ReportWire

Tag: Commentary/Opinion

  • How to maximize your streaming in October 2023, and why Netflix is all you really need

    How to maximize your streaming in October 2023, and why Netflix is all you really need

    [ad_1]

    It’s time to churn, baby, churn.

    The streaming scene has changed significantly over the past year or so, and for the worse: more expensive, less new programming, smaller libraries of older shows. And it’s coming at a time when consumers are being increasingly pressed by higher costs on all fronts. Prices for Disney’s ad-free tiers are rising sharply in October, and Amazon will jack up prices early next year for those who don’t want to see commercials. So it’s time for consumers to once again reassess which services are really worth paying for.

    There are three options if you don’t want your monthly streaming bill to look like your old triple-digit cable bill: bundle (you can save significantly with a Hulu-Disney+ package, for example), move to cheaper plans with commercials (ugh) or just drop the services you watch least. Pick a maximum monthly price ceiling and stick to it — at this point, most people don’t need more than two or three services anyway.

    If you’re frustrated by paying more for less, and want to make a point, cancelling a service is the one way that companies will take notice. Streaming services hate churn (adding and dropping services month-to-month) because it lowers their subscriber base and forces them to raise their marketing costs to win you back. As a consumer, it’s really your only weapon.

    Don’t like how Max keeps removing older shows? Dump it. Finding yourself watching less and less Disney+? Ditch it. It’s satisfying, it’s economical and you can always sign up again in the future.

    One benefit of streaming services is they’re a lot easier to cancel than cable. With prices soaring, now’s the time to be brutal in winnowing your subscriptions. A churn strategy takes some planning, but it pays off. Keep in mind that a billing cycle starts when you sign up, not necessarily at the beginning of the month.

    Each month, this column offers tips on how to maximize your streaming and your budget, rating the major services as a “play,” “pause” or “stop” — similar to investment analysts’ traditional ratings of buy, hold or sell, and picks the best shows to help you make your monthly decisions.

    Here’s a look at what’s coming to the various streaming services in October 2023, and what’s really worth the monthly subscription fee:

    Netflix ($6.99 a month for basic with ads, $15.49 standard with no ads, $19.99 premium with no ads)

    After a ho-hum past few months, Netflix
    NFLX,
    +0.33%
    is rolling out a more robust lineup in October. Which is nice, because no other streaming service is.

    After a two-year layoff, the French heist thriller series “Lupin” (Oct. 5) returns for its third season. Omar Sy stars as a master thief who’s now on the lam, and he carries the show largely on his charisma. It’s a fun one, and a welcome return for viewers.

    But the big-name show of the month is “The Fall of the House of Usher” (Oct. 12), from horror hit-maker Mike Flanagan (“The Haunting of Hill House,” “Midnight Mass”). The miniseries, based on Edgar Allan Poe’s classic story, combines Gothic horror with a modern twist, as the corrupt CEO of a family-owned and scandal-plagued pharmaceutical company is forced to face demons from his past as his family members keep dying, one by one, in increasingly gruesome ways. The sprawling cast includes Bruce Greenwood, Annabeth Gish, Carl Lumbly, Carla Gugino, Rahul Kohli, Mark Hamill, Henry Thomas and Mary McDonnell. This should be one to watch, if for nothing else than to finally see a Sackler-like family get their comeuppance.

    Also on the way: the seventh seasons of the raunchy animated adolescent comedy “Big Mouth” (Oct. 20) and the Spanish high school soap “Elite” (Oct. 20); “Pain Hustlers” (Oct. 27), a meh-looking satirical crime drama starring Emily Blunt and Chris Evans as scheming pharmaceutical reps; and the nature documentary “Life on Our Planet” (Oct. 25), narrated by Morgan Freeman.

    More: What’s new on Netflix in October 2023 — and what’s leaving

    And you may have missed it, but Netflix snuck in a new season of “The Great British Baking Show” at the end of September. New episodes stream every Tuesday, and feature new co-host Alison Hammond, replacing Matt Lucas, who always seemed out of place.

    Who’s Netflix for? Fans of buzz-worthy original shows and movies.

    Play, pause or stop? Play. Between some good-looking new shows, fresh eps of the “Great British Baking Show” and recent additions such as “Sex Education” (though its final season is underwhelming) and HBO’s classic “Band of Brothers,” Netflix is once again a must-have.

    Max ($9.99 a month with ads, or $15.99 with no ads)

    After a dismal September, Max has a better October lineup, with Season 2 of the beloved pirate comedy “Our Flag Means Death” (Oct. 5), starring Rhys Darby and Taika Waititi as wildly different ship captains involved in a star-crossed romance; Season 2 of “The Gilded Age” (Oct. 29), Julian Fellowes’ “Downton Abbey”-esque costume drama set in 1880s New York high society, with a sprawling cast that includes Carrie Coon, Cynthia Nixon, Christine Baranski, Morgan Spector and Louisa Jacobson; and the fourth and final season of the DC superhero dramedy “Doom Patrol” (Oct. 12).

    Notably, Warner Bros. Discovery’s
    WBD,
    +1.59%
    Max is launching its live-sports tier — the unfortunately named Bleacher Report Sports — on Oct. 5, just in time for the MLB playoffs and upcoming NBA season. The add-on tier will be free for all subscribers through February, when its price will shoot up to $9.99 a month.

    Also: What’s new on Max in October 2023 — and what’s leaving

    This is also your last chance to watch a bunch of AMC shows that are getting a two-month promotional run on Max: “Fear the Walking Dead” Seasons 1-7, “Anne Rice’s Interview with the Vampire” Season 1, “Dark Winds” Season 1, “Gangs of London” Seasons 1-2, “Ride with Norman Reedus” Seasons 1-5, “A Discovery of Witches” Seasons 1-3, and “Killing Eve” Seasons 1-4 will all leave Oct. 31. Do yourself a favor and at least watch “Dark Winds.”

    One more hidden gem to discover: Season 3 of the British rom-com “Starstruck,” which landed Sept. 28. It’s utterly charming and unwaveringly romantic, with literal LOL moments and some of the most swoon-worthy banter in recent years. Catch up with all three seasons, it’s an easy binge that’s well worth it.

    Who’s Max for? HBO fans and movie lovers. And now, unscripted TV fans too, with a slew of Discovery shows.

    Play, pause or stop? Pause and think it over. It’s an exceptionally weak month for streamers, but Max’s lineup — especially with the addition of live sports and its deep library — makes it one of the least weakest.

    Amazon’s Prime Video ($14.99 a month, or $8.99 without Prime membership)

    Prime Video has a fine lineup in October. Not great. Not terrible. But very OK.

    “Totally Killer” (Oct. 6) looks to be a cleverer-than-most spin on a horror trope, as Kiernan Shipka (“Mad Men”) stars as a 17-year-old who travels back in time to 1987 to stop a serial killer before he can start a slaying spree that terrorized her mother (Julie Bowen).

    Greg Daniels’ existential comedy “Upload” (Oct. 20) is back for its third season of rom-com exploits in a digital afterlife, thanks to uploaded consciousness. (Disclaimer: I liked Season 1, but can’t for the life of me remember if I ever watched Season 2, which doesn’t bode well, but perfectly fits this month’s “meh it’s OK” theme.)

    Meanwhile, Amazon’s
    AMZN,
    +0.90%
    free, ad-supported channel, Freevee, has the second season of “Bosch: Legacy” (Oct. 20), the “Bosch” spinoff starring Titus Welliver as a private investigator in L.A., while his daughter Maddie (Madison Lintz) charts her own path as a police officer. As gritty detective shows go, it’s solid.

    Prime Video also has a decent lineup of NFL Thursday Night Football; “The Burial” (Oct. 13), a funeral-home drama movie starring Oscar-winners Jamie Foxx and Tommy Lee Jones; all 11 seasons of the classic sitcom “Frasier” (Oct. 1), just in time for the reboot on Paramount+; as well as new eps every week of “The Boys” spinoff “Gen V” and the season finale of “The Wheel of Time” (Oct 6).

    See more: Everything coming to Amazon’s Prime Video and Freevee in October 2023

    It’s also a good time to dig into Prime Video’s extensive library, before commercials come early next year. In an obnoxious move, rather than add an ad-supported tier at a lower price, Amazon will subject all subscribers to commercials — unless they pay an extra $3-a-month ransom. Commercials will be especially annoying on Prime’s more cinematic series, so watch great-looking shows like “I’m a Virgo,” “Dead Ringers” and “The English” interruption-free, while you still can.

    Who’s Prime Video for? Movie lovers, TV-series fans who value quality over quantity.

    Play, pause or stop? Pause. There’s no a compelling reason to start a subscription now, but if you already have one, there’s probably enough to watch.

    Disney+ ($7.99 a month with ads, $13.99 with no ads, starting Oct. 12)

    After a hiatus of more than two years, Marvel’s “Loki” (Oct. 5) is finally back for its second season. The new season finds the eponymous god of mischief (played by Tom Hiddleston) bouncing across the multiverse in a battle for free will while trying to elude agents of the mysterious Time Variant Authority. Season 1 of “Loki” was one of Marvel’s better TV adaptations, and hopes are high that Season 2 can recapture that sense of chaotic fun. Owen Wilson returns as TVA agent Mobius, and Oscar winner Ke Huy Quan (“Everything Everywhere All at Once”) joins the cast, which also features Jonathan Majors as big bad Kang the Conqueror, which is… problematic. Disney is reportedly still planning for Majors to play a key role in “Loki” and the next phase of “Avengers” movies despite his arrest on assault charges earlier this year, which prompted troubling allegations of past physical and emotional abuse toward women. (“Loki” had already finished filming prior to his arrest.)

