3 Things 3-24-25

 Thing One

“The Top” Of The Market Is All A Matter Of Perspective

Most of us are familiar with the buy low, sell high mantra.  It’s a reminder not to enthusiastically rush into the market and buy “overpriced” stocks only to get discouraged and sell them when their prices deflate.  This is good advice, but it needs context.  While there are certainly stocks whose prices “get ahead of their earnings”, there really is no such thing as the top of the market for a long-term investor.  That is the conclusion financial writer Sam Ro came to as he reflected on some of his own stock purchasing behavior.

Worried that he had “bought at the top”, Ro wrote the following in TKer:

“…Both times, I made lump sum purchases into S&P 500 index funds.

And both times, those purchases were almost immediately followed by steep sell-offs.

The 2015 purchase happened while the S&P was on the precipice of a 14% correction. The 2021 purchases happened right as the market was entering a bear market, which saw the S&P fall 25% before bottoming in October 2022.

I am literally the unluckiest market timer I know.

Fortunately, my full-time job is researching the data and writing about having exposure to stocks during the market’s ups and downs. It’s helped me keep my investment decisions very informed.

I also have a carefully thought-out personalized financial strategy that takes into account the risk of big drawdowns. Importantly, I have a time horizon that allows me to ride out the downturns as I build wealth for the long run.

Thanks to having good financial information and a good financial plan, I held on.

And today, those older very poorly timed trades are in the black, and they’re helping me get closer to achieving my long-term financial goals.

The S&P 500 is up about 170% since my late 2015 purchase.  And it’s up about 20% since my late 2021 and early 2022 purchases.

As Bespoke’s Paul Hickey says: "Time heals in the markets…"

While this is definitely not an argument for buying any stock, at any time, at any price, it is a reminder that investing is a long-term endeavor that should always be distinguished from short-term trading.

Thing Two

Social Security Is Getting Tweaked For Some

Retirement benefits are improving for many public sector workers and their spouses thanks to the Social Security Fairness Act, signed by President Biden in January. By the end of March 2025, over 3 million Social Security recipients will see their monthly payments increase. This includes teachers, firefighters, police officers, some federal employees, and those with foreign social security pensions who also worked side jobs that paid into Social Security.

The law helps people who get a pension from jobs not covered by Social Security but also earned benefits from other work. For example, a teacher with a summer job that paid Social Security taxes might have lost out on full benefits before. Now, she’ll get what she’s owed. This isn’t the usual cost-of-living raise (which added about $50 to the average $1,900 monthly benefit in January 2025); it’s a bigger boost, ranging from hundreds to over $1,000 a month, plus a lump sum for back pay since January 2024.

The change eliminates two old rules— the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO)—that cut benefits for people with non-Social Security pensions. Many felt these cuts were unfair, and after years of pushback, Congress acted. Affected retirees will get a letter explaining the increase, which they’ll see in their April 2025 checks (for March benefits).

However, not all public workers are affected—about 72% of state and local employees already get full Social Security and won’t see a change. You can check your benefits online through a “my Social Security” account, but a new rule is causing concern. The Social Security Administration now requires online identity verification for applications or updates, ending the option to do everything by phone.

This shift worries seniors, especially in rural areas without internet access. Advocates like AARP say it’ll mean longer waits and trips to Social Security offices, which can be far away or hard to reach, especially with some offices closing soon. People will need to bring ID like a driver’s license or passport, but delays or office closures could make getting help even tougher.

Thing Three

Just A Thought 

"Learn what is to be taken seriously and laugh at the rest." - Hermann Hesse