Some thoughts worth pondering on personal spending

Happy Thanksgiving to all my readers.  God bless you, too.

I try to help my readers understand investment markets because I want you to be good stewards of your retirement funds.  You’ll need them. I want you to have money later in life – if you’re not, by the way, already in “later life.”

But in addition to helping you MAKE money, I also want to challenge you to be more careful in your spending. Your own retirement won’t care if you have extra money from your investments or from not spending money foolishly. Money is fungible.

The article below was published on The Motley Fool website over the weekend.  It makes some great points in helping us not spend hard-earned money carelessly.  I hope it makes you thing. Ponder its wisdom.

+++++++++++++++

4 Stats That Will Make You Hate Black Friday

Overspending, credit card debt, parking lot fights, and the erosion of the Thanksgiving holiday — what’s not to love?

Nov 18, 2017 at 10:11AM
Nearly two-thirds of American shoppers plan to get up early (or stay up late) and brave huge crowds in order to scramble for the best holiday gift deals on Black Friday and throughout the holiday weekend. Some shoppers simply love the thrill of getting a good deal or finding that perfect gift for their loved ones.

But, of course, there’s a dark side to Black Friday well. Parking lot fights, stampedes, overworked employees, and increased debt are ugly hallmarks of the American holiday shopping season. If you have an inclination to spend your post-Thanksgiving hours scouring retail shelves for this year’s hottest gifts, here are four Black Friday stats that might make you think twice.

1. 40% of Americans bust their budget looking for great deals

The time between Black Friday and Christmas brings in about 30% to 40% of annual sales for many retail companies, according to the National Retail Federation (NRF). This year, holiday retail sales are expected to reach up to $682 billion, up from $655.8 billion in 2016.

All of this spending provides a nice boost to the economy, of course, but it also comes at the expense of many consumers’ personal budgets. About 40% of shoppers overspent on holiday gifts last year, according to a survey conducted by Elevate’s Center for the New Middle Class.

While it’s not exactly shocking that many Americans spent more than they were planning to, it is surprising why they did it. According to the survey, shoppers were 45% more likely to overspend when they were actually looking for great deals.

Perhaps seeing more sales enticed them to spend more money, or buying lots of gifts to maximize perceived savings was the culprit. Either way, many Americans bust their holiday shopping budgets for the sake of a good deal — and that’s bad news for their personal finances.

2. 25% of shoppers will need three months to pay off holiday debts

While spending more than we want on holiday gifts isn’t good, what’s worse is that one-quarter of American shoppers spend so much on Black Friday (and over the holiday season) that it takes us three months to pay it off, according to 2016 survey by TD Bank.

Think on that for just a second; it takes 25% of Americans one-quarter of a year to pay off holiday debts. And don’t think it’s just shoppers with subprime credit that are having problems. A recent Goldman Sachs survey showed that Americans with credit scores of 660 or higher struggle with credit card debt too.

Americans now have more than $1 trillion in outstanding revolving credit card debt, some of the highest since the Great Recession days back in 2008. And consumers say they’ll spend about $967 on holiday shopping this year, up from about $935 in 2016. All of which means Americans aren’t likely to give up their tradition of accumulating more holiday debt just yet.

3. At least three people were killed during Black Friday last year

Even with rising online sales, nearly 102 million Americans went out for Black Friday deals last year, a huge increase from 74 million the year before.

Unfortunately, some shoppers occasionally turn violent during the intense shopping times. A Black Friday shooting in a New Jersey mall last year left one man dead and his brother injured, and another shooting the same day in a Memphis, Tennessee mall left another man dead. If that weren’t bad enough, two men began shooting at each other in a Wal-Mart parking lot last year as they fought over a parking space, and one of the men died from his injuries.

According to the depressingly named website, www.blackfridaydeathcount.com, 10 people have died on the popular shopping day and more than 100 have been injured since 2006 due to shootings, stampedes, robberies, and fights.

4. 32 million people shop on Thanksgiving Day

While most of us get to to enjoy a day off with family and friends, many retail worker have to cut their Thanksgiving holiday short and clock-in for work. About 75 popular retail stores will be closed on Thanksgiving, but many stores including Best Buy, Cabela’s, JCPenney, Target and Wal-Mart will be open for at least part of the day.

The NRF says that 34% of 2016 holiday shoppers stepped foot in a retail store on Thanksgiving day. There’s been a trend over the past few years for retailers to keep their doors closed on Thanksgiving, but the NRF says that 20% of holiday shoppers — or 32 million people — plan to shop on the holiday this year, which incents big retailers to open up.

