If you have been tuned-in to the financial press recently, you will have noticed a great deal of attention surrounding the concept of an inverted yield curve.  Why all the excitement and alarm?  While the topic can be quite complex, here is a quick primer. The Yield Curve:  This is an important metric to economists.  It is a simple graph that plots the yields of U.S. Treasury obligations of all different maturities.  Remember, Treasuries (bills, notes and bonds) are debt instruments issued by the US Government; it’s how they borrow money.  The Treasury’s “maturity” describes how long before the bond is repaid and ranges from 1 month to 30 years.  The vertical axis of the graph measures the % yield paid by the bond.  The horizontal axis measures the length of all the maturities. Normal Yield Curve:  Under normal conditions, the curve created by plotting the points on the graph is upward sloping.  It indicates that interest rates increase with each longer maturity.  At the most basic...

The former World Series of Poker champion, and now corporate consultant, Annie Duke, has written a wonderful book on decision making titled “Thinking in Bets, Making Smarter Decisions When You Don’t Have All The Facts.” The book opens with a story that many football fans have said is the worst play call in Super Bowl history. For those that may not remember, the Seattle Seahawks were down by 4 points with 26 seconds left in the game with the ball on the one-yard line. The head coach of the Seattle Seahawks, Pete Carroll, called a pass play instead of handing off the ball to one of the best running backs in the NFL. The pass was intercepted and the New England Patriots won the Super Bowl. When the details of the situation are clearly discussed in the book -- the number of downs and time outs left, along with the fact that not one of the sixty-six passes attempted from the one-yard line...

It appears that concern over the retirement readiness of American workers has reached a point where both Houses of Congress are poised to pass new legislation with broad bipartisan support.  The House version of the legislation is called the SECURE Act and has twenty-six individual components impacting either an employer’s ability to offer retirement benefits to its employees or an employee’s ability to save more easily and effectively for retirement.  Here is a quick summary of the more impactful provisions: Employer related: Multiple-Employer Plans (MEP’s)- Small employers are often discouraged from offering retirement plans due to the corresponding cost and administrative burden.  The SECURE Act expands on previous efforts to allow small employers to band together to form Multiple-Employer Plans thereby sharing costs and admin duties.  The act broadens and liberalizes the rules allowing small firms that do not share a common geographic area, trade, industry, or profession to join the...

The trade war with China reared its ugly head again this month as the President announced a tariff increase from 10% to 25% on $200 billion of goods while also threatening 25% tariffs on an additional $325 billion of Chinese imports.  Beijing retaliated with a threat to raise tariffs from 10% to 25% on $60 billion of U.S. goods on June 1st. Unsurprisingly, the stock market did not like this new development. The global stock market has dropped approximately 4.5% since the announcement of increased tariffs. Throughout the first quarter, the stock market rallied on news of progress towards an agreement, with an estimate at one point of a trade deal structure that was 90% done.  The U.S. claims China is trying to renegotiate aspects of the deal they previously agreed to. The bond market has subsequently rallied as the U.S. 10-year treasury yield dropped from 2.54% down to 2.32% (bond values...

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Millions of people get tax refunds every year and, according to the IRS, the average refund this year is $1,949.  Much has been said about how a large tax refund is just an interest-free loan to the government and people should adjust their withholdings to keep more of their money in their pocket. That topic has been well covered and so I won’t beat it to death any further.  But for retirees, there is another interesting angle when it comes to tax refunds.  A big tax refund may actually be costing you real money. Let me explain; the tax code is built on a system of complex calculations for different types of income.  Long-term capital gains being taxed differently than wages is just one example.  For retirees, by far the most impactful is how your Social Security is taxed.  Basically, 50% of your total Social Security benefits, plus your other income, determines...

The stock market entered its own polar vortex in December 2018 and tested the discipline of even the most seasoned investors.  December was brutal in both how much the stock market went down, but also in how relentless the decline was.  There was basically no pause button in the three-week span from December 4th to December 24th.  Take a look at the data on the S&P 500 for yourself: [caption id="attachment_7720" align="alignnone" width="255"] *data from Yahoo Finance[/caption] On top of that, the pundits came out punching with claims of the economy entering a recession and how the stock market would continue to go down dramatically.  The S&P 500 ended up losing 9.18% for the month**.  It was a dark moment and people were at their wits’ end.  Some investors inevitably bailed on their investment plans and sold all of their stocks. **according to YCharts We have always maintained, and so has the evidence, that...