Category: Uncategorized

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Paycheck to Paycheck World

I read an interesting article today that stated a majority of Americans could not afford a surprise expense of $1000 or more.

I wouldn’t be surprised if the number was lower, say a $500 dollar surprise expense. Inflation has pushed living expenses to an almost unsustainable level for lower income earners.

It really is a depressing thought that a majority of people barley earn enough to cover their monthly expenses.

Let’s take a look at the personal savings rate over the last 5 years.

As you can see from the chart above, the personal savings rate is hovering around 3.8%. With fuel prices headed higher, I would not be surprised if this touches the June 2022 low of 2.7% again.

High inflation and high interest rates are the culprits of the below trend savings rate. Things are starting to look a little brighter for the economy in terms of interest rates and credit, high prices are here to stay for the consumer.

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Uncategorized

The Week Ahead

Markets are coming off a winning week. The biggest question is – will that continue?

Monday kicks off a big week for your money. Most companies have reported earnings thus far, but a few still remain to do so. I will be watching Oracle (ORCL) and BJs Wholesale (BJ) both of report on Thursday 3/9.

A slew of economic data comes in next week along with Fed Chair Jerome Powell set to testify on the economy and recent monetary policy action in front of Congress.

Recent economic data has proved the US economy to be resilient, but markets have not liked what Powell has had to say recently. Markets have reacted negatively to Fed speak calling for rates to be “higher for longer” and an increased terminal rate.

The yield on US Two Year, sometimes called the “Shadow Fed” due to the marketing pricing the yield to account for changes in short term rates that the Fed sets, shot up last week with growing acceptance that the Fed is going to hold rates for longer at a higher terminal rate to tame sticky inflation.

At least the Fed isn’t complacent on inflation this time around. It’s only a matter of time before inflation is a thing of the past and the market moves onto the next problem. Markets always climb the wall of worry.

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Markets Uncategorized

Diversification and Single Stock Risk

A good friend, Mr. Jackson, asked me how he could invest his savings into Tesla stock so I told him I would write an article on his behalf explaining the importance of diversification.

Don’t get me wrong taking single stock risks is a great way to obtain excess returns in the market. You shouldn’t expose yourself to single stock risk until you have a well diversified portfolio.

For most people a portfolio of 80% equities and 20% bonds will do just fine over a long period of time. The best thing is you can do all of this yourself. All you need is a Fidelity Investment account that you regularly put money into. After opening the account you can allocate money accordingly.

Once you have an account and a well diversified portfolio, single stock risk is something you can consider if you’re a risk taker. However, single stock risk is much like gambling – it has its ups and downs.

The bottomline is it is much easier to set it and forget it when it comes to investing. Keeping tabs on your single stock investments is a challenge, especially when you don’t keep track of markets on a daily basis. Plus you don’t want to be like this guy: https://www.youtube.com/watch?v=eU4jTS–c_A