INVESTMENT COMMENTARY – THIRD QUARTER, 2021

Ripple Effects of Interest Rate Increases The stock market rallied consistently this year until the past month when the S&P 500 fell 5% due to several concerns. The Delta variant of COVID has slowed the economic rebound down due to less demand and persistent problems in supply chains. China also indicated that it would not financially support Evergrande, a financially unstable real estate development company, and the markets were spooked by fears of financial contagion. Finally, the Federal Reserve signaled that it would begin tapering its bond...

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LIQUIDITY AND HOW IT AFFECTS YOUR PORTFOLIO

Liquidity refers to the ability to purchase or sell an asset without drastically changing the price. Cash is considered to be the most liquid asset as it can easily be converted into other assets. Assets traded over an exchange like Exchange Traded Funds (ETFs) and most stocks, are liquid, as they are traded frequently and with relative ease. One way to measure liquidity is through the bid-ask spread. Bid refers to the price at which a buyer is willing to buy, and an ask is the price at which a…

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SOCIAL SECURITY AND RETIREMENT PLANNING

On August 31st, the Trustees of the Social Security System released their mandated annual report to Congress on the actuarial status and financial operations of the retirement and disability income trust funds, the Medicare Hospitalization Fund (Part A), and the Medicare Supplemental Medical Insurance Fund (Parts B & D). This year’s report was the 81st since the enactment of the Social Security Act (1935), and the first since the start of the Covid-19 pandemic. Not surprisingly, the solvency term, known as the “reserve depletion date,” of the existing retirement and…

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THE FRONT LINE OF INFLATION

“We're paying more for freight than I would like to pay.” The above quote is not from the manager of a small Mom & Pop store adjusting to the new post-pandemic online reality. It is from Apple CEO Tim Cook during the company’s conference call for the quarter ending June 2021. In other words, the CEO of the largest company in the world is complaining about shipping costs. Somewhat ironically, the largest package delivery company in the US by revenue, UPS, is dealing with wage increases. CEO Carol Tome had…

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