My latest: Will the Market Crash Soon? Lessons from the Last Four Bear Markets.
This Week’s Takeaways:
- Contributing to work-sponsored retirement plans helps younger people prepare for retirement, and using home equity if there’s a gap helps older Americans close that gap according to a Vanguard study.
- Investors need to understand private equity, if only to evaluate the pitches they might receive or its place in your 401(k) plan in the future. While the returns have been impressive, they’re hard to calculate and there’s a wide gap performance gap between good and bad funds. They’re illiquid so should only be a small piece of your portfolio you’re willing to hold for over a decade.
- Mortgage rates aren’t likely to fall by much, and the Fed will not restart buying mortgage-backed securities in order to help rates.
- A risk to the economy is that it’s being held up by AI spending and investing and that it’s in a bubble that could burst in the next year or two if the technology disappoints and AI stocks crash unleashing a wave of defaults and financial distress.
- Podcast interview with the author of the new book about the 1929 crash.
- Replay of our Fall Market Outlook webinar
- Boston Corner summarizing the New England economy now and Things to Do This Weekend in Boston.
- Plus my latest book recommendation.
The state of retirement readiness in three charts by Vanguard
Vanguard looks at retirement readiness across generations, but the main takeaways from this report are what is improving retirement readiness and some solutions they’ve identified to improve it. Contributing to work-sponsored retirement plans is helping people who have had access to it during their careers, and older Americans who are not as retirement ready can close the gap if they use their home equity to help.
How to Use Private Equity in Your Portfolio by Morningstar
Morningstar walks you through the basics of private equity given its increased popularity and because companies are staying private longer. The past returns are impressive but they come with iliiquidty and some caveats. Calculating performance is not straightforward and there is a wide dispersion between strong and poor performers in this space. You should assume a long holding period and allocate no more than 10% of your portfolio.
Powell admits MBS buying ‘should have’ stopped sooner—and says Fed will be more ‘nimble’ in future cycles by ResiClub
Powell acknowledged that the central bank may have kept purchasing mortgage-backed securities (MBS) for too long—but he’s also unsure how much it actually contributed to the Pandemic Housing Boom. He also firmly rejected the idea of doing it now to improve mortgage rates.
See also: Why Mortgage Rates Might Not Keep Going Down
America’s future could hinge on whether AI slightly disappoints by Noahpinion
The labor market is weak and tariffs should be doing more economic harm than they are, so perhaps AI investment is holding this economy up. If the technlogy disappoints in the next year or two, it could hurt the stocks and unleash a wave of defaults and financial distress that would harm the economy.
Podcast Recommendation
Odd Lots: Andrew Ross Sorkin on the Stock Market Crash That Shattered America
Almost everyone is talking about us possibly being in a bubble. Regardless of how AI investment ultimately pan out, there is an incredible amount of retail speculative mania in the air. So, how does this environment compare to past periods of exuberance? On this episode, we speak with Andrew Ross Sorkin, the editor of Dealbook, the co-host of CNBC’s Squawk Box, and the author of the new book 1929: Inside the Greatest Crash in Wall Street History–and How It Shattered a Nation. Sorkin, who previously wrote Too Big to Fail (chronicling the Great Financial Crisis of 2008), went into the archives to discover just how in thrall the American public was to the market on the eve of the great crash. We discuss lessons from the time, similarities, and differences.
Fall Market Outlook 2025 Webinar Replay
During our Fall Market Outlook webinar, Heritage Financial Chief Investment Officer, Bob Weisse, CFA, CFP®, and Director of Portfolio Management, Michael Waldron CFA, CFP®, shared what’s driving today’s markets and economy, our outlook for the months ahead, and answers to top client questions about what it all means for investors.
Book Recommendation
Robert E. Lee: A Life by Allen Guelzo
A WALL STREET JOURNAL BEST BOOK OF THE YEAR • From the award-winning historian and best-selling author of Gettysburg comes the definitive biography of Robert E. Lee. An intimate look at the Confederate general in all his complexity—his hypocrisy and courage, his inner turmoil and outward calm, his disloyalty and his honor.
