Retirement Data: Fidelity Plan Balances Q3 2020

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Source: Fidelity

From Fidelity's press release published on November 12, 2020:

• Retirement accounts increase slightly in Q3. The average IRA balance was $117,700, a 6% increase from last quarter and 7% higher than the average balance of $110,200 a year ago. The average 401(k) balance increased to $109,600 in Q3, a 5% increase from Q2 and up from 4% from a year ago. The average 403(b) account balance increased to $96,100, an increase of 5% from last quarter and up 9% from a year ago. 

October Market Update - Fiscal Support

S&P 500 lost 3.92% in September, finishing at 3,363.00. YTD through September 30, 2020 the S&P 500 is up 4.09%. Although the month was down, the S&P 500 gained 9.3% during Q3 2020. A snapshot of ETF asset class returns for the first three quarters of 2020 (please click on image to enlarge):

Now, let's review price, sentiment and valuation as we countdown to U.S. Election Day. Note: This will be my last monthly market update. Thank you for reading. 

September Market Update - Volatility Rising in a Stimulus Driven Market with a Presidential Election on the Horizon

 S&P 500 gained 7.01% in August, finishing at 3,500.31. YTD through August 31, 2020 the S&P 500 is up 8.34%. Volatility in markets increased for the last couple of weeks leading up to Labor Day weekend. When volatility rises in stocks, it often spreads to multiple asset classes. Investors frequently need to liquidate positions to calm their portfolio fluctuation. This situation can lead to temporary corrections in markets. How many market participants will need to press the sell button before the VIX is back below 26? Let's examine price, sentiment and valuation at the start of September.

Retirement Data: Fidelity Plan Balances Q2 2020

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Source: Fidelity

From Fidelity's press release posted August 11, 2020:

• The average IRA balance was $111,500, a 13% increase from last quarter and slightly higher than the average balance of $110,400 a year ago. The average 401(k) balance increased to $104,400 in Q2, a 14% increase from Q1 but down 2% from a year ago. The average 403(b) account balance increased to $91,100, an increase of 17% from last quarter and up 3% from a year ago.

August Market Update - Is This the Point of Maximum Complacency?

The S&P 500 gained 5.51% in July ending at 3,271.12. YTD through July 31, the S&P 500 is up 1.25%. At the end of July, U.S. market returns remain concentrated in large U.S. growth companies while many smaller U.S. companies struggle. Primary factors impacting returns in July include: 1) falling U.S. dollar and 2) a rally in the FAAMG (Facebook, Apple, Amazon, Microsoft and Google) stocks. I'll share more about market and economic perspectives after we examine price, sentiment, and valuation at the beginning of August 2020.

July Market Update - Preparing for More Challenges

The S&P 500 gained 1.84% in June ending at 3100.29. YTD through June 30, the S&P 500 is down 4.04%. Before we review price, sentiment and valuation, I'd like to highlight two quotes from a speech Vice Chair for Supervision and Chair of the Financial Stability Board at the Federal Reserve Randal K. Quarles gave at the Exchequer Club in Washington, D.C. on July 7, 2020:

"We know that the financial system will face more challenges. The corporate sector entered the crisis with high levels of debt and has necessarily borrowed more during the event. And many households are facing bleak employment prospects. The next phase will inevitably involve an increase in non-performing loans and provisions as demand falls and some borrowers fail." 

"According to the latest International Monetary Fund forecast, the global economy is projected to contract sharply by 4.9 percent in 2020, a much worse outcome than during the 2007–08 financial crisis. While some indicators suggest a rebound in activity, the path of recovery remains highly uncertain."

The high level of uncertainty over the medium term will allow the Fed to keep rates lower for longer. I'll share more thoughts on the market and economy after we review price, sentiment and valuation.

June Market Update - Temporary Euphoria

The S&P 500 gained 4.53% in May 2020, ending at 3,044.31. YTD  through May 31, the S&P 500 is down 5.77%. Financial conditions have changed considerably since the March low. Fiscal and monetary support have contributed to a spike in U.S. large cap stocks. The chart below highlights the performance of WTI crude. It provides an example, one of many, showing the volatility investors have recently experienced:

This chart  from MarketWatch shows the performance of Crude Oil WTI (NYM $/bbl) Front Month contract, updated as of June 7, 2020. Now let's review price, sentiment, and valuation for June 2020.

May Market Update - Non-Gaussian Planning

The S&P 500 gained 12.68% in April 2020, ending at 2,912.43. YTD the S&P 500 is down 9.85%. Market return data through May 1, reveals the S&P 500 is down 16.4% since its February peak. The S&P 500 had its best monthly gain since 1987. Outside of equities we see gold had its best monthly return in nearly four years. There's a lot to cover, so let's dig into price, sentiment, and valuation as we start May 2020.

Retirement Data: Fidelity Plan Balances Q1 2020

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Source: Fidelity

Fidelity Investments has over 30 million 401(k), IRA and 403(b) retirement accounts. This makes them uniquely positioned to describe the retirement savings trends of investors.

