Even though the high season for amusement parks is over, the roller coaster that is the stock market continues to leave investors with whiplash.
Higher-than-expected consumer prices in August triggered Tuesday’s market bloodbath, the worst day for the three key U.S. stock indexes since June of 2022 as the Nasdaq plunged 5.2%, the S&P 500 tumbled 4.3%, and the Dow Jones Industrial Average fell 3.9%.
Stocks edged higher Wednesday yet were lower Thursday afternoon.
Whether stocks will rise or fall next, volatility will likely persist this year and in such an environment dividend growers and alternative investments could reward investors.
At least this year’s market carnage should prove beneficial for younger investors who can buy and hold for decades. However, for those nearing retirement it’s a far different story, especially when factoring in the impact of sky-high inflation. Many are now wondering whether they should postpone retirement. Advisors share their suggestions.
The timing of one’s retirement is inexorably linked to when someone claims Social Security benefits. It also is the most important decision for retirees. In making that calculation, retirees must weigh the pros and cons of waiting longer for a larger check versus receiving smaller payments sooner.
This week, we learned that retirees could soon get their biggest Social Security raise in more than 40 years. That’s good news for Social Security beneficiaries, although some can expect higher taxes due to the annual cost-of-living adjustment (COLA) bumping them into higher tax brackets. Readers let loose:
Ashok Arora: “With this magnitude of COLA increase the Social Security program is going to be further stressed. It is expected to cut benefits by ~ 2035, my guess is that with these kind of COLA increases we may lose a few months/years. The Congress needs to fix the SS issue now rather than later. But with politics today no one 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 raise, and then tell me again how wage earners, despite their pay raises, can’t keep up with inflation. What a joke the whole thing is!”
Claudia Chapman: “Elsewhere in Barron’s today we see that the cost of the groceries required to make a typical eggs, bacon and toast breakfast has risen 22% in the last year. Suddenly that 8.7% social security increase kinda loses its luster.”
There’s a talent shortage. How advice firms are stretching 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. Firms indicated that they are relying on technology, streamlined processes, and employee specialization to boost efficiency. Commenters, instead, focused on the value that advisors offer:
Joe Grant: “The golden rule when working with these finance types is passively index (outside of their system…thus, no “Merrill Edge”) for instance with a Vanguard S&P 500. Then compare what they do for you versus the passive earnings. Most of my friends do better with absolutely no advisor.”
Brad Ducoat countered: ”Then your friends have the wrong advisors. Everyone out there talks about the 80 percent who don’t beat their appropriate index. How about the 20 percent who do?”
To which, Rachel Stultz asked: “@BradDucoat – Regarding anyone’s ability to correctly identify an outperforming advisor (over a full market cycle, such as a 10 year period)…do you perform due diligence by asking for his personal portfolio returns going back 10 years? I’d definitely try to avoid hiring a Chase Coleman/Cathie-type investor (who outperforms for several years due to holding on to a certain flavor of stock), so I’d probably ask to see holdings, too? Honestly wondering what you’d ask for… Thanks!”
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 gauge Bitcoin’s impact for a Barron’s cover story.
John Fischer: “This was utterly predictable. Imagine what would happen if the U.S. dollar fluctuated only a small percentage of the degree that Bitcoin does. Total chaos. Combined with the senseless environmental harm done 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 on crypto.”
Doug Anderson: “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 for the most part accept the realities of the world we live in. Having BTC in the market delivers if only in a tiny way a window with a view inside the rooms where all the 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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Write to Greg Bartalos at firstname.lastname@example.org