In his first piece of 2021, Jason Zweig, the “Intelligent Investor” columnist for the Wall Street Journal (WSJ 1/9/21), offered the following hypothetical: “Imagine that it’s Jan. 1, 2020, and you have a magic crystal ball. It tells you that coronavirus will spread like wildfire, killing nearly 2 million people worldwide and putting the global economy into an unprecedented coma …
Stock Prices & Looking Ahead to 2021
During November and December, stock prices in the US and internationally made significant gains, which took the three primary US indexes to new all-time highs. Since the March 23, 2000 lows of 2,237 for the S&P 500, 18,591 for the Dow Industrials, and 6,860 for the NASDAQ Composite, the three indexes closed December at 3,756; 30,606; and 12,888, respectively. The …
Consolidated Appropriations Act
Consolidated Appropriations Act In our March 2020 Comments, we discussed the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was passed on March 27, 2020 in response to the pandemic. We also addressed the parts of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, passed in late 2019, that made changes to IRA rules. We now review …
November 2020 Stock Prices
During November, stock prices in the US and internationally made significant gains, which took the three primary US indexes to new all-time highs. Since the March 23, 2000 lows of 2,237 for the S&P 500, 18,591 for the Dow Industrials, and 6,860 for the NASDAQ Composite, the three indexes closed November at 3,622; 29,639; and 12,199, respectively. The percentage gains …
The Psychology of Money
“Behavioral finance” is a relatively new but increasingly influential part of the financial world. Where traditional economic/finance theory assumes that consumers and investors regularly maximize their opportunities, behavioral finance acknowledges that this is not always the case. If you’re interested, excellent books on the subject include Thinking, Fast and Slow by Daniel Kahneman; Misbehaving by Richard Thaler; Nudge by Thaler …
Bond Prices
As stock price volatility continues, both up and down (more down for September and October, after a major gain from the 2020 lows in March through August), investors tend to pay more attention to bonds as an alternative to stocks for their liquid investment portfolios. (Although our Comments are written as of the end of each month, we take note …
Stock Prices
In our August Comments, we presented several investment definitions and principles that we consider useful in further understanding price changes in the financial markets. Interestingly, the price earnings (P/E) ratios we discussed in August have become a talking point in September’s media coverage of the volatility. Briefly put, some number of market analysts and financial media believe that stock prices …
Early Comments on the Upcoming Election
With all that is going on in the world, there is an additional wildcard, namely the upcoming US presidential election. As our regular readers know, we at PPA maintain that who is President is only one of several factors affecting stock and bond prices. Even if we know who is going to be President, no one can predict what will …
Important Investment Definitions and Principles
The month-end August 2020 US stock and bond market investment results continued to be mostly favorable, even though the declines during the first week in September (3rd, 4th, and 8th) reduced these positive results somewhat. We think this is an opportune time to present certain basic investment definitions and principles that we at Park Piedmont (PPA) consider important to know. …
Mortgage Refinancing
The historically low interest rates of the past year represent an attempt by the US Federal Reserve to stimulate a faltering US economy. The correspondingly low rates determined in the bond market have hurt investors who need income. But these rates have been a boon to borrowers, as the Fed intended. Now is therefore a very good time to consider …