While the exact parameters that distinguish an economic downturn from a true recession are debatable, the National Bureau of Economic Research (NBER) defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” The typical rule of thumb for determining whether a period constitutes a recession is whether it includes two or more consecutive quarters of decline in a country’s gross domestic product (GDP). Often, these periods aren’t officially labeled as recessions by economists until they are already well underway or have ended entirely. It’s important to remember that recessions are natural and temporary phases in the business cycle, and though they may come with hardships, they are typically succeeded by periods of economic growth.

In this article, we’ll cover:

• What happens in a recession
• Downturns vs. recessions vs. depressions
• What causes recessions
• Recessions and the business cycle
• Signs of a recession
• How a recession may affect you
• How to invest in the face of a recession

What happens in a recession

Recessions are complex events that can be triggered by various factors, from financial crises to external shocks. While each recession has distinct characteristics and causes, varying in length and severity, a few trends are common across all of them.

• GDP falls: GDP, which measures the total value of goods and services produced in a country, typically drops during a recession, indicating a weakening of the nation’s overall economic health.
• Economic activity declines: Businesses might reduce production due to decreased demand, leading to a slowdown in various sectors of the economy.
• Unemployment rate rises: As companies cut back on production or even shut down, job losses become more prevalent, leaving a higher percentage of the population without employment.
• Interest rates may decrease: The Federal Reserve might choose to lower interest rates in an effort to boost economic activity.
• Consumer spending shrinks: Uncertainty and financial concerns during a recession often lead consumers to cut back on their expenditures, further slowing down the economy.

Economic downturns vs. recessions vs. depressions 

Economic downturns, recessions, and depressions are all periods of economic contraction. Ultimately, their differences lie in their duration, intensity, and impact on the broader economy.

• Economic downturns: These are short-term declines in economic activity, often accompanied by bear markets. While they can lead to recessions, it’s possible for the economy to recover before that happens. The U.S. has experienced a number of downturns throughout history, with bear markets lasting an average of about 9.5 months, though many are much shorter. 
• Recessions: Going into a recession means that an economic downturn extends into a more prolonged and pronounced drop in economic activity. Since 1980, the U.S. has faced five recessions of varying durations, with the shortest lasting just six months and the longest extending to 18 months. On average, U.S. recessions have lasted about 11 months.
• Depressions: Depressions are the most extended and severe economic contractions. The U.S. has experienced only one depression, known as The Great Depression, which began with a profound stock market crash in 1929 and lasted for about a decade. This period was marked by extreme unemployment, a significant drop in consumer spending, and widespread bank failures.

Examples of past recessions

Each recession in the U.S. has been unique in its cause, duration, and impact on the global economy. Three significant recessions identified by the NBER in the recent past have left a lasting mark on the country’s economic landscape.

• Dot-Com Recession: Occurring between March and November 2001, this seven-month-long recession was a result of the bursting of the dot-com bubble of the 1990s. The overvaluation of tech companies led to a sharp stock market decline, impacting the broader economy.
• The Great Recession: Spanning from December 2007 to June 2009, the Great Recession was primarily caused by the subprime mortgage crisis, leading to significant job losses and a global banking crisis. Lasting 18 months, it’s the longest recession the U.S. has experienced since World War II.
• COVID-19 Recession: Triggered in early 2020 by the global outbreak of the COVID-19 pandemic, this recession saw a sharp decline in economic activity due to lockdowns, travel bans, and business closures. While its exact duration is still debated, the most severe stages occurred between February and April 2020.

What causes recessions

No two recessions are identical. They often arise from a unique combination of factors that work together to turn a mild economic downturn into a pronounced economic contraction. A few factors often contribute to the onset of a recession. 

• Sudden economic shocks: Unexpected events that disrupt the normal flow of the economic cycle,  like natural disasters, terrorist attacks, or health crises, can shake consumer and business confidence, triggering a reduction in spending and investment.
• Excessive, widespread debt: When households, businesses, or governments take on too much debt, they may need to cut back on spending in order to pay it off, leading to a significant dip in overall economic activity.
• Asset bubbles: Bubbles occur when the prices of assets, like real estate or stocks, soar far above their fundamental value. Asset bubbles often arise in a specific industry or sector. When these bubbles inevitably burst, those who invested heavily can face significant losses, companies go out of business, and a ripple effect may impact other sectors of the economy as well, leading to an overall economic slowdown.
• Excessive inflation: During periods of high inflation, prices of goods and services rise too quickly, eroding consumer purchasing power. The Federal Reserve may then choose to raise interest rates in an effort to curb inflation, which can result in reduced borrowing and spending.
• Runaway deflation: The opposite of inflation, deflation is a prolonged drop in prices. While it might seem like a good thing, deflation can lead to reduced consumer spending as people wait for prices to fall further, causing a vicious cycle of economic contraction.

How recessions fit into the business cycle

The business cycle is a natural ebb and flow of economic activity, characterized by periods of growth and decline. Recessions are a pronounced form of natural contractions, representing a significant dip in the cycle. The NBER plays a pivotal role in determining the start and end dates of U.S. recessions by breaking the business cycle into four primary phases:

• Expansion: Marked by increasing economic activity, the expansion phase is a period of economic growth and prosperity. This is an ideal economic stage for business growth, often featuring rising employment rates and bolstered consumer confidence. As demand increases, businesses raise prices, causing inflation.
• Peak: The peak of the business cycle is the zenith of the expansion phase, where economic activity reaches its maximum, right before starting to fall off. This phase is characterized by high levels of production, employment, and the highest prices, with no room for further expansion.
• Contraction: Following a peak, the economy starts to slow down. This period sees a decline in GDP, employment, and other economic indicators. If this contraction is prolonged and severe, it can lead to a recession.
• Trough: The trough is the lowest point of the contraction phase, when economic activity bottoms out before starting to rise again. From here, the business cycle moves back into the expansion phase, marking the beginning of economic recovery.

Signs of an impending recession

While it’s impossible to predict recessions with absolute certainty, economists and financial experts often turn to specific indicators that hint at economic turbulence ahead. 

• Inverted yield curve: Typically, long-term bonds have a higher yield compared to short-term bonds. But when short-term bonds yield more than long-term ones, it’s called an inverted yield curve. Historically, this inversion has preceded recessions, as it indicates a lack of economic confidence.
• Declining consumer confidence: When consumers are pessimistic about the future of the economy, they tend to spend less and save more. A sustained drop in consumer confidence can lead to an economic contraction.
• Increasing unemployment: A rising unemployment rate can be a sign that businesses are cutting back on staff due to decreased demand or revenue. Persistent high unemployment can contribute to reduced consumer spending, which may exacerbate an economic slowdown.
• Stock market drops: While stock markets can be volatile regardless of the larger economic landscape, a prolonged and significant drop in stock prices overall can sometimes precede a recession and might be a sign of continued decline.

How a recession may affect you (and how you can prepare)

A recession affects the average person in a variety of ways. You might feel a financial pinch, as job security becomes uncertain and daily expenses seem to loom larger. While it’s natural to be concerned, there are proactive steps you can take to navigate challenging times and prepare for an impending recession.

• Build an emergency fund: An emergency fund acts as your financial safety net, ensuring you have funds to cover unexpected expenses or income loss. Especially during uncertain times, having three to six months’ worth of expenses can provide peace of mind and financial stability. 
• Pay off debts: Reducing debt, especially high-interest credit card debt, can free up income and reduce stress on your personal finances. By tackling your debt, you’re not only improving your financial health, but also making yourself less vulnerable during an economic downturn. 
• Start saving money: Plan for what a recession would do to your current budget and savings goals and take action ahead of time. By cutting down on expenses and setting aside a portion of your income regularly, you’re building a buffer that can be invaluable during tough times.

How to invest if you’re worried about a recession

When economic clouds gather, it’s natural to feel uneasy about your investments. Remember that market fluctuations are a part of the investment journey, and before making any hasty decisions, you might want to consult with a financial advisor who can provide tailored advice for your situation. Instead of panicking when the stock market dips, consider these strategies to safeguard, and possibly even grow, your portfolio during a recession.

• Ride out the downturn with long-term investing: Historically, markets have shown resilience over extended periods. Focusing on long-term investing may allow you to weather short-term volatility and potentially benefit from the average stock market return over time.
• Seek out “recession-proof” stocks and funds: Some sectors tend to be more resilient during economic downturns. Identifying and investing in stocks that tend to hold value in a recession might help shield your portfolio against market turbulence. 
• Consider defensive stocks for your portfolio: Defensive stocks are shares in companies that provide essential goods and services, like utilities or consumer staples. Because of their relatively stable demand, adding them to your portfolio may reduce your vulnerability in the face of economic flux.
• Capitalize on inflation before it drops: Some securities can actually benefit from inflation. Investing in things like Treasury Inflation-Protected Securities (TIPS), I-bonds, and value stocks when inflation is rising before a recession might offer a hedge against decreasing inflation rates later. 
• Evaluate short-term investment options: If you’re apprehensive about locking your money into long-term investments during uncertain times, consider short-term, lower-risk options. Instruments with fixed interest rates, such as CDs and T-bills, can be a way to secure higher interest rates before they potentially drop in a recession. 
• Diversify your portfolio: Spreading your investments across various asset classes and economic sectors can reduce risk. Especially during a recession, a diversified portfolio can help mitigate losses and position you for growth when the economy recovers.

