The Long Term Investor

Well I was able to buy a car today. A hybrid....our first one. My typical car.....a mid size mid level SUV. It will now become our primary car and we will pile on the miles as usual.....probably about 200,000+ miles in about 5-6 years.

 

It was a long day going to five different dealers of different brands and comparing cars. We also made a trip to CarMax and sold off the old SUV which now has 210,000 miles. it was starting to suddenly have some age related issues so I felt like now was the right time to let it go......before something happened.

When I got back about 8:00PM I saw that I ended the day today with a very SLIGHT loss for the day....all compliments of NVDA since my other seven stocks were all up for the day. I also got whooped by the SP500 by 0.91% today.

 

So here is the week in review. A generally good week for the markets.....probably worse than the general markets for my accounts.

DOW year to date +3.62%
DOW for the week (-0.45%)

SP500 year to date +14.75%
SP500 for the week +0.82%

NASDAQ 100 year to date +36.72%
NASDAQ 100 for the week +1.66%

NASDAQ year to date +29.85%
NASDAQ for the week +2.26%

RUSSELL year to date +5.25%
RUSSELL for the week (-0.31%)

Looks like I did better for my entire account this week than I thought. I am now year to date for the entire account as of the close today +32.28%. At the close last Friday I was at +31.18%. So a positive change by +1.10%. I had too much focus on NVDA this week.....a distraction.

 

HAVE A GREAT WEEKEND EVERYONE. Lets come back strong next week to celebrate the end of August and our move into September. The FED is old news now as is most of earnings. For better or worse we can now move forward from the NVDA OBSESSION.

 

For myself....since I had no clue what was said by Powell today.....being out of touch with the markets.

Fed's Powell monitoring signs US economy 'may not be cooling as expected'

https://finance.yahoo.com/news/feds...may-not-be-cooling-as-expected-171222253.html

(BOLD is my opinion OR what I consider important content)

"A resilient US consumer and better-than-expected economic growth has been the story of the economy throughout the summer of 2023.

It might also be what pushes the Federal Reserve to keep raising interest rates.

"We are attentive to signs that the economy may not be cooling as expected," Federal Reserve Chair Jerome Powell said Friday at the Jackson Hole Economic Symposium in Jackson Hole, Wyo.

"Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy," Powell added.

While acknowledging inflation has moved down from its peak, Powell once again noted that prices remain "too high" and the central bank has not written off further tightening policy. Data from the CME Group on Friday showed markets pricing in a 55% chance the Fed raises rates at its November policy meeting.

The Fed's preferred inflation metric, core PCE, showed prices increased 4.1% in June, well off the Fed's long-run goal of 2% but progress from a peak of 5.4% in February 2022.

The tick down in inflation has come as signs of a resilient US economy have been abundant.

July's retail sales report revealed control group sales, which contribute directly into GDP, rose 1%. Economists surveyed by Bloomberg had expected just a 0.5% increase for the control group.

The July labor report showed wages increased 4.4% compared to the year prior while the unemployment rate remains historically low, though overall job gains showed signs of cooling.

"Evidence that the tightness in the labor market is no longer easing could also call for a monetary policy response," Powell said.

This run of strong data has had economists on Wall Street, and even the Fed's own staff, call off their 2023 recession forecasts while also spurring conversations around a "soft landing" for the economy in which inflation stabilizes without economic growth taking a significant downturn.

Some on Wall Street are forecasting "unspectacular growth" that would see the economy avoiding recession, though not exactly impressing. Other outlooks, however, suggest more robust growth could be ahead for the US economy.

As of Thursday, the Atlanta Fed's GDPNow forecast, for instance, projected annualized GDP growth of 5.9% in the third quarter, which would be the most robust period of economic growth since the fourth quarter of 2021.

And economists say growth at that pace provides "upside risks" to inflation that could keep prices from falling down to the Fed's 2% target.

"By highlighting these [upside] risks, and noting that policymakers would proceed 'carefully,' Powell maintained maximum policy optionality for upcoming meetings," EY chief economist Gregory Daco wrote in a note on Friday.

