THE WEEK ON WALL STREET
Stocks advanced last week as investors moved past stalled progress in Middle East peace talks and refocused on corporate earnings. The S&P 500 Index rose 0.91 percent, while the Nasdaq Composite Index climbed 1.12 percent. The Dow Jones Industrial Average moved up 0.55 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, added 0.58 percent.
FACT OF THE WEEK
On May 4th, 1959, the first Grammy Awards takes place. Despite leading nominations, Frank Sinatra's only win is for the album cover of "Only the Lonely." Meanwhile, the Chipmunks score three Grammys for their squeaky hit "The Chipmunk Song."
MARKET MINUTE
April: Best Month in Five Years for S&P, Nasdaq
Markets were under pressure early in the week as investors focused on stalled peace talks and rising oil prices.
But midweek, momentum shifted. First, the Fed announced it was holding interest rates steady, as expected, but there was some dissent over the decision. Then investors' attention focused on Wednesday’s closing bell, when several big-name companies reported Q1 results.
Investors mostly liked what they heard, and stock prices rose, ending April on a high note. The Dow led the broad market rally while the S&P 500 and Nasdaq each logged their best monthly performances in 5 years.
Stocks rose again on Friday as oil prices fell. Investors applauded Q1 results from another high-profile megacap tech company, which helped the S&P notch another all-time intraday high.
Fed News
The Federal Reserve voted 8-4 to keep interest rates steady at the April meeting, leaving the Federal Funds Rate at a 3.5 to 3.75 percent target range. Market observers were quick to point out that the 8-4 decision was the Federal Open Market Committee’s most divided vote since 1992.
At the last FOMC press conference of his eight-year tenure, Fed Chair Powell announced he would stay on as a Fed governor after his term as Chair expires on May 15. Earlier that day, the Senate Banking Committee confirmed Kevin Warsh as the next Fed Chair, setting up a final confirmation vote in the Senate.
FINANCIAL STRATEGY OF THE WEEK
The Cost of Procrastination
Some of us share a common experience. You're driving along when a police cruiser pulls up behind you with its lights flashing. You pull over, the officer gets out, and your heart drops. “Are you aware that the registration on your car has expired?”
You've experienced one of the costs of procrastination.
Procrastination is avoiding a task that needs to be done—postponing until tomorrow what could be done today. Procrastinators can sabotage themselves. They often put obstacles in their own path. They may choose paths that hurt their performance.
Though Mark Twain famously quipped, “Never put off until tomorrow what you can do the day after tomorrow,” we know that procrastination can be detrimental, both in our personal and professional lives. Problems with procrastination in the business world have led to a sizable industry in books, articles, workshops, videos, and other products created to deal with the issue. There are a number of theories about why people procrastinate, but whatever the psychology behind it, procrastination may cost money—particularly when investments and financial decisions are put off.
Putting off investing may put off potential returns.
Let's look at the case of Cindy and Charlie, who each invest $100,000.
Charlie immediately begins depositing $10,000 a year in an account that earns a 6% rate of return. Then, after 10 years, he stops making deposits.
Cindy waits 10 years before getting started. She then starts to invest $10,000 a year for 10 years into an account that also earns a 6% rate of return.
Cindy and Charlie have both invested the same $100,000. However, Charlie's balance is higher at the end of 20 years because his account has more time for the investment returns to compound.
If you have been meaning to get around to addressing some part of your financial future, maybe it's time to develop a strategy. Don't let procrastination keep you from pursuing your financial goals.