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By Michael E. Russell

Michael E. Russell

What we do know is that often, history repeats itself. We tell our children that they need to learn from their mistakes.  However, we never seem to follow our own advice. So where are we?

Trying to get a handle on how to manage our investments is proving to be difficult at best. The stock market is following every comment by Federal Reserve Chairman Jerome Powell, hoping for a guiding light. 

This past Friday, stocks dropped after a strong opening despite a solid August payroll report. The report showed solid job growth, increasing labor force participation and slowing hourly wage increases. Perhaps this shows that inflation may have peaked. The report was positive enough to unlikely change monetary policy. In spite of this the S & P 500 Index still fell 1.1% with the Nasdaq Composite down 1.3%. This capped an awful August in which the S&P 500 fell more than 4%. That followed July’s 9% gain, the market’s most solid month in more than two years.

Okay folks, the lesson for today is which month to believe. Is this the start of a new bull market or is it a bear market rally?

Let’s talk about a sector of the market that is extremely perplexing. Social media is probably the most influential innovation of the 21st century. Think about this. In 2022, if an event does not appear on a social feed, it never really happened! Most of Wall Street has been blind-sided by social media’s troubles. With every passing year, digital advertising is near a point where the market is saturated.

Case in point: Facebook. This stock, under its new name Meta, traded at $175 during 2017. This past Friday, it closed at $160. Over the past five years it traded as high as $380. As we have learned this past year, market realities eventually trump technology.  (Note:  trump with a small ‘t’).

I have not spoken about Crypto in a few weeks, so here are some thoughts. If Bitcoin is crypto’s answer to gold, Ethereum is the closest thing it has to its own internet.  For example, any person who wants to mint a new token or spend $150,000 on a Bored Ape non-fungible token, or NFT, probably uses the Ethereum network.

As of today, more than $3 billion in transaction volume flows through Ethereum daily. About $60 billion in crypto assets sit on its blockchain through third-party apps.  Other than Bitcoin, there is no network that is more critical to crypto’s infrastructure going forward.

A stock I have owned, Nvidia, has been a casualty of a slowdown in hardware purchases. Recently, on the company’s last earnings call, it was stated that the stock has suffered from a slowdown in gaming and other core areas. It was also stated it could not predict how reduced crypto mining might hit demand for its products. 

All of this new technology is growing way too fast for me. I am still having trouble learning all of the features on my iPhone. 

With school classes resuming and the holidays fast approaching, here are thoughts on some retailing stocks. Target (tgt) looks to be a cheaper stock based on its P/E ratio than Walmart (wmt). There is a potential for 20% upside from its Friday close of $164.  It trades at less than 16X earnings, while Walmart trades at 22X earnings — a 33% discount. 

On the interest rate front, it looks like Chairman Powell will be calling for two more rate increases of 50 to 75 basis points each. Banks will be charging more for car, personal, business and mortgage loans, while paying little if any interest on your savings accounts. Hmm, not fair!!

Just a thought …With the President’s new plan on school loan forgiveness, would it not be a good idea to convert your 30-year mortgage to a school loan? Probably not legal, also just kidding! On a closing note, I just cannot wait for the IRS to put the 87,000 new inspectors to work. Have a great September.

Michael E. Russell retired after 40 years working for various Wall Street firms. All recommendations being made here are not guaranteed and may incur a loss of principal. The opinions and investment recommendations expressed in the column are the author’s own. TBR News Media does not endorse any specific investment advice and urges investors to consult with their financial advisor. 

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By Michael Christodoulou

Michael Christodoulou
Michael Christodoulou

As an investor, you can easily feel frustrated to see short-term drops in your investment statements. But while you cannot control the market, you may find it helpful to review the factors you can control.

Many forces affect the financial markets, including geopolitical events, corporate profits and interest rate movements — forces beyond the control of most individual investors. In any case, it’s important to focus on the things you can control, such as the following:

Your ability to define your goals: One area in which you have total control is your ability to define your goals. Like most people, you probably have short-term goals  — such as saving for a new car or a dream vacation — and long-term ones, such as a comfortable retirement. Once you identify your goals and estimate how much they will cost, you can create an investment strategy to help achieve them. Over time, some of your personal circumstances will likely change, so you’ll want to review your time horizon and risk tolerance on a regular basis, adjusting your strategy when appropriate. And the same is true for your goals — they may evolve over time, requiring new responses from you in how you invest.

