ANOTHER RECORD HIGH: DOW Reaches New All-Time High - Up Over 60% and 11,000 Points Since 2016 Election
ANOTHER RECORD HIGH: DOW Reaches New All-Time High – Up Over 60% and 11,000 Points Since 2016 Election
by Joe Hoft February 12, 2020 26 Comments
The greatest stock market rally ever in US History continues – Sets new all-time highs again today!
After President Trump was elected the stock markets exploded. The markets are a gauge of the economy and include expectations of the future. On November 8th, 2016, the DOW stood at 18,332. Since that date the DOW has soared. Today the DOW closed at 29,551 or 11,219 points higher than the day of the 2016 election!
Considering that MOST Americans don't own stocks or bonds, just who the hell is trying to convince us that the Dow or any other Stock Market influences us on a day to day basis? And a given President has very little to do with the stock market. There are so many other factors that are much more important. Viewing the most recent blunders, if anything, if you went by just those blunders, the stock market should be nose diving. Therefore, there are other factors involved. And Rump has done his level best to hurt the market. So what are those other factors?
tell me Daryl ,
where do you think your 401K Volume increases come from ?
more confidence in the Stock Market attracts more business and more jobs as well ..
are you sure you are qualified to comment at all on such matters being ignorant of these key factors ?
im interested in your perspective here
Okay, let's look at the 401K from the normal person's point of view.
Most think of the 401K as a employer matching retirement fund. It is (up to a certain amount). Your Employer will find an outside source to manage the 401K usually and you have little say in how it's managed. But what happens when you no longer work for that employer? Taxes will only be paid on the money that you take out of the 401K.
You convert it to a 401 or a Roth 401 when you lose that employer. Or you can cash it in and pay the taxes in full. Or you can elect to take out X dollars per month/annum and just pay the tax on that amount. But you are responsible for finding a money manager for the 401 or the Roth 401.
Now, let's look at where the increase comes from. In the case of the 401K, it primarily comes from the matching funds of the Employer/Employee. The actual interest rate is usually right around 2 to 3%. But since it's also tied in with the stock market (only part of it) it will go up when the stock market goes up. But it will also go down when the stock market goes down. This is by far one of the worst investments for a money manager but for an average person, out of sight, out of mind. And Money Managers just love to handle your accounts. They make money on both ends of the transactions. But it's by far one of the Safest since it's FICA insured.
For instance, a CD Bank Bond pays an average of 2.15% annually but you have to cash them in each year, pay the taxes on the income and then repurchase new bonds. And you employer doesn't match funds usually.
The Best system is a company that allows you to match fund stock in their company. The usual dividend will be right around 2 to 3% but on a good year can be as high as 25%. And who knows, the stock might split. You have to pay the taxes on your profits on a yearly basis but this is one of the highest yields. And the Company manages it. So this is another out of sight, out of mind program. Many companies will give you the choice between the Company Stocks and the 401K. The good news is, even if you leave the company, you get to keep the company stocks or you can change it to a 401 Roth.
It used to be that we invested in a Money Management Program. It paid, on a bad day, 12% and sometimes as much as 25% or more annually against a federal rate of 6%. It still exists but it's called something different today. It's where a broker would take your investment and spread it out over a large number of solid performer companies like IBM, Apple, Cat, ATT, and a few others. When one under performed, others would outperform. Even today, that's the smart way of investing and has the highest rate of return. There are some really good Money Managers that make really good livings because they are just that good and they hardly EVER take chances with your money.
Getting back to the 401K, again, the biggest rate of increase is your and your employers matching funds. What makes it safe is that, like the old Money Manager Program, it spreads out over many safe stocks and bonds. When on under performs, another will outperform to either make up for it or increase the worth. The real increase is the dividends not the increase in the Stock Market Price. And by playing it safe, and those pesky handling fees money managers charge, the dividends will usually be between 2 to 3%. Just remember, in 2008/9 when the Stock Market Crashed, the paper worth of the IRAs were less than half. You still had as much stock and the dividends were still coming in. Today, the Stock Market is a Bear Market so it looks like you have more stock. You don't have. You have exactly the same you had before except you purchased more at a much higher rate meaning your purchasing power was much lower. Believe it or not, when you are building an IRA you want the Stock Market to be as low as possible so that your dollars invested buys more. And when you get ready do cash it in, you want it to be sky high. Right now is not a good time to invest extra money into a 401K. Wait until the Stock Market goes down.
But again, the largest increase in worth of a 401K comes from the money invested by you and your employer. Stock brokers lie out their asses and so do most Financial Managers because that's how they make their money. If you have a good head on your shoulders, you can actually do a better job because you can invest without paying the Money Managers Fees that lowers the Dividend rates from 6% down to 2 or 3%.
Now, before all of you Party of the Rumpers go into your routine, how do I know this? I have a degree in Business and have worked in the Investment Program decades ago. Back in those days, we made our clients a whole lot more money, lied to them less and didn't go to prison.
by Joe Hoft February 12, 2020 26 Comments