    Disney also has “Goosebumps” (Oct. 13), about a group of high school friends fighting supernatural forces as they uncover long-buried secrets about their small town in this series adaptation of R.L. Stine’s hugely popular series of spooky novels. (It’ll also stream on Hulu.)

    The “Star Wars” spinoff “Ahsoka” has its season finale Oct. 3, while ABC’s “Dancing with the Stars” will stream every Tuesday.

    Who’s Disney+ for? Families with kids, hardcore “Star Wars” and Marvel fans. For people not in those groups, Disney’s
    DIS,
    +1.15%
     library can be lacking.

    Play, pause or stop? Pause. The price of ad-free Disney+ jumps by $3 a month starting Oct. 12 — how much do you or your family really want to watch “Loki” and “Goosebumps”? It’ll be worth it for some, but an opportune time to cancel for others.

    Hulu ($7.99 a month with ads, or $17.99 with no ads, starting Oct. 12)

    Hulu has been on a fantastic run since the start of summer, but all good things must end. And it happens to coincide with a $3-a-month hike to its ad-free subscription.

    October’s lineup is weak, and heavily weighed toward Halloween-themed fare, such as Season 2 of FX’s spinoff anthology “American Horror Stories” (Oct. 26); the Stephen King thrillers “Rose Red” (Oct. 1) and “The Boogeyman” (Oct. 5); the Starz horror series “Ash vs. Evil Dead” (Oct. 1); the body-horror movie “Appendage” (Oct. 2); and “Goosebumps” (Oct. 13), a live-action adaptation of R.L. Stine’s bestselling kids’ book series (which will also stream on Disney+).

    Non-horror shows include new seasons of Fox’s “The Simpsons,” “Family Guy” and “Bob’s Burgers” (all Oct. 2), and Season 2 of the comedy “Shorsey” (Oct. 27), the “Letterkenny” spinoff series about minor-league hockey that has a surprising amount of heart to go with its absolutely filthy dialogue.

    For more: What’s coming to Hulu in October 2023 — and what’s leaving

    As an added bonus, all five seasons of ABC’s 1980s detective-agency rom-com “Moonlighting” (Oct. 10), starring Bruce Willis and Cybill Shepherd, will stream for the first time ever (legally at least). If I remember correctly, there were some really high highs but also some really low lows — but it’ll be worth checking out, for nostalgia if nothing else.

    There are also new eps every week of “The Golden Bachelor” and “Bachelor in Paradise,” the season finale of “Only Murders in the Building” (Oct. 3) and the series finale of “Archer” (Oct. 11). And if you missed it, all three seasons of “Reservation Dogs” are there and just begging to be watched, or rewatched. (It’s about as perfect as a TV series could ever be, and the recently concluded Season 3 is the best thing I’ve seen this year.)

    Who’s Hulu for? TV lovers. There’s a deep library for those who want older TV series and next-day streaming of many current network and cable shows.

    Play, pause or stop? Stop. If you’re on the ad tier, this month might be tolerable, but it’s certainly not worth $17.99.

    Paramount+ ($5.99 a month with ads, $11.99 a month with Showtime and no ads)

    Twenty years after ending its 11-season run (with 37 Emmy wins), the classic sitcom “Frasier” (Oct. 12) is back. Sort of. Kelsey Grammar returns in this revival as the pompous Dr. Frasier Crane, who’s moved back to Boston to be closer to his adult son (played by Jack Cutmore-Scott), who doesn’t necessarily want him there. The cast is mostly new, though Bebe Neuwirth (as Frasier’s ex-wife Lilith) and Peri Gilpin (his radio producer Roz) will reportedly guest star. David Hyde Pierce (Niles) and Jane Leeves (Daphne) will not return, however, which is a bummer since that’s where much of the original show’s laughs came from (John Mahoney, who played Frasier’s father Marty Crane, died in 2018). The jury’s out on this one — while in theory, it could be a refreshing update to a nostalgic favorite, the trailer is not encouraging.

    Paramount+ also has “Pet Sematary: Bloodlines” (Oct. 6), a creepy prequel to the 2019 horror reboot; “Fellow Travelers” (Oct. 27), a decades-spanning queer love story starring Matt Bomer and Jonathan Bailey; and Showtime’s courtroom drama “The Caine Mutiny Court-Martial” (Oct. 6), the late director William Friedkin’s last film, starring Keifer Sutherland, the late Lance Reddick and Jake Lacy.

    That’s on top of a live-sports lineup that includes SEC and Big Ten college football on Saturdays, NFL football every Sunday and UEFA Champions League soccer matches.

    Who’s Paramount+ for? Gen X cord-cutters who miss live sports and familiar Paramount Global
    PARA,
    +0.62%
     broadcast and cable shows.

    Play, pause or stop? Stop. There’s a good football lineup, at least.

    Apple TV+ ($6.99 a month)

    It’s another slow month for Apple
    AAPL,
    +0.30%    ,
    highlighted by the miniseries “Lessons in Chemistry” (Oct. 13), based on Bonnie Garmus’ bestselling novel. Brie Larson stars as a woman in the 1950s whose dreams of becoming a scientist are scuttled by male chauvinism, and instead becomes the host of a TV cooking show, where she inspires housewives and fights the patriarchy. Apple is getting a reputation for getting big-name stars for prestige-type series, only for the shows to fizzle out and quickly be forgotten (like “Mosquito Coast,” “Hello Tomorrow” and “Dear Edward,” for starters). I have yet to see any marketing for this series, and it would not be a surprise for someone to ask six months from now: “Wait, Brie Larson was in an Apple show?”

    There’s also a new documentary from Errol Morris, “The Pigeon Tunnel” (Oct. 20), about the life of spy-turned-writer David Cornwell, aka John le Carré; and “The Enfield Poltergeist” (Oct. 27), a four-part docuseries about the supposed real-life haunting that inspired “The Conjuring 2.”

    Apple’s biggest title will be on Oct. 20 in movie theaters, with the wide release of Martin Scorsese’s “Killers of the Flower Moon,” the spectacular-looking historical drama about a series of mysterious killings of Osage tribal members in Oklahoma in the 1920s, starring Leonardo DiCaprio, Lily Gladstone and Robert De Niro. There’s no streaming release date yet, but expect it to land on Apple TV+ after its theatrical run, possibly in November but more likely in December.

    There are also new episodes every week of “The Morning Show,” “The Changeling” (season finale Oct. 13) and “Invasion” (season finale Oct. 25).

    Who’s Apple TV+ for? It offers a little something for everyone, but not necessarily enough for anyone — although it’s getting there.

    Play, pause or stop? Stop. Apple’s had a great year, but there’s just not a lot on right now. But there’s good stuff coming in November (Season 4 of “For All Mankind”) and December (Season 3 of “Slow Horses”).

    Remember, you can get three free months of Apple TV+ if you buy a new iPhone, iPad or Mac. Strategically, if you buy an iPhone 15, and wait a bit to redeem the free trial, you’ll want it to extend into January.

    Peacock (Premium for $5.99 a month with ads, or $11.99 a month with no ads)

    It’s all about horror and sports for Peacock this October.

    On the scary side, there’s Season 2 of the werewolf rom-com “Wolf Like Me” (Oct. 19), starring Josh Gad and Isla Fisher; “Five Nights at Freddy’s” (Oct. 27), a horror movie based on the videogame about a troubled security guard who starts working the night shift at a cursed pizza parlor, starring Josh Hutcherson and Matthew Lillard; and the true-crime anthology “John Carpenter’s Suburban Screams” (Oct. 13).

    On the sports side, Peacock has the Rugby World Cup (through Oct. 28), NFL Sunday Night Football, Big Ten and Notre Dame college football, English Premier League soccer, and a full slate of golf, motorsports and horse racing.

    Meanwhile, the “John Wick” prequel miniseries “The Continental” ends Oct. 6.

    Who’s Peacock for? Live sports and next-day shows from Comcast’s
    CMCSA,
    -1.16%
     NBCUniversal are the main draw, but there’s a good library of shows and movies.

    Play, pause or stop? Stop. The live-sports offerings are the only lure.

    [ad_2]

    Source link

  • Why stocks are likely to be especially volatile this October

    Why stocks are likely to be especially volatile this October

    [ad_1]

    The U.S. stock market has been volatile in September. Brace yourself for October.

    September has the reputation of being the worst month for the stock market, but October far and away is the most volatile month of the year — as you can see from the accompanying chart. So if this October follows the historical averages, the stock market won’t lose as much as it has so far in September but investors will still feel whipped around.

    You might think October’s historical volatility can be traced to the U.S. market crashes that occurred in 1929 and 1987, each of which occurred during that month. But you’d be wrong: October remains at the top of the volatility rankings even if those two years are removed from the sample. Nor is there any trend over time in October’s place in those rankings: If we divide the period since the Dow Jones Industrial Average
    DJIA
    was created in 1896 into two periods, October is the most volatile in both the first and second halves.

    Why would October be the most volatile month? I’m not aware of any plausible theory, and that normally would be a reason not to expect the historical pattern to continue. But not in this case.

    That’s because an expectation of volatility can itself lead to greater volatility. So the fact that past Octobers have been so volatile is a reason to expect this coming October to also be a particularly choppy month on Wall Street.

