It appears that we have established a range in the stock market over the last few weeks. The bears have not seen their worst predictions come true. My hope is that we leave this month where we entered it. September 2021 was treacherous. Bears were calling for a 10% correction at a minimum. Bulls, already on the back foot after witnessing a 5% pullback in the indexes, insisted we had seen the lows. Since then, we had been bouncing back and forth in a range. This week, however, appears to be a game changer. We have not re-tested the lows…
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BMM Articles
Barbie gets better with age
Despite this new age of video games, electronic toys, and diminishing attention spans, children are returning to a toy that is almost as old as me. Mattel’s Barbie doll is back and at the top of many holiday shopping lists. Some of the credit for Barbie’s new-found popularity can be attributed to the pandemic. The lockdowns and the subsequent search for things to keep children occupied had mothers remembering their own fascination with all-things Barbie. Buying a Barbie, however (at least until recently), had parents wrestling with several negative stereotypes. Leading the list was the doll’s image of a whites-only…
How to save money with tax-gain harvesting
Tax-gain harvesting is an opportunity to convert a long-term taxable gain into a potentially tax-free cost basis. Readers are probably familiar with tax-loss harvesting. Tax-loss harvesting is a form of tax planning. It’s the process of selling some investments at a loss, usually to offset gains you’ve realized when selling other assets at a profit. The losses can offset the gains, thereby reducing your tax bill. As the owner of a financial advisory firm (Berkshire Money Management), tax-loss selling is not an unfamiliar practice to me. Not only do I appreciate it because it reduces tax obligations, but I like…
Deficit deal bolsters markets
Our politicians in Washington, D.C. did what they do best this week by kicking the debt ceiling can down the road until December 16, 2021. Until then, we can switch our focus to the Fed’s November decision on tapering their bond purchases. Does anyone have any Pepto Bismol? Financial markets roared higher on the news of this temporary reprieve, but at what cost? For one thing, the passage of the infrastructure package and the larger social support program that would provide additional stimulus to the economy will likely be delayed until after the debt ceiling is raised. That robs the…
Golf continues to grow
In 2020, during the midst of the pandemic, golf made a comeback. More than 24.8 million people discovered outdoor refuge on the links last year, and the popularity of the sport continues to grow. Golf, as many have discovered, is an outdoor activity that has proven to be an almost perfect answer to the limitations of the pandemic. Players can get outside, exercise, and at the same time, socially distance themselves from one another. Last year, the U.S. saw the largest increase in golfers (2%) in 17 years. This year, the number of rounds played was up 16.1%, compared to…
Here’s what retirement looks like
I went Halloween shopping last week, but I didn’t see anything scarier than the chart below (and I bought zombie babies, people). The horizontal numbers on the right measure the drawdown of the S&P 500 year-to-date 2021, as graphically depicted by the yellow line. The horizontal numbers on the left show that nearly 90% of the indices’ members have already had at least a 10% correction year-to-date, as graphically depicted by the blue blob. The result is that it’s been a good year for you if you’ve held the S&P 500. However, because a substantial amount of the index’s underlying…
Markets are on the cusp
It was another tumultuous week in the markets. Volatility spiked as events in Washington and around the world injected an atmosphere of caution and indecision among investors. I expect more of the same. Welcome to October. A month in which I see a continuation of the last few weeks of uncertainty. The political circus in Washington, D.C. is not helping, and is set to continue making headlines in the days ahead. The debt limit controversary is probably the largest challenge investors face this month. Simultaneously, the battle between progressive and moderate Democrats over the passage of two government spending programs,…
Out of gas
Winter approaches and with it a potential natural gas crisis. Areas of Europe are already scrambling to find the energy required to heat homes and continue their economic rebound. Could the U.S. be next? Over the last year, prices for European natural gas have jumped by almost 500%. Natural gas prices on this side of the pond have also spiked by more than 100% this year. But it isn’t just countries in the Northern Hemisphere that are feeling the scarcity. Parts of Asia, which are importing liquified natural gas (LNG) at record prices, are being forced to switch to coal…
New taxes to know about
Tax proposals from as recently as June 2021 have changed. The stuff that could fall under this topic has filled months and months of news coverage. Today I will focus on some interesting ones you should be aware of. I’ll keep it brief, just so that you know we’re monitoring it for you. The ABCs of ETFs When relevant, I use this column to tell you the trades I made in my portfolios. Readers know that I primarily use exchange-traded funds (ETFs). I use ETFs for a few reasons. ETFs are usually “passive” investments that track indices. If you look at the…
The Dip Buyers return
Last week, investors suffered through the gloom and doom of a declining market. Many Wall Street equity strategists added to the angst by predicting terrible times ahead. I begged to differ, counting on dip buyers to save the day once again. And that is exactly what happened. In case you missed it, last Friday, the S&P 500 Index was at an important level, hovering just below its 50 Day Moving Average (DMA). This had happened several times before since March 2020, and each time buyers appeared to “buy the dip.” “I suspect they will again,” I wrote, “so, no, I…
Weather worsens global trade
Changes in climate are impacting a global economy that is fighting to recover from a pandemic. Supply chain bottlenecks continue to worsen as continuous weather-related catastrophes close ports and snarl land, sea, and air transportation routes. Can it get any worse? Yes, and it probably will, according to climate experts. Nearly all actively publishing climate scientists agree that humans are causing global warming and climate change. The less than 2% of experts that disagree have published contrarian studies that either cannot be replicated or contain errors. I’ll go with the consensus on this issue. Here in the U.S., we receive…
Video: The Future
Are mandatory vaccinations legal?
Gross Domestic Product (GDP) is the broadest measure of economic growth. The U.S. GDP grew 6.4% in the previous quarter. By any standards, that’s a remarkable growth rate. GDP for this quarter has dropped precipitously to a forecasted rate of 3.7%. At the start of the quarter, there were growth expectations of 6.5% from Oxford Economics and Morgan Stanley. Typically, a 3.7% growth rate would be considered exceptional. However, measuring a $21 trillion economy is complicated and includes some mathematical estimates. I won’t run us through the calculation, but here’s the gist of it: the demand had been so significant that…
Markets enter the danger zone
It has been a bumpy week for stocks, and it could get worse if you believe the headlines of the financial press. The issue I see is that just about everyone is expecting a nasty period ahead for equities. That makes me somewhat bullish. Calling short-term market moves in this environment is akin to fortune-telling. It is short on analysis, and long on my gut feelings. Granted, I too, have been warning folks that the September-October 2021 time period has been a seasonally difficult time for equities. My column last week addressed the possibility of a 5-10% correction, and what…
Moderates winning on tax debate
For months, wealthy U.S. taxpayers and corporations have been living with the specter of higher taxes under the Biden administration. It is a pretty good bet that taxes will go up, but not as much as you might expect. Throughout the week, Democrats in the House and the Senate have been horse-trading over the amount of spending, versus the amount of taxes, necessary to pay for President Biden’s $2.3 trillion budget plan. Republicans are already on record that they will oppose any new tax hikes at all. Since the Democrats hold such a slim majority in both the House and…