Sure, employees usually get paid more on Thanksgiving because it’s a holiday, but as many of us already know, getting paid more money isn’t always worth the work. And staying open on the Thanksgiving holiday only feeds America’s growing problem of taking less vacation time than workers in other countries.

Some holiday tips

You don’t have to give up holiday shopping completely this year, but you can avoid some of theses cringe-worthy statistics with some simple changes to your shopping habits.

The first, and most obvious, is to avoid shopping on Black Friday. There’s plenty of evidence showing that you can get great deals over the entire holiday shopping season. Second, make a budget. Shoppers that don’t set a budget are 87% more likely to say they spent more than they planned on, compared to those who set a limit.Finally, remember that while it’s fun to give gifts, going into debt for them simply isn’t worth it.

Posted in investment myths, investment wisdom, Personal Finance, retirement investing, spending, Successful living | 2 Comments

When will this end?

I hear so many friends and acquaintances asking the question, “When will this end?”  Or, “how will it end?”

Well, as is my custom, I must state that I am not clairvoyant. I don’t know when “it” – i.e., this bull market in stocks – will end. But, I assure you all that there is a correction coming and, also, a bear market. But just when? I don’t know.

However, it’s not enough to say that, “Since this thing has started in 2009, it’s long past due for a big correction.”

Markets don’t work like that. You probably know that.  Or, if bull markets finally come to work that way, then we’re going to see the strangest correction of all time, given the inflation we don’t have, the low interest rates we have, the employment and wages we do, the earnings growth here in America and around the world.

This just is not the way bull markets end.

Moreover, there is not only no euphoria, which usually accompanies market tops; but globally, investors remain skeptical and very wary. Clearly, ghosts of 2000 and 2008 continue to haunt investors’ sentiment, which, need I remind you, is also very bullish.

Many others factors continue to support this view. This bull market will die, likely, when the Fed sees fit to tighten meaningfully – which they are not doing now – by draining liquidity from the system (raising rates a lot); or maybe by raising the discount rate many times in succession; or maybe by inverting the yield curve. But these and other steps will, however, only be taken when the economy overheats (which it hasn’t); when inflation surges (which it hasn’t); and speculation is rampant (which it isn’t).

In America, companies are doing so many things better, faster, cheaper, and for the customer. The biggest threat they face now, I think, is political. Don’t kid yourself: politicians are capable of inflicting great damage on both businesses and investors. Importantly, and differently, unlike the business trusts that were the rage in the late 19th and early 20th centuries, and were busted up by the government, today’s businesses are much more popular with their stakeholders. (Think Apple.) That fact also leads me to believe that this bull market ain’t over yet.

Back in the year 2000, when the dot.com bubble was about to burst, it may have been very smart keeping a lot of cash available.  But in 1455, with the invention of movable type (which enabled Gutenberg to print his Bible) and launch the explosion of mankind’s ability to communicate, was that a bubble? Or, how about 1820, with the coming of the steam engine, was that a bubble in manufacturing and transportation?

I don’t believe they were bubbles, and I don’t believe that we are in the midst of a stock bubble today either. We live, for better and for worse, in a time of significant leaping forward in technology and productivity – also of partisanship in politics, arrested development on the part of many younger folks addicted to their social networks and devices, and poorly educated and ill-prepared young people to enter life and the work world.  But this is still a great time in world history for technology and productivity.

So, I share with you my own conviction that our joyless, much-hated, and much-doubted bull market will keep bumping along. Those of you inclined to believe in gloom and doom, and those of you hearing others worried that another bear market is peeking around the corner: because, well, on the surface of things, the world is a mess and may not change much; or that it has been nine years since the last bear market, or that now is the time to get out of stocks, or at least lighten up, to all of them, I say, “Watch out!”

While it might feel good-in-the-moment to take money off the table and assume a regression-to-the-mean is soon going to be upon us based upon recent history, seeking comfort has never been the basis of a winning strategy in the stock market. Neither has being, or becoming, a market timer. Meanwhile stocks, in general, with their predictable backing and filling, and occasional and unpredictable downdrafts, continue to rise.

The stock market tends to be a predictor, of course, not of the past, nor even a confirmer of the present, but a predictor of future economic change, discounted back to the present.

So, my take, as of now, for what it’s worth, is that there are great things taking place that are not readily apparent. Behind the outrageous political noise of our day, American businesses are participating in one of the greatest growth and productivity surges the world has ever seen.