    If so, our job is not to get spooked by October’s volatility into going to cash. Of course, you may have other reasons why you might want to reduce your equity exposure. But if you were otherwise wanting to be heavily invested in equities, fasten your seat belt and hold on.

    Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

    More: Wall Street analysts expect the S&P 500 to rise 19% over the next 12 months. Here are their 10 favorite stocks.

    Plus: Let’s debunk the bears’ top arguments against further stock market gains

    [ad_2]

    Source link

  • Government shutdown looms: Here’s how to help preserve your investment portfolio.  

    Government shutdown looms: Here’s how to help preserve your investment portfolio.  

    [ad_1]

    “ The economic impact of a shutdown and the potential implications on your portfolio depend largely on how long the shutdown lasts. ”

    The potential for a U.S. government shutdown can raise alarm for investors and send the phone of a financial adviser like me ringing off the hook. Headlines in front of them, my clients are increasingly asking about potential portfolio implications and how they should respond.

    There is certainly a measured response, which includes not overreacting to the headlines and sticking to your long-term investment plan, and I’ll show you how to draw it.

    Government shutdown explained

    First, it’s important to understand what is happening. During a shutdown, the federal government will suspend all services that are deemed nonessential until a funding agreement is reached. This is much different than a default — which can happen when the government can’t pay its debts or satisfy its obligations. A default can have significant ramifications on U.S. creditworthiness and in turn, the global financial system. You may recall lawmakers’ discussions earlier this year regarding raising the debt ceiling — a solution to avoid defaulting. 

    A U.S. default has never happened, but shutdowns have occurred more than 20 times since 1976. Unlike a default, a shutdown does not affect the government’s ability to pay its obligations, and many critical government services, like Social Security may continue. When weighing the two, one can presume that markets may react more negatively to a default.   

    Markets may experience heightened volatility in response to the shutdown uncertainty, but markets do not react consistently to the news. In the past we have seen U.S. stocks — as measured by the S&P 500
    SPX
    — finish positively after more than half of these shutdowns. Results are similar for fixed-income securities, as we’ve seen an even split between positive and negative returns in the bond markets in shutdowns since 1976. 

    Of course, all investing is subject to risk, past performance is not a guarantee for future returns, and the performance of an index is not an exact representation of any particular investment. 

    The economic impact of a shutdown — and the potential implications on your portfolio — depend largely on how long the shutdown lasts. The longer the shutdown, the more Americans experience dampened economic activity from things like loss of furloughed federal workers’ contribution to GDP, the delay in federal spending on goods and services, and the reduction in aggregate demand (which lowers private-sector activity). 

    Read: Government shutdown: Analysts warn of ‘perhaps a long one lasting into the winter’

    A measured response 

    A government shutdown is just one of many factors, both positive and negative, that can cause fluctuation in the market, so it’s important to treat it just as you would other fluctuations.

    With so many variables, it’s impossible to precisely predict the effects the shutdown will have or determine how long it will last. This can seem scary for many, so it’s important to remember your long-term financial plan and focus on the factors you can control.  

    First, do not try to time the market. Doing so based on short-term events is never a good idea, and volatility is unpredictable. Even if the markets fall, we don’t know when they might recover. If you make an emotionally charged decision, you run the risk of missing out on potentially substantial market gains. 

    Instead, focus on the following: align your asset allocation with your risk tolerance; control your costs; adopt realistic expectations; hold a broadly diversified portfolio and stay disciplined. Doing so can help you weather any form of market uncertainty, including a shutdown.

    Stick to healthy financial habits

    In addition to not making any sudden moves in your investment portfolio, now is a suitable time to make sure you are keeping up with healthy financial habits, especially if you are a federal employee facing a furlough. This can look like readjusting your budget based on your current needs, keeping high-interest debt to a minimum, paying the minimum on all debt to keep your credit score in good standing and continuing to save.

    Remember, using your emergency fund to navigate tight times is exactly what you have saved for and tapping it in this instance is considered a healthy financial habit. Just be sure to replenish it when you have the funds to do so. As a good practice, Vanguard recommends having three- to six months of expenses saved in readily accessible investments.

    With a level, long-term approach and a personalized financial plan, you can be prepared for this potential storm and the inevitable ones to come. 

    Lauren Wybar is a senior financial adviser with Vanguard Personal Advisor. 

    More: Bill Ackman says Treasury yields are going higher in a hurry, and that investors should shun U.S. government debt

    Plus: Social Security checks will still come if there’s a shutdown. But there are other immediate threats to America’s benefits.

    [ad_2]

    Source link

  • By buying Splunk, Cisco is closer to becoming a software company

    By buying Splunk, Cisco is closer to becoming a software company

    [ad_1]

    With Cisco Systems Inc.’s pending acquisition of Splunk Inc., the networking giant is making another major step toward becoming a software company.

    On Thursday, Cisco CSCO said it was buying Splunk SPLK in a deal valued at about $28 billion, or $157 a share in cash, for the cloud-security company. The match had been speculated about for years, and Cisco has been on a buying binge this year, as it seeks to grow with more security and software offerings.

    “Together, we will become one of…

    [ad_2]

    Source link

  • Household income rose in just 5 states last year. Is your state one of them?

    Household income rose in just 5 states last year. Is your state one of them?

    [ad_1]

    American workers are feeling the pinch.

    The median annual household income in the U.S. was $74,755 in 2022, a 0.8% decline from the previous year after adjusting for inflation, according to the latest data from the Census Bureau.

    The decline in income is “disappointing,” said Sharon Parrott, president of the Center on Budget and Policy Priorities,…

    [ad_2]

    Source link

  • Stocks are trapped in a trading range. Something’s got to give.

    Stocks are trapped in a trading range. Something’s got to give.

    [ad_1]

    The U.S. stock market, as measured by the S&P 500 Index SPX, is trapped in a trading range, and volatility seems to be damping down considerably. The significant edges of the trading range are support at 4330 and resistance at 4540. Both of those levels were touched in the latter half of August. A breakout from this range should give the market some strong directional momentum. 

    Since Labor Day, prices have hunkered down into an even narrower range. Typically, the latter half of September through the early part of October…

    [ad_2]

    Source link

  • Here’s an easy way to make a more concentrated play on the ‘Magnificent Seven’ stocks

    Here’s an easy way to make a more concentrated play on the ‘Magnificent Seven’ stocks

    [ad_1]

    Investors in index funds have been well rewarded by a high concentration in the largest technology companies over the past decade. But there are also continuing warnings about the risk of such heavy concentrations, even in index funds that track the S&P 500. Solutions are offered to limit this risk, but if you expect Big Tech to continue to drive the broad market returns over the coming years, why not make an even more focused bet?

    Comparisons of three index-fund approaches highlight how successful concentration in the “Magnificent Seven” has been.

    The Magnificent Seven are Apple Inc.
    AAPL,
    +0.16%    ,
    Microsoft Corp.
    MSFT,
    +0.72%    ,
    Nvidia Corp.
    NVDA,
    -2.03%    ,
    Amazon.com Inc.
    AMZN,
    +2.17%    ,
    Alphabet Inc.
    GOOGL,
    -0.27%

    GOOG,
    -0.32%    ,
    Tesla Inc.
    TSLA,
    +9.37%
    and Meta Platforms Inc.
    META,
    +1.67%    .
    We have listed them in the order of their concentration within the Invesco S&P 500 ETF Trust
    SPY,
    which tracks the S&P 500
    SPX.
    The U.S. benchmark index is weighted by market capitalization, as is the Nasdaq Composite Index
    COMP
    and the Russell indexes.

    SPY is 27.6% concentrated in the Magnificent Seven. One way to play the same group of 500 stocks but eliminate concentration risk is to take an equal-weighted approach to the index, which has worked well for certain long periods. But here, we’re focusing on how well the concentrated strategy has worked.

    Let’s take a look at the group’s concentration in three popular index approaches, then look at long-term performance and consider what happened in 2022 as rising interest rates helped crush the tech sector.

    Here are the portfolio weightings for the Magnificent Seven in SPY, along with those of the Invesco QQQ Trust
    QQQ,
    which tracks the Nasdaq-100 Index
    NDX
    and the Invesco S&P 500 Top 50 ETF
    XLG
    :

    Company

    		 Ticker

    		 % of SPY

    		 % of QQQ

    		 % of XLG
    Apple Inc.

    		 AAPL,
    +0.16%         		7.05%

    		 10.85%

    		 12.46%
    Microsoft Cor.

    		 MSFT,
    +0.72%         		6.65%

    		 9.53%

    		 11.76%
    Amazon.com Inc.

    		 AMZN,
    +2.17%         		3.30%

    		 5.50%

    		 5.84%
    Nvidia Corp.

    		 NVDA,
    -2.03%         		3.02%

    		 4.44%

    		 5.33%
    Alphabet Inc. Class A

    		 GOOGL,
    -0.27%         		2.17%

    		 3.12%

    		 3.83%
    Alphabet Inc. Class C

    		 GOOG,
    -0.32%         		1.88%

    		 3.11%

    		 3.32%
    Tesla Inc.

    		 TSLA,
    +9.37%         		1.79%

    		 3.10%

    		 3.17%
    Meta Platforms Inc. Class A

    		 META,
    +1.67%         		1.77%

    		 3.60%

    		 3.12%
    Totals

    		  

    		 27.63%

    		 43.25%

    		 48.83%
    Sources: Invesco Ltd., State Street Corp.