Holding steady in the face of a recession

Economic downturns and recessions are inherent phases of the business cycle. Though they present challenges, remember that they’re followed by seasons of growth and rejuvenation. When you understand what a recession is, you’ll be more prepared to anticipate downturns and prepare.

As an investor, maintaining a clear strategy, staying informed, and resisting the urge to make impulsive decisions can help you pave the way for long-term success. With a good grasp of the cyclical nature of the economy, you can navigate the turbulence of recessions with more confidence.

Investing made easy.

Start today with any dollar amount.

Get Started

The post What is a Recession? appeared first on Stash Learn.

Much of 2021 was influenced by the world’s ongoing recovery from the Covid-19, as pharmaceutical companies rolled out vaccines and booster shots against the virus, people returned to work, and businesses reopened. Retail investors influenced markets, buying shares of “meme” stocks such as GameStop and AMC Theaters. President Biden entered office, ushering in new social and infrastructure policies, including another stimulus package. 

The world still continues to face struggles posed by the pandemic. New strains of the virus—Delta and Omicron to name two—have challenged vaccines and shaken public confidence. Meanwhile, the U.S. has recorded the highest inflation it’s seen in decades. 

January 

Social media shutdown. The largest social media companies, including Facebook, Instagram, Twitter, and more remove President Donald Trump’s accounts for his role in inciting the January 6, 2021 mob attack on the Capitol building in Washington, D.C.

Bitcoin bubble (again). The value of cryptocurrency Bitcoin surges to an all-time high of more than $40,000 on January 7, 2021, raising suggestions over another bubble. (It subsequently falls by 15%.) 

GameStop squeeze. Video game retailer GameStop, smartphone maker Blackberry, and entertainment giant AMC become the subject of short squeezes. Shorting is the reverse of buying long. It’s basically betting against a stock, and it’s a key technique used when an investor believes that the price of a stock will be lower in the future.

February

Bezos bows out. Jeff Bezos, the founder and chief executive officer of Amazon, announces he will step down from his role as CEO in the coming year. Andy Jassy, who leads Amazon’s cloud business known as Amazon Web Services (AWS), will take over as Amazon’s CEO.

Congress hits play on GameStop. The House of Representatives Financial Services Committee holds a hearing on the January, 2021 short squeeze of GameStop, AMC, and other “memestocks.” 

When Texas freezes over. Power outages and frigid temperatures in Texas cause a record drop in U.S. oil production, as more than 4 million barrels a day, or approximately 40% of total U.S. oil production, go offline.

March

New stimulus check, with new limits. The Senate passes President Biden’s $1.9 trillion aid bill this weekend. The package includes $1,400 direct payments, this time with different income limits than previous stimulus payments. 

Tax time delayed. The Internal Revenue Service (IRS) announces that it will extend the tax filing deadline by one month, to May 17, 2021 to accommodate new stimulus payments and a backlog of tax returns.

​​Root Canal. A 224,000-ton ship the size of New York’s Empire State Building, known as the Ever Given, is freed on March 29 after being stuck in Egypt’s Suez Canal for nearly a week, blocking one of the world’s most important waterways for shipping and oil. 

April 

Ketchup plays catch up. Restaurants and fast food spots across the country experience a shortage of ketchup packets due to the pandemic. In response to the increased demand, Heinz says it will increase its packet output by 25% to 12 billion per year.

Musk’s moonshot. SpaceX wins a contract with NASA to send astronauts to the moon, beating out Jeff Bezos’ Blue Origin and defense contractor Dynetics.

You might need a boost. People will most likely need a booster shot of Pfizer’s Covid-19 vaccine within a year of the initial two-shot regimen, the chief executive of the pharmaceutical company says. 

Netflix big Oscar’s night. Netflix movies wins seven Academy Awards, more than any other studio this year. The streaming service also led the pack in overall nominations, racking up 36.

May

Inflation nation. Prices for consumer goods such as diapers, toilet paper, and tampons are on the rise due to increased demand outpacing the supply, as well as inflation. The Bureau of Labor Statistics reports that consumers were paying 0.6% more for goods in March, 2021, the biggest increase since August, 2012, according to the Consumer Price Index. 

Problems in the pipeline. Hackers from the cybercrime gang DarkSide allegedly steal 100 gigabytes of data from Colonial Pipeline in a ransomware attack. The hack causes the pipeline company, which provides 45% of gasoline, jet fuel, and diesel to the East Coast, to shut down.

Earning extra credit. The IRS and the U.S. Department of Treasury announce that starting July 15, 2021, many families with children will be eligible for federal cash payments of up to $300 per child per month for the 2021 tax year.

June

Topping off at a premium. Gas prices reportedly hit a seven-year high prior to Memorial Day, 2021, with the average gas price in the U.S. reaching $3.04 per gallon. That average is a 58% increase from a year ago, when many people were stuck at home because of the pandemic. 

Federal forgiveness. The U.S. Department of Education approves $500 million in student loan forgiveness for former students of ITT Technical Institute, a private chain of colleges that was shut down in 2016 for misrepresentation. 

Re-Buffed. Berkshire Hathaway CEO and chairman Warren Buffett resigns from his position as a trustee of the Bill and Melinda Gates Foundation. The resignation comes weeks after Bill and Melinda French Gates announced their divorce. 

July

Au Revoir Amazon. Jeff Bezos, the founder and chief executive officer of Amazon, officially steps down from his role as chief executive officer on Monday, July 5. Andy Jassy, who previously led Amazon’s cloud business known as Amazon Web Services (AWS), takes over as Amazon’s CEO.

Hertz’s latest chapter. Car rental company Hertz emerges from bankruptcy, about a year after it entered Chapter 11. Hertz filed for bankruptcy in May 2020, when the Covid-19 pandemic hit the car rental business and others in the travel industry.

​​Starstruck. The billionaire space race takes another leap forward on Sunday as entrepreneur and Virgin Galactic founder Richard Branson flies to the edge of space and back. 

August

A crypto bind. The Securities and Exchange Commission (SEC) says that it will begin regulating cryptocurrency to the maximum extent allowed by the regulatory agency’s existing authority.

Tall EV order. President Biden signs an executive order committing the U.S. to making half of all new vehicles sold in the U.S. electric vehicles by 2030. Car companies General Motors, Ford Motor, and Chrysler’s parent company Stellantis NV reportedly throw their support behind the order.

The Delta rush. The Food and Drug Administration (FDA) officially approves the Covid-19 vaccine developed by Pfizer-BioNTech for people ages 16 and older. It was previously available under emergency-use authorization only. 

September

Expanded unemployment ends. Beefed-up unemployment benefits that have assisted approximately 7.5 million people in the U.S. during the pandemic expire on September 7, 2021.

Summertime spending. Signaling a possible improvement for the economy, retail sales beat expectations in August, increasing 0.7%  last month, after falling 1.8% in July.

October

Who’s gonna budge? Congress approves a short-term funding bill to keep the government open through December 3, temporarily avoiding a government shutdown. The bill includes $28.6 billion for communities affected by natural disasters, and $6.3 billion towards the resettlement of Afghan refugees.

The debt download. The U.S. Senate passes a bill temporarily increasing the debt ceiling by $480 billion, which will allow the country to continue to meet its financial obligations through December 3, 2021. 

I quit. A record 4.3 million people left their jobs in August, 2021, the highest number of “quits” since December 2000, according to the latest data from the Department of Labor.

We can work it out. Two years after a failed initial public offering (IPO) WeWork, the office-sharing company, goes public through a special-purpose acquisition company (SPAC) called BowX Acquisition Corporation. 

November

In a far-away galaxy. Facebook changes its corporate name to Meta, reportedly reflecting a desire to be known for more than just its social network. 

Money please. Inflation jumps 6.2% in October, the sharpest increase in nearly 30 years, according to the BLS.

Variant of concern. News of Omicron, the variant that could potentially evade the Covid-19 vaccine, causes major U.S. indexes to fall between 2.0% and 3.5% on Friday—due to concerns that it may interrupt the current global economic recovery. 

Jack breaks his crown. Twitter’s co-founder and chief executive officer Jack Dorsey says he will step down from his executive position at the social media company.

December

Good for now? Congress reaches a budget deal, called a stopgap spending bill, that will keep the government funded through mid-February, 2022. The bill will maintain federal spending at a 2021 level, and will temporarily prevent a government shutdown. 

Grande problem. Chinese real estate developer Evergrande fails to make two coupon payments due last Monday. As a result, credit rating agency Fitch Ratings downgrades Evergrande to a “restricted default.” 

