My first ride on a rollercoaster came when I was about 10 or 11 years old. It certainly got my attention but, compared to todays standard rollercoaster, my ride was more like a gentle walk in the park by Gramma and Grampa. This week, the equity markets certainly gave us a wild ride by any stretch of the imagination. We are now in what is called correction territory (-10%) and, no matter what your opinion is as to why it happened, you can find some talking head to support your theory. The article about the stock market plunge is a good summary of what’s right about the economy and, also about what’s causing some of the problems contributing to this last week’s volatility and drop in equity prices.
My personal opinion is that there could be more volatility in the weeks ahead as the economy adjust to the reality that the days of easy money are ending, and interest rates will settle on actual market interest rates rather than the low artificial interest rates that the Federal Reserve has promoted since the beginning days of the Great Recession. One thing I was certainly glad about this week were the insurance puts that are included in our investment accounts. Had the market really dropped fast (-25% or more), while it’s not guaranteed, these accounts are designed to recapture most if not all the losses incurred with such a sudden drop.
It’s early in the year but many of us are now subject to what is called a “Required Minimum Distribution”, RMDs, that must be taken from our IRAs and other such retirement accounts. As the article about 60% of retirees making a costly mistake, if it’s not done, the penalties are severe.
With the winter Olympics now going on in South Korea, I thought it would be nice to pay a tribute to what a sacrifice some of the athletes pay when working toward their goals of performing in a once-in-a-lifetime event. Hope you enjoy the article. Have a super week and you might want to make sure your seatbelt is buckled.