    The same group of seven companies (eight stocks with two common share classes for Alphabet) is at the top of each exchange-traded fund’s portfolio, although the top seven for QQQ aren’t in the same order as those for SPY and XLG. QQQ’s weighting was changed recently as the underlying Nasdaq-100 underwent a “special rebalancing” last month.

    Here’s a five-year chart comparing the performance of the three approaches. All returns in this article include reinvested dividends.


    FactSet

    QQQ has been the clear winner for five years, but it is also worth noting how well XLG has performed when compared with SPY. This “top 50” approach to the S&P 500 incorporates many stocks that aren’t listed on the Nasdaq and therefore cannot be included in QQQ, which itself is made up of the largest 100 nonfinancial companies in the full Nasdaq Composite Index
    COMP,
    +0.45%    .

    Examples of stocks held by XLG that aren’t held by QQQ include such non-tech stalwarts as Berkshire Hathaway Inc.
    BRK.B,
    +0.77%    ,
    Johnson & Johnson
    JNJ,
    +0.79%    ,
    Procter & Gamble Co.
    PG,
    +0.94%    ,
    Home Depot Inc.
    HD,
    -0.12%
    and Nike Inc.
    NKE,
    -0.42%    .

    Now let’s go deeper into long-term performance. First, here are the total returns for various time periods:

    ETF

    		 3 Years

    		 5 Years

    		 10 Years

    		 15 Years

    		 20 Years
    SPDR S&P 500 ETF Trust
    SPY     		40%

    		 69%

    		 223%

    		 370%

    		 531%
    Invesco QQQ Trust
    QQQ     		41%

    		 113%

    		 430%

    		 882%

    		 1,158%
    Invesco S&P 500 Top 50 ETF
    XLG     		41%

    		 85%

    		 262%

    		 404%

    		 N/A
    Source: FactSet

    Click on the tickers for more about each ETF, company or index.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    There is no 20-year return for XLG because this ETF was established in 2005.

    For five years and longer, QQQ has been the runaway leader, but for 5, 10 and 15 years, XLG has also beaten SPY handily, with broader industry exposure.

    Something else to consider is that during 2022, when SPY was down 18.2%, XLG fell 24.3% and QQQ dropped 32.6%.

    For disciplined long-term investors, the tech pain of 2022 may not seem to have been a small price to pay for outperformance. And it may have been easier to take the pounding when holding SPY or even XLG that year.

    Here’s a look at the average annual returns for the three ETFs:

    ETF

    		 3 years

    		 5 years

    		 10 years

    		 15 years

    		 20 years
    SPDR S&P 500 ETF Trust
    SPY     		11.8%

    		 11.0%

    		 12.4%

    		 10.9%

    		 9.6%
    Invesco QQQ Trust
    QQQ     		12.0%

    		 16.3%

    		 18.2%

    		 16.4%

    		 13.5%
    Invesco S&P 500 Top 50 ETF
    XLG     		12.2%

    		 13.1%

    		 13.7%

    		 11.4%

    		 N/A
    Source: FactSet

    So the question remains — do you believe that the largest technology companies will continue to lead the stock market for the next decade at least? If so, a more concentrated index approach may be for you, provided you can withstand the urge to sell into a declining market, such as the one we experienced last year.

    Here is something else to keep in mind. In a note to clients on Monday, Doug Peta, the chief U.S. investment strategist at BCA, made a fascinating point: “The only novel development is that all the heaviest hitters now hail from Tech and Tech-adjacent sectors and are therefore more prone to move together than they were at the end of 2004, when the seven largest stocks came from six different sectors. “

    Nothing lasts forever. Peta continued by suggesting that investors who are tired of big tech taking all the glory “need only wait.”

    “[I]f history is any guide, their time at the top of the capitalization scale will be short,” he wrote.

    Don’t miss: These four Dow stocks take top prizes for dividend growth

    [ad_2]

    Source link

  • Retire to Arizona? Seriously?

    Retire to Arizona? Seriously?

    [ad_1]

    The traditional Sunbelt retirement has lost its appeal: Brett Arends

    [ad_2]

    Source link

  • Sorry, Elon, a ‘super app’ is never going to fly in the U.S.

    Sorry, Elon, a ‘super app’ is never going to fly in the U.S.

    [ad_1]

    “Super apps” have never truly existed in the United States, and it is apparent at this point that they never will.

    That isn’t stopping some executives and investment analysts from still dreaming of becoming one-stop shops for their users’ needs, something only a small handful of apps in Asia have managed to do. The most prominent is Elon Musk, the Tesla Inc. TSLAchief executive who purchased Twitter last year and has proclaimed that he will turn it into an “everything app” called X that resembles super apps in China.

    “I…

    [ad_2]

    Source link

  • What’s worth streaming in September 2023? Here are your best bets amid slim pickings.

    What’s worth streaming in September 2023? Here are your best bets amid slim pickings.

    [ad_1]

    Looking to spend your entertainment dollars wisely in September? Watch Hulu and read a book or two.

    That pretty much sums up a hugely underwhelming lineup from streaming services, which burned through their best shows in the spring and have little to offer for the start of the traditional fall TV season. That’s not to say there aren’t a handful of promising shows — there are — but is one decent new show per service worth the price of multiple monthly subscriptions? Almost certainly not.

    It’s…

    [ad_2]

    Source link

  • You can invest in market winners and still lose big. Here’s how to avoid the hit.

    You can invest in market winners and still lose big. Here’s how to avoid the hit.

    [ad_1]

    Investors should think twice before picking an actively managed mutual fund according to its style category. By “style category,” I’m referring to the widely used method of grouping mutual funds according to the market-cap of the stocks they invest in and where those stocks stand on the spectrum of growth-to-value.

    This matrix traces to groundbreaking research in 1992 by University of Chicago professor Eugene Fama and Dartmouth College professor Ken French, and has since been popularized by investment researcher Morningstar in the form of its well-known style box.

    In urging you to think twice before picking a fund based on this matrix, I’m not questioning the existence of important distinctions between the various styles. Fama and French’s research convincingly showed that there are systematic differences between them. My point is that there also are huge differences within each style as well. You can pick a style that outperforms all others on Wall Street and still lose a lot of money, just as you can pick the worst-performing style and turn a huge profit.

    This points to the two types of risk you face when picking an actively managed fund. You have the risk associated with the fund’s style (category risk) and you also have the risk associated with the particular stocks that the fund’s manager selects (so-called idiosyncratic risk). Idiosyncratic risk often overwhelms category risk, especially over shorter periods.

    To illustrate, consider the midcap-growth style. As judged by the Vanguard Mid-Cap Growth ETF
    VOT,
    this style produced a 28.8% loss in 2022. Yet, according to Morningstar Direct, the best-performing actively managed midcap-growth fund last year produced a gain of 39.5%, while the worst performer lost 67.0%.

    This best-versus-worst performance spread of over 100 percentage points is illustrated in the accompanying chart. Notice that the comparable spread was almost as wide for many of the other styles as well. Though I haven’t done the research to compare 2022’s spreads with those of other calendar years, I have no reason to expect that they on average were any lower.

    “ The only way to eliminate idiosyncratic risk when investing in particular styles is to invest in an index fund.”

    The only way to eliminate idiosyncratic risk when investing in particular styles is to invest in an index fund benchmarked to the style in question. If you are enamored of a particular fund manager and willing to bet he will significantly outperform the category average, just know that you also incur the not-significant idiosyncratic risk that the fund will lag by a large amount.

    The bottom line? By investing in an actively managed fund in a style category, you will be incurring the risk not only of that category itself but also the not-insignificant idiosyncratic risk of that particular fund. Fasten your seatbelt if that’s the path you take.

    Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

    [ad_2]

    Source link

  • $1.8 million to retire? Are you kidding?

    $1.8 million to retire? Are you kidding?

    [ad_1]

    This time it’s in the latest Charles Schwab Retirement Survey. Among 1,000 people surveyed, the average respondent figured he or she needed to save $1.8 million to retire. (That figure is up from $1.7 million in the same survey a year earlier.)

    Touchingly, 86% also told Schwab they were either “somewhat” or “very” likely to achieve their goals.

    Er, no.

    If the numbers show anything, it’s that most people don’t understand math, don’t understand finance and are wildly out of touch with reality.

    Some simple calculations will show that these figures are all wrong.

    First, let’s start with the bad news. There is no way 86% of people should be “very” or “somewhat” confident that they are going to hit that $1.8 million target, or anything like it. Let alone that 37% think they are “very” likely to hit it.

    Median retirement-account balance at the moment? Try $27,000 and change, says 401(k) giant Vanguard.

    Even that’s overstating the picture. The Federal Reserve’s most recent triennial Survey of Consumer Finances says the median American household has $26,000 in total financial assets, including savings accounts, life insurance, 401(k) plan and the like. Among those aged 45 to 54, the figure is $37,000, and among those 55 to 64 it’s $47,000. How anyone thinks they are getting from there to $1.8 million by retirement age is a mystery. Magic carpets? Magic beans?

    Granted, the survey is from 2019, but the intervening pandemic period won’t have changed the picture that much — in either direction.

    It’s not clear from the survey whether those polled included the value of the equity in their homes. Throw that in, and the median household’s total net worth rises to $122,000. Among those aged 45 to 54 it rises to $169,000, and among those 55 to 64 to $213,000. COVID policies helped drive up average U.S. home prices by about 30%, so those figures will have risen since 2019.

    But again we are not nearing $1.8 million.

    Not even close.

    The good news, though, is that you don’t actually need this amount or anything like it to retire.

