When you see headlines about the private-equity industry or the people who run its funds and firms, you might think the news doesn’t apply to you. But private-equity firms have become important players in the U.S. economy.
Look to these cities for an affordable home
Right now the market for home buyers in the U.S. seems to be a perfect storm, with 30-year mortgage-loan rates near 8% and home prices rising because people with low-rate loans don’t want to sell.
But there are plenty of cities with median home prices that are much lower than the national median, which was $430,000 in September. Topeka, Kan., with a median home price of $250,000, topped the list of affordable cities ranked in the Fall 2023 Wall Street Journal/Realtor.com Emerging Housing Markets Index.
Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch and the Wall Street Journal are units of Dow Jones, which is also a subsidiary of News Corp.
Aarthi Swaminathan takes a look at what is going on in Topeka’s real-estate market and interviews a man who moved to Topeka, bought a house and says “life is easy” there compared with two other states where he has lived.
More housing coverage:
This index approach may be better for you than the top-heavy S&P 500
An index fund can be a good low-cost way to invest in a broad portion of the stock market, but it may not be as diversified as you expect. For example, the $382 billion SPDR S&P 500 ETF Trust
SPY
tracks the U.S. benchmark index, which is weighted by market capitalization. So far this year, SPY has returned 9.1%. Now look at how its largest 10 holdings have fared:
| Company | % of SPY | 2023 return | |
|
Apple Inc. AAPL, +0.80% |
7.1% | 29% | |
|
Microsoft Corp. MSFT, +0.59% |
7.0% | 38% | |
|
Amazon.com, Inc. AMZN, +6.83% |
3.1% | 42% | |
|
Nvidia Corp. NVDA, +0.43% |
2.9% | 176% | |
|
Alphabet Inc. Class A GOOGL, -0.09% |
2.1% | 39% | |
|
Meta Platforms Inc. Class A META, +2.91% |
1.8% | 140% | |
|
Alphabet Inc. Class C GOOG, -0.03% |
1.8% | 39% | |
|
Berkshire Hathaway Inc. Class B BRK.B, -1.32% |
1.8% | 9% | |
|
Tesla, Inc. TSLA, +0.75% |
1.6% | 67% | |
|
UnitedHealth Group Inc. UNH, -0.70% |
1.4% | 1% | |
|
Eli Lilly and Co. LLY, -1.39% |
1.3% | 57% | |
| Source: FactSet | |||
There are 11 stocks on the list, to include two share classes of Alphabet. The largest 10 companies in SPY make up nearly 32% of the portfolio, which means it isn’t very diversified, considering that it holds shares of 500 companies.
Brett Arends suggests a different low-cost approach for index-fund investors looking for more diversification.
For those in an S&P 500 index fund: The seven companies propping up the U.S. stock market are sending a bearish warning that investors should not ignore
From Mark Hulbert: Don’t give up on the 60/40 portfolio now — it has been a good insurance policy in an unpredictable stock market
Stocks for growth as the population ages
Here’s how the 11 sectors of the S&P 500
SPX
have performed this year, with dividends reinvested. The full index is at the bottom of the table.
| Sector or index | 2023 return | 2022 return | Return since end of 2021 |
| Communication Services | 34.7% | -39.9% | -19.0% |
| Information Technology | 31.6% | -28.2% | -5.5% |
| Consumer Discretionary | 16.7% | -37.0% | -26.5% |
| Energy | 1.4% | 65.7% | 68.1% |
| Industrials | 0.3% | -5.5% | -5.2% |
| Materials | -2.0% | -12.3% | -14.0% |
| Financials | -5.0% | -10.5% | -15.0% |
| Consumer Staples | -6.4% | -0.6% | -7.0% |
| Healthcare | -6.7% | -2.0% | -8.5% |
| Real Estate | -8.8% | -26.1% | -32.6% |
| Utilities | -13.1% | 1.6% | -11.7% |
| S&P 500 | 9.2% | -18.1% | -10.6% |
| Source: FactSet | |||
It might surprise you to see Communications Services at the top of the list, but this is really a tech-heavy group of companies. The index and the sectors are weighted by market capitalization. Within Communications Services, the largest companies are Google holding company Alphabet Inc.
GOOGL,
-0.09%
GOOG,
-0.03%,
Facebook holding company Meta Platforms Inc.
META,
+2.91%
and Netflix Inc.
NFLX,
-1.41%,
which have returned 39%, 140% and 37%, respectively, this year.
All the sectors except for Energy are still down from the end of 2021.
Healthcare is one of the weakest sectors this year, which sets up a contrarian play, according to Michael Brush, who suggests investors consider three biopharma stocks as long-term plays on the aging of the U.S. population.
Some fine print on required minimum distributions from retirement accounts
If you have an individual retirement account or another tax-deferred retirement account, such as a 401(k) or 403(b), eventually you must begin to make annual withdraws and pay income taxes on the amounts withdrawn, unless they are Roth accounts.
Minimum withdrawals are based on your life expectancy, but the rules are complicated and confusing. There have been two important changes to the rules over the past four years, as Brett Arends explains.
The Moneyist to the rescue
Quentin Fottrell — the Moneyist — helps readers with problems that combine money and emotion. This week he has advice for a woman whose goal is to separate financially from her husband with the least amount of expense.
More from the Moneyist:
A vocabulary lesson from Amazon
Shares of Amazon.com Inc.
AMZN,
+6.83%
were up as much as 8% Friday morning after the online retailer surprised analysts by reporting strong quarterly revenue and earnings.
Amazon CEO Andy Jassy’s new favorite word is “attenuate,” which he used in one form or another six times during the company’s earnings conference call to describe Amazon’s efforts to control costs. Analysts had a bit of fun providing their own definitions of the word, as Emily Bary reports.
More detail: Amazon’s AI talk is making Wall Street drool, but there seems to be a catch
More corporate news: This money manager has been predicting oil deals since 2019. Here’s what he sees happening after Chevron’s Hess buy.
Investing in bonds
As interest rates have risen, bond prices have fallen. This means that right now, bond yields are more attractive than they have been for decades. Beth Pinsker weighs the advantages and disadvantages of holding your own bonds, against holding those of an exchange-traded bond fund.
Related: How to tell if it is worth avoiding taxes with a municipal-bond ETF
Build income: I want to invest $100,000 in dividend-paying stocks, but my wife doesn’t. How do I convince her?
Bitcoin’s surge
Here’s a chart showing the movement of bitcoin’s
BTCUSD,
+0.04%
price in dollars over the past three years:
Bitcoin was trading at $33,950 Friday morning. That was a far cry from its peak price of $69,000 on Nov. 10, 2021. But the virtual currency was up 14% from a week earlier.
In the Distributed Ledger newsletter, Frances Yue explains bitcoin’s recent resilience but also gives a warning about the market action ahead.
Parting advice from a Wall Street veteran
Byron Wien, an investment banker who had long stints at Morgan Stanley and Blackstone, died Thursday at the age of 90. He was famous for his annual lists predicting “10 surprises” for the coming year.
Here are “Byron Wien’s 20 Life Lessons,” which are listed on Blackstone’s website.
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