The post Stash’s 2021 Year in Review appeared first on Stash Learn.

In fact, much of 2020 can be summed up in one word: Covid-19. The global pandemic, which descended quickly and unexpectedly, has reshaped world economies, infecting millions around the globe, shutting down businesses, creating record job losses, and causing market volatility. At the same time, the year saw a contentious presidential election, demonstrations of political protest in support of the Black community, and the seeds of an economic recovery.

Stash has attempted to keep you informed of the rapidly changing events, publishing nearly 300 stories this year to help you navigate the news and keep you up to date about business and your money. 

With that in mind, let’s take a look back at some of the biggest stories shaping 2020, as well as some important milestones achieved here at Stash. 

January

Australia on fire. Australia faces the ecological and financial impact of climate change as the country fights enormous bushfires, reportedly made worse by record-breaking heat. The brush fires spread across 25.5 million acres and produced nine times more carbon emissions than California’s record-breaking 2018 fire season.

Taco Bell’s salary boost. The fast-food chain commits to increasing the salaries for the general managers of its restaurants in 2020 in some locations to a whopping $100,000, up from a range of $50,000 to $80,000.

A global health emergency begins. The World Health Organization (WHO) calls Covid-19, the illness caused by a novel coronavirus, a global health emergency. The outbreak of the deadly virus, which began in Wuhan, China, begins spreading to other countries such as Japan, South Korea, and the U.S.

February

Tesla accelerates. The electric car company’s stock price increases by 20% on February 3, making the biggest jump for Tesla in six years. The spike follows Tesla’s positive fourth-quarter earnings. Tesla remains one of the largest players in the growing electric vehicle industry.

Markets tumble. Major indices from the S&P 500 to the Dow and Nasdaq react to the news of the novel coronavirus, dubbed Covid-19, which appears to be spreading more quickly than people had expected. The S&P 500 and Dow each fall more than 10%. The virus begins interrupting global supply chains stretching from China to the U.S., as tens of millions of people stay home due to a regional quarantine.

1,681,497 new investors joined Stash.¹

March

Congress passes a stimulus package. Congressional leaders negotiate a deal on a $2 trillion economic stimulus package in response to layoffs caused by the Covid-19 pandemic, one of the largest aid packages in U.S. history. Known as the CARES Act, the package includes direct payments of $1,200 for most individuals, expanded unemployment benefits,  as well as aid to states, small businesses, struggling industries, and hospitals. 

Stashers invested $25.15 at a time, on average.²

April

T-Mobile officially ties the knot with Sprint. T-Mobile finalizes its $30 billion merger with Sprint two years after talks began about combining the two companies. The new company, which is known as T-Mobile, comes under the leadership of the former Chief Operating Officer Mike Sievert. 

Unemployment climbs. In four weeks, the number of unemployed Americans reaches 22 million, erasing all of the employment gains achieved over the previous ten years. The economy added 21.5 million jobs starting mid-2009 until March, 2020, during the longest period of economic expansion in U.S. history.

May

Hertz declares bankruptcy. As a result of the pandemic, the global car rental chain files for Chapter 11 bankruptcy, following the bankruptcy filings of other well-known companies including Neiman Marcus, J. Crew, and J.C. Penney. 

June

Protests across the country. Hundreds of thousands of people take to the streets to protest the police killing of George Floyd, an African American man killed while in police custody in Minneapolis, Minnesota in May. The protests last through the summer, and spark a national conversation about race.

The Big Apple gets back to work. Following a three-month shutdown that ground the city and state economy to a halt due to Covid-19, up to 400,000 New Yorkers in the manufacturing, retail, and food-service industries return to work. 

Court victory. In a landmark victory for LGBTQ+ people, the Supreme Court rules that LGBTQ+ people are included in Title VII of the Civil Rights Act, protecting millions of LGBTQ+ workers from employer discrimination.
The summer spike. Some states start to roll back reopening plans as the U.S. reaches a record number of new daily Covid-19 cases—more than 45,000 cases—on June 26.

Stashers earned over 14 million pieces of stock with the Stock-Back^® Card.³

July

Job gains reach records. The U.S. adds 4.8 million jobs in June, 2020, the biggest gain since 1939, according to reports, bringing the unemployment rate down to 11.1%., from its April peak of 14.7%. The jobless rate remains significantly higher than its pre-pandemic level.

The gold bug. The price of gold reaches a record high of $1,944 per ounce on July 27. The previous record price of gold was $1,921 per ounce, set in 2011.

August

Apple serves up slices. Apple announces a 4-for-1 stock split. The split means that investors will get three additional shares of Apple’s stock for every one share that they own. The share price will also decrease to roughly $100 from its then-current price of approximately $400.

Tesla splits. Electric carmaker Tesla announces a 5-for-1 stock split. Investors will get fiveshares of Tesla stock for each one that they own.
TikTok heads to court. Video-creation and sharing app TikTok, which is owned by Chinese company ByteDance, reportedly plans to sue the Trump administration over an executive order banning TikTok in the U.S.

Stashers set aside more than $624 million with Auto-Stash.⁴

September

TikTok and Oracle reach a deal. Software and cloud-computing company Oracle reportedly agrees to buy the U.S. operations of video-creation app TikTok. Microsoft and Walmart had previously been frontrunners to acquire operations of the app from its Chinese parent ByteDance. 

Supreme Court vacancy. Supreme Court Justice Ruth Bader Ginsburg, the second woman ever to serve on the high court’s bench, dies at age 87 from complications related to pancreatic cancer.

October

Max to fly again in Europe. The European Union Aviation Safety Agency (EASA) says that Boeing’s 737 Max could begin flying in Europe before the end of 2020 following changes made to the plane’s anti-stall system. The plane, previously Boeing’s fastest seller, had been grounded globally after two crashes involving the aviation system killed more than 300 people in March, 2019. 

Google does not pass go. The Department of Justice announces that it will sue Google for allegedly maintaining a monopoly over internet searches and search advertising.

November

Biden wins. Former Vice President Joe Biden wins the 2020 presidential election on November 8, surpassing the 270 electoral votes needed for the presidency after winning in Pennsylvania.

Good news for the vaccine. Pfizer and Moderna announce that their Covid-19 vaccines are 95% and 90% effective respectively in late stage trials. Their vaccines are created with something called messenger RNA, which has never been tested in humans before.   

Tesla joins the big leagues. S&P Dow Jones Indices announces that Tesla will join the S&P 500after the electric car company reported five consecutive profitable quarters. Valued at approximately $400 billion, Tesla is one of the largest companies to ever join the index. 

737 Max gets the nod from the FAA. The Federal Aviation Association (FAA) approves Boeing’s 737 Max for domestic passenger flights again in the U.S., following the plane’s 2019 grounding globally for its faulty aviation system.

The #1 places Stashers earned Stock-Back^® were Netflix, Walmart, and Spotify.⁵

December

Movie theaters move in. Media conglomerate WarnerMedia says that it will release all of its 2021 movies on HBO Max, as well as in theaters, due to pandemic restrictions and closures.

Vaccination nation. An intensive-care nurse in Queens, New York receives the first dose of Pfizer and BioNTech’s Covid-19 vaccine, as medical centers around the U.S. began the largest inoculation program in the nation’s history, following emergency authorization from the Food and Drug Administration (FDA).

President-elect Biden. The electoral college meets and affirms Joseph R. Biden’s win as the 46th president of the U.S.

The post Check out Stash’s 2020 Year in Review appeared first on Stash Learn.

The political battle between President Donald Trump and former Vice President Joe Biden is projected to be the costliest presidential election in U.S. history. Add in several high-profile Congressional races and a host of high-ranking state seats and the estimated spending for this 2020 election cycle is nearly $2.2 billion.

Political candidates are leaning heavily on your money to win their seats. But what’s the best way to donate to your candidate of choice? Does your donation actually make a difference in their campaign? And how are they spending all that money?

“For this particular presidential race, I think a lot of money is going to be spent on getting out the vote,” said Sarah Bryner, director of research and strategy at the Center for Responsive Politics in Washington D.C. “Getting their people motivated to get to the polls is probably the most significant activity that the campaigns will be doing.”

To date, Trump and Biden have raised nearly $1 billion collectively.  Trump has raised $505.5 million and spent $376.9 million. Biden has raised $479.2 million and spent $343.6 million.

Their financial focus is largely on the so-called swing states, including Michigan, Wisconsin and Florida where every vote counts toward what could be a slim victory.

They are trying to turn campaign donations into votes largely through media advertising and, in the COVID-19 era, fewer public appearances than are typical for a presidential election year.

Trump, as an incumbent president, is also required to use campaign money to reimburse taxpayers for use of Air Force One or security details that he uses while on the campaign trail.

“All of the presidential candidates, the incumbent presidents have to do that,” Bryner said, including Presidents Barack Obama, George W. Bush and Bill Clinton. “That’s a pretty significant expense.” 

