Day: October 21, 2024

Earnings season for most S&P 500 companies is a time to post impressive growth. But a cohort of companies is about to shrink instead — something to watch out for if you’re a growth investor.

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Seven stocks in the index, including Microchip Technology (MCHP), American International Group (AIG) and General Electric (GE), are expected to post a revenue drop of at least 30% for the third quarter, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge.

Such a big fall in revenue by these stocks stands out in a bad way. The S&P 500 itself is seen reporting 4.7% revenue growth in the third quarter, says John Butters of FactSet.

S&P 500 Sectors Trailing In Growth

Most S&P 500 sectors will post growth in the quarter. But not all.

Few investors will be surprised to find that information technology stocks will post the strongest growth: 11.7%, says FactSet. But it’s easy to overlook the fact two sectors, industrials and energy, are forecast to shrink. Analysts think industrial companies’ revenue will shrink 0.1%. And energy companies’ revenue are expected to contract 4.9%.

Given tech’s strong growth, Microchip Technology is an outlier — in a bad way. Analysts expect the company to post quarterly revenue of $1.2 billion. That’s down nearly 49% from the same year-ago period. Such a poor outlook helps explain the stock’s 14.4% drop this year, manifesting in a 17 RS Rating. The 41 EPS Rating is low, too, as earnings are seen coming in down 18% this year.

Falling Revenue In S&P 500

Financials in the S&P 500 are expected to have a decent third quarter for growth. Analysts think the sector will show 4.9% top-line growth. But that’s even with AIG as an anchor.

The insurance giant is seen posting revenue of $6.8 billion in the quarter. That’s down 47% from the same year-ago period. Investors, though, don’t seem overly concerned yet. Shares are still up nearly 16% this year so far. AIG, as a result, sports an RS Rating of 61. Holding up the stock, somewhat, is decent profit growth despite contracting revenue. Analysts think the company’s bottom line will shrink just 6% in 2024 before growing 34% in 2025.

And sometimes shrinking is desirable. Shares of General Electric are up 51% this year. That’s even as analysts think the company’s revenue in the third quarter will contract 46%. The company has unlocked shareholder value by splitting itself up into several companies. That forces each unit of the old GE to be competitive and also allocate its resources efficiently. GE carries an impressive RS Rating of 95 and EPS Rating of 85. Earnings are seen rising 30% this year and 23% next year.

Shrinking isn’t always bad, as GE shows. But it’s not ideal if you’re looking for growth opportunities.

S&P 500 Companies Expected To Shrink Most

Based on third-quarter revenue forecasts

Sources: IBD, S&P Global Market Intelligence

It’s been months since Walmart (WMT) said it would require corporate employees to relocate to its headquarters in Arkansas or risk losing their jobs — but that decision is now pushing some executives to resign.

That’s been the case for Cheryl Ainoa, the chief technology officer at Walmart-owned Sam’s Club, who said she is leaving her position after almost five years because she doesn’t want to relocate to the retail giant’s home base in Bentonville, the retail giant confirmed to Quartz in an email.

In May, Walmart announced plans to eliminate thousands of corporate roles in Texas and California, requiring remote workers to relocate to one of its three main hubs in Arkansas, New Jersey, or Northern California. This decision sent shockwaves through the workforce, particularly for the 300 employees who learned during a Zoom call — where they were not permitted to speak — that they would need to move or face potential job termination.

Aiona, who helped oversee innovations such as the exit technology that allows customers to leave the warehouses without receipt checks, will remain in her position until February. She will be succeeded by Sanjay Radhakrishnan, Walmart’s senior vice president of global technology.

Walmart and Sam’s Club did not immediately respond to Quartz’s request for comment.

Earlier this year, Walmart said it would allow certain employees to work remotely, but only part-time. In an employee memo, chief people officer Donna Morris emphasized that in-person collaboration would enhance workforce effectiveness, foster innovation, and strengthen company culture.

Layoffs for employees who hadn’t yet relocated began on Aug. 9.

Since then, the retail giant has aimed to address its worker shortage with a pipeline program designed to funnel hourly employees into higher-level positions. As part of the three-year initiative, the company hopes it can train and certify workers to fill roles as pharmacy technicians, opticians, and software engineers.

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Ultimately, whether you have enough to retire depends on your costs and your income.

If you can live on a tight budget with the right circumstances, $2,000 a month from a pension and Social Security, combined with the right strategy with $500,000 in your Roth IRA may be enough to sustain you throughout your retirement. But it’s important to consider the opportunity cost between retiring now and working and investing for a few more years, as it may determine your quality of life in retirement.

