Wall Street chalked up another milestone on Tuesday when the Standard and Poor’s 500 index closed above 2,000 points for the first time ever, buoyed by gains in durable goods orders and higher consumer confidence, as Reuters reports.
Those big round numbers are causing the usual buzz in the financial press — the Wall Street Journal says “The Bull Market’s Strength Is Reaching Epic Proportions,” and notes that “The S&P 500 has rallied 195% since March 2009, the fourth-best bull market since 1928 in terms of both duration and magnitude, according to Bespoke Investment Group.”
The sustained bull market is good news for investors, particularly those who stayed the course. The Investment Company Institute, an industry trade group, recently issued a release with the catchy headline “Accounts of Consistent 401(k) Participants Grew 6.8 Percent Annually During the Five Years That Included Financial Crisis.” People who did not liquidate investments, or tap them in hard times, and who continued to make contributions, now are reaping the benefit of following traditional buy-and-hold advice. Read the full ICI report here. (PDF)
No doubt many investors are enjoying their quarterly statements more these days. But one angle you might pursue is flip side of the coin: Only about half of Americans are invested in the stock market, and many don’t have any practical way to be invested. Which may explain why the roaring bull market is making so little noise on Main Street: Gallup just reported that “U.S. Investors Seem Unaware of Bull Market’s Strong Gains,” noting that its polls found low awareness and low optimism about a market which actually is in one of its brightest stretches of the past 85 years. The market apparently is out of reach of a huge segment of Americans, who already are woefully behind in savings — some 36 percent lack any sort of retirement account, according to this L.A. Times report based on a new Bankrate.com study.
With one of this year’s recurrent stories the low wages and low quality of most newly created jobs, why not talk with a cross-section of workers about what (if anything) these stock market headlines mean to them, and whether they see the stock market as a viable investment for them? You also could talk with Certified Financial Planners about when and whether households on very limited budgets should invest in stocks, and provide a step-by-step primer on opening, say, a Roth IRA with automatic contributions. (Keeping in mind the monies funneled to a Roth need not necessarily be invested in stocks).
People in your audience who feel shut out of America’s financial markets may appreciate guidance in how to participate, or alternative ideas from the pros. Sometimes, for example, the savings in tax liability can offset the first few percentage points of income they contribute to a plan, so their pocketbook won’t know the difference but the dollars will be headed to their own coffers rather than the Treasury Department’s. I don’t think that’s reported widely enough, complete with the math, to refute the notions of those who feel they can’t afford to save.
Another angle is the gender gap in retirement savings: This Wells Fargo survey says more men than women invest in 401(k) plans and at a greater rate. Talk with consumers, employer sponsors of plans, financial counselors and advisers about why this is. Here’s a Reuters story about women’s greater need for retirement security and problems in saving, too.
Another way to localize the S&P 500 milestone is to take a look at how index members in your neck of the woods have performed vis a vis the overall index and their peers. It’s a decent reason to check in with local companies about their fourth-quarter and 2015 outlook, their take on the coming mid-term elections, sentiment about Fed policy and other economic issues. Oddly I could not locate a list of S&P 500 members sortable by state, but this list in Wikipedia will serve as a starting point for you; a local brokerage firm probably can use its Bloomberg terminal to create a list for you, as well.
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