RECOVERY AND A LONGEVITY RECORD: On January 26 of this year, the S&P 500 hit a record high, and then it fell. On Friday it closed above the January 26 mark for the first time, fully recovering from its swoon earlier in the year. On Wednesday, the bull market in U.S. stocks became the longest in history. The bull market began on March 9, 2009.
FED CHAIR MAKES IT CLEAR CURRENT PATH WITH CONTINUE: Federal Reserve Chairman Jerome Powell delivered a message last week in which he made it clear that the central bank intends to continue its plan of gradual interest-rate increases. He stated that the Fed has “no interest to chill the current expansion” in the U.S. He stated that the strength of the economy indicates that this continues to be the correct path. Markets responded positively to his comments.
DON’T OVERREACT TO POLITICS: We have a president who likes to be provocative, something markets do not like. The latest was his comment last week that if he were impeached “the markets would crash” and that “everybody would be very poor”. Fortunately, we have plenty of history to look back on. The markets did not do anything sustained and dramatic during the Nixon and Clinton problems. When George H.W. Bush fainted in Japan and rumors spread that he had died, the markets went down less than 1% on the prospect of “President Quayle”. I have been asked if President Trump would intentionally hurt the economy on his way out. I am not going to speculate as to anything the President might or might not do, but keep in mind that his wealth to a large degree depends on a healthy economy, so self-interest alone might forestall any egregioius acts, not to mention the constitutional government we have with its checks and balances. In the meantime, this drama will continue to play out for a long time, so don’t let a random comment define your attitude about the markets.
401K MILLIONAIRES: With markets climbing, the number of Americans with a million dollars or more in their total 401k holdings rose to 168,000. That is up 41% from one year ago. The number of IRA millionaires grew to 156,000. The average balance of a 401k is currently $104,300, a new record. The average IRA balance is $106,900, also a record.
EXPENSIVE COMPANIONS: Last year, Americans spent $17 billion on veterinary care for their pets. A quickly growing industry is pet insurance. Gross annual premiums for pet insurance topped $1 billion last year, growth of about 23% from the year prior. That only represents about 1% of dogs and cats in the U.S., so this is likely to keep growing rapidly for awhile. In the U.K., 25% of dogs and cats are insured.
DON’T LET THIS HAPPEN TO YOU: One of the quotes at the end of this email last week was by Aretha Franklin who had just passed away. It turns out that her four sons and niece, all of whom have registered an interest in the estate, have confirmed that she had no will. Her estate is estimated to be worth $80 million. She was intensely personal in her private life, and now the details of her financial life will be made public. The assets will be subject to significant estate taxes, much of which could have been avoided or mitigated. I hope there are no disputes among the statutory beneficiaries, as that could have been avoided as well with some simple estate planning.
DON’T LET THIS HAPPEN TO YOU: https://www.wealthmanagement.com/estate-planning/aretha-franklin-died-without-will?NL=WM-27&Issue=WM-27_20180825_WM-27_834&sfvc4enews=42&cl=article_1_b&utm_rid=CPG09000005796842&utm_campaign=15744&utm_medium=email&elq2=39d48adea8ca414cbbcb07ea4b1b83bf
EXPENSIVE COMPANIONS: https://www.wsj.com/articles/as-veterinary-bills-add-up-more-pet-owners-opt-for-insurance-1535108400
FED CHAIR MAKES IT CLEAR CURRENT PATH WITH CONTINUE: https://www.wsj.com/articles/global-stocks-struggle-for-direction-as-central-bankers-meet-1535096380
401K MILLIONAIRES: https://www.foxbusiness.com/personal-finance/number-of-401k-ira-millionaires-continues-to-surge