For most of our lives many of us have heard the old adage “Money can’t buy happiness.” And we can all think of numerous examples of individuals where this certainly seems to be true – whether among the powerful and famous, or within our own family or group of friends. But is that really true? Research over the last few decades suggests “NO!” In fact, many studies show that in one sense money can buy happiness. But it’s not the amount of money we have, but rather how we SPEND our money that can indeed increase our happiness – although perhaps not in the way Madison Avenue or Amazon Prime would like us to think. First, let’s address the skeptics among you who feel sure that if you simply had MORE money you would indeed be happier. Statistics show that certainly isn’t true, since 70% of all lottery winners or those with a sudden financial windfall end up bankrupt within a few years.1 Carl Jung, famous psychologist, said in fact that the keys to happiness were five things.
Atlanta Financial Blog
What Happened? And Now What?
Those are the questions many investors are asking themselves after the worst December for US stock markets in decades. Despite record setting levels going into the fourth quarter, they saw markets give all that back and then some. For the quarter, the S&P ended up off nearly 14% from its high, the Dow was down nearly 12% and the Nasdaq fell over 17%. Foreign stocks shared a similar fate, and oil prices are off nearly 40%. All of this was against a backdrop of pretty solid economic data across the board.
Payrolls and wages were up, unemployment continued to decline, auto sales and capital goods were steady and holiday sales were the best seen in 6 years. While we can point to fears about monetary tightening, turmoil in Washington or trade uncertainty, none of these were new. And, are any of these enough to explain such seismic shifts in markets? We believe you have to look past the fundamentals to see what moved the markets in December.
At least one factor is the changing mix of investors. Passive investors and short-term traders have grown relative to active investors (who focus on fundamentals like corporate earnings and the business backdrop). Because of this, the market is increasingly moved in the SHORT-TERM by market momentum and computer algorithms. This is especially true when trading volumes are lighter, such as holidays. While the market may correct sharply during such periods, if the market pullback isn’t justified by a legitimate deterioration in economic conditions, the correction isn’t likely to endure, and eventually investors will again focus on the underlying opportunity.
But can the market itself shift fundamentals? With the loss in stock market value, certainly consumer confidence and household net worth have taken a hit. But, the huge drop in oil prices is likely to be felt by consumers in a good way at the gas pump, helping offset some of their stock market woes. Consumers are also getting some help from the Fed, which is now indicating a slower pace of interest rate hikes for 2019 than even a month ago (and the market is actually pricing in NO hikes at all for 2019). Finally, we have the possibility of additional money in consumers’ pockets in early spring due to tax refunds under the 2018 tax cuts.
In short, we don’t believe this market turmoil will move the fundamentals. While you need to remain vigilant for signs to the contrary, at this time, we believe this is the type of turbulence to monitor rather than react to. It is a time for discipline and revisiting your plan, your goals and your attitude about risk. If none of these things have changed, your plan and portfolio probably shouldn’t either.
The opinions voiced in this post are for general information only and are not intended to provide specific advice or recommendations for any individual. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is no guarantee of future results.
“How did the new tax bill affect me?” was the question on everyone’s minds this tax season, and for good reason. Even though this was touted as the greatest simplification of the tax code in my lifetime, I didn’t notice any reduction in time spent preparing returns. Those of you who reviewed your returns in detail noticed that the schedules look drastically different although contain all the same information. The short answer for many is that it didn’t materially change your overall tax liability. The outliers fell into one of a few buckets…
No one enjoys thinking about what will happen after they’re gone, but we all want our families to be well cared for. Many people set up trusts to provide for their loved ones, but the trust is only as good as its trustee.Choosing a trustee is one of the more difficult decisions in creating your estate plan. Some attorneys suggest choosing several trustees to promote checks and balances, but sometimes choosing just one trustee can be difficult in light of family relationships and other factors. Choosing a trustee is a very personal and complex decision, but there are some basic guidelines one should consider.
It is that time of year again where school years are coming to a close and many parents are gearing up for a bitter-sweet high school graduation or are celebrating their child being one year closer to a hard-earned college diploma. Whatever the case may be, it is hard to deny the heavy lift education costs can be. You may not be able to shrink the bottom-line cost of attendance any further, and you surely can’t impact how fast many costs are going up, but, you can reduce the weight this line-item carries within your financial plan by remembering these 5 things: