Optimizing Your Social Security Strategy

Have you thought about when you'll start taking Social Security? According to a new report from United Income, almost all American retirees claim Social Security at the wrong time. The upshot is that they will miss out on a collective $3.4 trillion in benefits before they die.

While they can tap their benefits as early as age 62, retirees could boost the size of their checks for every year they wait until age 70, when they can get the maximum benefit. The advantage in waiting is substantial: A person eligible for a $725 monthly check at 62 could get $1,280 if they wait to start at age 70.

Only 4 percent of U.S. retirees are waiting until age 70 to claim Social Security, but 57 percent should be doing so, the report calculated. Meanwhile, more than 70 percent start taking checks before turning 64, a time when ideally only 6.5 percent of retirees should be cashing checks. The lost income from these less-than-optimal decisions amounts to about $111,000 per household, the researchers estimate.

The June Jobs Report

The employment picture bounced back strong in June, following a disappointing month of May, according to figures out this morning from the Bureau of Labor Statistics. The American economy added 224,000 jobs last month, after adding just 24,000 jobs in May. The headline unemployment rate ticked up to 3.7 percent.

All told, for the first half of 2019, we have averaged a solid 172,000 new jobs per month. That's down a bit from the strong pace of 223,000 jobs per month we saw in 2018, although the June report was back to that level.

The leading industry for job growth last month was health care, which added 35,000 jobs. Employment in transportation and warehousing expanded by 24,000 in June, while construction added 21,000. Over the past 12 months, construction employment has increased by 224,000.

Thoughts for Independence Day

"Those who expect to reap the blessings of freedom must undergo the fatigue of supporting it." ~ Thomas Paine

"Freedom is nothing but a chance to be better." ~ Albert Camus

"Men first crossed the Atlantic not to find soil for their ploughs but to secure liberty for their souls." ~ Robert J. McCracken

The First Half's Biggest Losers

Yesterday we looked at the best stocks for the first half of 2019; today we present the biggest losers. None of these fell by nearly as much as the best performers rose, but look at what a rough six months it's been for retail:

1. Nordstrom, down 31 percent
2. Mylan, down 31 percent
3. Gap Inc., down 30 percent
4. Kohl's Corp., down 28 percent
5. Kraft Heinz, down 27 percent
6. Macy's, down 25 percent
7. AbbVie Inc., down 22 percent
8. Foot Locker, down 22 percent
9. ABiomed, down 22 percent
10. Kroger Co., down 21 percent

The First Half's Biggest Winners

As we mentioned yesterday, this was a blazing first half for the stock market, with the S&P 500 rising by 17.3 percent. Here are the ten best-performing stocks in the S&P over the first six months of 2019:

1. Coty, up 105 percent
2. Xerox, up 81 percent
3. Chipotle Mexican Grill, up 68 percent
4. Advanced Micro Devices, up 67 percent
5. Anadarko Petroleum, up 63 percent
6. Cadence Design Systems, up 61 percent
7. Hess Corp., up 60 percent
8. MSCI Inc., up 60 percent
9. Total System Services, up 58 percent
10. Dentsply Sirona, up 55 percent

The Blazing First Half

With a gain of about 6.9 percent, the S&P 500 index notched its best June since 1955, when the benchmark rose 8.2 percent. The Dow Jones Industrial Average put up its best June gain of 7.2 percent since 1938 when the blue-chip benchmark surged 24.3 percent.

That capped off the best first half of a year since 1997 for the S&P, rising 17.3 percent. All 11 of the S&P 500 sectors rose in the first half of the year, with tech rising more than 26 percent to lead the gains. Energy was the market’s laggard in the first half, rising just 7.1 percent.

Meanwhile, the Dow Jones industrial average registered a 14 percent gain. But that trailed the Nasdaq composite index, which led everybody with 20 percent.

What the New Indexes Mean

FTSE Russell, which operates many of the most-followed mid-cap and small-cap stock indexes will rebalance its suite of indexes at the close of trading today. The changes will reflect several broad trends in equity markets over the past year, including the resilience of large-capitalization companies and the dismal performance of smaller U.S. firms.

The dividing line between the large cap index and the small fell this year, from a capitalization of $3.7 billion to $3.6 billion, as a result of the poor performance of small cap companies, which shrunk in average market capitalization from $2.5 trillion to $2.4 trillion. The Russell 2000 small cap index fell 6.3 percent over the past 12 months, versus a 7.5 percent rise in price for larger companies.

Earnings for Russell 2000 small-cap companies fell 14.5 percent in the first quarter of this year on 3.4 percent of sales growth. Equity analysts expect the second quarter will likely show small-cap earnings falling 11.5 percent, on 3.6 percent of revenue growth.