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Wrought Insights - January 22, 2022 Thumbnail

Wrought Insights - January 22, 2022

Taxes Investing News

What caught my attention over the past weeks in the world of finance covering everything from financial planning and investments to global events

In This Edition: Monthly Market Insights, Keep an Eye on Your Mailbox for a Letter From the IRS, Omicron is the Beginning of the End edition

Monthly Market Insights

The year is off to a rocky start, with a jump in 10-year Treasury yields and a swoon in tech shares pulling down stocks. The culprit? Markets believe the Fed will raise rates sooner and more aggressively than expected. That’s not the story, in our view. The sum total of expected rate hikes remains low, thanks to a historically muted Fed response to inflation. Instead, the yield spike tells us that investors are less willing to pay a safety premium for bonds – and isn’t bad news for stocks per se.

While we just experienced a top ten 3-year period return for US stocks, historically US stocks have an average rate of return of 7.3% in the twelve months following the first Fed interest rate hike. There is still over $4 trillion dollars in money market fund assets on the sidelines and stocks also typically do well in the three years following peaks in money market fund assets. 

This is a reminder to us all that we cannot time the market and that we need to stay diversified! A diversified portfolio rarely feels good but it can work in the long run.

Click to read more.

Keep an Eye on Your Mailbox for a Letter From the IRS!

Thanks to our friends at Abo and Company, LLC in Cherry Hill, NJ for reminding us that the IRS will be sending out two letters to taxpayers in January:

Letter 6419 - Advance Child Tax Credit Payments

Letter 6475 - Economic Impact (stimulus) Payment

It is important for you to retain these letters and to provide them to your tax preparer as we are told it is is an involved process to try to get this information online and entering incorrect advance child tax credit or economic impact payment amounts on your tax return will cause delays in tax return processing and the issuance of refunds.

Omicron Is the Beginning of the End

An opinion piece by Yascha Mounk for The Atlantic capture well what I was thinking and feeling too. A lot of people, friends, family (including my own) contracted COVID over the holidays and this may be the beginning of the end of the pandemic as a social phenomenon.

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