Our Thoughts

FJY News to Know #60

As a Possible Pandemic Looms, the Temptation to Sell is Great – But Hold On

As news of the COVID-19, the latest strain of the coronavirus, puts the world under a cloud of doom and gloom – it raises the stakes for investing. Prices are always lowest after the World Health Organization announces a new universal virus threat. Many investors are tempted to sell now, and then wait until the health situation reaches critical mass and prices bottom out. Only then should they buy, reaping the rewards of more bullish signals once things stabilize. However, investors should consider the hard data of the virus: The fatality rate stands at 3% in China, while outside China, it’s below one percent. If the virus follows the path of other similar outbreaks, such as SARS (2003) and MERS (2009), the likelihood of COVID-19 becoming a pandemic is slim. To see a further breakdown and more numbers of this historical pattern, click here.

 

People Are Saving More Now — And the Results Speak for Themselves

Employees’ 401ks and IRAs have grown considerably over the past year. According to Fidelity Investments, the average 401 balance rose 17% to $112,300. The average IRA balance rose the same percentage to $115,400. However, the median is different from the average, and the top 1% of 401k savers have more than $1 million in each of their accounts, which makes for the high average. It’s no surprise that healthy markets are cited as the cause for this surge: The S&P 500 index had a phenomenal year — with a 31.5% increase. To read what other investments and sources are benefiting from this timely trend, click here.

 

New Business Travel Per Diem Rates for 2020

Keeping track of travel expenses can be a big headache. However, many companies opt for a per diem rate — instead of tracking actual costs. To this end, the IRS has created a ‘high-low method’ for the flat annual rate. Under this method, the per diem rate for all high-cost areas within the continental U.S. is $297. In some circumstances, an employer might provide lodging, paying the hotel directly. In this case, an employee will only receive reimbursement for their meals and incidental expenses. Compared to the prior per diems, the high-cost area per diem has increased $10, whereas the low-cost is up to $5. To see a list of the new high-cost cities and their states, visit this page.

 

Barclays Says the Investors That Can Take Bumpy Roads are More Ideal Than Their Fear-Based Peers

Investors have lately been backing away from stocks, opting for safe-havens such as bonds. William Hobbs, chief investment officer at Barclays Wealth Management, said, “The most common narrative in markets is what to do when the next recession comes along — own Treasurys, own gold, etc. But if the next recession is of a more normal variety, such as a stock retracement of 10% to 15% and moderate declines in unemployment, you’ll find that you have overprotected yourself — and the underperformance could actually be in the areas which you thought were giving you safety.” To read where Hobbs suggests investing today, please click here.