THE WEEK ON WALL STREET
Stocks ended last week with modest losses after a volatile five days of market-moving economic data, geopolitics, and Fed drama. The S&P 500 Index slid 0.38 percent, while the Nasdaq Composite Index skidded 0.66 percent. The Dow Jones Industrial Average edged down 0.29 percent. By contrast, the MSCI EAFE Index, which tracks developed overseas stock markets, rose 1.41 percent.
FACT OF THE WEEK
On January 19, 1977, on her last day in the White House, First Lady and ERA supporter Betty Ford—on a whim—jumps on the Cabinet Room table and strikes a pose. At the time, only three women had ever sat at that table as presidential cabinet members.
MARKET MINUTE
Choppy Trading
Stocks started the week lower after pre-opening bell news that the Justice Department had launched a criminal investigation into Federal Reserve Chair Jerome Powell. A statement issued Tuesday morning by central bankers worldwide helped tamp down market volatility.
The White House called for a 10 percent cap on credit card interest rates for 1 year, putting pressure on financial stocks. Meanwhile, news that headline inflation matched forecasts while core inflation came in cooler than expected was well received by investors.
Despite solid retail sales and wholesale inflation reports for November, stocks were under pressure on Wednesday due to geopolitical tensions and disappointing Q4 results from a handful of financial stocks.
Then chip manufacturers and banks led a rebound, recouping most of the week’s losses. Markets opened higher on Friday but then slid after the president backtracked on his preferred candidate to be the next Fed Chair. His comments led investors to believe that his new choice would be more market-friendly but perhaps less likely to adjust interest rates.
Fed Drama
Tensions between the White House and the Federal Reserve escalated last week after the Justice Department issued a criminal indictment against Fed Chair Powell.
Powell, typically calm and collected in the face of criticism, posted an assertive video Sunday night. By the close of the week, however, investors seemed to have moved past the Fed drama as there was plenty of other news to follow.
FINANCIAL STRATEGY OF THE WEEK
Who Is Your Trusted Contact?
Investment firms have a client service feature that may be a benefit to certain investors. They will ask you whether you would like to provide the name and information of a trusted contact.
You do not have to supply this information, but it may offer some advantages. The request is made with your best interest in mind – and to lower the risk of someone attempting to make financial decisions on your behalf.
Why is setting up a trusted contact so important? While no one wants to think ill of someone they know and love, the reality is that there is $3.4 billion worth of suspicious transactions a year related to elder financial exploitation, according to the Financial Crimes Enforcement Network.
The trusted contact request is a response to this reality. The Financial Industry Regulatory Authority (FINRA) now requires that investment firms make reasonable efforts to acquire the name and contact info of a person you trust. This person is someone that investment firms can contact if they suspect the investor is making an “unusual financial decision” or appears to be suffering a notable cognitive decline.
Investment firms may put a hold on disbursements of cash or securities from accounts if they suspect the withdrawals or transactions may involve financial exploitation. In such circumstances, they are asked to get in touch with the investor, the trusted contact, and other agencies, if necessary.
Who should your trusted contact be? At first thought, the answer seems obvious: the person who you trust the most. Yes, that individual may be one of the best choices – but keep some factors in mind.
Ideally, your trusted contact is financially savvy, or at the very least, has some basic financial knowledge. You may trust your spouse, your sibling, or one of your children more than you trust anyone else, but how much does that person know about investing and financial matters?
You should have a high level of confidence that your trusted contact will behave ethically and respect your privacy. This person may be given confidential information about your investments.
It is encouraged that your family members know who your designated trusted contact is. That way, any family member who might be tempted to take advantage of you knows another family member is looking out with your best interest in mind, which may be an effective deterrent to elder financial abuse. It should be noted that the trusted contact may, optionally, be an attorney, a financial professional, or a CPA.
Your trusted contact is your ally. If you are being exploited financially or could be at risk of such exploitation, that person will be alerted and called to action.
As the old saying goes, money never builds character; it only reveals it. The character of your trusted contact should not waver upon assuming this responsibility.