We’ve all heard that the S&P 500 is more concentrated than it has been in decades. Indeed, the top 10 holdings in the S&P 500 now account for a whopping 33.8 percent of the index. That’s right, ten of the 500 stocks in the index equal more than one-third of the value of the index. I’m a fan of global diversification, but it’s been a frustrating decade, given how well… Read More
The Tax Cuts & Jobs Act (TCJA) was passed by Congress and signed into law by President Trump in 2017. The TCJA expires in 2025, which means one of three things: Congress and the President could work together to develop a new law, act to extend the current law, or let it expire, meaning the tax laws would revert to their 2017 levels. With tax day behind us, I thought… Read More
As noted above, the March Consumer Price Index (CPI) inflation data exceeded expectations. The year-over-year headline rate was expected to be 3.4 percent but was actually 3.5 percent. The core rate, which excludes food and energy, was expected to be 3.7 percent but was 3.8 percent. Those might not sound like big misses at one-tenth of one percent, but the chart below helps tell the story. The chart shows the… Read More
I remember listening to one of my parents’ friends talk about retirement. He was proud that his tax-free income was covering all of his expenses. Although I was in a pretty low tax bracket at the time, I liked the idea of not having any deductions from my paycheck. I didn’t know it then, but he was saying that his entire portfolio was in municipal bonds, which are generally exempt… Read More
Last week, I showed four charts that all said the same thing: US stocks are a little expensive when compared to fundamentals (click here to read the article). You could fairly accuse me of saying the same thing this week, but this time, I’m using the bond market. The chart below shows the spread (or difference) between high-yield bonds. High-yield bonds, also known as junk bonds, are issued by companies… Read More
I am as happy about the strong market rally as the next guy. Still, I was caught off guard when I saw that the S&P 500 is up 25 percent per year since the bottom around the pandemic. Of course, the Financial Times journalist said that they picked an unfair start date since stocks were down about a third at that point. But still, even if we pick a neutral… Read More
There are a handful of annual outlooks that I look forward to each year, and one of them is Vanguard’s Economic and Market Outlook. The report, which you can find here, is thoughtful, thorough, and isn’t trying to sell you anything (which is high praise in this industry). They also have great titles, and this year’s was a standout: A Return to Sound Money. In their opening paragraph, the authors… Read More
I’ve said for some time that college planning is hard. I discovered this the hard way, through my own situation. Both of my daughters are in college now, and I started 529 accounts for each of them the year they were born. I got a little tax deduction and the benefit of tax-free growth. When my older daughter was a freshman in high school, I realized the problem: even though… Read More
A lot of people are worried about the effect of the Presidential election on the stock market. It seems like no matter who you support, you’re worried that the other candidate will ruin everything. I have no intention of making any political comments of any kind, and the best way for me to allay any concerns without making half of the folks upset is to take a look at data…. Read More
Last March, I wrote about a new pair of exchange-traded funds (ETFs) that track the bets of Jim Cramer, the host of Mad Money, known as much for his bright lights, loud sounds, and yelling as he is for his investment advice or track record (here’s a link to my article). One of the ETFs would short his stock picks, betting that the picks would fall, and the other went… Read More