As Powell often reiterates, the Fed plans to remain data dependent and the week ahead will bring more information on two key data points.

The July PCE report and the August labor report are both set for release in the coming week and will provide the Fed further information on the growth and inflation fronts.

But an imminent turn in the Fed's approach appears unlikely after Powell's remarks.

"It is the Fed's job to bring inflation down to our 2% goal, and we will do so," Powell said. "We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.""

MY COMMENT

Could, might, perhaps, possibly, etc, etc, etc. Nothing but weasel words that mean nothing. A typical worthless FED statement that the professionals will parse to death.

Good riddance to the FED till their next meeting September 19 & 20.

 

The PRIMARY cornerstone of my investing process is......PROBABILITY.

Investing is the Study of Human Decision Making

https://ritholtz.com/2023/08/investing-decision-making/

(BOLD is my opinion OR what I consider important content)

"Most people believe that investing is the science of generating a return on capital. That is an accurate but incomplete assessment. I believe it is more useful and comprehensive to define investing as the decision-making behavior of human beings as they interact with money: What their financial desires are, the risks they embrace, how they think about wealth, and what emotional pain they willingly suffer in order to generate that return on capital.

At its heart, investing is a problem-solving exercise, filled with opportunities that also reveal the errors we all make. If a core part of investing is the study of human behavior, then we must recognize the way human behavior manifests itself is in the way we make decisions.

To be better investors, we have to learn how to make better decisions.

The deeper you fall down this rabbit hole, the more you learn exactly how important good judgment and decision making is. It affects every aspect of your life, from who your spouse is, how successful your career may become, how good your healthcare outcomes are, and how fulfilling your relationships are. Good decision-making leads to increased happiness, greater life satisfaction, and perhaps even becoming the best person you can be.

I’m not suggesting that you have to be a great investor in order to have a good life; rather, I want you to think about the skill sets that go into investing and how transferable they are to much of what you do outside of the world of finance.

Perhaps this is why my definition of investing differs from the mainstream:

“Investing is the art of using imperfect information to make probabilistic assessments about an inherently unknowable future.”

There is a lot of nuance packed into those 17 words.

– “Art” refers to the fact that this is not a science, and there is no single optimal solutions for everybody.

– “Imperfect information” refers to the fact that the information we have is dynamic, at best incomplete, often confusing, and frequently wrong. No one can possibly know all there is to know at any given moment.

– “Probabilistic assessments” recognizes lots of outcomes are possible; we need to plan for not one but many potential future results.

– “Inherently unknowable” is a very humbling acknowledgment of how little we actually know about the future. Nearly all of the time, we do not – and cannot – know what comes next. This should be reflected in how we invest.

– “Future” demands optimism. Pessimists have been on the losing side of the trade for all of human history. Even setbacks like the dotcom implosion, the GFC and the pandemic were temporary. Pessimism is a bet against human ingenuity, and that has been a losing wager.

I’ve spent my adult life watching markets and, more importantly, how people behave when they interact with those markets.

Given the widespread adoption of behavioral economics (including three separate Nobels for Kahneman, Schiller, and Thaler) we tend to take this for granted today. It wasn’t all that long ago that BeFi was not a thing that investors took seriously.

The process by which you make decisions is worth examining. Whether we are talking about important milestones in life or your asset allocation, don’t let your decision-making default setting be “auto-pilot.”'

MY COMMENT

EVERY investing decision should be based on PROBABILITY. The process of investing.....no market timing, all in all at once......how and when to buy and sell....etc, etc, etc.....are all subjects that have been established in the academic research. Yet people routinely can NOT follow what the research proves.

In addition......it is FUNDAMENTALS......that should also drive investing behavior.....selection of holdings, when to sell, when to buy, risk, portfolio make up, etc, etc, etc.

In evaluating any investment.....you have two choices in your behavior......act according to PROBABILITY or act according to POSSIBILITY. Probability is a measured decision based on what is more likely to happen in the future. Possibility is simply guess work.

