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The Best of What They Said and I Read Week Ending 8/4/2019

“The Best of What They Said and I Read” week ending 8/04/2019 

Short excerpts from articles I found interesting.  I may not agree with the author and the following material is not intended as investment advice

Barron’s – August 2, 2019 – New Tariff Threat Bites Investors – Randall W. Forsyth 

  • “It was in the middle of television’s Shark Week, just when it seemed safe to go back in the water, that another Great White attacked. It was Tariff Man, returning to take an additional bite out of U.S. consumers’ wallets and out of investors’ portfolios, as well.  By midday on Thursday, the stock market had all but recouped its losses in the wake of the Federal Reserve’s policy meeting the previous day. That’s when President Donald Trump announced that he will impose a 10% levy on an additional $300 billion of Chinese goods on Sept. 1. The shock sent stocks underwater and resulted in this year’s worst week for the S&P 500 index and the Nasdaq Composite, which slid 3.1% and 3.92%, respectively. The Dow got off with just a 2.6% nick. For the broad U.S. stock market, the paper loss was about $1.1 trillion, according to Wilshire Associates.”

  • “The tariffs’ …had an even stronger impact on the bond market, with the 10-year Treasury note’s yield having its biggest one-week decline in more than seven years, falling 21.7 basis points, to 1.864%, the lowest since Election Day, Nov. 7, 2016, according to Dow Jones data. (A basis point is 1/100th of a percentage point.)”

Barron’s – August 2, 2019 – 2 Easy Steps to Create Retirement Income That Lasts – Sarah Max

  • “…The Stanford Center on Longevity and Society of Actuaries recently outlined a strategy that could be the answer for middle-income Americans seeking a straightforward plan they can execute without an advisor or annuity. The Spend Safely in Retirement Strategy, as they call it, involves two basic components.”   

  • “The first is to maximize Social Security income by claiming benefits as late as possible, ideally until age 70, when recipients receive 132% of their full monthly benefits for delaying 48 months.   “Social Security is probably the best retirement income source for most middle-income people because it addresses every common financial risk,” says Vernon. “It’s indexed for inflation, it protects against longevity risk, and if the stock market crashes, it doesn’t go down.” It also protects against cognitive risk, he says, since recipients don’t need to worry about making complicated investment decisions or turning their assets over to a scam artist. And there are tax advantages to boot: A portion of the benefit is exempt from federal tax, and most states don’t tax Social Security income.”

  • “…The second component of the Spend Safely in Retirement Strategy is to invest retirement assets more aggressively than had traditionally been prescribed by experts while withdrawing as little as possible.  The thinking here is that retirees who adopt the first part of the strategy to rely more heavily on Social Security for income needs can afford to take more market risk…This phase of the strategy calls for retirees to withdraw no more than the Internal Revenue Service’s required minimum distribution. (For people younger than 70½—the age at which retirees must begin withdrawing a percentage of their savings in tax-deferred accounts—the researchers used IRS methodology to map out equivalent percentages.)  Vernon acknowledges this strategy isn’t for everyone, namely retirees who have amassed larger savings.”

The Wall Street Journal – August 2, 2019 – “Where Did This “Bull Market” Come From, Anyway? – Jason Zweig

  •  “Everybody talks about bull and bear markets, especially the current one, often called the longest bull market in history at just under 3,800 days. But nobody seems to agree on an exact definition, or knows where the prevailing ones originated, including many investment professionals.  Analysts often say that a bull market is defined by a 20% rise from a market index’s most recent lowest point; a bear market, a 20% decline from its latest high.   Variations on that are countless—and endlessly confusing. Only by looking back at the history of these terms can you can get a better sense of what they mean, why they matter and how you should factor them into your thinking.”

  • “…According to Anatoly Liberman, a linguist at the University of Minnesota, the use of “bull” and “bear” to refer to financial optimists and pessimists, respectively, originated in Britain in the early 18th century.  “Bull” evoked the bellowing of an eager buyer. “Bear” appears to have come from an early proverbial expression, “to sell the bear’s skin before one has caught the bear”—an apt metaphor for a short sale, in which a trader sells borrowed shares in hopes of buying them back at a lower price.  The terms “bull market” and “bear market,” however, didn’t arise until the 1850s, says lexicographer Barry Popik. Even then, they often referred to only a single day’s action…”

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