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Why the Dow is the Kardashian of Stock Indices

The Dow Jones Industrial Average is famous for being famous. As one advisor noted in a recent blog post "the Dow is ingrained in our subconsciousness as the premier benchmark for US stocks, which doesn't make any sense if you understand how the index works."

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Predicting How the Stock Market Will Perform Next Week

A headline touting how the stock market will perform in a week's time should be ignored as nonsensical. Anything can happen in a week. A month is equally unpredictable. But prognostications about the stock market for the upcoming year appeal to many people as worthy of consideration.

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A Unique Buying Opportunity: I Bonds

Low interest rates have reduced the attractiveness of fixed income investments, especially with the recent spike in inflation. But rising inflation has made I Bonds appealing, at least for the next few months -- they are paying 7.12% on an annualized basis!

I Bonds are U.S. government savings bonds that earn a composite of a fixed interest rate and an inflation rate. While currently the fixed rate is zero, the inflation rate is 3.56%. The inflation rate, however, resets every six months. Your rate of return will thus vary over time, dropping if inflation dissipates.

To learn more, see the following links from TreasuryDirect:

please note that you cannot buy I Bonds through your brokerage account (like Schwab). You need to purchase them directly from the U.S. Treasury. I Bonds must be held at least 12 months and penalties exist for withdrawals prior to five years. There are limits to how much you can purchase -- $10,000 per person, per calendar year (with additional opportunities in specified situations). The links above tell the whole story. I'm also happy to be a resource.

Words of Wisdom

Bargain ... anything a customer thinks the store is losing money on. -- Kin Hubbard

How Technological Advances Impact Inflation as Measured by CPI

In 1973, my family got its first color television -- a 19" Zenith -- for around $300. The picture was small, the color a bit faded, and there was no remote control. Now you can buy a 42" HD Smart TV for $250. Not only has the price declined, but the quality has significantly improved.

The somewhat controversial Consumer Price Index (CPI) considers two factors in determining the changes in the cost of goods and services. The simple part is the change in price. The cost of a haircut, for example, has risen over time (offset, of course, by a growth in wages). This is fairly easy to track.

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