Daily Commentary

MarketMinder’s View: As this article mentions some specific stocks, please note MarketMinder doesn’t make individual security recommendations. We are here for the broader theme only: personal finance education for fun and profit—the earlier, the better! We are big believers in learning by doing, and with investing, there is nothing like concrete experience to bring key financial principles home. So how to start with your kids? Some joint brokerage accounts allow both parents and teens “the ability to place trades and withdraw money. The parents, however, get notified through the app whenever their child tries to make a trade or withdrawal, giving them a chance to stop the transaction.” They may also offer educational modules to help teach young investors the ropes. The more familiar they are with financial fundamentals and the basics of sound investing, the likelier they can build a foundation for future success!

MarketMinder’s View: Many fret Social Security’s solvency, but as we wrote recently, fixing it needn’t be onerous (it just isn’t politically expedient). It also needn’t be partisan, as the 1983 reforms discussed here demonstrate, which reminds us we favor no politician nor any party—we are here for the policies, not the personalities involved. As the article points out, “So long as the Social Security system runs on a pay-as-you-go basis with no real investments to support benefits, it will never be solvent on a long-term basis. The Roosevelt administration could have invested the portion of annual Social Security taxes not required to fund the small early-year benefits in a trust fund that was owned by the people who paid Social Security taxes. Had the government adopted such a system from the beginning, investing 70% in a broad-based stock portfolio like the modern S&P 500 and 30% in investment-grade private bonds, the trust fund in 1977 would have held $209 billion in real assets rather than $36 billion of government IOUs. Had the surpluses generated by the bipartisan reforms of 1983 been invested in a similar investment mix, the Social Security trust fund would have $14.1 trillion in real assets today rather than a government IOU for $2.6 trillion.” Now, coulda-woulda-shoulda hypotheticals aren’t testable hypotheses (though that aforementioned example underscores the power of compound interest). But as the rest of the piece details, there are plenty of ways for Congress to patch Social Security funding—the historical examples shared here show how (e.g., raising the full retirement age from 65 to 67 gradually starting in 1983). The insolvency of this “third rail” is an attention-sucking wedge issue, convenient for raising campaign contributions, but it isn’t the threat to retirement benefits many presume it to be.

MarketMinder’s View: This is a very silly debate. Look, we get the historical tendency to use letters like L, V or W to depict economic growth’s trajectory during and shortly after recessions. Those make at least some sense from the perspective that they reflect how a graph of GDP or markets (or some other econometric) may look during and after the downturn (although we would note here that L-shaped recoveries have never occurred in a broad, diverse market or economy). But no, this is building on the recent, nonsensical “K-shaped” economy narrative that argues the wealthy are enjoying booming growth while everyone else slumps. Data never supported that (and don’t in the scant evidence provided here), as both high-, middle- and low-income households have seen consumption rise, just at different rates. Now Treasury Secretary Scott Bessent and others (reminder: we favor no politician nor any political party) want to say that is over and the economy is a C-shape, where low-income households are on the rise and high earners are cooling. Others say it is an E-shape, where spending is stratified. That seems most accurate but really isn’t telling you anything new. There have always been gaps in economic experience by income group or wealth category, and they will never fully converge. Some people, sadly, will always struggle and live paycheck-to-paycheck. We don’t think you need a letter to paint this picture. Lastly, none of this (or the included discussion of consumer sentiment) tells you anything useful about the current economic expansion or bull market. Wealth inequality trends aren’t cyclical indicators. They are sociology. Stocks don’t do sociology, so this shouldn’t factor into your investment decisions.