Your response to market downturns: When the market drops and the value of your investments declines, you might be tempted to take immediate action in an effort to stop the losses. This is understandable.  After all, your investment results can have a big impact on your future. However, acting hastily could work against you. For example, you could sell investments that still have solid fundamentals and are still appropriate for your needs. If you can avoid decisions based on short-term events, you may help yourself in the long run.

Your commitment to investing: The financial markets are almost always in flux, and their movements are hard to predict. If you can continue investing in all markets — good, bad or sideways —you will likely make much better progress toward your goals than if you periodically were to take a “time out.” Many people head to the investment sidelines when the market tumbles, only to miss out on the beginnings of the next rally. And by steadily investing, you will increase the number of shares you own in your investments. And the larger your ownership stake, the greater your opportunities for building wealth.

Your portfolio’s level of diversification: While diversification itself can’t guarantee profits or protect against all losses, it can help to greatly reduce the impact of market volatility on your portfolio. Just how you diversify your investments depends on several factors, but the general principle of maintaining a diversified portfolio should govern your approach to investing. It’s a good idea to periodically review your portfolio to ensure it’s still properly diversified.

The world will always be filled with unpredictable, uncontrollable events, and many of them will affect the financial markets to one degree or another. But within your own investment world, you always have a great deal of control — and with it, you have the power to keep moving toward all your important financial objectives.

Michael Christodoulou, ChFC®, AAMS®, CRPC®, CRPS® is a Financial Advisor for Edward Jones in Stony Brook. Member SIPC

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By Michael Christodoulou

Michael Christodoulou
Michael Christodoulou

The COVID-19 pandemic may end up changing our lives in some significant ways. To cite one example, it’s likely we’ll see a lot more people continue to work remotely, now that they’ve seen the effectiveness of tools such as videoconferencing. Education, too, may be forever changed in some ways. Perhaps just as important, though, is how many people may now think more about the future – including how they invest.

If you work with a financial professional, you may have connected with this individual over the past several months through a videoconferencing platform, rather than in person. Some people like this arrangement because it offers more scheduling flexibility and eliminates the time and effort of traveling to and from an appointment. Others, however, still prefer face-to-face contact and look forward to when such arrangements will again be practical and safe for everyone involved. But if you’re in the first group – that is, you prefer videoconferencing – you may now wish to use this communication method in the future, at least some of the time.

But beyond the physical aspects of your investing experience, you may now be looking at some changes in your investment strategy brought on, or at least suggested, by your reactions to the pandemic.

For example, many people – especially, but not exclusively, those whose employment was affected by the pandemic – found that they were coming up short in the area of liquidity. They didn’t have enough easily accessible savings to provide them with the cash they needed to meet their expenses until their employment situations stabilized. Consequently, some individuals were forced to dip into their long-term investments, such as their 401(k)s and IRAs. Generally speaking, this type of move is not ideal – these accounts are designed for retirement, so, the more you tap into them early, the less you’ll have available when you do retire. Furthermore, your withdrawals will likely be taxable, and, depending on your age, may also be subject to penalties.

If you were affected by this liquidity crunch, you can take steps now to avoid its recurrence. Your best move may be to build an emergency fund containing three to six months’ worth of living expenses, with the funds held in a separate, highly accessible account of cash or cash equivalents. Of course, given your regular expenses, it may take some time to build such an amount, but if you can commit yourself to putting away a certain amount of money each month, you will make progress. Even having a few hundred dollars in an emergency fund can help create more financial stability.

Apart from this new appreciation for short-term liquidity, though, the foundation for your overall financial future should remain essentially the same. In addition to building your emergency fund, you should still contribute what you can afford to your IRA, 401(k) and other retirement plans. If you have children you want to send to college, you might still explore college-funding vehicles such as a 529 plan. Higher education will still be expensive, even with an expansion in online learning programs.

Post-pandemic life may contain some differences, along with many similarities to life before. But it will always be a smart move to create a long-term financial strategy tailored to your individual needs, goals and risk tolerance.

Michael Christodoulou, ChFC®, AAMS®, CRPC®, CRPS®

Financial Advisor from the STONY BROOK EDWARD JONES

Edward Jones. Member SIPC.

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