How Much You Can Donate to Your Favorite Candidate

Smaller, individual donations are highly coveted by candidates in all races, Bryner, said, because they allow the campaigns to boast that they are working for and supported by the people. In the Congressional arena, she added, Democratic incumbents Alexandria Ocasio-Cortez of New York and Republican Matt Gaetz of Florida have leaned particularly hard on their prowess for collecting individual donations.

About 55 percent of Trump campaign money has come from small individual donations of less than $200, compared to 42 percent for Biden.

But there are rules and regulations for how much one person can donate. The Federal Election Commission sets limits on individual political donations that are adjusted each year for inflation. 

“Campaign donation limits are in place to prevent corruption, [such as] a donor giving a million dollars to a candidate and the candidate being so beholden to them as to grant favors once in office,” Bryner explained.

This year’s contribution limits for individuals include $2,800 to a candidate’s committee or a combined $10,000 for state, district or local party committees. The FEC also maintains a database of people who donate more than $200 per individual campaign or PAC, including their name, location, employer, how much they have donated and who has received their donations.

So while you may throw all your support behind a particular candidate, you need to keep tabs on your political spending. Penalties for willfully ignoring federal campaign finance limits can include hefty fines and even jail time. 

Where You Can Donate to Your Favorite Candidate

If you want to donate directly to your candidate of choice, your best and safest bet is to go directly to their website.

Both  Donald Trump and Joe Biden have official campaign websites where you can purchase merchandise and make a political donation. But there are many other ways to make your dollars count. 

You may choose to donate to a House or Senate race or a smaller race closer to home. Every candidate, no matter how big or how small their campaign, should have an official site where you can donate. You could also donate to a race outside of your district, which you may want to do for high-profile or high-stakes races.

Knowing who the players are and how they are polling can help you figure out how your money could make a difference.

“A candidate might be in a district that’s pretty safe for the incumbent and be so far behind in the fundraising game that it’s really unlikely they’re going to win. On the one hand you want to support that person because you believe in them, but then, on the other hand, you could allocate that money to someone in a closer contest,” Bryner saud. “Generally, a closer contest, your dollar is going to go a little bit farther.”

How to Donate to a Cause or a Committee

If you’d rather donate to a cause, instead of than a candidate, you could donate to a politician action committee or a PAC. A PAC is an organization that uses money to influence or lobby for legislation that benefits that particular group. 

If you are passionate about environmental causes, you may choose to donate to Sierra Club Political Committee or the League of Conservation Voters, which advocate on behalf of candidates and legislation that are pro-environment. 

There are thousands of possible options for cause-related PACs, from public education to medical advocacy to gun rights or gun control to religious or atheist communities to organizations based on race and ethnicity.

You can also donate to PACs that are related to your occupation.

“If you work for a business or if you are in a profession, like you are a dentist, your profession or your business likely has a PAC affiliated with it that you might be able to donate to,” said Bryner, noting that realtors have one of the biggest PACs in the country. “These are oftentimes non-partisan or are bi partisan.”

You can also donate directly to your political party. The Democrat National Committee and the Republican National Committee, as well as third-party organizations such as the Libertarian National Committee and the Green Party, all accept donations and will send your money to the candidates they feel need the most help to win a race or a particular swing state.

That could mean high profile Senate or Congressional races, swing states in the presidential election or even gubernatorial elections.

Make Sure Your Donation Dollars are Safe

When donating, whether to a candidate or a PAC, or a local or nationwide race, make sure you are donating to the actual campaign and not a fraudulent site.

Always use a credit card and never send cash, Bryner cautioned. Also be wary of making political donations via social media as they can be harder to verify and may look strikingly similar to a candidate’s actual donation ads.

“I wouldn’t go through a social media platform because there’s a lot of manipulative Facebook sites that…are really random dudes in Wisconsin,” Bryner said. “So just be careful with that.” 

And while authentic donation sites may ask for your name, your location and your political party affiliation, they will not ask for your social security number or personal financial information.

Your Political Donation is Not a Tax Write Off

While you can deduct a certain amount of non-profit or charity donations on your taxes, donations to political candidates or PACs do not count as approved write offs.¹

An IRS-approved deduction is a donation made to a charitable or non-profit organization with a 501(c)(3) designation. Political committees are designated as 501(c)(4) organizations and are not tax deductible for individuals. 

Make Sure You Are Registered to Vote!

While candidates rely on campaign contributions to win their election, there’s something they want more than your money — your vote.

You need to register to vote before you head to the polls. You can visit your local Board of Elections or register to vote at Vote.org.

The post Want to Donate to a Presidential Candidate? Here’s What to Know appeared first on Stash Learn.

If you’re confused, don’t be. Here’s a breakdown of what’s going on with voting around the country. 

REGISTERING TO VOTE

If you aren’t already registered to vote, each state requires you to register by a rolling set of dates in October. You can find your state’s exact date on this list. Most states have multiple options for registration, such as in-person, by mail, and online. It’s important to check your particular state’s rules so you don’t miss a deadline. 

What is absentee voting, and how is it different from mail-in voting? 

In practice, there isn’t much of a difference. Absentee voting encompasses any voter who cannot be at the polls. Most states include chronic or severe illness, citizens overseas, poll workers, and those who are traveling as valid reasons to request an absentee ballot. This year, Covid-19 concerns count as a valid reason to request an absentee ballot in 44 states and Washington D.C. (See below.) 

Absentee ballots are almost always mailed in. However, an absentee ballot can also be hand-delivered to your local board of elections, or a polling place. Mail-in ballots, on the other hand, are always—ahem—mailed in. A small number of states allow you to vote by mail even if you don’t have an absentee excuse (for that list, also see below). So: most absentee ballots are also mailed in. And—because only a small number of states allow for mail-in voting without an absentee excuse —most mail-in ballots are also absentee. 

VOTING

This is where things can get confusing, since different states have different rules.

Mail-in ballots sent automatically

A handful of states and one district  will automatically mail paper ballots to all registered voters. Some of these are the “universal mail-in” states that have conducted elections this way for years. Others, like California, New Jersey, and Vermont are automatically mailing ballots in response to the pandemic. 

Here’s the full list: 

Washington

Oregon

California

Utah

Nevada

Colorado 

New Jersey

Hawaii

Washington D.C.

Vermont

Application for mail-in ballots necessary

Another 35 states will allow you to cite the pandemic as a valid reason to vote absentee by mail, but you need to apply for your ballot. Some of these states may automatically send you an application to vote absentee. In the other states, you must request your absentee ballot either online or by mail. (Here’s where you can do that. And here is a list of deadlines by state to request your ballot. The deadlines begin Oct. 9. )

Pandemic-related absentee ballots are permitted in the following states:

Alabama 

Arkansas

Alaska

Arizona

Connecticut

Delaware

Florida

Georgia

Idaho

Illinois

Iowa

Kansas

Kentucky

Maine

Maryland

Massachusetts

Michigan 

Minnesota

Missouri

Montana

Nebraska

North Carolina

North Dakota

New Hampshire 

New Mexico

New York

Ohio

Oklahoma

Pennsylvania 

Rhode Island 

South Dakota

Virginia

West Virginia

Wisconsin

Wyoming

States that require a non-pandemic excuse to vote absentee

Finally, six states will not allow absentee voting due to the pandemic. That means that if you’re not traveling and have no other valid excuse to vote absentee (see above), you must vote in-person. 

The states that are not allowing mail-in voting because of the pandemic are: 

Texas

Louisiana

Mississippi

South Carolina

Indiana 

Tennessee

Is voting by mail safe? Will my vote be counted? 

There’s been a lot of speculation that mail-in ballots will not be counted, and for good reason. Thirty-five states will allow you to request a ballot so close to the voting deadline that the U.S. Post Office may not be able to return the ballot in time, according to The New York Times.  If you live in one of the ten regions that are sending out ballots automatically, or in one of the states that won’t send out ballots close to the deadline (Maryland, New York, New Mexico, Rhode Island, Iowa or Alaska), you can rest easy that your vote will be counted if you send your ballot in on time.

However, you can ensure that your mail-in vote will be counted no matter where you live by requesting your ballot early and sending it back early. To be safe, you should allow the ballot one week to arrive and one week to be delivered. Not all ballots must be delivered by Nov. 3 to be counted. Again, that varies by state. This list shows which states require a postmarked ballot by Nov. 2 or 3, as well as acceptable delivery dates for each state.  

What is voting early, and should I do it? 

Roughly two thirds of states allow you to vote up to 45 days early by voting in person. But remember, voting by mail is also voting early. Once you’re confident in your decision, you should vote as soon as you can to make sure your ballot is counted on time. As mentioned above, voting by mail too close to the deadline could result in your vote not being counted in some states.

The post Here’s How to Vote in All 50 States in 2020 appeared first on Stash Learn.

The latest news has more symbolic importance than strictly economic: On July 21, the Trump administration ordered China’s consulate in Houston to close to “protect American intellectual property and Americans’ private information,” according to US State Department spokeswoman Morgan Ortagus. She did not elaborate on specifically what data was in question. Chinese officials in the consulate responded to the closure by burning confidential documents, with smoke visibly rising from the building. 

