Correction, Change of Leadership, or Something else?

The market decided not to pay attention to the job reports released last week.  All major stock markets fell with no regard to the unemployment rate dropping to 8.4%, which by far exceeded expectations.  Last month, we added 1.4 million jobs. We have now recovered 22 million jobs lost because of Covid-19.

For the week, the Dow dropped (1.73%), the S&P 500 (2.27%), the Nasdaq Composite (3.27%) and the Russell 2000 (2.70%).   International Stocks were also down around (2%).

The Barclays Aggregate Bond Index increased slightly by .15%.  Hey, the money from stock sales needs to go somewhere!!!

Stock Correction/Change of Leadership?

It’s no secret our stock market has been forecasting a quick and robust recovery from the pandemic.  Many technology stocks and other “stay at home” stocks were bid up to nose bleed levels.  Tesla, for example, hit a post stock split high of 502.49/share.  This morning, in the pre-markets as I’m typing, Tesla is trading around $360/share.  That’s an approximate 28% pullback in 3 days.  Has Tesla’s true value lost 28% in 3 days, or perhaps the stock rising to 500 was overly optimistic?

Stock market corrections are normal and periodic.  They can bring companies values back to what makes sense, and is reasonable.  After seeing how quickly the markets moved higher, additional selling pressure should be expected.  Will this turn out to be a true correction?  As always, time will tell.  This could happen quickly! Often times during a correction, stocks that lagged on the way up become the new leaders.

The “value” side of investing has been deeply in the red, even after the recent run-up.  There are some signs that value may actually lead, or at least market perform, after the pullback.  These sectors and stocks should certainly benefit from the continuing improvement and re-opening of our economy.  So far in September, value is showing out-performance compared to growth, as value is flat to slightly down for the month with growth stocks down between 3.5% and 4%.

I’ve held the philosophy for many years that attempting to predict the leaders is nothing better than an educated guess.  The stock portion of portfolios, especially retirement, should be evenly invested between growth and value.  This has proven to be valuable for many years because no matter what is leading, you’ll be participating.

Social Security Checks/Benefits

I’m frequently asked, what day of the month will I receive my Social Security retirement checks?

  • If you were born between the 1st and 10th of the month, you’ll receive your check the 2nd Wednesday of the month.
  • If you were born between the 11th and 20th of the month, you’ll receive your check the 3rd Wednesday of the month.
  • If you were born between the 21st and 30th of the month, you’ll receive your check the 4th Wednesday of the month.

For a handy calendar chart of when Social Security benefits are paid, please click here. 

The largest check from a worker retiring at their full retirement age in 2020 is over $3000/month.  Not bad!

Your Social Security Claiming decision will be extremely important for your retirement.  It’s a good idea to have an understanding of how your benefits are actually calculated.  For your convenience, here is a short 90 second video that will provide the details:

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