BY JULIA ANDERSON
I’ve been taking stock of my stocks, this week.
It’s a good idea to regularly check in on what’s doing well and what might need attention inside a Rollover IRA portfolio. I take this seriously since this is money I plan to live on the rest of my life.
In general, I’m happy. It has been good to be in the U.S. stock market in 2019. In fact, the bull market of the past 10 years has been a good place to be.
This year, my portfolio mostly had winners, a few laggards and only one loser.
More than half of my invested money is in three mutual funds with low management fees (the industry calls a fee an “expense ratio” because they are charged as a percentage of the fund’s total holding.)
Year-to-date, these three funds --- an S&P 500 Index Fund, a “contra” fund heavy with tech stocks and a telecom and utilities fund are up, respectively, in share value 18 percent, 26 percent and 27 percent. I dare most stock pickers to beat this performance tied to the strong U.S. economy with low inflation, low loan interest rates and near record low unemployment.
In addition to mutual funds, I own shares in publicly traded corporations.
Among individual stock winners over the past 52 weeks in 2019 were:
Microsoft, up 37 percent in share value at $151 a share.
Raytheon, up 25 percent at $217.
Intel, up 21 percent at $58.
The 52-week laggards:
U.S. Bank, up only 11 percent in share value at $60.
IBM, up 10.6 percent at $134.
GlaxoSmithkline, up 10.5 percent at $46.
Johnson & Johnson, down 5.73 percent in share value in the past 52 weeks, thanks to ongoing legal challenges related to its suspect baby powder and the oxycontin addiction crisis.
While the pharmaceutical sector in general has under-performed the market -- up only 15 percent this year -- Johnson&Johnson, formerly a staple of any investment portfolio with a good dividend and a great share price track record has taken a hit. Neither of the issues it faces are going away any time soon. At $137 a share, J&J is down from a high of $148.99 and could go lower.
The 2020 forecast?
Interest rates set by the Federal Reserve Bank are unlikely to change much as we head into a Presidential election year. That’s good news for businesses, consumer spending and the economy.
If employment remains strong, the home-building industry picks up steam and Americans keep spending, we are in good shape for another positive market year. Wall Street Journal analysts agree.
Weakness in the financial sector (especially regional banks) will likely continue. Pharmaceuticals look vulnerable. Retailing is being disrupted by online shopping.
But so far so good for me. Thanks to the robust U.S. economic recovery since the Great Recession, the average annual return on my Rollover IRA over the past nine years has been 12.1 percent.
By the way, except for the Required Minimum Distributions that the IRS says I must now withdraw from my Rollover IRA, I am REINVESTING ALL quarterly dividend money back into the purchase of more shares in the funds and stocks that I own. I see no reason to get conservative. If you don't believe me that this is a good idea, visit www.rebalance360.com.
Cash loses money because inflation means cash buys less in a few years as the cost of living goes up.
Getting to retirement is one thing but managing my nest egg in retirement is another. I keep reminding myself to stay the course, take the long view and avoid emotional reaction to day-to-day news or market gyrations.
The U.S. economy looks solid. Free market capitalism and the rule of law continue to govern our financial markets. I’m sticking with my ALL-IN stock investment strategy. There’s nowhere else to go if you want to stay ahead of inflation and keep earning money with your money.
(I do keep some cash (12 months’ worth) on hand to pay bills in case there’s a downturn. I don’t want to have to sell stock when share prices are in recession.)
Historical track record
Since, 1926 the average annual return of the S&P 500 (the performance of the 500 largest U.S. companies) has been approximately 10 percent. That’s EVERY YEAR no matter whether Democrats or Republicans are in charge in Washington. (Investopidia)
Meanwhile, Gallup research shows that 55 percent of Americans report that they own stocks either individually or through a mutual fund or a retirement 401(k) or IRA account. That unfortunately is down from the 62 percent stock ownership prior to the 2007-2009 recession.
I feel badly for people (especially women) who bailed out of markets during the recession and never got back in. They’ve missed an opportunity to avoid poverty in their old age.
Banks, investment firms and tax accountants all must do more to help Americans understand the miracle of the U.S. economy, our markets and the powerful financial reward from reinvesting quarterly dividends that over time build wealth.
I meet women all the time who face job and money transitions and who want to do them right. It’s about building confidence and taking charge of the future. This is your money. No one cares more than you do!
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