Interestingly, too, this technological leap forward is taking place at the same time that increasing transparency (made possible by technology, too) is making it more fashionable to do the right thing. Even a small shift toward more ethical behavior opens up an even bigger opportunity for American businesses operating throughout the world. In short, I see plenty of reasons why the current bull market could be extended. All this does not imply that my current worldview is without risk nor that bear markets and recessions have been repealed: they have not. There are real threats, for sure. (Like No. Korea.) But in my opinion, it is not the time to run for cover, at least not yet. Let us react to the things we can control, not the things or the feelings we can’t.

If this sounds like I am trafficking in a bit of faith and hope, you got it. I traffic in a lot of that stuff. Someday, I hope everyone reading my stuff might as well.

God bless you all.

 

Posted in bubbles, economic recovery, fear, investment myths, investment wisdom, market corrections, stock rallies, Successful living | Leave a comment

What an interesting September this has been. Rewarding, too.

September, in the markets at least, is over for this year.  As I wrote earlier in the month, this past month tends to be the roughest one of the year.  But not this year.

Not only is it over, it will find a place in financial lore as one for the record books.  At least from the standpoint of the S&P 500, this month was the least volatile September in 66 years. No small accomplishment.  The change between the index’s closing high and closing low for the entire month was just 2.1%.  Back in the fall of 2008, you may remember, there were days upon days where a daily move of only 2.1% was a cause for hope.

September, typically being the worst performing month of the year, has averaged a decline of 0.5% for the month. However, during 2017’s September, the market actually rose amid all kinds of potentially disruptive news.  How much? About one-and three-quarters percent.  Why?  I think earnings were a major part, and a good, sound part, too

That allowed the market to stay above the fray of a series of potentially rally-threatening events. For starters, the richest company and stock in the world, Apple Inc., was down close to 7% in September, after rolling out three much-hyped iPhone models. Out came the phones and down went the company’s stock from which it has yet to recover.

Then take North Korea (please!).  A war of words escalated between the leaders of our two countries, which has raised the threat of  nuclear war.  Usually, that would be more than enough to tank stocks. Also consider the punt by the White House and Congress of the debt ceiling deadline until December, when they’ll have to start negotiating all over again. Then, too, there was yet another belly flop of an attempt to repeal Obamacare fell. That one fell flat on the floor of the U.S. Senate.

There’s still more that might well have upended stocks rise this past month. The Federal Reserve said it just may raise interest rates one more time this year, surprising a lot of folks who thought, given recent inflation weakness, that the FED would stand pat for the rest of this year. What usually bugs investors about such a future move didn’t this time: stocks often have trouble marching higher as the Fed ratchets up rates.  But then, you must realize that the FED is less “raising” interest rates than trying to return them to normal.

If anything, the market only grew calmer over the course of month. Last week, the S&P 500 traded in a range of just 0.5% — the smallest range its traded in since 1972. And it was only the ninth week this century that the trading range was smaller than 13 points.

If third quarter earnings continue like the last couple of quarters to come in strong, and global economic activity continues to accelerate, growth in our portfolios could continue. But the market has been so calm for so long that you have to be mindful that this can’t go on like this indefinitely.  Now, that’s no hint that I sense a collapse or a recession is around the corner.  It’s just the statement of a realist that “trees don’t grow to the sky,” and markets don’t rise forever.  At some point, yes, they will take a break. But I don’t see the conditions yet that would tell me, “batten down the hatches.”

Posted in economic recovery, fear, investment wisdom, market corrections, Market falls, market volatility, Personal Finance, retirement investing, saving, stock rallies, Successful living | Leave a comment

September is the roughest month of the investment year.

Yesterday marked the 8-1/2 year anniversary of the great bull market that is still going on. On March 9, 2009, the S&P 500 reached its closing low of 676.53. The previous Friday, March 6, 2009, the index touched its sinister-sounding intra-day low of 666.79. To give you an idea of how bleak things were, that morning the government reported that the unemployment rate touched a 25 year high, and the non-farm payrolls report for February, 2009, came in at a whoppingly awful minus 651,000.

Yikes!

But things are quite different today. Last Thursday’s close of the S&P 500 Total Return Index showed a gain of 332.64% so far in this long bull market. That’s enough to have turned any dollar invested into the S&P 500 Index, with dividends reinvested, into $4.32. Every dollar.  Quite a bit different from what would have happened if someone put money in a C.D. over the same period.