    Naturally if someone hasn’t figured life out by the time they retire, and they still think that buying yet more stuff is the route to happiness, no amount is going to be enough.

    How much we’d like and how much we need are very different things.

    A $1.8 million balance would buy a 65-year-old couple an immediate annuity paying a guaranteed lifetime income of $9,500 a month, or just over $110,000 a year.

    The average Social Security benefit on top of that for a retired couple is just under $3,000 a month, or $36,000 a year. So in total you’d be on about $146,000 a year. What are these people planning to do in retirement?

    Even with a 3% annual rise, to account for inflation risk, that annuity will pay out $83,000 a year, and that’s for a couple, not just for one person. The money continues until both of you have gone.

    How much do we really need? Well, while acknowledging that each person and each person’s situation is going to be different, let’s do some simple math.

    Actual seniors are living on median annual incomes of around $45,000 to $50,000, says the Federal Reserve. And most of them say they are either reasonably satisfied with retirement or actually happy. So, at least, they tell Gallup and the Employee Benefit Research Institute.

    Meanwhile, a new survey from Schroders finds that the average person thinks a comfortable retirement can be had on around $5,000 a month, or $60,000 a year.

    The average Social Security benefit for a retired couple is $36,000 a year. To bring that income up to $50,000 you’d need an annuity paying $14,000 a year.

    Current cost in the annuities market: $225,000.

    To bring that up to $60,000 the annuity would cost $385,000.

    For $350,000 you can get an income of $18,000 with a 3% annual increase to deal with inflation.

    For $800,000 you can double your Social Security income, bringing in another $36,000 a year — with a 3% annual increase to deal with inflation.

    The cost of housing is a major component for retirees. No, someone doesn’t have to move to Iowa to be able to retire in comfort. But they can move the dial by cashing in their home in an expensive neighborhood — especially the kind of location they may have moved to for a high-paying job or the best schools — and moving somewhere cheaper. Away from coastal California or the “Acela” corridor in the Northeast, a lot of U.S. homes are really cheap.

    Retirement savings generally are grossly inadequate, and many people face genuine hardship in their senior years. And, of course, pretty much everyone could use more money. On the other hand, you can retire in comfort with a lot less than $1.8 million.

    [ad_2]

    Source link

  • August used to be the best month for the stock market. Then it became the worst.

    August used to be the best month for the stock market. Then it became the worst.

    [ad_1]

    August the best month for average stock market performance? Or is it the worst?

    The answer depends on the period of stock-market history you examine. Over the 90 years from the Dow Jones Industrial Average’s
    DJIA,
    +0.50%
    inception in 1896 until 1986, August on average was far ahead of the other months — more than four times larger, as you can see from the table below. August outperformed the other months’ average by 1.4 percentage points. This difference is significant at the 95% confidence level that statisticians often use when determining if a pattern is genuine.

    In the years since then, in contrast, August has been the worst month for the stock market, on average, lagging the other months’ average by 1.7 percentage points. Since 1986, in fact, August has been a worse month for the stock market than even September, whose reputation for stock market losses is widely known.

    August’s average DJIA return

    		 Average return of all other months

    		 August’s rank among all 12 months
    1896 to 1986

    		 +1.8%

    		 +0.4%

    		 1st
    After 1986

    		 -0.8%

    		 +0.9%

    		 12th

    If the 36 years since 1986 were all that statisticians had to go on, they would conclude that August’s underperformance was significant at the 95% confidence level — just the opposite of the conclusion that emerges from the 90 years prior. But when analyzing the Dow’s entire history since 1896, August’s performance is no better or worse than average.

    This August, in order to use history as a basis for investing, you’d first need to come up with a plausible explanation of what changed in the 1980s that caused August to swing from best to worst.

    Though I’m not aware of any such explanation, it’s always possible that one exists. To search for it, I analyzed monthly values back to 1900 for the Economic Policy Uncertainty (EPU) index that was created by Scott Baker of Northwestern University, Nicholas Bloom of Stanford University, and Steven Davis of the University of Chicago. We know from Finance 101 that the stock market responds to changes in economic uncertainty, so we’d be onto a possible explanation of August’s seasonal tendencies if the EPU underwent some fundamental change in 1986.

    But no such change shows up in the data. August’s average EPU level is no different than for any of the other months of the calendar, either before or after 1986.

    Another possible explanation might trace to investor sentiment. To investigate that possibility, I analyzed stock market timers’ average recommended equity exposure levels, as measured by the Hulbert Stock Newsletter Sentiment Index (HSNSI). I was looking to see if, after 1986, the HSNSI was significantly different at the beginning of August than in other months, on average. The answer is “no.”

    A plausible explanation might still exist for August’s change of fortune beginning in the mid-1980s, notwithstanding my inability to find one. But absent such an explanation, the most likely explanation is that it’s a random fluke.

    It would hardly be a surprise if randomness is the culprit. Most of the patterns that capture Wall Street’s attention are in fact nothing more than statistical noise. The reason we nevertheless insist that significant patterns exist is because — as numerous psychological studies have shown — we’re hardwired to find patterns even in randomness.

    That’s why your default reaction to all alleged patterns, not just those involving August, should be skepticism. The odds are overwhelming that they aren’t genuine. Only if those patterns can survive the scrutiny of a skeptical statistician should you even begin to be interested.

    Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

    More: Puzzled by the stock-market surge? Overshoots are the new normal, Bank of America strategist says

    Plus: Here’s how long the stock market rally may last

    [ad_2]

    Source link

  • Banc of California is expected to keep leading regional banks higher as PacWest deal ignites sector

    Banc of California is expected to keep leading regional banks higher as PacWest deal ignites sector

    [ad_1]

    Banc of California Inc.’s proposed agreement to acquire PacWest Bancorp. helped send regional-bank stocks considerably higher on Wednesday. But even after a two-day increase of 12% for its shares, the acquiring bank remains the favorite name among analysts covering regional players in the U.S.

    The merger agreement was announced after the market close on Tuesday, but the rumor mill had already sent Banc of California’s
    BANC,
    +0.62%
    stock up by 11% that day. Then on Wednesday, shares of PacWest Bancorp
    PACW,
    +26.92%
    shot up 27% to $9.76, which was above the estimated takeout value of $9.60 a share when the deal was announced. The merger deal, if approved by both banks’ shareholders, will also include a $400 million investment from Warburg Pincus LLC and Centerbridge Partners L.P.

    A screen of regional banks by rating and stock-price target is below.

    Deal coverage:

    With PacWest closing above the initial per-share deal valuation, it is fair to wonder whether or not its shareholders will vote to approve the agreement. In a note to clients on Wednesday, Wedbush analyst David Chiaverini called Banc of California’s offer “fair, but not overwhelmingly attractive,” and wrote that PacWest was “a likely seller before the mini banking crisis occurred in March.”

    While Chiaverini went on to predict the deal’s approval by PacWest’s shareholders, he added that he “wouldn’t be surprised if there were some dissent among a minority of shareholders [which could] possibly open the door to the potential emergence of a third-party bid.”

    More broadly, Odeon Capital analyst Dick Bove wrote to clients on Wednesday that the merger deal, along with increasing involvement of private-equity firms in lending businesses, the expected enhancement of regulatory capital requirements for banks and other factors could lead to more consolidation among smaller banks.

    He went on to write that we might be entering a period for the banking industry similar to the 1990s, “when rules were being changed and acquisitions were rampant,” which “created new investment opportunities.”

    The SPDR S&P Regional Banking exchange-traded fund
    KRE,
    +4.74%
    rose 5% on Wednesday but was still down 17% for 2023, while the SPDR S&P 500 ETF Trust
    SPY,
    +0.02%
    was up 19%, both excluding dividends.

    KRE holds 139 stocks, with 98 covered by at least five analysts working for brokerage firms polled by FactSet. Out of those 98 banks, 45 have majority “buy” ratings among the analysts. Among those 45, here are the 10 with the most upside potential over the next 12 months, implied by consensus price targets:

    Bank

    		 Ticker

    		 City

    		 Total assets ($mil)

    		 July 26 price change

    		 Share buy ratings

    		 July 26 closing price

    		 Consensus price target

    		 Implied 12-month upside potential
    Banc of California Inc.

    		 BANC,
    +0.62%         		Santa Ana, Calif.

    		 $9,370

    		 1%

    		 71%

    		 $14.71

    		 $18.58

    		 26%
    Enterprise Financial Services Corp.

    		 EFSC,
    +1.83%         		Clayton, Mo.

    		 $13,871

    		 2%

    		 80%

    		 $41.75

    		 $49.25

    		 18%
    First Merchants Corp.

    		 FRME,
    +3.52%         		Muncie, Ind.

    		 $17,968

    		 4%

    		 100%

    		 $32.38

    		 $37.33

    		 15%
    Amerant Bancorp Inc. Class A

    		 AMTB,
    +3.47%         		Coral Gables, Fla.

    		 $9,520

    		 3%

    		 60%

    		 $20.26

    		 $23.30

    		 15%
    Old Second Bancorp Inc.

    		 OSBC,
    +3.39%         		Aurora, Ill.

    		 $5,884

    		 3%

    		 100%

    		 $16.15

    		 $18.50

    		 15%
    F.N.B. Corp.

    		 FNB,
    +2.87%         		Pittsburgh

    		 $44,778

    		 3%

    		 75%

    		 $12.91

    		 $14.50

    		 12%
    Columbia Banking System Inc.