Your retirement plan depends on your specific circumstances. Talk to a financial advisor about your goals today.

Weighing the Opportunity Cost of the Next Few Years

Steve Davis, CEO of Total Wealth Academy recommends waiting a few years to shore up your retirement portfolio at this point, in order to let your Roth IRA and Social Security benefit grow.

“The average female lives 18.5 years in retirement. That is less than $2,000 a month from the IRA or $4,000 a month total. That is not enough for the basics let alone romance, travel, and fun… [Instead] I would pull the money out of the IRA, leaving maybe $400,000. Get it invested in income producing assets.”

“I would also keep working until 70 at least, to buy additional assets before retiring to get that up to about $10,000 a month [because] $12,000 a month would be a pretty high quality of lifestyle in retirement,” he told SmartAsset.

There are three important issues here:

1. By retiring early you are giving your portfolio less time to grow and will spend more time making withdrawals.

2. A $500,000 Roth IRA is a small portfolio. Using the 4% rule, it can only generate $20,000 per year/$1,667 per month. This is tight for an individual and probably unworkable for a couple.

3. You are not maximizing your Social Security. At age 62, you will receive 70% of your total potential benefits each month, cutting your lifetime income significantly.

Remember, you may need to finance a long life, and you may incur unexpected expenses during retirement. A $1,667 monthly rate of withdrawal will last 25 years, taking you to age 87. That leaves you less than $4,000 per month in total, with the realistic possibility of that portfolio running out.

For many people, this is not a good plan.

A financial advisor can help you develop a sustainable retirement plan.

How To Fix A Small Portfolio

As Davis suggested, you actually are in a good position to retire, just not to retire early. With a few more years, you can have a very comfortable retirement.

Maximize Your Social Security

We don’t know how your monthly income is distributed between pension and benefits, but on average a retiree collects $1,793 per month in full Social Security benefits. Retiring at 62 would reduce that by 30% to $1,255. So we assume a $1,255 Social Security payment and a $745 pension.

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If you wait until age 70 to retire, your benefits will increase to 124%. That would boost an average payment to $2,223. Add your pension, and you have a $2,968 monthly income. That alone is almost as much your entire income at 62, without even considering your Roth IRA.

Grow Your Portfolio

Your Roth IRA has two key advantages. First, by not paying taxes on your withdrawals you functionally increase the value of this account by 6% to 11% on average. Second, right now it has hit its era of peak growth. Maximize that.

Let’s assume you contribute nothing extra to this portfolio and leave it in an S&P 500 index fund, with the market’s average annual return of 10%. If you wait until age 70 to retire, this portfolio could be worth as much as $1.07 million. If you take a slightly more conservative approach, investing in 60% stocks and 40% bonds, you might expect an 8.7% rate of return and a final portfolio of $974,555.

These numbers can fuel a very comfortable retirement. For example, say you took that entire $974,555 and bought a lifetime annuity on your 70th birthday. That could generate a $7,321 monthly income. Add in your benefits and pension and you can retire on $10,289 per month.

Yes, eight more years is a long time to work and wait. But your retirement will be even longer. With just a little more patience, you can make it a great one. Discuss your plan with a financial advisor to find the most efficient path to retirement.

Bottom Line

You have half a million dollars in a Roth IRA and $2,000 in a pension and benefits. You are close to a fantastic retirement, but at age 62 you likely aren’t quite there yet.

Retirement Income Tips

• Annuities are an interesting product. On the one hand, they can cost you some potential gains. You’ll get less from an annuity than you might from the market. On the other hand, they guarantee you an income for life, which is a promise you can’t get from any other investment class. So… are they right for you? 

• A financial advisor can help you build a comprehensive retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.

• Are you a financial advisor looking to grow your business? SmartAsset AMP helps advisors connect with leads and offers marketing automation solutions so you can spend more time making conversions. Learn more about SmartAsset AMP.

Photo credit: ©iStock.com/Morsa Images

The post I Have $500k in a Roth IRA, and Will Receive a Combined $2,000 a Month From a Pension and Social Security. Can I Retire at 62? appeared first on SmartReads by SmartAsset.

It’s well known that legendary investor Warren Buffett answers investor questions for hours every year at Berkshire Hathaway Inc’s (NYSE: BRK-A) (NYSE: BRK-B) annual meeting of shareholders. But most don’t know that such wouldn’t have been possible in Buffett’s early days.

If it weren’t for a $100 college course he took when he was 20 years old, the “Oracle of Omaha” might have shorted his own success.

