The stock market has enjoyed three straight days of gains after the Senate passed a massive economic stimulus bill in an effort to cushion the U.S. economy from the impact of the coronavirus outbreak. The stimulus bill will now head to the House, which will push to pass it sometime this morning. Yesterday (Thursday) was a great lesson in the unpredictability of the stock market. Who would have expected a 6% rally on the same day the U.S. coronavirus infection totals surpassed those of China and the Labor Department reported that jobless benefit claims soared to a record 3.28 million.
The US economy is in peril and this time it’s Main Street in trouble, more than Wall Street. The largest economy in the world is shutting down with increasing speed as federal and state officials issue new guidelines and requirements on individuals and businesses to curb the spread of this menacing virus. To avoid a deep and long-lasting recession, Washington has to get this right, and so do we. The usual Federal Reserve tools and tax cuts for stimulating the economy simply are not going to work to help those most impacted. This time it’s not a top-down problem like
Yesterday, we officially entered a bear market when the stock market closed more than 20% from its recent February highs. On average, we experience bear markets every three years, but this one stands out in the speed with which we entered it. In fact, it’s one of the most sudden bear markets ever: the average number of trading days from the most recent market high to entering a bear market is 137, according to Dow Jones. This one took just 19 days, making it the second fastest ever. See the charts below for more context on bear markets: A decline of this magnitude
Times are scary. Virus numbers are growing, countries are closing their entire borders and ordering their citizens to stay in their homes, and uncertainty over how long it will last and how bad it will be for economies prevails. Yesterday’s shock to stocks was caused by the outbreak of an oil price war between Russia and Saudi Arabia, sending crude prices down 24%. The S&P fell 7.6% bringing the total decline to 18.8% since the market’s latest peak on February 19th. Why would cheaper oil be a bad thing for the economy? The answer is one of degree. Our country’s
When I got to the office on Monday, the market had just had an awful seven-day period that looked something like this: The Vanguard Total Market Index was down nearly 13% in about the same amount of time it takes my four year old to find and put on his shoes, and of all Geoff’s great suggestions from last week’s brief, one had begun to stick out in my mind Monday morning: “Make a plan to put cash to work.“ One of the more interesting (and common) questions in investing revolves around the most prudent way to deploy cash that
There are a lot of scary headlines in the news right now. I’ll forgo the commonly accepted blogging practice of listing a few examples here to avoid unnecessarily exposing you to more of them than you are already reading. Along with the scary news headlines we’re experiencing a return of volatility to the stock market. As I write this the S&P 500 has just entered into correction territory – down 10% from it’s record close. While periods of volatility are normal and even necessary for the stock market, let’s be honest, times like this are challenging for all of us.
Last week, Ryan did a great job in his Brief titled Your Home is Not an Investment (You Probably Won’t Downsize), explaining how a home is a lifestyle or ‘use’ investment, behaving differently than stocks, bonds or other impersonal investments that produce income or can be easily sold to fund goals. Ryan’s Brief was aimed at readers considering the purchase of a larger home; to inform a wiser and more practical financial decision. This week’s Brief is for our readers who have spent many years in larger homes and are considering the merits of downsizing. My wife, Sharon and I
Home prices, both nationwide and in the Triangle, have surged over the past few years. The escalation in prices across the country brings back memories of the boom period prior to the financial/housing crisis of 2007-2009. There isn’t evidence to suggest that is what’s taking place this time, but the rapid rise in home prices is nearly unprecedented. The chart above, taken from Robert Shiller’s website, displays four pieces of data: home prices, building costs, population growth, and interest rates. Looking at home prices in blue, you can see the massive bubble that was building from 2000-2007. The home price
“One cannot live the afternoon of life according to the program of life’s morning; for what was great in the morning will be of little importance in the evening, and what in the morning was true will at evening become a lie.“ Carl Jung said that. The famous Swiss psychologist and psychoanalyst was referring to what he called “the two halves of life.” And while this is by no means a blog devoted to Jungian psychology, I think Jung’s two halves of life ring true and can have a massive impact on the ways we spend, save, and give money
Tax season is officially here. The IRS began accepting paper and electronic tax returns on Monday, January the 27th and the due date for 2019 federal income tax returns is April 15, 2020, for most individual taxpayers. By now you’re probably somewhere between assembling a stack of envelopes with “Important Tax Document” written on the front and having everything input into TurboTax or ready for your CPA save those last few 1099s, of course. Either way, I thought I might point out a few potential ways you can still reduce your 2019 tax bill, proactively impact your 2020 bill, and