    		 COLB,
    +3.95%         		Tacoma, Wash.

    		 $53,592

    		 4%

    		 55%

    		 $22.63

    		 $25.32

    		 12%
    Wintrust Financial Corp.

    		 WTFC,
    +3.43%         		Rosemont, Ill.

    		 $54,286

    		 3%

    		 92%

    		 $86.05

    		 $95.33

    		 11%
    Synovus Financial Corp.

    		 SNV,
    +6.01%         		Columbus, Ga.

    		 $60,656

    		 6%

    		 75%

    		 $34.06

    		 $37.73

    		 11%
    Home BancShares Inc.

    		 HOMB,
    +4.56%         		Conway, Ark.

    		 $22,126

    		 5%

    		 57%

    		 $24.09

    		 $26.67

    		 11%
    Source: FactSet

    Click on the tickers for more about each bank.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Any stock screen can only be a starting point when considering whether or not to invest. If you see any stocks of interest here, you should do your own research to form your own opinion.

    Don’t miss: How you can profit in the stock market from an incredible financial-services trend over the next 20 years

    [ad_2]

    Source link

  • ‘Oppenheimer’ gives stock investors another reason to be bullish about nuclear energy

    ‘Oppenheimer’ gives stock investors another reason to be bullish about nuclear energy

    [ad_1]

    One of the hottest movies of the summer is the staggeringly good biopic “Oppenheimer,” about the man who oversaw the frantic race to develop the atomic bomb during World War II. 

    The atom bomb dropped on Hiroshima, Japan on Aug 6, 1945 was a fission-style device. This also happens to be the same basic physics behind nuclear reactors that are in use today. It’s a reminder that technology can be, at its essence, agnostic: Whether it is used for malevolent or benevolent purposes (in nuclear fission’s instance, an instrument of death or clean, carbon-free electricity) depends upon the intent of the user. 

    Fission reactors generate about 10% of the world’s electricity today. The United States gets even more of its electricity this way, about a fifth.

    These percentages are likely to rise as global demand for electricity — and concerns about global warming and climate change — rise. This will present opportunities for long-term oriented investors. The lion’s share of this demand — about 70%, says the Paris-based International Energy Agency (IEA), will come from India, which the United Nations says is now the world’s most populous country, China, and Southeast Asia. Put another way, “the world’s growing demand for electricity is set to accelerate, adding more than double Japan’s current electricity consumption over the next three years,” says Fatih Birol, the IEA’s executive director.

    While fossil fuels remain the dominant source of electricity generation worldwide — the Central Intelligence Agency estimates that it provides about 70% of America’s electricity, 71% of India’s and 62% of China’s, for example—the IEA report says future demand will be met almost exclusively from two sources: renewables and nuclear power. “We are close to a tipping point for power sector emissions,” the IEA says. “Governments now need to enable low-emissions sources to grow even faster and drive down emissions so that the world can ensure secure electricity supplies while reaching climate goals.”

    “ The Biden administration is a big booster of nuclear energy. ”

    It’s helpful that the Biden administration is a big booster of nuclear energy, which the White House sees as an integral part of its broader effort to move the U.S. economy away from fossil fuels. The Department of Energy says that the country’s 93 reactors generate more than half of America’s carbon-free electricity. But price pressures from wind, solar and natural gas (which the feds call “relatively clean” even though it emits about 60% of coal’s carbon levels) have putseveral reactors out of business in recent years. 

    The bipartisan infrastructure bill that Biden signed into law in November 2021 includes $6 billion, spread out over several years, for the so-called Civil Nuclear Credit Program, designed to keep reactors — and the high-paying jobs that come with them — running. If a plant were to close, it would “result in an increase in air pollutants because other types of power plants with higher air pollutants typically fill the void left by nuclear facilities,” the administration says. U.S. Energy Secretary Jennifer Granholm has said the Biden administration is “using every tool available” to get the country powered by clean energy by 2035.

    The private sector is beginning to stir. Last week, Maryland-based X-Energy said it would build up to 12 reactors in Central Washington state, for Energy Northwest, a public utility. These wouldn’t be the behemoth-type reactors we’re used to seeing, but “advanced small, nuclear reactors.” X-Energy, which is privately held,  has also been selected by Dow
    DOW,
    -1.40%
    to construct a similar facility in Texas.  

    Other companies are also rolling out new technology to meet demand. Nuclear fusion — a breakthrough in that it creates more energy than the Oppenheimer-era fission model and at a lower cost — is likely to be the basis for reactors in the years ahead; the Washington, D.C.-based Fusion Industry Association thinks the first fusion power plant could come online by 2030. After seven rounds of funding, one fusion company, Seattle-based Helion Energy, is currently valued at around $3.6 billion, and appears headed for a public offering.    

    Here too, the Biden administration is getting involved. In May, the Department of Energy announced $46 million in funding for eight other fusion companies. “We have generated energy by drawing power from the sun above us. Fusion offers the potential to create the power of the sun right here on Earth,” says Granholm.  

    There are several opportunities here for long-term investors. You can pick your way through any number of publicly held companies, including more traditional utilities, or spread your bet across the industry through a handful of exchange-traded funds. The largest of these is the Global X Uranium Fund
    URA,
    +0.78%    ,
    with about $1.6 billion in assets. It’s up about 9% year-to-date. The VanEck Uranium + Nuclear Energy Fund
    NLR,
    +0.41%
     is up almost 10% and sports a 1.8% dividend yield. These are respectable year-t0-date returns, even though they lag the S&P 500
    SPX,
    +0.32%
    (up close to 19%) by a wide margin. 

    More: Net-zero by 2050: Will it be costly to decarbonize the global economy?

    Also read: Fukushima’s disaster led to a “lost decade” for nuclear markets. Russia, low carbon goals help stage a comeback.

    [ad_2]

    Source link

  • Am I being tricked into overtipping when I eat out? Should I tip before or after sales tax is added?

    Am I being tricked into overtipping when I eat out? Should I tip before or after sales tax is added?

    [ad_1]

    Dear Quentin,

    I’ve read your previous responses to letters on tipping, and my thoughts are simple: Tipping is dependent on the service given. I won’t tip at a deli counter, but I will tip more in a diner. I see no reason to tip a deli counter person on a regular basis. The person who rings up my groceries isn’t allowed to accept tips, and they do a lot more than put a sandwich in a bag.

    As far as restaurants go, 15% is the starting point and I will go up from that as warranted. I do tend to tip a high percentage in diners. The waitstaff there are generally fabulous, deal with lower price points and a varied clientele. I feel they also suffer from customer bias where some people seem to think it’s only a diner not a fancy restaurant.

    “‘Helping others is not always through money. I volunteer my time with several charities and donate blood.’”

    The job is the same whether my meal is $10 or $100. I try to pay in cash to ensure the waitstaff is promptly getting their tip, and to ensure that the money does indeed go to the wait staff. Are we expected to tip on a total that includes credit-card charges? What’s more, helping others is not always through money. I volunteer my time with several charities and donate blood.

    What troubles me is that throughout the New York City metro area, tipping recommendations in restaurants are based on faulty calculations. My friends and I all agree that tips are supposed to be based on the price of the meal — that is the subtotal or pre-tax figure. Restaurants frequently encourage people to tip on the final amount. 

    A Fair Tipper

    Related: I’m sick and tired of tipping 20% every time I eat out. Is it ever OK to tip less? Or am I a cheapskate? 

    Dear Fair,

    Yes, yes, yes, and yes. 

    Yes, wait staff in diners work as hard as any restaurant worker, and they deserve whatever your optimum tip — 15% or 20% — and as much as you would tip in a white-tablecloth restaurant. Yes, consumers should not be expected to tip in a deli — unless you have a good relationship with the staff, and you tip occasionally for goodwill. If you choose to “skip” the charity donation in a pharmacy, that’s OK too. Yes, donations and tips are increasingly being conflated, and that’s not always a good thing. We should be comfortable with the charity and 100% sure that the donation is going to the charity in question. 

    And your main point: Yes, tipping on the subtotal before tax and before credit-card charges is absolutely fair, although a lot of people — especially when calculating the tip among friends — tip on the after-tax total. Why? Perhaps we don’t want to be seen splitting hairs over the tax among friends and/or in front of a service worker who has given us exemplary service. Calculating tips is often done under pressure, and no one likes to be seen as a cheapskate. I almost always tip on the total amount, knowing that the sales tax is included, primarily because I figure that extra $1 or more is going to the person who served my table.

    My colleague, MarketWatch news editor Nicole Pesce, put together a guide for how much you should tip everyone, and who you should NOT tip. She also cited three reasons why tipping has become such a note of contention, and why it appears we are tipping more: people tipped staff more during the pandemic (they were, after all, putting their health and lives at risk with their jobs); 40-year high inflation over the last 12 months has increased the cost of everything and, as such our tips rose in tandem with prices; and, finally, digital tipping appears to be ubiquitous, and people have been suffering from tipping fatigue. 

    “‘You’re not the only one: Americans are souring on tipping.’”

    You’re not the only one with tipping fatigue, though: Americans are generally souring on tipping. A large majority (66%) of U.S. adults have a negative view about tipping, according to a poll released by the personal-finance site Bankrate last month. The bottom line: consumers feel they are being forced to compensate employees for low pay (41%) and they don’t appreciate all that digital guilt tipping (32%) and, as a result, they believe that tipping culture has gotten out of control (30%). Respondents also said they were confused about how much to tip (15%), but a small minority (a paltry 16%) said they would be willing to pay higher prices in lieu of tipping.

