Bob’s Journal for 7/18

Two Alerts Issued by Social Security

The Social Security Administration (SSA) recently issued two alerts about the program.

Many people who access information about their Social Security benefits through a “my Social Security” account on the Social Security website (which I recommend doing) soon will experience changes in how they access the website.

The SSA says that anyone who created an account before September 18, 2021, soon will have to access the account in a different way.

They’ll have to access the account through either login.gov or ID.me.

These are two Credential Service Providers that many other government online services use to provide additional security and protection and simplify sign-in experiences.

If you already have an account with either of those services, you won’t need to create a new one. Otherwise, at some point in the future, you’ll have to create an account with one of those services to access your Social Security account. It’s best to create an account with those services sooner rather than later.

The other alert regards fraudulent reports you might have seen online or in emails.

The reports say that Social Security beneficiaries are due an additional $600 cost of living adjustment (COLA) during 2024 to supplement the COLA implemented at the start of the year. Some reports say beneficiaries are due to receive a $600 stimulus check.

The reports simply are false. They apparently were generated by websites that try to attract a lot of public attention to maximize their rankings in online search engines. That helps these “content farms” charge more for the ads on their websites.

The next real Social Security COLA will be announced in October and will take effect January 1, 2025.

Why Investors Have Trouble Finding Good Stocks

Many investors haven’t noticed, but you have fewer choices when looking for stocks to buy. So do your fund managers.

Over the years, the number of publicly traded companies has decreased. A publicly traded company is one whose stock is traded on a public exchange, such as the New York Stock Exchange.

A couple of factors are responsible for the reduction in tradeable stocks.

Institutional and wealthy investors prefer to invest in privately held companies, often through large private equity funds. They prefer to invest this way because data from the last few decades indicates private equity investments often achieve higher returns than publicly traded stocks and funds.

Low interest rates are another factor. Low rates made it easier and more profitable for a fund to borrow money to buy or invest in privately held companies. Low interest rates also made it attractive for larger companies to buy smaller companies.

For example, the administrators of the FT Wilshire 5000 Index used to have to decide which of the publicly traded stocks in the United States to weed out to compile an index of the 5,000 largest-capitalization stocks in the country. At times, the index had more than 5,000 securities.

Recently, the index held only 3,381 stocks, because there weren’t 5,000 publicly traded stocks that met the standards for the index.

Likewise, the Russell 3000 Index recently had only 2,667 securities.

In the United States, there are more mutual funds and ETFs that invest in stocks than they are stocks for them to own. In fact, there are about three times as many stock funds as stocks.

Fewer than 10% of the world’s publicly listed stocks are U.S.-based. In the late 1990s, more than 20% of the world’s listed companies were U.S.-based.

Some research concludes that the average publicly traded business in the United States today is less profitable and less attractive by other financial measures than in the 1990s. That’s likely because the most attractive companies have been taken off the exchanges by either private equity funds or other companies.

Is the Stock Market Rotating?

The Magnificent Seven stocks led the major stock indexes higher in recent years. But it could be that those stocks are starting to lag while investors find the rest of the market to be more attractive.

It’s still early, but recent market action is worth noting.

In the last month, the Invesco QQQ Trust (QQQ) is up 3.75%.

But the iShares Russell 2000 (IWM) is up 13.02%. That’s quite a gap, and it’s a big turnaround from recent years when the Russell 2000’s returns lagged returns of large stock indexes by historic margins.

Most of that turnaround happened in the last week. IWM is up 11.52% in the last week while QQQ is down 0.29%.

The SPDR S&P 500 Trust (SPY) is up 4.40% over the last four weeks and 1.63% in the last week.

This year, I’ve been anticipating a broadening of the bull market and a shift in the winners. It’s still too early to tell if this is a long-term shift or a temporary change. But the recent turnaround in relative returns is worth monitoring.