Five days later, China retaliated by closing the American consulate in the city of Chengdu in condemnation of America’s move. The Houston and Chengdu consulates aren’t the biggest or most important, but their closings are a definitive sign that U.S./China relations are only worsening. 

What’s a trade war, and why is this happening?

A trade war is when one country increases or implements taxes called “tariffs” on imports and occasionally exports from a particular nation. When that nation retaliates with tariffs of their own, we consider this a trade war. 

The Trump Administration began the trade war in 2018 because it believes China isn’t playing by the rules on the global market. For example, the Chinese government partially subsidizes some private companies, which allows those companies to produce goods at a lower selling point than their competitors and secure a valuable, lasting foothold in the market. China has also been accused of spying and stealing private data, most recently in the form of coronavirus vaccine developments. 

The Trump administration doesn’t want to rely so heavily on a global power it can’t trust or control. But instead of going through the World Trade Organization to solve its problems, it chose to start a trade war. 

President Trump also ran on an “America First” platform, which aims to advance the interests of U.S. manufacturers, in part by withdrawing from trade treaties and prior trade agreements. In the past few years, the U.S. has put tariffs on foreign steel and aluminum, not only from China but also Canada and Mexico. It has also taxed solar panels and washing machines, primarily from Asia.

Who does trade war affect in the U.S.?

This directly affects farmers, steel workers, and manufacturers who would typically ship their goods to China, but due to high tariffs, have lost clients there. Soybean farmers were an example of this, and the Trump Administration even bailed them out to the tune of $12 billion in 2018. In fact, the U.S./China soybean market was so disrupted that China made a soybean exemption last September. 

The trade war also affects anyone who imports goods or products from China. Due to the increased tariffs, they’ve been paying more for their supplies, and/or have to make due with different, less-than-ideal products from somewhere else. One third of American small businesses may have been negatively affected by the trade war. And all together, American companies’ stock prices may have lost as much as $1.7 trillion due to this trade war. 

Finally, the trade war affects American consumers, since businesses need to increase prices to pay for tariffs. In 2018 and 2019, the average cost to American households was an extra $650 per year, according to Chief U.S. Financial Economist for Oxford University Kathy Bostjancic. With additional sanctions added in 2020, that number has jumped to $2031 per year, according to the National Foundation for American Policy. 

Sorry to say: It’s unknown. So far, China has been comfortable retaliating in kind to The Trump Administration’s penalties, but not escalating them. Relations are at a low point now, but this could change based on upcoming presidential election results, and/or a change in strategy from either side. 

The post How the Trade War With China Can Cost You appeared first on Stash Learn.

The World Economic Forum (WEF) is an international organization of world leaders and executives. For fifty years, the forum has held an exclusive meeting in Davos for executives, elected officials, and even celebrities to hear from experts about the biggest issues facing the world and to brainstorm solutions. The meeting has a theme each year and the theme this year is “Stakeholders for a Cohesive and Sustainable World.” Participants are focused on building a more sustainable future in the face of climate change.

Climate Change at Davos

Given the WEF’s focus on sustainability for 2020, climate change has been a major talking point at the conference. Sixteen-year-old Swedish climate activist Greta Thunberg attended the meeting. Thunberg delivered a speech in which she claimed that world leaders are not doing enough to reduce carbon emissions and that the continued inaction of world leaders and companies will allow climate change to accelerate.

Klaus Schwab, the German economics and engineering professor who founded the World Economic Forum, also urged participating companies to aim for net-zero carbon emissions by 2050. Some executives took the opportunity at the meeting in Davos to speak about how their companies plan to reduce their carbon footprints and increase their sustainability efforts.

Leadership at British-Dutch consumer goods conglomerate Unilever promised to reduce unsustainable packaging by 14% by 2025, while Nestlé pledged that it would spend $2 billion on the development of more sustainable packaging, according to Reuters. Meanwhile, Russian aluminum producer En+ said it would spend $850 million revitalizing plants to reduce their carbon footprint. Starbucks CEO Kevin Johnson also promised that the coffee company would cut its carbon emissions in half by 2030.

Investment manager BlackRock also announced its partnership with the Climate Finance Partnership, which hopes to raise $500 million for the development of renewable energy. This announcement came after BlackRock’s chairman and CEO Larry Fink sent a letter to CEOs warning them about how the advancement of climate change might significantly shift the world of finance.

Donald Trump Takes a Different Tone

Despite the theme of this year’s meeting in Davos, President Donald Trump made a speech in which he claimed that climate change is not the immediate threat that scientists and climate experts have asserted that it is. While company leaders outlined their plans for reducing carbon emissions, President Trump spoke in support of America’s position as the biggest producer of oil and gas in the world.

Energy-Conscious Investing

If the theme of this year’s Davos is any indication, confronting climate change is becoming a priority for companies and consumers. You can be climate-conscious in how you invest. Stash offers ETFs that include clean energy companies and companies that are working to reduce their carbon footprints.

When you invest, remember to follow the Stash Way, which includes regular investing, diversification, and planning for the long term.

The post Let’s Dive into Davos appeared first on Stash Learn.

Markets and the economy had a great year in 2019, with record gains for most of the major indexes, including the Dow, S&P 500, and the tech-heavy Nasdaq.

Now it’s on to a new decade, and to start the year out the right way, Stash is offering its perspective on some things to look out for in 2020 as you plan the most important parts of your financial life, which should include creating a budget, saving for emergencies and creating a financial plan for retirement. (Find out more here.)

Here’s wishing you a great new year, and a wonderful new decade!

Unemployment

At 3.5%, unemployment has reached a 50-year low. That number is also a far cry from the financial crisis of 2008 and 2009, when unemployment peaked at 10%.

In fact, in December the U.S. economy added 266,000 jobs, beating economist expectations by nearly 90,000 jobs.

Takeaway: No matter how you look at it, when U.S. consumers have jobs, it’s great for the economy. But higher employment rates means it’s more expensive to hire workers, which can drive wages up, as workers demand more, and can make it more expensive for businesses to take on new workers. As a result, businesses can pass along the cost increases to consumers, which can lead to inflation.

Consumer sentiment and spending

Consumer sentiment—which essentially means how people feel about their economic prospects and their willingness to spend—was strong toward the end of 2019. That’s according to something called the Consumer sentiment index, put out by the University of Michigan. Its most recent survey shows general confidence in the economy, for factors including employment, inflation, and the strength of household finances.

Consumer spending, which makes up nearly 70% of the economy, was particularly strong on the two mega-shopping days following Thanksgiving. Shoppers spent $7.4 billion online on Black Friday, a nearly 20% increase compared to their Black Friday spending in 2018, according to Adobe Analytics.  (They spent an additional $4 billion on Thanksgiving day itself, according to Reuters.) Even so, according to Adobe, it was Cyber Monday that emerged as the real winner for one-day sales, with online shoppers ringing up $9.4 billion in purchases, an almost 20% increase compared to 2018 when shoppers spent $7.9 billion.

Takeaway: Upbeat consumers who continue spending are generally a good sign for the economy. But consumer sentiment can change quickly. In fact, two-thirds of consumers still believe a recession will occur in 2020.

Interest rates

The Federal Reserve lowered interest rates three times in 2019, providing stimulus to the economy that may begin to fade this year.

Here’s how it works. Interest rates are the underpinning of consumer borrowing—think credit cards, car loans, and mortgages. Lower interest rates can provide a stimulus to the economy through cheaper loans.

But the Federal Reserve has indicated it’s finished lowering interest rates for now, and the current rates—the Fed lowered its benchmark rate to between 1.5% and 1.75% in September—may remain where they are for a while. In fact, in its most recent meeting in December, the central bank left interest rates unchanged.

Takeaway: Lower interest rates helped to stimulate the economy in 2019, but it’s unclear if the Fed will continue to lower rates in 2020.

The trade war

The U.S. is engaged in a trade war with at least half-a-dozen other countries, including China, Argentina, Canada, France, Japan, and South Korea.

But it’s the trade war with China that has most economic experts worried, as it has the potential to reduce economic growth.

Not only are the U.S. and China the largest economies in the world, but the two countries also trade nearly half a trillion dollars worth of goods with one another.

While the U.S. has entered into a partial agreement with China to resolve tensions, since 2018, the United States and China have taken turns raising tariffs on each other’s exports, including steel, soybeans, whiskey, lumber, and electronics, among others. In May 2019, the United States doubled tariffs on $250 billion of Chinese products and China responded by announcing tariffs on $60 billion of American products.

Takeaway: Trade wars can provoke uncertainty not just in the U.S. economy but globally. The tariff war with China has already led to higher costs at home. In fact, with the current tariffs in place, American households will spend an extra $2,031 per year, according to the National Foundation for American Policy.