This has been one of the longest and strongest bull markets in history. Yet what’s really fascinating to some of us is how hated it’s been. And remains.  If not “hated,” then disbelieved. Some people just can’t stand to see the indexes rise higher and higher.

We’re all constantly told by pundit after pundit that it’s nothing but a reckless bubble that’s going to crash any day now. Or, some say it’s all due to the manipulations of the Fed; and when the Fed pulls back (which, by the way, the Fed began doing a couple of years ago), the market will come a-crashing down.

Give us a break, please.

Predicting that the world is about to end is one of the favorite pastimes on Wall Street and many conspiracy theorists.  Still, the bull market marches on. In fact, this year may turn out to be the least volatile year on record for the stock market.

If there’s a golden rule for long-term investing, the kind of investing I want for those of us saving and investing for retirement, it’s that betting on disaster is always overpriced, and betting on “it’ll all work itself out” is always a bargain.

September, remember, remains the toughest month of the year for stock market returns. On average, the market falls a full percent or a little more each time September rolls around. And true to form, in the last month, the S&P 500 is down about a half percent. Not great, of course, but it’s still up about 10%, year-to-date.  Again, much better than a CD.

August and September are the two roughest back-to-back months on the calendar. But beginning in November, we come into the best six month stretch of the year.

Don’t pay attention to the day-to-day gyrations.  Don’t listen to the many negative voices telling us that this is a bubble, the bull market is too old, it has to crash, and lots else like that. They don’t know.  Nor do I.  There is no recession in sight yet.  Just stick to your knitting.

Does anything concern me?  If I could honestly seeing a recession coming.  Or, a strike on, or from, No. Korea. Each of those would upend the order of our lives and investing.  But we can’t hide from things we can’t predict or control or influence.

Hang on.  And have some faith.

Posted in economic recovery, fear, investment myths, investment wisdom, market corrections, Market falls, market volatility, retirement investing, saving, stock rallies, Successful living | Leave a comment

We interrupt this program to bring you this bulletin

The market is now down two days in a row.  Imagine!  Are you getting weak-kneed?

I hope not.

Let me share a couple of charts with you to provide some perspective.

Image result

The August/September period of the stock market – the chart, above, is of the S&P’s performance from 1929 to 2012 – is the roughest period of the year.  The above chart notes that the average return for August is about +0.7% for the month of August. But isolating monthly returns for August during the last 50 years pull that average down towards September’s more dismal average. Suffice it today, for seasonal reasons that no one understands, August and September are tough months.

Add to this, the goings-on with No. Korea, and we could be in for quite a tizzy. Peace and diplomacy are uppermost in my mind, and probably yours.  But this is a can that’s been kicked down the road for multiple decades.  No. Korea acts up, threatens neighbors or the world, nations agree to talk, more threats are muttered, and time and bribes are offered to stop the hysterics.  That’s been the script.  At least so far. Perhaps, it is time to challenge that script.  Or, are we to continue to permit, or even enable, a nation to act like a terrorist or to facilitate others’ terrorism in various, sordid places around the world until they are ready to stop or to cause us to cower into surrender?  Same goes for Iran, as far as I’m concerned.

Now financial markets are wonderful places to make money over time, but they are dreadful places to find examples of courage.  That, you will need to find within.

If I might offer some encouragement, take a gander at this chart:

Chart of the Day
As I have noted many times, we don’t know why stocks go up or down.  Not exactly.  Skirt lengths, Super Bowl winners, seasonality have all been alleged contributors.  But we seem most sure that the earnings of companies contribute a good deal to the dynamic. So, if that’s the case, then the chart above should give us some courage, in spite of the many voices of fear and negativity, that our economy is doing well.
Our new President may not be doing everything I would have hoped.  His temperament and self-discipline for the tasks he has been elected to perform leave much to be desired.  But his efforts to deregulate our economy by the executive orders and the people he has put in his government have provided a degree of optimism to our land.  I say that in spite of the endless drumbeat to delegitimatize and “resist” his presidency from the media and his many opponents.
So, I hope and pray that our willingness to confront an unpredictable enemy and the general malaise that Aug. and Sept. brings to markets do not rattle your resolve or willingness to do what’s right for the long-term good of our nation or for your retirement portfolio.
God bless us all.
Posted in fear, investment myths, investment wisdom, market corrections, Market falls, market volatility, news biases, political considerations, retirement investing, saving, stock rallies, Successful living | 1 Comment