Planned Solutions

In this episode of the Planned Solutions Incorporated Podcast, The recent executive order creating student loan forgiveness of $10,000 or $20,000 for most student loan borrowers has created more questions than it has answered. Over time we should get more information on how this will be administered and the steps that borrowers will need to take to apply. However, there are some changes to student loan repayment programs that have been made which may impact some borrowers and allow them to better plan for their financial future. Also, Commodity prices often follow predictable patterns as supply and demand shift over time. These cycles can lead to high prices followed by low prices and then high prices again. For example, one needs to look no further than the market for avocados which surged from 2017-2019 due to increased demand. Suppliers responded by increasing production creating a glut of avocados causing prices to drop. And, The Federal Reserve’s tough talk on inflation at their Jackson Hole, WY sympo

In this episode of the Planned Solutions Incorporated Podcast, The strong rebound in stock prices over the past two months has partially been due to short sellers reversing their bets against stocks. The short interest, the number of shares borrowed and sold, reached a high in mid-June but has since declined. Often when stock prices increase short sellers will engage in panicked buying as they rush to buy shares to repay the shares that they borrowed before the share prices increase further. Also, the meme stock craze (investors buying shares of companies that are thought to be near bankruptcy based on a recommendation from internet message boards) looked like it was running out of steam this year as the share prices of recently popular meme stocks crashed. However, there appears to be a new round of get-rich-quick investors distorting stock prices with their high-risk trades And, The IRS has extended and increased the tax deduction allowed for K-12 educators who spend their own money on classroom supplies.

In this episode of the Planned Solutions Incorporated Podcast, The US stock market has rebounded from its mid-June lows rallying 13% and cutting the losses for the year in half. However, the market is now nearing a key resistance line defined by the mid-March lows and the late-May/early-June highs. Should the market fail to push through this resistance level the lows from mid-June could be revisited. On the other hand, should the market push through this level the next point of resistance is 10% higher than the current price. Also, The US economy has likely contracted for two consecutive quarters based on the first estimate for the second quarter of 2022 economic output. However, household spending has remained positive for the first two quarters showing that the consumer remains strong. Meanwhile, government spending has declined as the stimulus spending from early 2021 is compared to current spending levels. And, Investors typically want to avoid taking distributions from their investment accounts when t

In this episode of the Planned Solutions Incorporated Podcast, One of the themes of the stock market in 2022 has been the outperformance of value stocks over growth stocks. However, growth stocks have demonstrated a tendency to outperform value stacks when prices are trending upward as they have over the past six weeks. This may be a sign that growth stocks are more likely to lead market returns should the stock market recovery continue. Also, One of the themes of the stock market in 2022 has been the outperformance of value stocks over growth stocks. However, growth stocks have demonstrated a tendency to outperform value stacks when prices are trending upward as they have over the past six weeks. This may be a sign that growth stocks are more likely to lead market returns should the stock market recovery continue. And, Stock lending is now being offered to non-institutional investors as an enticement to use certain brokerage firms. Some investors are attracted to the idea of lending their stock holdings to

In this episode of the Planned Solutions Incorporated Podcast, The second-quarter earnings season, in which companies report their results for the second quarter, will be picking up steam soon. The results will likely have a significant impact on stock returns for the remainder of the year as investors assess how companies are dealing with inflation, rising interest rates, and concerns about economic growth. In addition, the number and amount of negative earnings adjustments that are taken this quarter may impact the overall earnings results as they have during past market downturns. Also, While the major stock indexes were down as much as 20% earlier this year there are several areas of the market where the losses have been much greater. The cryptocurrency area as well as technology companies that recently went public have experienced losses of 70-80% over the past nine months. However, many mainstream investors did not participate in these investments making their experience much different. And, The IRS r

In this episode of the Planned Solutions Incorporated Podcast, increasing oil prices have been a major contributor to the high inflation rates in the US. The increase in oil prices is due to a variety of factors, but the most important may be the oil investment cycle. This is the pattern of increased and decreased investment in new oil supply in response to high or low prices. The lag between when the investment is made and when oil makes it to market often results in large swings in prices as oil and gas companies have attempted, and failed, to accurately forecast market demand. Also, the mortgage markets appear to be normalizing as the low mortgage rates from the pandemic are now giving way to rates that are more in line with the long-term average. In addition, loan offers are changing their loan standards so that the lending standards are no longer loose, but rather have reverted to a more neutral stance, even as demand for mortgage loans has moderated. And, The IRS has increased the amount that businesses

In this episode of the Planned Solutions Incorporated Podcast, The S&P 500 entered bear market territory (defined as a 20% or greater decline from the previous high) in mid-June. The stock market is now very close to pricing in a recession which on average could be expected to lead to a 27% decline in stock prices. Therefore, even if the US economy were to go into a recession, the stock market may not have much further to fall. On the other hand, should the US economy avoid a recession the stock market may rally due to the current pessimistic outlook. Also, The motor vehicle industry was hit hard by the COVID pandemic. First, production decreased due to the need for social distancing. Then, supply chain issues disrupted production causing the industry to operate below the pre-COVID levels for most of 2021. However, the motor vehicles and parts production index recovered to its preCOVID levels in April which may help to alleviate price increases. And, Restricted Stock Units (RSUs)are a valuable source of em

In this episode of the Planned Solutions Incorporated Podcast, the inflation breakeven rate is derived by comparing the interest rates paid on nominal Treasury bonds to the rates paid on inflation-protected Treasure bonds. It is a way for economists to gauge the inflation expectations of investors who are investing real money in these markets, as opposed to opinion surveys, making the inflation breakeven rate a historically more accurate gauge of future inflation. Recently this indicator has been falling signaling that inflation in the US may have peaked in the near term. Also, When 529 plan funds are left over after higher education expenses have been met there are several options for account holders. These include transferring the beneficiary to the next generation, using the 529 plan funds to pay down student loan balances, or taking a nonqualified distribution from the 529 plan in which the growth in the plan may be subject to income taxes and penalties. And, Charitable Remainder Trusts (CRTs) can be a

In this episode of the Planned Solutions Incorporated Podcast, As high inflation continues to impact households and businesses, the different segments of the economy are pointing fingers at each other. Households blame government policy for overstimulating the economy last Spring, the government blames businesses for price gouging, and businesses blame households citing the low labor force participation rate that is putting upward pressure on wages. The trust is that each segment of the economy will need to do its part to bring down the rate of inflation. Also, Proponents of virtual currencies have made arguments that these assets would take on the role of other assets, such as gold. The assertion is that virtual currencies would be considered safe assets that increase in value when financial markets are in turmoil and would also serve as a good hedge against inflation. However, the large decline in the value of virtual currencies this year appears to be disproving these arguments. And, Donor Advised Fund

In this episode of the Planned Solutions Incorporated Podcast, The stock market is currently testing a key level that could impact the performance of the market over the first six months of 2022. After declining in January, and then falling further in March, the stock market is now testing its lows from March. Should the market rebound in May it may create a double bottom which could be a positive sign going forward. However, if the market declines further, dipping below the March / April lows, it could mean that another leg down will come before the market finds a bottom. Also, Series I US Government Savings Bonds are currently offering attractive interest rates. The rates on these bonds are based on the rate of inflation which is currently quite high compared to other interest rates. However, investors should understand the rules surrounding these bonds including the limits on the amount that can be purchased, required holding periods, and the income tax implications. And, In an effort to uncover untaxed