Manufacturing slowdown

One worrying sign that’s been haunting the economy and economists since the summer of 2019 is the marked slowdown in manufacturing. In fact, November marked the fourth straight month that manufacturers reported a contraction in their activity, according to the Institute of Supply Chain Management, which tracks factory orders and output.

Takeaway: The trade war may be causing a drop in orders as American factories struggle to come to terms with global economic uncertainty. While manufacturing makes up only 11% of the U.S. economy, a slowdown in this sector could have a big impact on industries such as car manufacturing that make up a big chunk of economic activity, and on regions where manufacturing is an economic mainstay, according to reports.

Climate concerns

Climate change is real. Look no further than the increasing power of hurricanes, floods, and wildfires in recent years to permanently change landscapes.

And it’s likely that the increasing natural disasters will also harm the economy.

Here are some key findings from the most recent National Climate Assessment study, from 2018.

• By 2050, the average annual temperature of the U.S. could increase by 2.3 degrees.
• The U.S. economy could shrink as much as 10% by the end of the century, losing hundreds of billions of dollars in national and overseas trade, not to mention health costs and disaster relief. Farming and other agriculture will be harmed, through the declining health of livestock, reduced crop yields, and threats to food security, among other things.
• Aging national infrastructure could be further harmed by extreme weather such as flooding, heatwaves, and wildfires, leading to threats to the economy, national security, and human health.

Takeaway: Expect extreme weather events and other natural disasters to continue affecting the U.S. economy, potentially causing billions in damages and lost revenue.

Elections

2020 is an election year. And while individual presidents come armed with economic policies, achieving those goals can depend on politics. For example, a divided Congress lost in legislative gridlock could be good for business, because there is very little chance that meaningful regulations will be passed unless both parties find some sort of common ground. On the other hand, a unified Congress might have a good chance of passing things like infrastructure reform, health care improvements, or tax changes.

Takeaway: Elections matter, and politics can affect the economy in unexpected ways, from the passage of new regulations, to lowering interest rates, and spending on infrastructure.

How you can prepare

Volatility and risk, or the potential for your investments to lose money, are always part of investing, especially in the short term.

But there are things you can do to help shield yourself from too much risk.

We recommend following the Stash Way, which includes regular investing, investing for the long term, and diversification.

You can also consider adding safer investments such as bonds to your portfolio. They’re often good long-term investments that could help smooth out fluctuations in your returns.

Another thing to think about, particularly if you’ve got small amounts of money to invest, is to ride out any downturn by sticking to a regular investing schedule, and investing over time. You’ll effectively be purchasing investments sometimes when stocks are low, and sometimes when they’re high. Over time, share prices should even out.

The post Stash Looks Ahead in 2020 appeared first on Stash Learn.

And as the year draws to a close, it’s important to take a moment to think about everything that’s happened.

This year saw an escalating trade war between China and the U.S., not to mention the IPOs of big tech companies including Uber, Lyft, and WeWork, with mixed results. Meanwhile, the Federal Reserve Board cut interest rates for the first time since the financial crisis in 2008. HBO’s Game of Thrones ended while Disney sought the streaming throne with the debut of Disney+. And who knew that public utilities could go bankrupt? (PG&E we’re talking about you.)

Through it all, Stash has been here with you, helping you understand the important business news, and how current events can shape your financial future. In fact, we’ve published more than 300 stories in 2019, helping you identify the most important trends and guiding you through your financial journey.

Take a trip down memory lane with us as we remember the events that defined the year.

January

PG&E announces bankruptcy. Pacific Gas and Electric Company, the largest public utility in California, announces it will file for bankruptcy protection, according to reports. The electric company faces $30 billion in liability charges for its alleged role in the 2017 and 2018 fires in California.

Beginner investors joined us in 2019¹:
873,521

Are you starting out your investing journey and want to know where to start?

February

Amazon’s NY HQ is over before it starts. After months of pushback from local politicians and community leaders, e-Commerce king Amazon announces it is canceling plans for a second headquarters in New York City. Amazon previously conducted a year-long search among hundreds of U.S. cities for its new spaces.

March

Lyft goes public. The ride-share company has its first day as a public company, following its initial public offering, or IPO.  Lyft, which lets consumers use an app to hail rides in numerous towns and cities around the world, sees its stock price jump 20% as it begins trading on Friday, March 29, 2019.

The average amount Stashers invested at a time² in 2019:
$17.95

Check out all of the stocks and ETFs offered on Stash.

April

Game of Thrones ends. HBO’s blockbuster series has its finale, meaning everyone has one less show to talk about around the water cooler. We riff on how some of the most important characters from the show might advise you on how to invest your very own coin(s). Do you know where your dragons are?

The markets reach record highs. On Tuesday, April 23, the S&P 500 gains 25.71 points, closing at 2,933.68. Its previous record was 2,930.75, reached on September 20, 2018, according to the Associated Press. On the same day, the Nasdaq jumps 105.56 points to 8,120.82, beating its previous record of 8,109.69 on August 29, 2018.

May

The trade war intensifies. President Trump announces the U.S. will double tariffs on $200 billion worth of Chinese imports. China responds by saying it will add new tariffs of its own on $60 billion of U.S. exports.

The Fed stays the course. The Federal Reserve Board, the nation’s central bank, decides against increasing interest rates on Wednesday, May 1. By leaving interest rates where they are, the Fed reverses a policy of rate increases that it had followed throughout 2018.

Uber’s IPO troubles. After plenty of hype suggesting Uber’s IPO would be one of the largest in a decade, the company’s stock falls 7% from its offering price of $45 on its first day of trading. By the end of its first trading day, Uber’s valuation stands at $76 billion, far below its initial estimate that it could reach as high as $120 billion, according to reports.

Using Auto-Stash, Stashers set aside a total of³:
$445,516,115

Have you saved with Auto-Stash yet? If not, turn on Auto-Stash.

June

Defense companies merge. Two of the nation’s largest defense companies, Raytheon and United Technologies announce plans to merge. The combined business potentially could be an aerospace and defense industry giant, nearly rivaling Boeing for market cap.

July

Equifax settles. Credit reporting agency Equifax announces it will pay $700 million to settle dozens of lawsuits related to a massive cybersecurity breach in 2017.

The Fed cuts rates. In July 2019, The Federal Reserve cuts its federal funds interest rate to a range between 2% to 2.5%, the first interest rate cut in ten years. By cutting its benchmark rate, the Fed hopes to keep the economy growing, according to a statement.

August

Score better credit. Your credit score is a key part of your financial life. It determines how much credit you can get, the interest rates you pay on your loans, and how much it might ultimately cost you to buy a house or a car, among other things. We take a look at some tactics for boosting your credit score.

The trade war continues. Trade talks between China and the U.S. break down, as China backs out of an agreement to purchase more products from the U.S. The Trump administration threatens a new round of tariffs, in addition to the $250 billion it has already placed on Chinese imports.

Stock-Back^® rewards earned by Stashers in 2019⁴:
5,694,529

Learn more about Stock-Back^®

September

FDA says cool it, Juul. Juul announces Chief Executive Officer Kevin Burns is stepping down, reportedly in reaction to a proposed FDA ban on all flavored vaping products, and a spate of deaths and illnesses related to electronic cigarettes.

The Fed cuts rates again. The Fed cuts the federal funds rate again, this time to a range between 1.7% to 2%. It cites slower global growth and soft U.S. inflation as reasons.

October

WeWork falters. WeWork’s initial public offering (IPO) was supposed to be one of the most successful of 2019. But soon after it files its S-1 paperwork with the Securities and Exchange Commission (SEC) in August 2019, things began to unravel. The paperwork shows WeWork has hundreds of millions of dollars of debt.

The Fed makes a third cut. The central bank cuts interest rates to a range between 1.5% to 1.75%. Its benchmark rate is used to determine many consumer loans, from credit cards to mortgages.

#1 places Stashers earned Stock-Back^®5 in 2019:
Walmart, Uber, and Netflix

Learn more about Stock-Back Bonuses.

November

Disney+ arrives. The Walt Disney Co., best known for animated classics and family-friendly entertainment, launches a new streaming service called Disney+. With its streaming service at half the price of Netflix, Disney enters streaming wars dominated by companies like Netflix and HBO.

December

Google’s leadership changes. On Tuesday, December 3, Sergey Brin and Larry Page, announce that they will step down from their executive roles at Alphabet, the parent company of Google, which they started as a research project while they were students at Stanford in 1998.

Aramco breaks a record. Saudi Arabian oil company Aramco achieves its goal of having the largest IPO in history when it lists 1.5% of its shares on the Saudi stock exchange. On December 12, 2019, Aramco reaches a $2 trillion market cap, hitting the Saudi Crown Prince Mohammad bin Salman’s initial hope.

The post Stash’s 2019 Year in Review appeared first on Stash Learn.

The tweet was reportedly meant to show support for protesters in Hong Kong, where hundreds of thousands of people have demonstrated for weeks against mainland China, asking for greater access to democracy and political representation.

Instead, it has caused an ongoing backlash in China, where some of the nation’s biggest businesses have reportedly withdrawn their sponsorship of the NBA over the controversy.

