Week of 4/21/2022

We are planning our next live “Ask the Joes®” event for early May. If you have any questions you would like for us to review, please let us know. We hope you enjoy this week’s edition!

The Walt Disney Corporation is in the news and under political fire in Florida. There are complicated issues and many potential problems if the special tax district Disney enjoys is abolished. No stranger to controversy, the company once explored creating a historical theme park, Disney’s America, outside of Washington, DC. We try to avoid overtly political commentary here but are shaking our heads at a proposal in California to force large employers in the state to reduce the workweek from 40 to 32 hours. More on how this kind of regulation can be harmful here. We learned some things about Ethiopia, including that it is currently the year 2014 in Ethiopia, due to their unique calendar that contains 13 months. Europa, Jupiter’s moon, may have more water than expected. As a result, the chance of life existing there is also higher than previously imagined.

Q: I can’t remember a time in my investing life that bonds have done so poorly. What do you expect for bonds? A: The outlook for bonds is improving. There are a few reasons for this:  A lot of the decline in bond values is in anticipation of rate increases. It is possible that the bond market has priced in the Fed’s approach and that we have seen the worst of those declines. If the Fed is more aggressive than expected, that will put pressure on bond values, but that will not be a permanent issue. Rising rates bring some positive news. In most cases, interest received in bond funds is reinvested. Right now, those reinvestments are happening at more attractive share prices. Also, as bonds mature and are replaced, the new bonds will usually have the higher yields now common in the bond market. These assets have some potential appreciation potential if the effect of Fed rate increases has already been felt. The turmoil in the bond market is a great example of how diversification can be helpful. Stocks have outperformed many areas of the bond market during the first part of the year, not an outcome we would have predicted 6 months ago .

Bonds are subject to availability and market conditions; some have call features that may affect income. Bond prices and yields are inversely related: when the price goes up, the yield goes down, and vice versa. Market risk is a consideration if sold or redeemed prior to maturity. Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.

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