Improving Our Retirement Ecosystem in the United States

In the United States federal and state regulators allow every major financial product to be offered in the marketplace. When students graduated from college prior to 1980 few of them could have conceived of the financial world they would be entering. As the retirement product offerings evolved, so did our understanding of the gaps in our system. I recently read the BPC's Commission on Retirement Security and Personal Savings report titled Securing Our Financial Future. The report states:

Workers have found themselves part of a great experiment—one that has given individuals and families far more control and responsibility for financing their own retirement, and simultaneously exposed them to greater risk. Some families are preparing appropriately, but others struggle to save for retirement while meeting competing, and often more-immediate, personal needs related to emergencies, homeownership, and education.

The commission highlights 6 areas where the US retirement system needs to improve:


Source: BPC Securing Our Financial Future

This report presents a comprehensive package of bipartisan proposals to address six key challenges:

1) Many Americans’ inability to access workplace retirement savings plans.
2) Insufficient personal savings for short-term needs, which too often leads individuals to raid their retirement savings.
3) Risk of outliving retirement savings.
4) Failure to build and use home equity to support retirement security.
5) Lack of basic knowledge about personal finance.
6) Problems with Social Security, including unsustainable finances, an outdated program structure and failure to provide adequate benefits for some retirees.

Please read the full report to learn the commission's suggestions for how to improve these areas of the retirement ecosystem in the United States. While we may not fully agree with all of the commissions' suggestions, we can all agree the current retirement ecosystem has significant gaps for many Americans that need to be addressed.

April Mid Month Sentiment Update

Sentiment on the market changed from positive for the short term (2 to 6 weeks) on April 8th to negative. We expect this sentiment indicator to fluctuate frequently as it measures the cumulative impact of multiple short term technical indicators on the S&P 500 ETF IVV. Intermediate patterns --covering 6 weeks to 9 months-- continue to read negative. Long term indicators 9 months to 2 years remain neutral. Additionally, the CNN Money Fear and Greed Index is moving closer to extreme fear, which might be a positive for long term investors. Using the calendar as a guide the market is overdue for a 5-10% correction. Fundamentally, earnings for the first quarter will ultimately drive performance over the coming months. I expect more volatility in the market over the coming months as the Trump legislative agenda flickers back and forth between perceived positive and negative impact on stocks. Wise investing my friends.

Please consult a qualified financial advisor before making any investment decisions. This blog is for educational purposes only and does NOT constitute individual investment advice.

April Market Update - Lower Expectations or Accelerating Earnings?

March 2017 was relatively uneventful for the S&P 500 (-0.04%). For the first quarter of 2017, the S&P 500 gained 5.53% --the best first quarter for the index since 2013. Overall, it was the best quarter for the market since the fourth quarter of 2015. On March 21, the S&P 500 dropped 1.2% (after the healthcare legislation failed to pass), only the second move of greater than 1% or more in either direction this quarter, the fewest such moves since 1995. Let's jump right into price, sentiment, and valuation for the market.