As 2019 begins, many market observers will be watching the Federal Reserve carefully for signs of a change in monetary policy. Markets had been hopeful that the Fed wasn’t going to raise rates in December, but it stuck to its guns. The reaction, predictably, was a huge fall in stock markets. But with the Fed seeming to indicate that...
The actions of stock markets over the past several months have likely contributed to a number of near heart attacks among anxious investors. With unprecedented volatility roiling markets, they’re just as likely to end a trading day down 600 points as they are to end up 600 points. And with the trend tending ever downwards and well off all-time...
Markets had been pricing in a December Fed rate hike all year. But with President Trump’s comments expressing his disappointment at the Fed’s hiking of rates this year, and Fed Chairman Jay Powell’s comments attempting to placate both the markets and the President, many on Wall Street were hopeful that the Fed would dispense with hiking rates last week....
Investing orthodoxy likes to state that investors can’t time markets. In one sense that’s true, in that the likelihood of an individual investor being able to sell right at the top of a market and buy right at the bottom of a market is incredibly slim, if not impossible. That’s why buy and hold has become such an important...
Anyone who lived through the 1970s remembers the crushing effects of stagflation. The phenomenon, characterized by severe recession, double digit inflation, and high unemployment baffled Keynesian economists who had long posited that high inflation and high unemployment couldn’t exist together. The Phillips Curve propounded by the Keynesians held that there was a direct relationship between inflation and unemployment, with...
Every week seems to bring more bad news about the US housing market. It’s clear that the housing market is headed towards a standstill and may very well swing downwards in the near future. With year-over-year sales continuing to remain weak and home sales even in previously hot markets stagnating, home sellers are about to enter a very rough...
If you’re like many Americans with a 401(k), IRA, or other type of retirement account, the last few years of stock market gains may have sent your paper wealth soaring. There are more 401(k) millionaires in the United States today than ever before. But with the sums in retirement accounts piling up ever higher, and American households more indebted...
One indicator that market analysts look to for signs of an impending recession is an inverted yield curve. Because of uncertainty about the future, investors demand more yield from longer-term investments. That’s why you’ll see higher interest rates on longer-term bonds than shorter-term bonds. An one-month bond may yield 3% interest while a 10-year bond may yield 5%. When...
In the aftermath of the 2008 financial crisis the Federal Reserve engaged in a massive amount of quantitative easing (QE). In addition to pushing interest rates to near zero, the Fed also purchased nearly $2 trillion worth of US government debt. That incentivized the US government to take advantage of the low interest rate environment to issue trillions of...
Building up a nest egg for retirement is only one half of retirement planning. The other half consists of planning to safeguard and maintain that wealth well into the future. Business cycles have been a regular part of the economy for over a century. The booms and busts that occur with regularity are something that need to be taken...