The market rallies once more.

This Week In Your Wallet: The Roaring 2020s? Not So Fast

This past weekend, I absorbed the latest insights on Omicron and the jobs report, which led to a 1% dip in the S&P 500 on Friday. The jobs added in November totaled just 210,000—less than half of expectations—but the participation rate showed some signs of recovery.

As for Omicron, its implications remain unclear. Will it disrupt life again? Or, as Jeff Sommer from The New York Times questions, is it merely a temporary setback? Judging by the market's response yesterday, with the Dow climbing 650 points, optimism seems to prevail.

Looking ahead, forecasts are abundant. “Now is the season for analysts to run their models and predict where the S&P 500 will land in 2022, the closing yield of the 10-year U.S. bond, and inflation rates,” Sommer notes. Historically, these predictions are often inaccurate; the S&P 500 has outperformed last year’s predictions by 20%. From 2000 to 2020, the median forecast deviated by about 13%.

However, it’s essential to pay attention. Long-term trends generally offer more reliable guidance than short-term predictions. Currently, the outlook is rather flat, with Wall Street estimating the S&P will close at 4,825 by the end of 2022, up from Monday’s close of 4,591. Interestingly, Bank of America’s model suggests no negative returns for stocks over the next decade, a scenario not seen since before the dot-com collapse.

So, how should we respond to these predictions? (Which, again, might be inaccurate.)

  1. Rebalance your portfolio. If you’re not in a target date fund or a managed portfolio and it’s been six months since your last review, now’s the time to adjust your stock allocations back to your comfort level.
  2. Don’t attempt to outsmart the market. As you plan for 2022, keep contributing to your 401(k) and workplace retirement accounts. Capture those matching funds to boost your returns right from the start. Consider HSAs and 529 plans as well for additional benefits. If those aren’t options, set up automatic contributions to an IRA to avoid worrying about market fluctuations.
  3. When the inevitable downturn arrives—which Sommer predicts is a certainty—stay composed and stick to your strategy.

The Bitcoin Bust?

On November 10, Bitcoin peaked at $69,000, but by yesterday, it had fallen below $50,000. Is this a chance to buy, or should you hold off? Should you even be investing in crypto?

If you’re curious about these topics, here are two worthwhile reads. The first is a Wall Street Journal article highlighting the emergence of Bitcoin Investment Clubs. Unlike traditional investment clubs, these groups focus on sharing knowledge rather than pooling funds. The Black Bitcoin Billionaires Clubhouse is particularly notable as a welcoming space for people of color to ask questions.

The second article is from New York Magazine: A Normie’s Guide To Becoming A Crypto Person. It’s informative and designed for anyone wanting to understand this realm, whether you want to appear knowledgeable at social gatherings or enhance your tech skills for career advancement.

And While We’re On The Topic Of Your Social Media

New regulations now permit debt collectors to contact you through social media to request repayment. Here’s what you should know: there are some restrictions. Collectors can only reach out to a delinquent borrower seven times within a week, and they must identify themselves if they attempt to friend you online. All communication must remain private, so you can effectively cut them off by not engaging.

Moreover, as Michelle Singletary points out, this change could lead to harassment. It’s crucial to understand when a debt becomes uncollectible. If you make a payment on such a debt, you might inadvertently revive it. Read this article to familiarize yourself with the updated rules.

And, Something To Feel Good About

In closing, here’s a bright note amidst the heavier topics. A writer shares 10 Ways to Prevent Climate Change and Save Money. Enjoy!