 

Obviously the point of this thread is LONG TERM INVESTING. At a minimum five to seven years is the best measure of long term. Even better......15, 20, 30, or more years.

How Long Should Your Time Horizon Be in the Stock Market?

https://awealthofcommonsense.com/2023/08/how-long-should-your-time-horizon-be-in-the-stock-market/

(BOLD is my opinion OR what I consider important content)

"A reader asks:

"I’m anticipating needing to replace both the roof on my house and a car five years from now. I would like to have $100,000 set aside for these expenses. Five years out feels like an investment no man’s land. Stocks seem to be a bit risky at that time frame, and high interest savings, while attractive now, will likely have rates dropped if the Fed drops interest rates in the future. I’ve also considered doing something like a target date fund through a robo advisor and having it manage the stock and bond allocations, decreasing risk over time. I plan to dollar cost average throughout the next five years as I have funds available to save. Do you have recommendations for how to allocate savings given this time frame? Are there other options I should consider?

If we were looking at a lump sum the answer would be pretty simple right now. Put your money into a 5 year U.S. treasury bond yielding 4.5% or so and call it a day. That’s a pretty good return with a perfect asset-liability match for the future.

The fact that you’ll be saving money periodically until you reach you goal changes the equation a bit but we can still use that 5 year time horizon to think about investing in the stock market for this kind of intermediate-term goal.

These are the rolling 5 year total returns for the S&P 500 going back to 1926:


And here’s another way of looking at these returns ranked from worst to best:


The good news is the majority of the time stocks have been up on a 5 year basis. Returns were positive on 88% of all rolling 5 year windows.1

The bad news is the range of returns from best to worst has been quite wide:

• Worst 5 year return: -61%
• Best 5 year return: +367%

To be fair, both of these 5 year windows occurred in the 1930s but even if we look at post-WWII data, there is still the potential for a wide range of outcomes:

• Worst 5 year return: -29%
• Best 5 year return: +267%

I have a relatively high tolerance for risk. But if I’m investing for a specific goal in the future and I know how much I’m going to need and when I’m going to be spending the money the stock market is too risky for me unless we’re talking 5+ years or so.

And since you’re going to be saving this money over time as you approach your end date to spend on that new roof and car the stock market is going to get even riskier. Here are the historical win rates over 1, 2, 3, 4 and 5 year time horizons for U.S. stocks:


The odds are still in your favor but the range of outcomes and the potential for loss increases the shorter your time horizon goes:


If you could just bank on those average returns2 year in and year out you would be set but the risk of seeing a loss at the exact moment you need your cash seems unappealing. It’s an unnecessary level of financial stress to add to your life.

The idea of utilizing a targetdate fund or robo-advisor makes more sense than putting all of your money into stocks because you have the ability to diversify and have some say over your risk tolerance and the timing of that goal.

The Vanguard 2030 targetdate fund is currently 65% stocks and 35% bonds. The 2025 fund is more like 60/40.

Some people have a higher appetite for risk than I do when it comes to these things but I wouldn’t overcomplicate it if I had a goal like this. Just look at the rates you could lock in on short-term Treasuries at the moment:


Could rates fall again? Sure. That’s a strong possibility in the coming years but you have the ability to lock in higher rates for longer now that the longer end of the curve is catching up.

When it comes to short-to-intermediate-term financial goals I have 3 simple rules:

1. It has to be liquid.

2. I’m not willing to accept much volatility.

3. I don’t want the possibility of large losses when I need to spend it.

You could make more money by investing your savings in riskier securities. But the downside of having less than you need when the bill comes due far outweighs any additional gains you could get by taking on more risk."

MY COMMENT

Much of the PROBABILITY in investing comes from TIME. If your stock and fund picks are rational and reasonable......time....will strongly SKEW the probabilities in your favor.

Stock market money.....at least for me....is not and should not be short term money.

 

AND.....a CRITICAL investing topic....that is based on current culture and social norms.