    People appear to be less generous with their tipping amounts, and they also appear to be tipping less often. What’s perhaps most surprising from Bankrate’s research is that only 65% of diners actually tip when they eat out (that’s down from 73% last year). After restaurants, people are most likely to tip barbers/hairdressers (53% of those polled) and food-delivery workers (50%). From thereon, only a minority of people say they tip taxi or rideshare drivers (New York City cabs, which give tipping options upon payment, may be an outlier here), hotel housekeepers, baristas and food-delivery workers.

    It’s important that we have this conversation about tipping because expectations and digital tipping methods are evolving all the time. On the one hand, people are facing higher prices and they are understandably feeling under pressure to tip. On the other hand, this conversation naturally overlaps with the working conditions and pay of service workers. Americans are tipping less than they did during the worst days of the pandemic. Service workers — along with medical personnel, bus and train drivers and first responders — were among the heroes of the pandemic. That is something I hope we never forget.

    “The person who rings up my groceries isn’t allowed to accept tips, and they do a lot more than put a sandwich in a bag,” the letter writer says.


    MarketWatch illustration

    Also read:

    ‘I respect every profession equally, but I feel like so many people look down on me for being a waitress’: Americans are tipping less. Should we step up to the plate? 

    ‘We’re very upset!’ We gave a friend $400 concert tickets and $2,000 Rangers seats, but weren’t invited to his wedding. Do we speak up?

    ‘All of these tips add up’: If a restaurant adds a 20% tip, am I obliged to pay? Should tipping not be optional? 

    [ad_2]

    Source link

  • Here’s why Wall Street has fallen out of love with Tesla — for now

    Here’s why Wall Street has fallen out of love with Tesla — for now

    [ad_1]

    Late on Wednesday, Tesla Inc.
    TSLA,
    -1.10%
    reported that quarterly sales were up 47% from a year earlier. But the stock tumbled 10% on Thursday.

    Tesla’s shares are still up 113% this year. The company is among a group of 13 in the S&P 500 that stand out with high growth expectations for sales, earnings and free cash flow through 2025.

    But less than half of analysts polled by FactSet rate Tesla a buy. Emily Bary explains what they are worried about.

    Traders have placed large short bets against Tesla and two of its rival EV makers — Rivian Automotive Inc.
    RIVN,
    -2.09%
    and Nio Inc.
    NIO,
    +2.52%    .
    Claudia Assis looks into how well those trades have been working out.

    Cody Willard explains why he remains confident that Tesla and Rivian will dominate the EV market over the long term.

    Related coverage:

    Here’s what may propel U.S. stocks for years.

    Chipotle Mexican Grill is among 14 stocks named by Michael Brush for consideration by investors looking to ride along with long-term improvement of U.S. labor productivity.


    AP

    The S&P 500
    SPX,
    +0.03%
    has returned 19% this year, following its 18% decline in 2022. On the same basis, with dividends reinvested, the benchmark index is still down 2% since the end of 2021.

    What is going on? Michael Brush believes that a high level of corporate investment in new technology and equipment is setting the stage for a long phase of earnings growth for U.S. companies. He shares four developments behind the coming productivity boom and 14 stocks expected to benefit from it.

    A signal for the stock-market’s health


    Getty Images

    The Dow Jones Industrial Average
    DJIA,
    +0.01%
    is up 6% this year. The venerable index has trailed the S&P 500, but its closing level of 35,255.18 on Thursday was only 4% shy of its record close a 36,799.65 on Jan. 4, 2022. Joseph Adinolfi explains Dow Theory, which according to technical analysts is sending a strong bullish signal for the stock market.

    Other opinions about market sentiment:

    Even if you have resisted the idea of a Roth IRA, you may soon be forced to have one

    This year if you are age 50 or older and are already maxing-out your contribution to a 401(K), 403(B) or other qualified employer-sponsored tax-deferred retirement plan at $22,500, you can make an additional “catch up” tax deductible contribution of $7,500 for a total of $30,000. But starting in 2024, the catch up contribution will no longer be tax deductible if you earn at least $145,000 a year. You can still make the contribution with after-tax money into a Roth 401(K) account that your plan administrator may already have set up for you.

    Alessandra Malito provides more details and news about employers’ efforts to delay the rule’s implementation.

    Beth Pinker writes the Fix My Portfolio column. This week she digs into Roth IRA conversions, through which you can simplify your taxes down the line.

    A hot vote in Spain

    The center of Madrid on July 15, 2023. A brutal heat wave could affect turnout for the country’s general election on July 23.


    Uncredited

    Barbara Kollmeyer reports from Spain about a highly contested election on Sunday, with controversy over the government’s policies during the pandemic, parties’ social policies and the possibility of a coalition government that might rattle financial markets.

    Meta vs. Alphabet

    Shares of Meta Platforms Inc. and Alphabet Inc. trade only slightly higher than the S&P 500 on a forward price-to-earnings bases, while Nvidia Corp., Microsoft Corp. and Apple Inc. trade much higher.


    FactSet

    Leslie Albrecht looks at Meta Platforms Inc.
    META,
    -2.73%    ,
    which is Facebook’s holding company and has a hit on its hands with the new Threads social-media platform, and Google holding company Alphabet Inc.
    GOOGL,
    +0.69%    ,
    to consider which stock is a better buy.

    Brett Arends: ‘I used to work at Nvidia. The stock I got is now half my portfolio. Should I sell?’

    The Ratings Game

    In The Ratings Game column, MarketWatch reporters track analysts’ thoughts about various stocks. Here’s a sampling of this week’s coverage:

    You don’t know every bad factor causing air travel to be nothing but harassment

    Getting there is half the fun.


    Getty Images

    The U.S. flying scene — from shortages of equipment and labor (and runways) to ill-staffed air-traffic control towers — is a well-known nightmare for U.S. travelers. But there is more to the story. Jeremy Binckes looks into other factors that may surprise you and cause great inconvenience this summer.

    The Federal Reserve is expected to raise interest rates again next week

    The Federal Open Market Committee will meet next Tuesday and Wednesday, to be immediately followed by a policy announcement. Economists expect the central to raise the federal-funds rate by another quarter point. The question is whether or not this will end the Fed’s inflation-fighting rate cycle.

    More coverage of the Fed:

    How much would you pay for 100% downside protection in the stock market?


    MarketWatch illustration/iStockphoto

    Over the past 30 years, the SPDR S&P 500 ETF Trust
    SPY,

    has returned 1,650%, for an average annual return of 10%, with dividends reinvested, according to FactSet. But it hasn’t been a smooth ride. The ETF, which tracks the benchmark S&P 500, fell 18% last year and 37% during 2008, for example. And there have been even larger declines if the analysis isn’t confined to calendar years.

    But can you ride through market declines? Many studies have shown that most investors who try to time the market sell after a decline has started and buy back in well after a recovery is under way, which means their long-term performance can suffer significantly.

    In this week’s ETF Wrap column (and emailed newsletter), Isabel Wang describes a new buffered fund that can give you 100% downside protection over a two-year period, in return for a cap on your potential gains in the stock market. Here’s the price you would pay for the protection.

    The World Cup games have started

    Hannah Wilkinson scored the home team’s first goal against Norway during the first World Cup game in Auckland, New Zealand, on July 20.


    Getty Images

    The Women’s World Cup began Thursday with an upset victory by New Zealand over Norway.

    James Rogers reports on what is expected to be a much easier environment for FIFA and corporate sponsors than that of last year’s Men’s World Cup in Qatar.

    U.S. Soccer Federation President Cindy Parlow Cone participated in MarketWatch’s Best New Ideas in Money podcast and spoke about the long-term effort to achieve equal treatment for women soccer players.

    More coverage of the World Cup:

    Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.

    [ad_2]

    Source link

  • ‘I was outraged’: Our restaurant bill was $35 each, but our friend wanted to pay $22 for a gluten-free dish. Who’s right?

    ‘I was outraged’: Our restaurant bill was $35 each, but our friend wanted to pay $22 for a gluten-free dish. Who’s right?

    [ad_1]

    Dear Quentin,

    I went for dinner with six friends last weekend, and we each ordered entrees and desserts, and some side orders. One of our group only eats gluten-free food, so he ordered two starters. We split the bill, and it worked out at $36 each. But our gluten-free friend cried foul, and asked for a separate check to pay $22 for his gluten-free dish. I was outraged — and almost felt physically sick. I kicked my husband under the table, and said under my breath, “Can you believe that?’

    Can you believe it? Do you think he should have just paid the $35 instead of asking for a separate check? Adding insult to injury, he left the waiter a $10 tip. Why not just pay $35 like everyone else? I told my husband I was never going for dinner with him again. Don’t you think he should have just paid $35 like everyone else? It was a big crowd. If everyone did that, you’d need a forensic accountant to figure out how many breadsticks someone ate. 

    We otherwise had a nice evening, and it was a bring-your-own-bottle restaurant. I work as a teacher and my husband works in tech. We own a home together and have three kids. Our gluten-free friend is a freelance consultant, and is divorced with two kids. He had a very privileged upbringing. I worked hard for everything I have. I’m not saying any of us are rich, but when we go out to eat, we like to share and share alike, and split the bill down the middle. 

    When did eating out become so full of these cringeworthy moments?

