Originally titled, “Gut Check in Rocky Markets” but with a new twist the following excerpted edition from the archives of TGIF 2 Minutes is timely on (Not So) Fat Tuesday. Please keep in mind three new factors:
The political divide currently in the US is adding to market tensions and even politicizing the Coronavirus,
Primary Elections and Debates and the policy issues being brought forth are next-to-center stage in the media,
A still very recent UP 29% equity market in 2019,
and there exist the makings of a potential market correction. A market correction is defined as a decline of 10% from a recent high; the US equity markets are down over 6% in two days and are nearing an official “market correction” in 2020.
At February 21st, while the year is still young… the time is perfect for reviewing or setting goals for this year and the years and months to come. No pressure. The holidays are in the past and the deadline for filing 2019 taxes is still a bit in the distance – for now!
At this somewhat perfect time of the year, goal setting can pay off in a big way toward achieving those goals. Often goal setting is difficult to start with a blank sheet of paper so here are a few tidbits to create momentum:
Exogenous Threats. These types of threats or risk factors come from an external place and affect markets – unexpectedly. Already in 2020, only 38 days into the year, the US and global markets have been presented with at least three major exogenous threats:
Brexit becoming abruptly final
A US Impeachment trial
A viral epidemic, the unnamed Coronavirus in China (and now spreading to other countries too)
(Bonus 4th threat) US-China and US-World trade policy
As the year turned from 2019 to 2020, there stealthily rolled in several of the most sweeping reforms to retirement and tax legislation in a decade or so (outside of the 2017 Tax Cuts and Jobs Act, or TCJA). The recent changes apply to IRA, 401k and other retirement savings accounts. If any of these apply to you then please read on:
Turning 70½ this or next year
Own a business with or proposing a 401k plan
Working for a small company and do not have access to a 401k plan
Need an early distribution for reasons of qualified birth or adoption
It is still early in the year – there is still plenty of time to evaluate how to start or tweak a savings and investing plan. In fact, it is ALWAYS a good time (January, February, March, July, October, December…) to evaluate savings and investing. But after the amazing past year and decade in US and global stock and bond markets, it may cross your mind to say,
“Should I wait to invest?”
“How can markets keep going up, up, up?”
“I need to jump on the bandwagon here!”
“Growth stocks are the way to go! I have stock ideas!”
Staying positive in a negative interest rate world just got a little easier. Sweden’s central bank, one of the world’s first to lower benchmark interest rates to below zero, this week raised its rate up to zero from negative 0.25%, or -0.25%.