In the last issue of Seasonal Musings, we discussed the prospect of a "lost decade" of returns in the U.S. stock market. Is that what we're starting to experience? Either way, the best way to protect your portfolio against the possibility of a lost decade is to diversify it into other asset classes and into less expensive sectors. Read on for more details.
The prospect of another "lost decade" for U.S. stock market returns has been getting a lot of attention in the media recently. Late last year, Barron's, Morningstar and MarketWatch all published articles about the possibility of the S&P 500 generating little or no returns during the next 10 years.
During his campaign, President Trump vowed to eliminate the taxation at the federal level of all Social Security benefits. According to the Social Security Administration, only about 40% of its beneficiaries pay federal income tax on their benefits. But I'd be willing to wager that the vast majority of you reading this fall into that group.
President Joe Biden signed into law the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 at the end of 2022. SECURE 2.0 also contained numerous sections related to retirement. Among them:
More than 70% of workers with the option to invest in 401(k) plans either don’t participate in them or don’t fully understand them. Here are some simple tips for getting the most out of your 401(k) plan:
529 plan accounts are frequently used as tax-efficient and cost-effective vehicles for these education funding purposes. But some parents and grandparents remain reluctant to use them, or to contribute to them as much as they could, out of fear that these accounts may become overfunded.
When the U.S. stock market is expensive, diversifying your portfolio away from that asset class becomes even more important, either to reduce risk and/or to supplement future returns. Here are some possible moves to consider:
The impressive year-to-date returns in the S&P 500 and in the NASDAQ index without the benefit of much growth in corporate earnings or sales has resulted in our stock market becoming expensive, and by some measures very expensive. In discussions with clients, I am often asked how I come to the conclusion that a given stock market is cheap or expensive.
I urge you to embrace bear markets as opportunities, as recurring market phenomena that can't be effectively avoided. This is the bright side of bear markets:
Historical Perspective on the Bear Markets of 2022