    Equal Bill Splitter

    Dear Equal,

    I’m sorry to say that the most cringeworthy moment here happened when you kicked your husband under the table. I’m not a big fan of under-table communication in a group, and while we could debate the pros and cons of asking for a separate check for a $13 difference, I don’t think there’s much of a gray area when it comes to calling someone out at the dinner table, especially when your eye-rolling and disapproval could be picked up by the other guests.

    As far as your friend is concerned, $13 is a lot of money to pay when you did not eat all the food that was ordered by the table. Maybe it doesn’t seem like it to you or anyone reading this column, but your friend is divorced with two kids, and works as a freelancer — so let’s assume his income is not always stable. Could he have just split it down the middle and paid $35 and another 15% or 20% for a tip? Sure. But he has good financial boundaries. I applaud him.

    The real issue here may go back to your respective upbringings, and could explain your dramatic — and I would argue disproportionate reaction — to your friend asking for a separate $22 check. You’ve worked hard, and maybe your friend had an easier start in life, but that doesn’t mean he’s not entitled to pay for what he ate, and watch every dollar. Divorce is like a recession. You can end up struggling to get back on your financial feet for years.

    Perhaps your friend had always intended to pay $22 for his gluten-free dish, and tip the server 50%, or perhaps he has a well-trained side eye and caught your reaction to his paying for his own order, and he decided to pay closer to what everyone else had paid. But ordering separate checks, I suspect, will become more common as prices continue to rise, even at a slower pace, and people feel uncertain about spending money in restaurants. 

    You believe in equality of bill splitting. I suggest you apply that equality to all dinner guests, regardless of upbringing and dietary restrictions, and allow them to make their own choices about what they pay for at dinner. People often have problems — financial or otherwise — that we are not aware of, so try to leave space for that. And if your friend did see your eye-rolling and under-the-table antics? I’d like to think he made space for your behavior too.

    Readers write to me with all sorts of dilemmas. 

    By emailing your questions, you agree to have them published anonymously on MarketWatch. By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

    The Moneyist regrets he cannot reply to questions individually.

    More from Quentin Fottrell:

    I had a date with a great guy. I didn’t drink, but his wine added $36 to our bill. We split the check evenly. Should I have spoken up?

    ‘I’m living paycheck to paycheck and I feel drained’: My fiancé said he would pay half of the mortgage. Guess what happened next?

    ‘We live in purgatory’: My wife has a multimillion-dollar trust fund, but my mother-in-law controls it. We earn $400,000 and spend beyond our means.

    [ad_2]

    Source link

  • Should Twitter have rejected Musk’s offer and remained publicly traded?

    Should Twitter have rejected Musk’s offer and remained publicly traded?

    [ad_1]

    Would Twitter have been better off to remain a public company rather than be taken private by Elon Musk?

    We’ll never know for sure, of course. But it’s hard to imagine that it would have performed any worse. Twitter as a private company is hemorrhaging advertisers, and according to a recent Fidelity analysis its market value is down nearly two-thirds from the $44 billion Musk paid for it.

    Grading Twitter’s performance as a private company is more than an idle armchair exercise. It goes to the heart of an age-old debate over whether companies can be more profitably managed when private rather than public. The private equity (PE) industry not surprisingly claims that its approach is superior, and much of Wall Street agrees since many PE firms have produced impressive long-term returns.

    The industry’s claims are not devoid of dissenters. Consider a recent study from Verdad Capital entitled “Private Equity Operational Improvements.” It was conducted by Minje Kwun of Dartmouth College and Lila Alloula of Yale University.

    In order to overcome the otherwise insuperable obstacle of being unable to measure how private companies are performing, the researchers focused on a subset of leveraged buyouts (LBOs) from 1996 to 2021 in which the private equity firms issued public debt. In order to sell debt to the public, of course, the PE firms had to issue financial statements publicly, and that enabled the researchers to analyze the LBOs’ performance after going private, relative to public companies in the same industry sector.

    Kwun and Alloula focused on six indicators of financial performance: Revenue growth, EBITDA margin, capital expenditures as a percentage of sales, and the ratios of gross profit to total assets, EBITDA to total assets, and debt to EBITDA. (EBITDA, of course, refers to Earnings Before Interest, Taxes, Depreciation and Amortization.)

    Relative to public companies in the same sector over the three years after going private, LBOs on average did not show any operational improvement along these six dimensions. The researchers conclude: “The [private equity] industry mythology of savvy and efficient operators streamlining operations and directing strategy to increase growth just isn’t supported by data.”

    Their results are consistent with those of a near-decade ago study by Jonathan Cohn and Lillian Mills of the University of Texas and Erin Towery of the University of Georgia. They used a different technique to access the otherwise inaccessible financial data of newly-private companies: Their tax returns. The professors focused on the operating performance of a sample of companies that had gone private between 1995 and 2007, comparing them to otherwise-similar companies that remained public. On average over the three years after going private, the researchers found, the private companies performed no better than the public ones.

    The source of PE’s industry high returns

    What, then, is the source of the increased return that the private equity industry often produces? The answer appears to be increased leverage. Leverage increases returns on the upside, even if it magnifies losses on the downside. Leverage has worked to the PE industry’s advantage over the last several decades since public markets have on balance have risen significantly.

    Notice that increasing leverage requires no particular management expertise or shrewd strategic planning. In principle it’s no more difficult than you or me purchasing stock on margin.

    These studies are not the final word on the subject. Some other studies, using alternate methodologies, have found some operational improvement at companies after being taken private. If different methodologies can reach such different conclusions, however, that would suggest that the benefits of going private are not as obvious and overwhelming as the private equity industry would have us believe.

    At a minimum, Kwun and Alloula argue, we should be skeptical “of any claims of operational improvements being a major contributor to PE’s performance relative to public markets.”

    Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

    More: These 5 fast-growing stocks pay generous dividends you can count on

    Also read: Top investment newsletters are down on tech, Tesla and Meta Platforms. Here’s what they like.

    [ad_2]

    Source link

  • Gold should be dead, but somehow it’s still adding value

    Gold should be dead, but somehow it’s still adding value

    [ad_1]

    Why isn’t gold dead yet?

    It hasn’t served a vital economic function since the government stopped treating it as money back in 1971. Actually, you could argue it stopped being necessary long before that.

    Yes, some people prefer it in jewelry. It is used in some technological equipment, and sometimes, still, in dentistry. But so what? According to authoritative data from the World Gold Council, even all those uses only account for about half of the world’s supply each year. Logically, this should mean that there is a gigantic glut of gold and that its price would be in free fall.

    But it isn’t. Gold is beating U.S. stocks and bonds this month. And this isn’t even a rarity. I’ve run some numbers and have found a couple of things that could be very important to retirees, and for all of us suckers saving for retirement.

    Even though, according to traditional financial theory, they really make no sense at all.

    Don’t miss: Gold headed for best week since March after U.S. inflation reports

    Also see: Why gold will beat the stock market in the coming weeks

    The first thing is that over the past century including some gold in your portfolio alongside stocks and bonds has genuinely added value. It has produced higher average returns, less volatility and fewer of those disastrous “lost decades” where your portfolio ended up whistling Dixie.

    The second thing is that this peculiarity has been showing no signs of letting up in recent years or decades — even though, if anything, gold makes even less sense today than it used to.

    Let me explain.

    As usual, I’ve tapped the excellent database maintained by the NYU Stern School of Business, which tracks asset values going back to 1928.

    Over that period, a conventional so-called balanced portfolio invested 60% in the S&P 500
    SPY,
    -0.06%
    index of large-company stocks and 40% in U.S. 10-year Treasury bonds
    TMUBMUSD10Y,
    3.832%
    has generated an average return of 4.9% a year in “real” terms, meaning above inflation.

    A portfolio that’s 60% invested in the S&P 500, 30% in the bonds and 10% in gold
    GC00,
    -0.26%
    earned a slightly higher average, 5.1% a year in real terms. But the volatility was lower: The portfolio that included the gold had a lower standard deviation of returns, and a much higher “median” return, meaning the middlemost return if you ranked all the years from best to worst. The portfolio including gold beat the traditional one by five full percentage points in total over the typical 10-year period, and failed to keep up with inflation for 10 years on only five occasions — half as often as the portfolio consisting exclusively of stocks and bonds.

    Nor is this just about olden times. The portfolio including 10% gold has beaten the traditional 60/40 by an average of 0.4 percentage point a year since President Richard Nixon finally killed the gold standard in 1971. And it has beaten the traditional portfolio by the same amount, an average of four-tenths of a percentage point, so far this millennium. (The 60/40 portfolio has done better if you start measuring only in 1980, as that ignores the golden 1970s but includes the long bear market for gold of the 1980s and 1990s.)

    And gold has added value in five of the last seven years (while in the other two it was effectively a tie).

    It’s not so much that gold is a great long-term investment on its own. It’s that gold has seemed to shine when others, specifically stocks and bonds, have failed. And it still does. It held up during the crash of 1929-32. But it also held up during the crash in 2002. And in 2008. And 2020.

    A financial expert told me this was “hindsight bias.” But so is most financial analysis.

    When your financial adviser tells you what you might reasonably expect from large stocks, small stocks, international stocks, real estate and so forth in the decades ahead, he or she is basing that on history. (In some cases this has been downright hilarious, as when advisers said you should still expect “average” historical returns of 5% a year from Treasurys, even when they had only a 2% yield.)

    I’m danged if I know why. But so far this year, once again, you’ve been better off in a portfolio of 60% stocks, 30% bonds and 10% gold than in just 60% stocks and 40% bonds. Make of it what you will.

    [ad_2]

    Source link