How 'shrink' became the biggest story in retail

https://finance.yahoo.com/news/how-shrink-became-the-biggest-story-in-retail-113229908.html

(BOLD is my opinion OR what I consider important content)

"Retail theft, or "shrink," as business executives put it, has run wild.

In waves of earnings calls, references to shrink resemble the retail industry's upside-down version of mentioning AI. But instead of generating hype, citing shrink softens the blow of sinking profits.

The most prominent mention of shrink in recent weeks came from Dick's Sporting Goods (DKS).

On a call with analysts following its Aug. 22 earnings report, CFO Navdeep Gupta said, "The biggest impact in terms of the surprise for Q2 primarily came from shrink." Gupta went on to say, "The number of incidents and the organized retail crime impact came in significantly higher than we anticipated." The company cut its full-year profit outlook in response.

The theme of missing merchandise also featured in recent calls from Dollar Tree (DLTR), Macy's (M), Home Depot (HD), and Target (TGT).

Analysts say the trend reflects a real problem for retailers, and one that they are taking steps to prevent.

"Nobody wants to come out and say, 'We are not in control,'" said David Johnston, NRF vice president of asset protection and retail operations. "To see the number of CEOs coming out and talking about shrink and loss — it's an issue."

Dollar Tree, for instance, told investors it is installing locked cases on more items and even taking some SKUs out of stores in response to elevated theft. "We are now taking a very defensive approach to shrink," Dollar Tree CEO Rick Dreiling told analysts this week.

And as executives continue to hammer on the industry-wide threat coming from shrink, the concept has gathered momentum and can work as a crutch for explaining weaker financial performance.

"There is a bandwagon effect here," said Neil Saunders, a retail analyst at GlobalData. "When one retailer starts to call something out, others will look at it. And because everyone is interested in it, that fuels more mentions of theft."

Growing 'shrink'

But data suggests that behind a new industry-wide excuse for business slowing down is an uptick in theft and increasing concerns for safety.

Retailers say that shrink amounted to $94.5 billion in 2021, according to the National Retail Federation’s (NRF) annual of survey of companies, up from $90.8 billion in 2020. As a percentage of sales, however, that figure came out to about 1.4% of sales, down from 1.6% in 2020.

Retailers also reported a 26.5% increase in organized retail crime incidents, when groups of professional shoplifters steal and resell stolen goods. While the latest figures are nearly two years old, sustained commentary from executives suggests that shrink is a growing problem for them,.

Jonathan Simon, a criminal justice professor at UC Berkeley School of Law, said businesses probably do have relatively accurate estimates of how much their inventory is shrinking due to theft. And that it's possible retail theft has increased partially because of online resale platforms, which serve as a conduit for organized theft for profit.

"But businesses also have an incentive to place more emphasis on theft as it shifts the responsibility for business shrinkage — never a good look to investors or customers — to an abstract but blameworthy factor like organized crime," he said.

The public also has a tendency to place all retail theft in the same category, he added, lumping together organized theft, survival theft by unhoused or very poor people, and teenagers and younger adults acting out by stealing. "Each of these really needs to be seen as distinct problems with distinct solutions."

Beyond the 'smash and grab'

The dramatic crime figures and sensationalized videos that have drawn broader public attention have also invited criticism that the problem might be overblown.

In a widely covered backtrack, Walgreens CFO James Kehoe said earlier this year that the pharmacy chain "cried too much" about theft on a prior earnings call that was among the first to ignite concerns about retail crime.

But retail industry experts insist this quarter's references to shrink aren't merely executives crying wolf.

Janine Stichter, a research analyst covering consumer retail and lifestyle platforms at BTIG, said citing shrink figures isn't something that you can fake for very long.

Stichter sees the timing of shrink's big moment in earnings calls, which picked up at the end of last year, as coinciding with price increases and a weaker economic environment, highlighting a link between crime and a tougher economy.

Under the strain of higher costs, consumers squeezed by inflation, and shifts in shopping habits, the industry faces a host of challenges even without the pain and risks of theft.