From Fidelity's press release posted April 24, 2020:

• Market downturn caused average 401(k), IRA and 403(b) balances to drop. The average 401(k) balance was $91,400, down 19% from the record high of $112,300 in Q4 2019, but still higher than Q1 2010 balance of $71,500. The average IRA balance was $98,900, a 14% decrease from last quarter but higher than the Q1 2010 balance of $66,200. The average 403(b)/tax exempt account balance was $75,700, down 19% from last quarter but still above the average balance of $50,000 in Q1 2010.

April Market Update - A Full Credit and Employment Cycle with a Pandemic

The S&P 500 lost 12.51% in March 2020, ending at 2,584.59. YTD the S&P 500 is down 20%. Looking at this chart from Business Insider is extremely important this month.

Many Americans have been conditioned to believe that virus outbreaks can be contained "over there." Geographic separation was supposed to happen this time as well. For many Americans that logic lasted until February 29 when we learned of the first COVID-19 death in the U.S. For others this lasted until March 11 when the WHO declared COVID-19 a pandemic. Maybe the "over there" thinking ended later on the eleventh when the NBA suspended their season and folks heard Tom Hanks and Rita Wilson had COVID-19. This will be a longer post than normal, so let's jump right into price, sentiment and valuation for April 2020.

European Banks - More Questions than Answers

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Source (with a more interactive graph): STOXX® Europe 600 Banks

This is a chart of the STOXX Europe 600 Banks index from January 1987 to March 2020. Curiously, in the last few days, we've seen this index hit levels it last reached in the 1987 to 1988 time period.
As European bank stocks were falling, Neil Irwin wrote an article for The NY Times on March 12, 2020 titled Something Weird Is Happening on Wall Street, and Not Just the Stock Sell-Off. He wrote in his piece:

"Underneath the headline numbers were a series of movements that don’t really make sense when lined up against one another. They amount to signs — not definitive, but worrying — that something is breaking down in the workings of the financial system, even if it’s not totally clear what that is just yet."

March Market Update - Watch the C Suite

The S&P 500 lost -8.41% in February. The spread of the coronavirus --COVID-19-- accelerated supply chain disruptions (started with tariffs), caused demand shocks in multiple industries, and in general, slowed the entire global economy during (or pulling forward) a window of economic vulnerability.  Let's dig into price, sentiment and valuation as we start March.

Retirement Data: Fidelity Plan Balances Q4 2019

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Source: Fidelity

From Fidelity's press release on February 13, 2020:

• Average 401(k), IRA and 403(b) balances increased to record levels. The average 401(k) balance rose to $112,300, a new record high and a 7% increase from last quarter’s balance of $105,200. The year-over-year average balance increased 17% from $95,600 in Q4 2018; the average IRA balance also rose to a record $115,400, a 5% increase from last quarter and 17% higher than the $98,400 balance one year ago. The average 403(b)/tax exempt account balance increased to $93,100, up 6% from last quarter and an increase of 18% from Q4 2018.

February Market Update - Novel Coronavirus

The S&P 500 lost 0.16% to start 2020. The first month of 2020 turned negative when China reported humans are suffering from the spread of the 2019 Novel Coronavirus, or 2019-nCoV. A novel coronavirus (nCoV) is a new coronavirus that has not been previously identified. It is a respiratory virus first identified in Wuhan, Hubei Province, China. To learn more about this virus and how halting its spread is impacting the economy read NY Times article, SARS Stung the Global Economy. The Coronavirus Is a Greater Menace. or BBC article, Coronavirus: The economic cost is rising in China and beyond. Bloomberg has an excellent article covering this topic, Charting the Global Economic Impact of the Coronavirus. Without further adieu, let's examine price, sentiment and valuation.

Retirement Data - Fidelity and Transamerica Retirement Updates

If you're wondering how American households are doing saving for retirement, please read two recent reports issued by Fidelity and Transamerica examining retirement preparedness in the United States. Transamerica published their findings from their 19th Annual Transamerica Retirement Survey of Workers in December 2019 and Fidelity published their Retirement Savings Assessment in January 2020.

January Market Update - Commodities Rising

The S&P 500 gained 2.86% in December. For a summary of market returns for 2019, read Visual Capitalist's post How Every Asset Class, Currency, and Sector Performed in 2019.  After dropping significantly in October 2018, commodity prices have begun turning higher.  This increase and an upturn in inflation may be substantial economic themes for the first half of 2020. As I wrote in the March Market Update of 2019, the United States has never experienced 138 months of economic expansion. Remember, this is how long it will be if this economic expansion lasts until the U.S. presidential election in November. We know what increasing inflation and slowing growth means. Yes, stagflation season in the U.S. economy. Will it last for a couple of quarters and then reverse? Now let's review price, sentiment and valuation as we start 2020. Happy New Year!