American's 401(k) Are More Tied to Stocks Than Ever
By Anne Tergesen and Hannah Erin Lang, The Wall Street Journal, 8/14/2025

MarketMinder’s View:  This article seemingly bemoans retirement investors shifting employer-sponsored retirement accounts (mainly 401(k)s) toward stocks from bonds, assuming workers’ portfolios are becoming riskier, including target-date funds, which allocate more to bonds from stocks as retirement nears. “Workers across nearly all age groups are investing record portions of their 401(k) accounts in equities. After years of relentless market gains, they are either allocating more to stocks or having it done for them by money managers. Workers in their late 30s had 88% of their 401(k)s in stocks last year, versus 82% a decade earlier, according to Vanguard Group, which examined the average stock allocations of the millions of people in the plans it administers. 401(k) investors in their early 60s had allocations to stocks of 60%, up from 57% a decade ago.” (The article mentions some specific funds, so please keep in mind MarketMinder doesn’t make any individual fund recommendations.) The problem with this implicit criticism as we see it: It makes the general presumption no worker should rationally have that much in stocks and is doing so only because markets have done well in recent years. It never really asks whether higher stock weightings are consistent with individuals’ particular situation. Maybe for some (say facing health issues, a short retirement and large medical outlays), their equity allocation is outsized relative to their overall financial needs. But is that you? Those still working may be saving for a decades-long retirement that is decades away—a super-long time horizon. Even those closer or in retirement may need their money to work for them a decade or three longer—maybe indefinitely if leaving a bequest. With a decades-long investment time horizon ahead of you, a higher stock allocation lowers your risk of outlasting your savings. Belatedly recognizing this, the industry is apparently (and sloooowly) trying to rectify the situation: “More asset managers ... have adopted higher equity allocations in their target-date funds in recent years, at least for some age groups.” And perhaps individual investors are, too. Higher 401(k) equity allocations by themselves aren’t alarming. Far from it, especially as more and more younger folks enter the workforce and adopt them. The article also includes some rather curious assertions as to why folks are doing this, like the notion Congress stepping in after 2008 and the Fed in 2020 drove swift recoveries from downturns. But that really isn’t so correct and leaves the impression government intervention is needed to end a bear market, which we fundamentally disagree with and think history would call into question.

European Q2 Corporate Profit Outlook Improves Further
By Javi West Larrañaga and Marleen Kaesebier, Reuters, 8/14/2025

MarketMinder’s View: Amid August’s dog days, Q2 earnings are ancient for stocks, which look forward around 3 to 30 months. But we bring this to you because it shows why European stocks have led globally this year. “European companies are expected to report 4.8% growth in second-quarter earnings, on average, according to LSEG I/B/E/S data. That is above the 3.1% rise analysts had expected a week ago. Market sentiment has steadily improved in recent weeks, after the European Union struck a framework deal with the United States in July and the U.S. and China extended their tariff truce for another 90 days on Monday. Following U.S. President Donald Trump’s plans for tariffs on all countries in February, second-quarter earnings expectations of STOXX 600 companies had gone from a 9.1% year-on-year increase right before the announcement to a 0.7% fall before the signing of the U.S.-EU deal.” Earnings expectations reflect prevailing sentiment—and the evolution of them here helps show you how sentiment toward European markets has evolved this year. Q2 expectations in early April proved too dour, reality turned out better than anticipated and, hence, Europe’s STOXX 600 is up a world-beating 25.5% year to date (in dollars, per FactSet).

Read all of our headlines commentary