"Shrink is clearly an issue, but so is the tremendous volatility that the consumer and retail has experienced over the last nearly four years," said Ethan Chernofsky, senior vice president of marketing at Placer.ai, a location analytics firm.

"The pandemic presented a unique set of circumstances and just when we expected a period of normalcy as the pandemic's effects faded, a wide array of economic challenges disrupted retail 'normalcy.'"

MY COMMENT

NO....this is NOT an issue of the pandemic. This is a HUGE issue for any sort of retail business. It is an issue of out of control crime.

it is also an issue of CULTURE, SOCIETAL NORMS, POLITICS, etc, etc, etc. For those topics I refer you to non-investing sites and sources.

One thing is clear...this problem is definately impacting the bottom line for many retail companies and therefore impacting the investors in those businesses.

 

As to the above.

Nordstrom reports 'historical highs' for theft-incurred losses

https://www.foxbusiness.com/retail/nordstrom-reports-historical-highs-theft-incurred-losses

 

Another little article that I like.

For Investors, No Need to Debate 2024 Yet

https://www.fisherinvestments.com/e...tary/for-investors-no-need-to-debate-2024-yet

(BOLD is my opinion OR what I consider important content)

"The election is too far out to assess the market implications.

Editors’ Note: MarketMinder prefers neither political party nor any candidate. We assess developments for their potential economic and market impact only.

It has begun. With the first GOP primary debate in the books, we are officially off to the races for 2024’s presidential election. And we suspect that, for all those who watched with rapt attention, notepads and popcorn in hand, an equal or greater number’s reaction to the news was akin to, noooo this is still too early don’t make it start yet. To both camps, we get it. Being in tune with policy proposals is important for voters who will participate in the primary and have a choice to make. Yet these circuses are also tiring, and when they start well over a year ahead of the election, it is a lot. So here is an important reminder for everyone: For all the sociological importance of this or any national election, it is far too early for investors to start dwelling on the contest and its market impact, a practice that is fraught with bias anyway.

Not that we don’t get the temptation, what with candidates’ economic policy proposals starting to grab the spotlight. Former President Donald Trump is the prime example, with his proposed uniform 10% border tax on all imports hogging headlines globally. Some cheer the alleged benefit for American factories. Others (rightly, in our view) explain the deleterious impact of a 10% price hike—especially on the heels of 2022’s inflation—which would apply not just to final goods but to parts and resources, hitting made-in-the-USA goods hard. Those goods would also see their competition hamstrung, giving even 100% US-made goods, to the extent they exist, less reason to compete on price.

Yet going further than thinking through the pros and downstream consequences of any proposal is very much putting the cart before the horse at this juncture. Markets move on probabilities, not possibilities, and it is simply impossible to determine the likelihood of any economic policy proposal becoming law. Many of them depend on some or all of the following, in no set order: the candidate who proposes them becoming president; said candidate sticking with said proposals; said candidate having a Congressional majority; said majority not being beset by intraparty gridlock; and other issues not taking priority.

Right now, there isn’t any way to know who will win the nomination on both sides, never mind which of those final candidates will win in the Electoral College 14 and a half months from now. Congressional races haven’t even begun to take shape yet. And we have no idea how either party will coalesce around their eventual nominee. Anyone who says otherwise is just throwing spaghetti at the wall.

The time for investors to consider the election’s implications will come. But when it does, it won’t hinge on the candidates’ personalities and attitudes, and preset biases about which party is better for stocks have been classically undercut on both sides. In our view, investors need to get beyond those factors and weigh simple things, like which party has a higher probability of claiming the White House, whether they have a likelihood of a strong Congressional majority, and how those factors square with investors’ prevailing hopes and fears.

We know from history that new Republican presidents tend to fuel big hopes with market-friendly rhetoric, driving above-average election year returns, but disappoint in their first year as they prove to be just a politician, driving weaker returns in year one. We also know from history that while new Democratic presidents tend to generate the opposite—fear in the election year and relief when they, too, are just a politician with no follow through—also due to rhetoric. And we know re-elected Democrats tend not to drive this same pattern, as familiarity breeds content. But we can’t know which is more likely until the general election begins to unfold.