The NBA’s commissioner has defended Morey’s right to freedom of expression, but the NBA also issued an apology to China, which itself is the subject of controversy. Some critics have said it shows the NBA appears to be more concerned with its profitable relationship in China than the political freedoms of the country’s citizens.

Companies often need to walk a fine line when it comes to politics, and business relationships with China can be complex. China is one of the largest economies in the world, but it also has an authoritarian government, and numerous other U.S. companies have reportedly walked back political statements challenging China in recent months, or bowed to government censorship in other ways, to continue doing business there.

Here’s an explainer:

China and the NBA

The NBA is a huge moneymaker, with annual revenue of about $8 billion, according to Forbes. However, China accounts for nearly 10% of the NBA’s total revenue, an amount that’s expected to increase to 20% in the next decade according to reports. China is also the basketball league’s largest market outside of the U.S.

China, which has a population of 1.4  billion, has the second-largest economy in the world after the U.S., valued at about $14 trillion. And it’s an important market for U.S. businesses of all kinds.

While China’s economy has operated with free-market principles for decades, the country’s government is communist and authoritarian. Although its businesses have tended to operate freely for decades, they have come under growing government supervision and control, according to experts. Increasingly, U.S. businesses have encountered free-speech issues operating there.

In reaction to the Morey’s tweet, the NBA’s Chinese sponsors have reportedly pulled their support for the league, including media conglomerate Tencent, which claims to have 500 million customers to whom it live streams NBA games, as well as China Central Television, smartphone maker Vivo, numerous large Chinese retailers, and a Nissan partnership in China.

Additionally, the Chinese Basketball Association reportedly severed all ties with the NBA.

Not just the NBA

• Facing media criticism in China, Apple reportedly recently disabled an app that helped Hong Kong demonstrators track the whereabouts of police.
• Search engine company Google, which has been banned from operating in China for years, has been working on a censored version of its search engine to operate there, according to reports.
• Gaming company Activision Blizzard suspended a Hearthstone champion who voiced support for Hong Kong demonstrators and revoked a $10,000 prize he’d earned playing the game.
• American Airlines, Delta Air Lines, and United Airlines no longer refer to Taiwan as a separate country on their booking websites. Taiwan has asserted its independence from China since the 1940s.
• Marriott fired an employee in Omaha, Nebraska in 2018 for liking a Tweet that commended the hotel chain for listing Tibet as an independent country. China claims that Tibet is under its sovereignty, and Marriott later apologized to China and changed the listing status of Tibet, according to the Washington Post. (China had allegedly threatened to shut down Marriott’s website in China.)
• In order to tap the huge Chinese market, various film studios in Hollywood have adapted scripts so they pass scrutiny with Chinese censors.

More about Hong Kong

Hong Kong reverted back to Chinese rule in 1997, after nearly 100 years as a colony of Great Britain. Protestors there have demonstrated for greater freedom from mainland China, and have gone as far as to shut down the airport on the island, which is one of the busiest in the world. The protests began this summer over a law that would allow mainland China to extradite Hong Kong citizens, meaning they could be sent there to stand trial.

The trade war with China

The U.S. and China are also engaged in a trade war, and rhetoric between the two countries has gotten heated.

• Trade talks between China and the U.S. have repeatedly broken down, which has caused some market turmoil in the U.S.
• The Trump administration has threatened tariffs on $550 billion of Chinese imports.
• In response, China has called for a halt to purchases of American agricultural products.
• Over the summer, China let the value of its currency, called the yuan,  fall. Very generally, China pegs its currency to the dollar. So that means every yuan exchanged equals a fixed amount of dollars, and that fluctuates with the value of the dollar. By letting its currency devalue, or fall below its current value, China made its own goods and services cheaper in export markets.

Comic relief

The cartoon South Park, often raunchy and controversial, has also ventured into the fracas. A recent episode criticized censorship in China. China then banned the cartoon from its airwaves. Last week cartoon creators Trey Parker and Matt Stone tweeted in response:

Watch the full episode – https://t.co/oktKSJdI9i@THR article – https://t.co/nXrtmnwCJB pic.twitter.com/Xj5a1yE2eL

— South Park (@SouthPark) October 7, 2019

*By tapping on the link above, you are going to a website not managed by Stash which is subject to a different privacy policy and terms of use.

Remember the Stash Way

Investing can be scary and confusing, especially when markets are volatile.

That’s why we’ve boiled down our investing philosophy into three basic principles that we hope can help guide you as you make your first investing decisions. We call our approach the Stash Way. Here are its three pillars:

• Invest for the long-term
• Invest regularly
• Diversify

You can learn more about the Stash Way here.

The post All About the NBA’s China Dilemma appeared first on Stash Learn.

But perhaps not anymore.

The chief executives of the leading corporations in the U.S. released a new set of standards, through an organization called the Business Roundtable, about how they propose to operate their businesses in the future. And from now on, people, suppliers, communities, and the environment will allegedly come first.

“The American dream is alive, but fraying,” Jamie Dimon, chairman and CEO of JPMorgan Chase, and chairman of the Business Roundtable, said in a press release. “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”

Why is this important?

• The new goals are the opposite of established business norms that prioritize profits.
• For the last 50 years, the stated objectives of big corporations has been reportedly to make money, increase profits for the owners and shareholders, i.e., the people who own the company and its stock.
• A top proponent of the profits over people mindset was Milton Friedman, a leading economist who wrote in 1970 that “the social responsibility of business is to increase its profits.”
• In its 1997 mission statement, the Roundtables said it “wishes to emphasize that the principal objective of a business enterprise is to generate economic returns to its owners…In The Business Roundtable’s view, the paramount duty of management and of boards of directors is to the corporation’s stockholders.”

What’s different this time?

• The Business Roundtable says it wishes to be more inclusive of workers and other non-owners who participate in business.
• The Roundtable’s new statement says: “Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all.”
• Sustainability and the environment are also key.

What is the Business Roundtable?

Founded in 1972, the Business Roundtable is a pro-business public policy and lobbying group that represents the interests of the largest U.S. corporations, which collectively employ 15 million people, and produce $7 trillion in annual revenue, according to the group.

Who signed the statement?

Nearly 200 CEOs, including:

• Tim Cook, CEO of Apple
• Jeff Bezos, founder and CEO of Amazon, and
• Mary Barra, the chief executive of General Motors
• Michael Dell, founder and CEO of Dell computers.
• Doug McMillon, CEO of Walmart.
• Here’s the full list.

Why now?

The heads of the largest U.S. companies may realize that times are changing, and they need to be more inclusive of people beyond shareholders and other owners, according to experts.

For example, executive pay and the increasing wealth gap between the richest and poorest U.S. citizens has been the topic of conversation from pundits to politicians in recent years, and particularly as the country gears up for the next presidential election.

Since 1978, the average CEO salary has increased 940%, according to the Economic Policy Institute, a labor think tank. Over the same time period, the wages of average U.S. workers have increased only 12%. The average CEO pay at a large company was $17.2 million compared to $56,000 for the average worker nationally.

Companies have also grown more sensitive about how the products they produce actually get made, and have grown more aware of the potential mistreatment of workers, particularly in emerging economies.

There is a growing realization that supply chains must be transparent, and that in order for capitalism to be sustainable, treatment of people matters, according to experts.

Additionally, global warming, and the role of business in producing carbon emissions that contribute to the heating of the planet, has become a top issue.

The post What’s the Business Roundtable and Why Does It Want to Change Capitalism? appeared first on Stash Learn.

I usually write to you when the market makes big moves, and over the past few days, the market has been gyrating up and down. Here’s something I really want you to take to heart: Investing is all about time in the market, not timing the market.

Yesterday, for example, the Nasdaq was up around 2%, and today as I write this, it’s down even more than that. Zoom out and take a long-term view. Don’t get caught up in the short-term noise. Remember, you’re a long-term investor!

Market Psychology

Today I want to address something called market psychology.

Market psychology is all about the way investors feel at any one point in time. But it also includes the tendency for investors to act with their emotions, rather than stick to their long-term financial plans.

There’s a lot going on with the economy and with markets today. The U.S. is beginning to feel the impact of a trade war with China. An important indicator in the bond market, called the yield curve, is flashing red lights. And there’s a lot of uncertainty in global markets too.

As a long-term investor, however, it’s important to tune out the noise of the day, and buy small amounts of stocks, bonds, and funds on a regular basis, through the market ups and downs. Turn on Auto-Stash to help you do that.

Volatility is normal

It’s understandable for someone to be nervous when the market moves sharply down.  It can be uncomfortable, especially if this is your first time investing during one of these periods. Hey, I was a beginner investor once, too.

I remember investing through my first bear market in the early 2000s right after the Dot-com bust. It wasn’t fun seeing my account balance decline; however, I always had a long-term perspective. In 2008, I lived through another big market correction. But again, I thought long-term and maintained my focus.