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What To Know: Buffett had an extreme fear of public speaking up until the age of 20, according to a report from CNBC.

“Just the thought of it made me physically ill. I would literally throw up,” Buffett told CNBC contributor and “Getting There” author Gillian Zoe Segal.

In his early college days, Buffett would select certain classes to avoid having to present in front of his classmates. Furthermore, he designed his schedule so he wouldn’t have to be in front of crowds.

He told Segal that he could barely even introduce himself whenever he found himself in a situation that required him to speak in front of others.

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Buffett set out to change that when he saw an ad for a Dale Carnegie public speaking course at Columbia’s Business School. He signed up and even wrote a check to cover the costs, but shortly after, he reneged on his intentions.

“I just couldn’t do it. I was that terrified,” the Berkshire CEO said.

Not long after Buffett graduated, he came across the exact same ad in the paper and set out to sign himself up again, with one key difference in his approach.

“This time, I handed the instructor $100 in cash. I knew if I gave him the cash I’d show up,” Buffett said.

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He did show up, and he discovered that about 30 other people had the same problem he did, he said: “We all had trouble saying our own names.”

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By the time he finished the 12-week course, he was ready to put his skills to the test. He applied for a teaching position at the University of Omaha right away, knowing that if he didn’t keep at it, he would risk giving up the progress he had made in the public speaking class.

“I just kept doing it, and now you can’t stop me from talking,” Buffett told Segal with a laugh.

The report indicates that the Berkshire CEO credits much of his success to the public speaking class, which is a lot of praise for someone as successful as the Oracle himself.

According to Bloomberg, Buffett is the eighth-richest person in the world, with an estimated net worth of $145 billion at the time of writing. His fund has historically outperformed the S&P 500, delivering nearly 20% compounded annual returns since Buffett took control of Berkshire in 1965.

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Photo: Fortune Live Media from Flickr.

Some elements of this story were previously reported by Benzinga and it has been updated.

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This article Warren Buffett Says He Wouldn’t Be Successful Today If He Didn’t Take This $100 College Class: ‘I Was That Terrified’ originally appeared on Benzinga.com

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Shaquille O’Neal, the former NBA superstar, has seen his fair share of investments. Still, one of his most notable financial decisions came through babysitting – something he didn’t expect to be doing. In an interview with Ellen DeGeneres, O’Neal detailed how this casual encounter led to one of his most lucrative opportunities. However, not all of his investments began as favorably.

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Discussing his ventures, O’Neal recounted what he considers his “worst investment ever.” He had a chance to partner with Starbucks when its CEO, Howard Schultz, proposed expanding into African American communities. O’Neal explained his initial skepticism: “So, me growing up, I’d never seen Black people drink coffee. So I look to the owner of Starbucks and say, ‘it’s not going to work. Black people don’t drink coffee.’” This decision, he admits, did not age well, humorously noting, “So now, every time I go to Starbucks, I see Black people drinking coffee, I’m like–”

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Passing on Starbucks may have been a huge mistake, but he still got in early on one of the most powerful tech companies ever. While at the Four Seasons Hotel in Los Angeles around 1993 or 1994, he babysat a couple of children whose father was in a meeting. After the meeting, the father, impressed with Shaq’s rapport with his children, offered him an investment opportunity in a then-little-known startup named Google. “You’re good with kids. I like you. I’m going to bring you in on this investment,” the father said. He described the future of Google, envisioning a world where “you’re going to be able to type on your phone, search engine, this, do this, boom, boom, boom. You should invest.”

Shaq took the advice and the rest is history. “I invested. And then, a couple of years later, I got a really big return,” he shared with DeGeneres. The exact amount Shaq invested in Google was never disclosed.

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In Zack O’Malley Greenburg’s book, “A-List Angels: How a Band of Actors, Artists and Athletes Hacked Silicon Valley,” Shaq reflects on his successful investment in Google. He recounts how he stumbled into the opportunity simply by being at the right place at the right time and engaging with the right people. Despite the success, O’Neal expressed one significant regret: “My only regret is that I wish I would have bought more.”

With a massive net worth of $500 million, his career is legendary. “I always wanted to be a business owner and now I am,” Shaq once remarked, according to a Marca article. His business ventures and endorsements are as iconic as his athletic achievements, showcasing his versatility and acumen in both arenas.

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Up Next: Transform your trading with Benzinga Edge’s one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today’s competitive market.

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This article NBA Icon Shaquille O’Neal Says An Accidental Babysitting Gig Led To His Early Investment In Google – ‘You’re Good With Kids. I Like You.’ originally appeared on Benzinga.com

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.