In the meantime, we think politics point positively. Years three and four of the presidential cycle are stronger than years one and two, with both historically delivering S&P 500 returns above the annualized average since 1925. Returns in year three tend to be front-end loaded—powered by big tailwinds from midterms increasing gridlock the prior year—but they are still typically fine overall in the year’s second half. Year four, too, tends to be positive much more often than not, with the S&P 500 delivering an average 11.4% return and rising 83.3% of the time since 1926.

So if you enjoy watching these early verbal sparring matches, go on, have your fun! And if you would much rather spend time on family, friends and hobbies and ignore the lot of them for a while longer, you have your fun too! Giving serious thought to the election’s outcome and any related potential market impact can wait till next year."

MY COMMENT

Getting all caught up in politics is a sure way to screw up your investing. I do like this statement in the article above:

"Markets move on probabilities, not possibilities,..."

This simple little statement underpins ALL investing. If an investor has the clinical focus to achieve probability based investing they will NO DOUBT be successful.

 

HERE is the open today.

Stocks open higher as inflation, jobs data looms

https://finance.yahoo.com/news/stoc...-looms-stock-market-news-today-133147832.html

(BOLD is my opinion OR what I consider important content)

"Stocks opened higher across the board on Monday as investors continued to wade through the fallout from Fed Chair Jay Powell's speech on Friday and braced for key inflation and jobs data due out this coming Thursday and Friday.

The benchmark S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) were each up about 0.5% at the open, while the tech-heavy Nasdaq Composite (^IXIC) jumped roughly 0.8%

The economic and earnings calendars are sparsely populated to start the week, with no major earnings announcements expected while the Dallas Fed's monthly manufacturing report will be the most notable economic report.

Stocks finished last week's trading mixed, with the Dow falling about 0.5% while the Nasdaq rose 2.2% after Nvidia's (NVDA) strong earnings report on Wednesday and a market rally that followed Powell's speech in Jackson Hole Friday morning."

MY COMMENT

Looks like a continuation of last Friday. The general averages and many stocks up. NVDA continues to sink....for the short term.....as it deals with the end of the earnings news mania and consolidation of all the gains of the recent time span.

In short.....NOTHING.....going on this week. We are in the final week of the summer vacation month for all the Wall Street people. After next Monday we get back to a normal fully staffed Wall Street.....and....hopefully a bit less low volume volatility.

We continue in the normal market condition that is now the norm.....with the day to day crazy market action being driven by the QUANT and COMPUTER AI trading. This will of course be the short term norm forever going forward in terms of the short term.

I avoid that CRAZY day to day volatility by continuing to be very long term.

 

A couple of......little.....good news stories for AAPL.

Apple reportedly planning major iPad Pro upgrade

https://www.cnbc.com/2023/08/28/apple-ipad-pro-major-upgrade-reportedly-coming-next-year.html

"Key Points

• Apple is planning some major updates for its iPad Pro next year, which will include a new Magic Keyboard, a shift to the M3 chip and brighter and sharper displays, according to a report from Bloomberg.
• The company’s new updates may inspire some consumers to splurge on an upgrade as demand for tablets has slumped in recent years.
• The new iPad Pro will not be announced at Apple’s upcoming launch event in September, but it will debut in the spring or summer of next year."

AND

iPhone 14 Pro Max tops global smartphone shipments as people shun budget phones for top-end devices

https://www.cnbc.com/2023/08/28/app...smartphone-shipments-globally-omdia-says.html

"Key Points

• Last year, the iPhone 13 was the bestselling device on the market, indicating consumers were still buying flagship devices but at the entry level rather than the top end.
• This year, the iPhone 14 Pro Max, the most expensive of the Cupertino, California, tech giant’s smartphone array, has taken the crown.
• It reflects a growing shift among consumers toward the more higher-end parts of the market."