Why thinking long-term is key

It’s important to think about why a long-term investor shouldn’t get emotional over these types of market gyrations.

Over time, the stock market will go up and down. Look at this chart compiled by New York University’s Stern School of Business, which shows market performance since 1928.  You’ll see some really good years, and some nasty years as well. The coolest thing to see is the compounding value of stocks, throughout the good and bad years.

Here’s what it all means. Over the last 90 years, annual returns for the S&P 500 have been positive three quarters of the time. Nearly half the time (11 out of 24 down years) any losses were recovered within two years.  It has never taken more than 7 years to fully recover.

A prudent investor who bought regularly throughout this period (and didn’t panic or make rash decisions) would have seen a full recovery from all the down markets.

Important disclosure and takeaway: This is what happened in the past. It is by no means a guarantee of what will happen in the future. The key thing to understand from history is how bad years and good years follow each other pretty consistently over time. It’s the nature of the market.

How to think like a long-term investor

The majority of Stashers are new to investing. It’s our job to keep educating you on this long-term journey, and we take this very seriously. There are 3 million of you now with Stash accounts, and many of you all joined at different times.

Here’s the big tip: It doesn’t matter when you started. We aren’t market timers so the goal is not to buy something all at once, but rather to buy small amounts at different prices over a long period of time.

As an investor, you own real shares of public companies, bonds and other asset classes. These assets—or shares—are tangible and real and their prices move up and down. Your invest account isn’t a bank account, but instead represents money that you are putting away for the long term. Think of it like owning a home. Its value will go up and down over time.

Turn on Auto-Stash

Turn on or update your Auto-Stash. It’s the easiest way to add small amounts of money on a regular basis.  This way, you’ll avoid the emotional aspect of investing and won’t get fooled into trying to time the market.

Auto-Stash is an incredibly powerful tool, and an essential part of the Stash Way.

Work hard, earn your money, and then make it work hard for you. By taking a long-term view and consistently investing small amounts, you can allow your money to work for you.

Remember the Stash Way

Investing can be confusing, especially when markets become volatile.

That’s why we’ve boiled down our investing philosophy into three basic principles that we hope can guide you as you make your first investing decisions. We call our approach the Stash Way. Here are its three pillars:

• Invest for the long-term
• Invest regularly
• Diversify

When in doubt, follow the Stash Way, which you can learn more about here.

Stash on

We look forward to many great years ahead, as we help you meet your financial goals.

Thanks—and keep on Stashing!

-Brandon

Ps. We love to hear from you and value your feedback. Please write to my co-founder and me at: feedback@stash.com

The post How to Think Like a Long-Term Investor appeared first on Stash Learn.

Stock market indexes around the world dropped on Monday, August 5, 2019  as China retaliated by canceling orders for U.S. products, and by devaluing its currency.

What’s happening with the trade war with China?

• Trade talks between China and the U.S. broke down, over an alleged agreement that China would purchase more products from the U.S.
• The Trump administration threatened a new round of tariffs, in addition to the $250 billion it has already placed on Chinese imports.
• In response, China has called for a halt to purchases of American agricultural products.
• China is also allowing the value of its currency, called the yuan, to fall. It’s a little complicated, we know, but bear with us. China pegs its currency to the dollar. Very generally, that means every yuan exchanged equals a fixed amount of dollars that fluctuates with the value of the dollar. By letting its currency devalue, or fall below its current value, China makes its own goods and services cheaper in export markets.
• Last week, the Federal Reserve also cut a key interest rate in the U.S., in an attempt to keep the U.S. economy from slowing down.

What’s a trade war again?

A trade war is when countries start waging an economic battle with each other using tariffs. One country will put tariffs on another’s goods, and the other will retaliate in kind.

A tariff, sometimes called a duty, is a tax imposed by one nation on another’s imports. (In some cases, tariffs can be “levied”–or placed–on exports.) The tariff is generally calculated as a percentage of the import’s total value, including freight and insurance charges.

Governments tend to impose tariffs on another’s goods to make their own products more competitive and affordable, and to generate revenues.

Until recently, the U.S. has generally refrained from increasing tariffs and entering into trade wars with other countries.

The trade war with China could decrease global growth by $1.2 trillion, according to recent reports. The U.S. and China are the world’s first and second-largest economies.

Remember the Stash Way

Investing can be scary and confusing, especially when markets are volatile.

That’s why we’ve boiled down our investing philosophy into three basic principles that we hope can guide you as you make your first investing decisions. We call our approach the Stash Way. Here are its three pillars:

• Invest for the long-term
• Invest regularly
• Diversify

You can learn more about the Stash Way here.

The post The U.S.-China Trade War Explained appeared first on Stash Learn.

It’s the third time this year the Fed has hit the pause button, after years of gradually increasing something called the federal funds rate.

The Federal Reserve (the Fed), is the nation’s central bank, and one of its goals is to oversee the health of the nation’s financial system.

Here are more details:

• The Fed left the federal funds rate at a range between 2.25% and 2.5%.
• The federal funds rate forms the basis of other interest rates, such as for credit cards and mortgages, and it even factors into the yield offered by many bonds.
• When interest rates go down, consumer and business borrowing can become cheaper.
• After its interest rate decisions, the Fed typically issues a statement that many experts examine for meaning. This month’s statement dropped the word “patient” from its text, a word that appeared in May’s statement to describe the Fed’s attitude toward future interest rate hikes. By dropping the word, the Fed suggested it might consider making cuts to the federal funds rate if the economy experiences difficulty later this year, Bloomberg reported.
• The reasons for a potential rate cut are complicated, but they could include low inflation, a softening employment market, weakening global growth, the unresolved trade disputes with China and Mexico, which could act as a drag on the economy, particularly in the manufacturing sector, according to reports.
• Although the central bank is supposed to operate independently from politics, President Trump has pressured the Fed to lower interest rates, saying the rate increases over the past few years have slowed economic growth.

What does the Fed do again?

The Federal Reserve is the central bank of the U.S. It oversees 12 district banks, which together are responsible for the monetary policy of the U.S.

The Fed’s mission is to oversee the health of the nation’s financial system. It attempts to keep the economy strong and growing by enacting policies to maintain low inflation and healthy employment levels. It does this primarily by adjusting interest rates, and lending money to the nation’s banks.

The central bank can adjust something called the federal funds rate, which is a short-term rate that it charges banks to borrow and lend money to one another. The federal funds rate forms the basis of other interest rates, such as for credit cards and mortgages, and it even factors into the yield offered by many bonds.

The Fed has been steadily increasing interest rates since 2014. The increases follow a seven-year period when the central bank left interest rates at or below 0%, to stimulate the economy following the recession.

It raised rates four times in 2018, and its current benchmark rate is between 2.25% and 2.50%. The last time the Fed raised rates was in December 2018.

What do rate changes mean for the stock market?

In December news of an interest rate hike sent stock indexes tumbling, because the Fed also suggested the pace of economic growth might cool off in the next year.

When interest rates go up, it can also make borrowing costs for businesses, not just consumers, increase as well. That can eat away at profits for some companies, and that can also factor into stock market swings.

But markets also dropped in May when the Fed left rates unchanged after its last meeting.

Following the June meeting, markets increased modestly.

Check out this message about the value of long-term investing (and avoiding market noise) from Stash’s CEO Brandon Krieg.

The post The Federal Reserve is No Longer ‘Patient’ appeared first on Stash Learn.

PG&E, as the utility is known, provides electricity and gas to 16 million people in northern and central California. It employs 20,000 people.

What happened?

PG&E reportedly faces about $30 billion in liability charges for its alleged role in the 2017 and 2018 fires in California. Fires in 2018 alone caused an estimated $9 billion of damages in the state, including the deaths of 88 people and the destruction of 20,000 structures.

PG&E reportedly disclosed that some of its equipment may have malfunctioned in November 2018 near the site of the Camp Fire, the deadliest and most destructive blaze in California history.

Fire investigators claim that power lines maintained by PG&E came in contact with trees, potentially causing as many as 18 of the 21 fires that California experienced in 2017 and 2018, according to reports. A broken power transmission tower, and bullet holes in a power pole may also have contributed to the Camp Fire.

In response to the news, the company’s stock fell about 50% in morning trading, according to CNBC. The company’s chief executive officer, Geisha Williams, also stepped down.

What’s a utility?

Utilities are corporations that provide important services that keep the modern world working. These services include water, electricity, telephone service, gas, or sewer infrastructure.

Utilities can be either publicly or privately owned, but because everyone needs access to the services they offer, they are heavily regulated by either state or federal authorities.

Wait, what’s bankruptcy?

Businesses file for bankruptcy to protect themselves from creditors, which are entities or people that have loaned them money. They typically go through a court-mediated process, called Chapter 11, that allows them to reorganize and round up financing to continue operations, as well as discharge some of their debts.

PG&E will file for Chapter 11 protection, which could allow it to continue operating.

The post PG&E in Flames: Can a Public Utility Go Bankrupt? appeared first on Stash Learn.