Weekend reads: How to invest amid higher inflation and as interest rates rise
By Philip van Doorn
Also, beautiful retirement locations for biking, retirement planning and how to prepare for a career move
This week the U.S. Bureau of Labor Statistics said the consumer price index in December had risen 7% from a year earlier, bringing inflation close to a 40-year high. There was a bit of improvement in the producer price index, with a December increase of 9.7% from a year earlier, down from 9.8% in November.
Rex Nutting breaks down the causes of inflation during 2021 while also considering whether the Federal Reserve's expected moves to raise interest rates can even work in slowing price increases.
Here's more coverage of inflation and the Federal Reserve's reaction:
How to invest in the rising-rate environment
The pandemic bull market for stocks has been driven in part by historically low interest rates. For much of 2020, the yield on 10-year U.S. Treasury notes was below the S&P 500 index's dividend yield. So even income-seeking investors were attracted to stocks, which had growth potential in addition to a competitive yield.
But investors have been anticipating a tougher time for stocks in the rising-rate environment of 2022, especially tech stocks that trade at high price-to-earnings ratios. Here are some investment ideas suited to this new environment:
What market signals really tell you
Here's how the S&P 500 index and its 11 sectors have performed this year through 10 a.m. ET on Jan. 14, in ascending order:
Index Price change -- 2022 Price change -- 2021 S&P 500 index -2.2% 26.9% Real Estate -6.4% 33.3% Health Care -4.8% 18.2% Information Technology -4.7% 27.0% Consumer Discretionary -3.9% 18.9% Utilities -3.0% 10.6% Communication Services -2.3% 17.8% Materials -2.0% 22.5% Consumer Staples -0.5% 15.0% Industrials 0.0% 19.4% Financials 4.1% 38.0% Energy 15.4% 70.5% Source: FactSet
It's easy (and possibly fun) to read into these results and predict what's in store for the rest of 2022. Mark Hulbert weighs the usefulness of the "January Barometer" is a useful measure for investors.
Where to move if you want to have fun on rail-trails
Silvia Ascarelli writes the Where Should I Retire column. This week she helps a reader who is ready to retire and move to "a small town with easy access to hiking and biking trails, kayaking and other joys of the natural world." A home-purchase budget of $200,000 makes this a tall order, but here are three possible locations.
Regardless of your budget or preferences for weather and amenities, you should try MarketWatch's retirement location tool for your own custom search. It includes data for more than 3,000 U.S. counties and incorporates climate risk.
Retirement lessons and plans
Alessandra Malito writes the Help Me Retire column, not only to help people plan big post-career moves but to help them solve problems after they have retired. This week she does something different, sharing lessons learned by a reader who retired years before she was eligible for Medicare and then suffered serious heath problems.
On a related note, Richard Conner advises people planning for retirement to think carefully about their possible needs if they "age in place" and their health eventually turns for the worse.
5 crucial steps for boosting your career in this tight labor market
For those who don't want to join in the "Great Resignation," the Great Reshuffle now happening within companies also creates career opportunities. Karyl Innis, a career coach, walks you through how to position yourself for the next opportunity.
Financial crime pays -- until it doesn't
Lukas I. Alpert writes the Financial Crime column, which can help all of us understand how easy it is to be victimized. The stories can also be entertaining, if we care to admit it. Here's a sampling of recent coverage:
Semiconductors are in demand
A shortage of computer chips has been commonly cited by corporate executives talking about supply shortages and price increases. Here's a breakdown of exchange-traded funds that cover the semiconductor space as well as 44 stock held by those ETFs.
ETFs and crypto
Mark DeCambre writes the ETF Wrap column, with performance highlights and various industry features. This week he talks to Benchmark Investments CEO Kevin Kelly, who makes the case that Ether is a better investment play than bitcoin for 2022.
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-Philip van Doorn
(END) Dow Jones Newswires
January 15, 2022 06:25 ET (11:25 GMT)
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