MY COMMENT

Bit by bit....this sort of stuff adds up to real money. Good news for AAPL shareholders.

 

Speaking of every little bit helps.....the yield on the Ten year Treasury is down some today.

 

NOTHING to do today but let the markets settle in and wait till the close. ACTUALLY.......this is my normal day and normal year strategy. Simply do nothing and wait for the long term to do the heavy lifting.

I recently sold ALL shares of NKE in all accounts. I dont anticipate any further moves this year or next......and....hopefully far into the future.

 

This is a pretty SIGNIFICANT POSITIVE for those doing catch up contributions to 401K plans.

IRS delays change for 401(k) catch-up contributions. Here’s what higher earners need to know

https://www.cnbc.com/2023/08/28/irs...0-change-for-401k-catch-up-contributions.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• Currently, “catch-up contributions” allow savers 50 and older to funnel extra money into 401(k) and other retirement plans beyond the employee deferral limit.
• A change enacted via Secure 2.0 would have eliminated the tax break for higher earners by only allowing these deposits in after-tax Roth accounts, starting in 2024.
• However, the IRS on Friday announced a two-year delay for the change, meaning savers can still make pretax catch-up contributions through 2025, regardless of income."

Higher earners who maximize retirement savings now have more time for pretax catch-up 401(k) contributions, thanks to new IRS guidance.

Currently, “catch-up contributions” allow savers 50 and older to funnel an extra $7,500 into 401(k) plans and other retirement plans beyond the $22,500 employee deferral limit for 2023.

A change enacted via Secure 2.0 would have eliminated the up-front tax break on catch-up contributionsfor higher earners by only allowing these deposits in after-tax Roth accounts, starting in 2024.

But the IRS on Friday announced a two-year delay for the change, meaning savers can still make pretax catch-up contributions through 2025, regardless of income.

“The administrative transition period will help taxpayers transition smoothly to the new Roth catch-up requirement,” the IRS said in a statement.

The Secure 2.0 change applies to employees making catch-up deposits to 401(k), 403(b) or 457(b) plans who earned more than $145,000 from a single company the prior year.

Some 16% of eligible employees took advantage of catch-up contributions in 2022, according to a recent Vanguard report based on roughly 1,700 retirement plans.

Delay is ‘a very good thing’ for retirement plans

The delay is “a very good thing” for retirement plan administrators, said Dan Galli, a Norwell, Massachusetts-based certified financial planner and owner of Daniel J. Galli & Associates.

“There’s no way to do this right without a couple of years of preparation,” he added.

Roughly 200 organizations wrote a letter to Congress in July asking for more time to implement the 401(k) changes, and many are applauding the delay.

Retirement plan sponsors are grateful for the agency’s “critically important relief,” Diann Howland, vice president of legislative affairs for the American Benefits Council, said in a statement on Friday.

“Without this additional compliance period, a vast number of plans and employers would not have been able to comply with the new requirement and likely would have had to suspend catch-up retirement contributions,” she said.

‘Leverage the lower tax brackets’

While higher earners now have an extra two years for pre-tax catch-up 401(k) contributions, some may still consider after-tax deposits with impending income tax law changes, Galli said.

“This really coincides well with the changing tax brackets coming in 2026,” he said. Several provisions from the Tax Cuts and Jobs Act, including lower individual tax rates, will sunset after 2025 without intervention from Congress.

While pre-tax 401(k) contributions provide an upfront tax break, after-tax Roth deposits allow funds to grow and be withdrawn in retirement tax-free. And with possible tax hikes on the horizon, it may make sense for some investors to pay taxes now.

“What we’re doing with clients right now is trying to leverage the lower tax brackets for as long as we can,” Galli said."

MY COMMENT

Very good news for high income earners that are under a 401K or the other plans mentioned.

NOW.....we need our political hero's to come up with a save of the current tax brackets and now let them sunset in 2026

 

I am doing ok in the markets today. Five of eight stocks up at the moment. It is nice to see NVDA up at the moment. My DOWN stocks so far today....COST, MSFT, and AMZN.

