Below is the usual weekly summation, the main positive that Q2 Big Tech continues to do very well and consumer spending is again on the rise, the critical factor that saved the economy from pre-pandemic recession. The big negative continues to be the pandemic with the death count now surpassing the 150K mark and GDP falling almost 33% (annualized) in Q2, the worst in history. For the bonus this week, I will take us all back to basics with an article published by AAII on Thursday providing a very good summary of all the different kinds of investment accounts and their various pros and cons. We finally had that storm that broke the heat and have had a perfectly delightful Sunday. Hoping for more of the same during the coming week.

Succinct Summations for 7.31.20

July 31, 2020 5:30pm by Barry Ritholtz

Succinct Summations for the week ending July 31st, 2020:

Positives:

1. Earnings from Big Tech Companies continue to impress, as markets power higher for the week.
2. Consumer spending rose 5.6% m/o/m.
3. Pending home sales rose 16.6% m/o/m, above expectations.
4. Durable goods orders rose 7.3% m/o/m, above expectations.
5. International trade in goods deficit narrowed to $-70.6B in June.
6. Retail inventories fell 2.6% m/o/m.

Negatives:

1. US Death count surpasses 150,000, as California, Florida and Texas vault past New York for the dubious distinction of having the most cases per state.
2. US GDP fell 32.9% in Q2, worst in US History.
3. Jobless claims came in at 1.434M for the week, above expectations.
4. Home mortgage apps fell 2.0% w/o/w.
5. Consumer confidence came in at 92.6 for July, below expectations.
6. Wholesale inventories fell 2.0% m/o/m, below expectations.

7-30-20 AAII : Account Inventory

AAII Investor Update
THURSDAY, JULY 30, 2020

Dear Member,

Our newest worksheet for The AAII Way is an inventory of your savings and investment accounts. It’s a document we think everyone should have. Considering it in the context of an overall investment policy statement will help you to understand why it’s being included in The AAII Way.

If you consider yourself to be an index investor or someone who is focused on costs, the list can be a prompt to take a look at what you’re paying in fees and costs. From the standpoint of ensuring your allocations are in line with your tolerance for risk and/or doing your periodic review, the account inventory serves as a useful checklist to ensure that you haven’t overlooked anything. From an estate-planning standpoint, an inventory of your accounts serves multiple purposes. It makes it easier for someone you trust to step in when you are no longer able to manage your own assets. It prompts you to review your beneficiary information. And it helps your heirs to settle your estate. On top of all this, you can find opportunities to consolidate and reduce the number of accounts you have.

There is certainly a lot of ground to cover. As we further develop The AAII Way, you’ll see some of these topics covered in more detail. Today, we’re going compare and contrast the types of investment accounts. It ties into the conversation of where you should hold certain investments (asset location) and helps you think about what constraints you may have, which plays into the rules you need to establish for managing your portfolio.

More on AAII.com

Do’s and Don’ts of IRA Investing – This 2010 AAII Journal article explains what type of investments could prove to be problematic if held in an IRA.

IRA Rollover Chart: Rules Regarding Rollovers and Conversions – A helpful chart showing what types of retirement accounts can be rolled over or converted into another type of retirement account.

Highlights from this month's AAII Journal

Inherited IRA Rules Before and After the SECURE Act – We compare and contrast the rules governing inherited IRAs before and after the SECURE Act and the CARES Act went into effect.

Supreme Court: Pension Participants Lack Standing to Sue – In a 5–4 ruling, the high court ruled that participants cannot claim injury because of the bad investment decisions made by the plan’s fiduciaries.

AAII Sentiment Survey

This week’s bullish sentiment reading ranks among the 40 lowest out of the more than 1,700 weekly readings recorded over the survey’s history. Plus, this week’s special question asked AAII members for their thoughts on the Nasdaq composite’s record highs. More about this week’s results.

This week’s results:

Bullish: 20.2%, down 5.8 points
Neutral: 31.3%, up 4.2 points
Bearish: 48.5%, up 1.6 points

Historical averages:

Bullish: 38.5%
Neutral: 31.0%
Bearish: 30.5%

Take the Sentiment Survey.

What’s Trending on AAII

The Week Ahead

On Wednesday, I will be joining a special Alliance for Investor Education (AIE) panel to discuss how investors can stay the course in the current market environment. Click here to register for this webinar, which will take place on Wednesday, August 5, at 7:30 p.m. CDT.

Second-quarter earnings season will remain in full stride, with 127 members of the S&P 500 reporting. Included in this group will be Dow Jones industrial average component Walt Disney Co. (DIS) on Tuesday.

On Monday, the Institute for Supply Management’s (ISM) July manufacturing index, the IHS Markit Purchasing Managers’ Manufacturing Index (PMI) index and June construction spending will be released. On Tuesday, the Bureau of Economic Analysis will report motor vehicle sales for the month of July and the U.S. Census Bureau will report factory orders for the month of June. The July ADP employment report, the July ISM non-manufacturing index and June international trade report will be released Wednesday. On Friday, the U.S. Bureau of Labor Statistics will release the July jobs data, including the changes in nonfarm payrolls and the unemployment rate.

Local Chapter Meetings

AAII Local Chapter meetings offer a variety of presentations from expert speakers who give you their view on the world of investing. Currently, due to the coronavirus pandemic, all Local Chapter in-person programming has been suspended. However, many chapters are hard at work converting their planned events to webinars, which all AAII members are invited to attend regardless of their geographic location. Visit the Local Chapters webpage at AAII.com for a complete list of upcoming webinars.

Upcoming Meetings »

Wishing you prosperity,

Charles Rotblut, CFA
AAII Journal Editor