Smart Financial Planning

05/08/2024

A recent poll in Michigan asked people for their thoughts on the state of the nation’s economy today.

Only 35% of those polled described the economy as excellent (6%) or good (29%), while 65% described it as either not so good (28%) or poor (37%).

However, when asked how they would describe their PERSONAL financial situation these days, a majority of people (61%) described their circumstances as excellent (9%) or good (52%), while 38% described them as either not so good (25%) or poor (13%).

So the prevailing sentiment of this group is: I’m doing just fine, thank you very much, but the economy stinks.

There's a huge disconnect, right?

Michigan is not unique in its conflicted feelings. A national Gallup poll shows that Americans are five times as satisfied with their own lives as they are with the economic direction of the country as a whole.

I'd be in this camp for sure. How about you?

05/01/2024

Below is a look at the performance of key ETFs across various asset classes in April, year-to-date, and year-over-year from Bespoke Investment Group. You can see that the S&P 500 (SPY) fell more than 4% in April, while mid-caps and small-caps fell even more.

At the sector level, Real Estate (XLRE), Technology (XLK), and Health Care (XLV) all fell more than 5%. Meanwhile, Utilities (XLU) was the only sector that was up.

Outside of the US, China (MCHI) and Hong Kong (EWH) actually bounced back while the rest of the world took a breather. Commodities ETFs either rose or only fell slightly, while Treasury and other fixed-income ETFs were solidly in the red.

Bespoke's daily newsletter offers some great info!

04/23/2024

Gold has been doing pretty well lately and stirring up interest. But let's look at its history.

From 1971 to 1979, gold was up nearly 1,300%. WOW! That was good enough for a nine-year annual return of 33.8% per year. Some would say gold was an incredible inflation hedge in the 1970s.

Others argued that those massive returns were just playing catch-up from the decades in which the government artificially held the price down.

If you look at the gains since 1980, they tell a very different story. From 1980 to 2023, gold was up just 3.2%/ year. That lagged the returns for stocks (+11.7%), bonds (+6.5%), and even cash (+4.0%).

In that same period, the annual inflation rate was 3.2%. So gold had a real return (inflation-adjusted) over a 44-year period of an unspectacular ZERO.

So, what do you think about investing a bit in gold bars or an ETF?

03/04/2024

I love these charts, which show how various asset classes or, in this case, sectors of the S&P 500 index compare to each other over the years.

The EW (darker blue box) is showing an equal weighting of all 11 sectors which, for example, weighs tech and energy equally in the returns.

That is different than the equal-weighted S&P 500 index (RSP), which weights each of the individual 500 stocks the same.

Healthcare, technology, and consumer discretionary were the only sectors to outperform the S&P 500 from 2008-2023. They were up 10.7%, 14.7%, and 12.7% per year, respectively, versus an annual gain of 9.8% for the S&P 500. The worst-performing sector was energy, which was up just 3.5% per year in this time frame. And it's still underperforming most sectors so far in 2024.

Do you find these quilt charts interesting as well?

08/10/2023

Here's a very interesting chart and commentary by Bespoke for you.

As of yesterday morning, the 101 stocks in the S&P 500 that pay no dividend were up an average of 20.7% YTD, while the 100 S&P 500 stocks with the highest dividend yields were actually down an average of -3.2% YTD. Remember, the S&P index is up more than 17% YTD, so anything down on the year is massively underperforming.

Below is a table listing the 29 stocks in the S&P 500 that had the HIGHEST indicated dividend yields (5%+) yesterday morning. As you'll see at the bottom of the table, these 29 stocks are down an average of -8.37% YTD on a total return basis, so the 5%+ dividend yields are being more than erased by falling share prices for many of these names.

08/08/2023

Take a look at the rolling 30-year returns on the S&P 500 since 1950 (the blue line). Compare them to the latest one-year returns (the orange bars) for each 30-year period.

The returns in any given year are all over the map. However, the 30-year returns don’t change all that much from year-to-year.

One-year returns can make you feel wonderful or terrible, but they’re not going to have a ton of bearing on your long-term results (assuming you stay the course).

08/02/2023

The longer your time horizon, the higher your probability of success in the markets.

07/21/2023

How does Medicaid work for LTC patients?

This week’s blog post explains how Medicaid works in relation to long-term care (LTC) services.

This example shows the financial effect on Susan when her husband needs care beyond what she can now physically and emotionally provide (after 4 years of caring for Frank at home).

Simply CLICK the button below to read the post.

It’s a quick and educational read. And feel free to share this with those you care about.

all the best… Mark

Medicaid is a joint program with the federal government and is run by each state (the rules are generally similar but do vary by state). Below is an example from the CLTC course (a 600+ page textbook to pass the test) to earn the “Certified in Long-Term Care” designation. By the way, it does not...

07/18/2023

This chart shows the SEVEN stocks have accounted for 71.8% of the S&P 500 index gains for the year as of last Friday!

By the way, the Dow Jones Industrial Avg. is only up 5.3% YTD, while those 7 NASDAQ stocks have helped propel that index to a 35.7% gain for 2023.

07/17/2023

The good news is inflation is falling pretty quickly.

After peaking at more than 9% in June last year, the latest inflation reading was a bit under 3%.

It took 16 months for the inflation rate to go from under 3% to over 9%. It’s taken just 12 months to go from over 9% to under 3%.

However, the bad news is inflation has been higher than wage growth for some time now.

07/14/2023

Most folks know that mortgage rates are about 7% right now.

Zillow recently released a report on the "hidden" costs of owning a home. They estimate the average ancillary homeownership costs — utilities, insurance, maintenance, property taxes, etc. — to be more than $14,100 annually. That’s an additional $1,100 a month on top of your mortgage.

And those numbers are even higher in most metro areas listed on the map.

When you add in things like lawn care, furniture, and all of the other stuff you have to buy to fill up your house, these numbers are probably on the low side.

07/12/2023

According to this chart, the U.S. economy has been in the midst of a recession for 188 months since the summer of 1929. That means we’ve been in a recession roughly 16% of the time over the past ninety-plus years.

Which conversely means 84% of the time, the economy is not in a recession and is thus in an expansion.

Will the Fed drive us into the next recession or engineer a safe landing?