 

WELL......looks like I will not be doing any shows for a while. I have been playing with the same FRONTMAN over the past 12 years. He is now winding things down and moving out of state.

In a way it is nice and something I have been thinking about anyway. We play nearly EVERY show outside.....and....in this heat and the winter cold those shows are brutal. I have a medical condition that is not critical....but....dehydration and heat is potentially a very bad thing for me. I am very careful.....but.....I do think about the impact of these high heat shows all summer long. I do blood work every 3-4 months to make sure I am not being impacted.

In addition....it will be nice to NOT have the income for a while....assuming I dont start back with something else. That income increases my taxes......and......the Self Employment tax that I owe for Social Security in the neighborhood of 15% is a BIG IRRITANT at tax time every year.

I do have some repairs to equipment and guitars that I need to do this year to make sure I can deduct them against the income on my taxes.

I will probably take a break for a while and not actively do much to get back out there. I have been doing this for over 55 years now....so.....a break is kind of a good thing once in a while.

 

A very nice close today. I was nicely GREEN with seven of eight stocks UP today. My lone down stock was AMZN. I also got in a beat on the SP500 by .28%.

Dow closes 200 points higher as Wall Street aims to curtail August’s decline

https://www.cnbc.com/2023/08/27/stock-market-today-live-updates-.html

(BOLD is my opinion OR what I consider important content)

"Stocks rose Monday to kick off the final trading week of August, with Wall Street looking to regain ground amid a month of losses.

The Dow Jones Industrial Average gained 213.08 points, or 0.62%, to close at 34,559.98. The S&P 500 climbed 0.63% to 4,433.31, and the Nasdaq Composite advanced 0.84% to finish the session at 13,705.13. All three indexes have lost ground in August, with the S&P 500 shedding 3.4%. The Nasdaq and Dow have slipped about 4.5% and 2.8%, respectively.



CNBC

Meta and Apple traded slightly higher, while Nvidia
added 1.8%. Shares of electric vehicle giant Tesla inched up 0.1%.

Those moves come as tech tries to regain its footing late in August. The information technology sector of the S&P 500 is down 4.6% for the month.

Outside of tech, shares of 3M popped more than 5% after a Bloomberg News report, citing sources familiar, said that the company was ready to settle lawsuits alleging some earplugs were faulty.

Monday’s rally was broad: Ten of the 11 sectors in the S&P 500 were positive. Utilities ticked lower by 0.04%.

“Today is much more of a cyclical lift versus tech, and I think that’s just from stronger-than-expected growth outside of the U.S.,” said Dylan Kremer, co-chief investment officer at Certuity. “The rally [in] tech this year has been driven by artificial intelligence but also the quality factors within tech companies. Where we are now, the growth slowdown may be pushed out, and you may see investors start to favor cyclicals over tech in the short-term.”

Stocks are coming off a winning session following fresh remarks from Federal Reserve Chair Jerome Powell. On Friday, Powell pointed to some signs of continued economic growth and strong consumer spending, but indicated that the central bank would “proceed carefully” with additional hikes.

As of Monday morning, traders were pricing a more than 20% chance that the Fed will raise rates again at its upcoming September meeting, according to CME Group’s FedWatch tool. Investors are also eyeing the Fed’s preferred inflation gauge, the personal consumption expenditures index, due out on Thursday, followed by fresh non-farm payroll data Friday morning."

MY COMMENT

If it was me in regards to the last paragraph I would say........."traders are pricing in a slightly less than 80% chance that the FED will stand firm on rates. The way this is worded in the article it sounds like someone trying to make a negative out of a positive.

With three days to go and NOTHING happening in the news this week......it is possible.....that we will significantly wipe out most of the losses for the month. Look at how we did today......and extrapolate that times three more days. There is a POSSIBILITY that August will end up as NO BIG DEAL. ACTUALLY.....as we stand right now I consider it.....NO BIG DEAL.