The Data

Retail sales were unchanged in June after rising 0.3% in May. Over 12 months, retail sales were up 2.3% through June and 2.6% through May.

After excluding gas and vehicles, retail sales rose 0.8% in June (the highest since January 2023) and 0.3% in May. Over 12 months, sales excluding vehicles and gas rose 3.8% through June.

The Consumer Price Index (CPI) declined 0.1% in June after being unchanged in May. Over 12 months, the CPI increased 3.0% through June and 3.3% through May.

The core CPI, which excludes food and energy prices, increased 0.1% in June and 0.2% in May. Over 12 months, the core CPI rose 3.3% through June and 3.4% through May.

The Producer Price Index (PPI) rose 0.2% in June after being unchanged in May. Over 12 months, the PPI rose 2.6% through June and 2.4% through May.

The core PPI increased 0.4% in June and 0.3% in May. The 12-month increase in the core PPI was 3.0% through June and 2.6% through May.

The Consumer Sentiment Index from the University of Michigan fell to 66.0 in mid-July (an eight-month low) from 68.2 at the end of June.

Both the current conditions and expectations components of the index fell. While inflationary expectations declined slightly, consumers still listed inflation as their prime concern followed by uncertainty about how the election will affect the economy.

Housing starts increased 3% in June after falling 4.6% in May. June’s increase was in apartments. Single-family home starts declined 2.2%.

Industrial production rose 0.6% in June following an increase of 0.9% in May. Over 12 months, the increases were 1.6% and 0.3%, respectively.

Manufacturing production rose 0.4% in June and 1.0% in May. Over 12 months, manufacturing production was up 1.1% through June and 0.1% through May.

The Empire State Manufacturing Index fell to 6.60 in July from 6.00 in June. The index was positive in only two of the last 12 months, September and November 2023.

The Housing Market Index from the National Association of Home Builders (NAHB) declined to 42 in July from 43 in June.

New unemployment claims declined by 17,000 to 222,000 in the latest week. That’s a five-week low.

Continuing claims, which lag a week behind new claims, decreased to 1.852 million from 1.856 million.

The Markets

The S&P 500 rose 1.63% for the week ended with Tuesday’s close. The Dow Jones Industrial Average gained 4.26%. The Russell 2000 increased 11.52%. The All-Country World Index (excluding U.S. stocks) added 2.07%. Emerging market equities advanced 1.07%.

Long-term treasuries rose 1.97% for the week. Investment-grade bonds increased 1.18%. Treasury Inflation-Protected Securities (TIPS) added 0.89%. High-yield bonds gained 1.25%.

In the currency arena, the U.S. dollar declined 0.79%.

Energy-based commodities fell 1.08%. Broader-based commodities dropped 0.98%. Gold advanced 4.48%.

Bob’s News & Updates

A recent review on amazon.com of my latest book said, “Carlson is a unique national Asset while alive! Get the book, dude!” Look for “Retirement Watch: The Essential Guide to Retiring in the 2020s” (Regnery Capital: 2023) at amazon.com, barnesandnoble.com, booksamillion.com, and Regnery.com.

My previous book, “Where’s My Money: Secrets to Getting the Most out of Your Social Security,” is receiving mostly five-star reviews on Amazon for telling you clearly what your benefit options are in different situations and how to determine the best choice for you. You can find it on amazon.com or Regnery.com.

The number of regular viewers for my Retirement Watch Spotlight Series continues to increase. You should sign up because I make in-depth presentations of key retirement finance topics. You can watch these online seminars from the comfort of your home or office at times you choose. To learn more about my new Spotlight Series, click here.

A recent five-star review of my book, “The New Rules of Retirement” on amazon.com said, “A complete retirement guide! One of the best books on this topic!” Click for more details about the revised edition of “The New Rules of Retirement.”

If you’re interested in my books, check my amazon.com author’s page.

I’m a senior contributor to the Forbes.com blog. You can view my contributor page here.