I hope everyone is staying safe and healthy.
Market volatility this year has increased relative to the last few years. After falling more than 30% in a little more than a month, the S&P 500 Index quickly recovered and reached a new high. The pandemic also caused many to lose their jobs. Somehow this confluence of events has led to increased day trading activity. Some attribute this growth to shutting down professional sports. Why? The theory is that those no longer able to gamble on sports decided to start day trading to satisfy their gambling “itch.” Some believe Barstool Sports’ Dave Portnoy is driving this trend. This week’s first article shares some cautionary tales. It also reminded me of a story I wrote after I took a class on day trading when I wrote for The Motley Fool. (I only took the class for information purposes. I have never tried day trading. I never plan to either.)
After strong August returns, the S&P 500 has turned lower this month. After these losses, the S&P is close to correction territory – usually defined as a 10% decline from recent highs. The S&P’s recent peak was on September 2nd. As of Thursday’s close, the S&P is down 9.3% from this high. For the year, the S&P is up 0.5%.
Historically, September is the year’s worst month for stocks. The S&P has fallen 7.2% so far this month. In general, investors can look forward to the fourth quarter. Stocks typically close the year with gains. But this year is certainly not typical. It seems market volatility is here to stay. At least for the short term.
Apprise’s “Ask Me Anything” webinars will re-start on Thursday, October 8th at 5 pm. The next webinar will be called “Ask Me Anything –Something You May Not Know About Markets and Elections.” Going forward, I will hold these sessions on the second Thursday of the month at 5 pm and the fourth Thursday of the month at 12:30 p.m. I hope you can join me. Additional information will be sent beginning next week.
Here are the links to this week’s articles as well as a brief description of each:
1. Why You Should Not Day Trade. This article stirred up some old memories. I first started writing about investing in for The Motley Fool (TMF) on February 9, 1998. That experience was the beginning of a somewhat circuitous route to starting Apprise Wealth Management. I learned about the CFA Program and decided that successful pursuit of the CFA designation would help me get out of the tax world. A few months after I started writing for TMF, I attended a one-day program on day trading. I shared my thoughts about the experience with readers. (You can find it here: C-KDay-trading?) More than anything, the class convinced me I could never be a day trader. I prefer Investing to Speculating. Those thinking about joining the bandwagon and becoming day traders should read either my earlier work or this article first.
2. Your To-Do List Is, in Fact, Too Long. Even when we get things done, we often lament that we haven’t accomplished enough during the workday. Would you like to get to the end of your day with a feeling of accomplishment? Try putting together a long to-do list. Then identify the one thing you most want to do. Write it down. Work on it until you complete the task. I’ve tried a version of this from time-to-time. It helps. I should probably do it more often.
3. Women, Marriage, and Retirement Risk. Married women tend to have higher income and accumulate more wealth. But a study by the Center for Retirement Research (CRR) at Boston College reached a surprising conclusion. This apparent success does not translate to greater retirement security. Why? A key issue in retirement security is the amount of preretirement income that can be replaced. Married women tend to be less prepared because two incomes need to be replaced when they retire. CRR found the following three factors drive this problem:
· Social Security
· Previous Divorce
There are ways to mitigate these risks. Proper planning helps you address these issues early. If you’d like to discuss this issue further, please schedule a free call.
4. Exclusive: The Billionaire Who Wanted to Die Broke … Is Now Officially Broke. This feel-good story is worth a read. Chuck Feeney was the cofounder of retail giant Duty-Free Shoppers. Over the last four decades, he has donated more than $8 billion to charities, universities, and foundations worldwide. The article’s author first met Mr. Feeney in 2012. He told him he had set aside about $2 million for his and his wife’s retirement. He has given away 375,000% more money than his current net worth. He’s also done it anonymously. He’s done more than that though. His actions influenced Bill Gates and Warren Buffett when they launched the Giving Pledge in 2010.
5. What Is Long-Term Care Insurance and Do You Need It? Americans are living longer and longer. The article estimates that 70% of those 65 or older will need some kind of nursing care or assisted living. How much we will need is an open question. Some only need part-time help at home. Others may spend months or even years in assisted living or a nursing facility. The cost of long-term care is increasing faster than inflation. Your regular health insurance will not cover long-term care. Deciding whether you should have coverage involves an element of personal choice. A financial plan can help you determine if you need long-term care coverage. If you would like some help with your financial plan, please schedule a free, no-obligation call.
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