until the very last day before passing a $903 billion stimulus bill. Thursday was supposed to be the deadline, and then Friday; talks may well stretch through the weekend at this point. In the meantime, another important piece of legislation, an extension of the government budget, had to be signed by Friday, December 18th to keep…
Oil’s comeback
Earlier this year, the price of West Texas Intermediate crude oil slumped into negative territory for the first time in history. Oil traded at a negative $37.63. Today, that same barrel of oil is changing hands at $47.48. What changed? More than any other sector, the coronavirus has had a devastating impact on the global oil and gas industry. Declining consumer demand in the first quarter of the year in combination with high levels of energy production threatened to exceed worldwide oil storage capacity. OPEC+, the oil cartel, took action on April 12, 2020 by cutting oil production by 9.7…
The Ghost of Christmas Past
Tis the season to be overly optimistic about the year ahead of us. We reflect upon 2020 and commit (for about a month?) to New Year’s resolutions that will help us participate in what will undoubtedly be a better year than almost any prior. I’m not talking about you and me. I am talking about the U.S. equity market. The MSCI U.S. Index is comprised of 618 companies that represent large and mid-cap companies. It covers approximately 85 percent of U.S. market capitalization. The consensus expectation for aggregate earnings per share of this index is 20 percent for 2021….
The same old stimulus song
Investors should know better by now. Stimulus talks have been going on since July 2020, but politicians in the capital appear to be stuck on the same old issues. Unfortunately, the deadline for a 2020 compromise bill is less than three weeks away. It is anyone’s guess whether the nation’s economic and pandemic plight will win over partisan politics. It hasn’t so far. The financial markets are not taking kindly to failure at this point. The all-time highs we have been enjoying for the last two weeks have been built on investors’ near certainty that at least $900 billion in…