ICYMI: Should You Dollar-Cost Average in This Market?
Stocks are at all-time highs and valuations are expensive, leaving investors with a lump sum to invest wondering if they should pull the trigger or dollar-cost average to protect against investing a lot right before a market decline. Here are four quick points to consider and my ultimate conclusion.
November CPI: Going Nowhere Fast by Wells Fargo
Progress on lowering inflation has stalled, although the November report came in as expected. Consumer prices rose .3%, and the 12-month change is up to 2.7%. This likely doesn’t change the Fed’s rate cut outlook as inflation is continuing to slow and the labor market isn’t a concern.
See also November Employment: Softer Than Meets the Eye by Wells Fargo
The November employment report signaled that supply and demand in the labor market has come back into balance.
Market Timing Has Picked Up Since Covid. It Has Cost Investors Dearly. by The Wall Street Journal
The losses due to poor market timing decisions have cost investors twice as much since before Covid, coming in at over 1% per year. This is measured by return gap “the difference between the average return for a fund and what the average investor actually experiences in returns within that fund. ” The worst gap existed with actively traded U.S. small cap funds. This is just another in the seemingly endless data points showing that you’re better off not trying to time the market.
2025 Treasury Bonds and Fixed Income Outlook by Charles Schwab Asset Management
Schwab sees a bumpy ride for fixed income investors in 2025 due to a wide range of potential outcomes, including higher inflation, and as such is recommending being cautious and having less duration than the benchmark and favoring higher-credit quality bonds.
See also Is This Wildly Overvalued Stock Market Doomed? Yes, but Maybe Not Yet by The Wall Street Journal
While nosebleed valuations in the stock market can signal weaker long-term returns, they tell us nothing about the short-term. The justifications for the run continuing uninterrupted like AI, rising earnings, and American exceptionalism become harder to justify the more expensive stocks get (and it will be hard for the massive amounts already invested in AI to pay dividends quickly).
DOGE’s Musk, Ramaswamy want Congress to pass huge spending cuts. That’s a tough sell by CNBC
While their message was popular with Republicans in Congress, the math just doesn’t work out and the $2 trillion goal is DOA. Out of the $6.1 trillion spent in 2023, $3.8 can’t be cut on day one as it’s legally obligated for mandatory spending programs like Social Security and Medicare, $650 billion is set aside for interest payments, and half of what’s left goes to defense.
The Psychology of Investing #5: What’s Your Internal ‘Yes-Person’ Saying? by Safal Nivesak
Confirmation bias is a dangerous thing overall and particularly with investors. You end up holding bad investments for too long, missing better opportunities, and overestimating your abilities. Combat it by finding opposing views, focusing on data and not anecdotes, diversifying, keeping a decision journal, and conducting fact-based portfolio check-ins.
November Market Review: Riding the Wave by Heritage Financial
Post-election optimism fuels U.S. markets while global uncertainty lingers. A Republican victory fueled a rally in the U.S. equity markets in anticipation of pro-business policies such as potential deregulation and tax cuts. The U.S. dollar appreciated, reflecting expectations of inflationary fiscal policies and potential shifts in Federal Reserve actions. The Federal Reserve and Bank of England cut rates by 25 basis points, citing a need to support economic growth amid moderating inflation.
Latest Wealthy Behavior Podcast Episode
We discuss the market’s reaction to the election results and what might lie ahead. Taxes, tariffs, and immigration lead the new administration’s agenda, and related announcements are already moving markets. With the Republican sweep, there is potential for significant changes happening under Trump’s administration compared to a divided government. Given the wide range of outcomes, we expect some near-term market volatility. Bob also shares actionable insights on portfolio strategies for stocks and bonds, helping investors navigate this uncertain landscape. Plus, they dive into Elon Musk’s potential influence on the government, Fed rates, inflation trends, and the S&P 500’s momentum.
Book Recommendation
Children of Ash and Elm: A History of the Vikings by Neil Price
The Viking Age saw an unprecedented expansion of the Scandinavian peoples into the world. As traders and raiders, explorers and colonists, they ranged from eastern North America to the Asian steppe. But for centuries, the Vikings have been seen through the eyes of others, distorted to suit the tastes of medieval writers, Victorian imperialists, Nazis, and more. Based on the latest archaeological and textual evidence, Children of Ash and Elm tells the story of the Vikings on their own terms: their politics, their cosmology and religion, their material world. Known today for a stereotype of maritime violence, the Vikings exported new ideas, technologies, and beliefs to the lands and peoples they encountered. From Eirík Bloodaxe, who fought his way to a kingdom, to Gudríd Thorbjarnardóttir, the most traveled woman in the world, Children of Ash and Elm is a remarkable history of the Vikings and their time.
Boston Corner
How many Boston-area workers clock in from home by Axios
Nearly 18% of Boston-area workers work remotely, above-average nationally but not one of the highest rates in the country.
New England Economic Conditions Through December 3, 2024 by Federal Reserve Bank of Boston
The unemployment rate remained steady, but inflation is higher in New England than in the U.S. Shelter price increases are the primary driver. Inflation-adjusted real wages declined for two consecutive quarters.
Festive fun in Boston: Your guide to the holidays
