‘Sell in May and
Go Away’ is a trading maxim which, according to Investopedia, encourages an
investor to “sells his or her stock holdings in May and get back into the
equity market in November...” Traders who adhere to that adage may be pondering
averages and exceptions right now. During the first two weeks of the month, the
Dow Jones Industrials Average, the Standard & Poor’s 500, and the Russell
2000 Indices all reached new highs. The Dow passed 15,000, the S&P reached 1,600,
and the Russell 2000 hit 968.
Bulls are in the
majority among investors, although there is some bearish sentiment, according
to the Bull and Bear Wise Index. Investors’ changing expectations are reflected
in CNNMoney’s Fear & Greed Index which showed investor sentiment has shifted
from ‘fear’ one year ago to ‘extreme greed’ last week. The premise of the
index, which measures seven indicators, is investors are driven by two
emotions: fear and greed. When investors are fearful, stock markets may fall
more than they should; when investors are greedy, markets may be pushed higher
than they should be.
Investors’
inclination toward stocks may be one of the reasons for declines in the value
of gold and commodities last week.
Although
there was little of it, economic news generally was positive last week. The U.S.
Labor Department announced the number of Americans filing initial claims for
jobless benefits dropped unexpectedly. Approximately 323,000 people filed for
unemployment benefits which was about the same number that filed each week
before the recession started in December 2007. According to Bloomberg, investors
took the news as a sign the U.S. economy is improving which helped push yields
on 10-year Treasuries higher.
Perceived
economic strength in the U.S. caused the U.S. dollar to gain against many of
the 16 major world currencies last week, as well as the 24 emerging countries’
currencies tracked by Bloomberg.com.
Where will you
live during
RETIREMENT? As
with many of life’s important questions, the answer depends on you and,
possibly, your partner or spouse. Before you make a decision and decide to
retire to wherever your grandchildren live (or in your favorite vacation spot) you
might want to take a moment and consider the tax implications of your decision.
If your grandchildren
live in Alaska, Nevada, Wyoming, Mississippi, or Georgia, you’re probably okay.
Each year, Kiplinger.com reviews the tax rules of each of the 50 states, giving
special consideration to states which offer attractive tax incentives to retirees
and then provides a list of those states it deems most tax-friendly for
retirees. For 2012, Kiplinger reported the five states listed above were the
most tax-friendly. According to the article,
“All of these tax
havens exempt Social Security benefits from taxation (and some impose no state
income tax at all). Many of them exclude government and military pensions from
income taxes, and some exempt private pensions, too. A few offer blanket
exclusions up to a specific dollar amount of retirement income from a wide
variety of sources, which is important if you depend on distributions from IRAs
and 401(k) plans rather than traditional pensions. Review all of your sources
of income before you decide which state may be the best fit for your retirement
home.”
Kiplinger.com reported the least tax-friendly states
included Connecticut, Vermont, Rhode Island, Montana, and Minnesota, which have
one or more of the following:
·
Estate
or inheritance taxes
·
High
property taxes
·
No
tax breaks on Social Security benefits
·
No
special treatment for various types of retirement income
Source: Kiplinger.com
No matter where
you decide to settle, it’s important to evaluate all of the factors which may
affect your income during retirement.
Weekly Focus – Think
About It
“Every
saint has a past and every sinner has a future.”
--Oscar Wilde, Irish writer and poet
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