Even though the high season for theme parks is over, the rollercoaster that is the stock market continues to leave investors with whiplash.
Photo illustration of staff; Dreamstime
Higher than expected consumer prices in August triggered Tuesday’s market carnage, the worst day for the three main US stock indexes since June 2022 when the Nasdaq plunged 5.2%, the S&P 500 fell 4.3% and the Dow Jones Industrial Average fell 3.9%.
Shares rose on Wednesday, but were lower on Thursday afternoon.
Whether stocks will rise or fall next, volatility is likely to persist this year and in such an environment dividend growers and alternative investments could reward investors.
At the very least, this year’s market carnage should prove beneficial to younger investors who can buy and hold for decades. But for those approaching retirement, it’s a very different story, especially when you factor in the impact of skyrocketing inflation. Many are now wondering whether they should delay retirement. Advisors share theirs suggestion.
The timing of one’s retirement is inexorably linked to when someone claims social security benefits. It is also most important decision for pensioners. When you do that calculation, retirees must weigh the pros and cons of waiting longer for a bigger check versus receiving smaller payments earlier.
This week we learned that pensioners may soon get theirs the biggest social security increase in more than 40 years. That’s good news for Social Security recipients, although some might expect higher taxes because of the annual cost of living adjustment (COLA) that bumps them into higher tax brackets. Readers let loose:
Ashok Arora: “With this size of COLA increase, the Social Security program will be further stressed. It is expected to reduce benefits by ~2035, my guess is that with this type of COLA increase, we could lose a few months/years. Congress needs to fix SS- the problem now instead of later. But with politics today, nobody wants to be the first to touch it. This is where we need leadership!!!”
Edward Palumbo Jr.: “Wait for the Medicare price increase, then tell me about the big increase, then tell me again how wage earners, despite the wage increases, can’t keep up with inflation. What a joke it all is!”
Claudia Chapman: “Elsewhere in Barron’s today, we see that the cost of groceries required to make a typical egg, bacon and toast breakfast has risen 22% in the past year. All of a sudden that 8.7% Social Security increase kind of loses its luster.”
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There is a lack of talent. How advisory firms stretch their resources. In a recent Big Q, we asked six wealth management executives: What steps have you taken to be able to serve more clients without necessarily adding more people. Companies indicated that they rely on technology, streamlined processes and employee specialization to increase efficiency. Comments instead focused on the value that advisers offer:
Joe Grant: “The golden rule when dealing with these financial types is passive indexing (outside their system…so no ‘Merrill Edge’), such as with a Vanguard S&P 500. Then compare what they do for you versus passive earnings. Most of my friends do better with absolutely no counselor.”
Brad Ducoat opposed: “Then your friends have the wrong advisors. Everyone out there talks about the 80 percent who don’t beat their appropriate index. What about the 20 percent who do?”
To which, Rachel Stultz asked: “@BradDucoat – Regarding someone’s ability to identify an out-performing advisor (over an entire market cycle, say a 10-year period)… are you doing due diligence by asking about his personal portfolio returns going back 10 years? I’d definitely try to avoid hiring a Chase Coleman/Cathie type investor (who outlasts for several years due to holding on to some flavor of the stock) so I’d probably ask to see holdings as well? Honestly wondering what you would ask for… Thanks!”
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Bitcoin bombed in El Salvador. It’s a cautionary tale for crypto. The country made history last September when its president, Nayib Bukele, signed the Bitcoin Law, becoming the first country to fully legalize the crypto for domestic use. In addition to embracing Bitcoin, El Salvador rebranded itself as a tech-friendly country, but things aren’t going well so far, writes Sabrina Escobar, who visited the country to measure Bitcoin’s impact for a Barron’s cover story.
John Fischer: – This was completely predictable. Imagine what would happen if the US dollar fluctuated just a small percentage of the rate that Bitcoin does. Total chaos. Combined with the senseless environmental damage caused by these absurd cryptos, this should be a lesson to anyone who thinks this “currency” has any place in serious financial systems. Hopefully the SEC and/or Congress will finally apply common sense regulations to crypto.”
Doug Anderson: “The central banks don’t like it. Why? It poses a threat to their control over the money ergo the people. Most of us reading this article know the score and mostly accept the realities of the world we live in. Having BTC in the market provides, if only in a tiny way, a window into the rooms where all decisions are made. I take that as an advantage.”
Jon Chaay: “Very well written and informative story. Also clear explanations. Excellent.”
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Please check out previous community talks and feel free to share your thoughts below.
Write to Greg Bartalos at [email protected]
