Kiplinger\'s Personal Finance 03.2020

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Low mortgage rates and a healthy job market are feeding

a slow but steady gain in home sales and prices. The National

Association of Realtors reports that existing-home sales were

up 2.7% in November from a year earlier, the fifth straight

month of year-over-year gains.

Millennials buying their first home accounted for nearly half

of mortgage originations for home purchases, according to

data from Realtor.com. But the market for starter homes re-

mains tight, contributing to a rise in prices. The median sales

price for an existing home rose to $271,300 in November, up

5.4% over the past year.

State pensions have seen overall improvement, but there

are some notable laggards. Strong investment returns have

boosted the median funding ratio...the fraction of what is

needed now in order to deliver promised future benefits...

to 72.5%. But four state plans (New Jersey, Rhode Island,

Pennsylvania and Hawaii) are below 60%. Three (Kentucky,

Illinois and Connecticut) are less than 40%.

Benchmarks: S&P 500, MSCI EAFE, MSCI Emerging Markets, Bloomberg Barclays U.S.

Aggregrate Bond index, PM London Fix. The 2019 and 10-year annualized returns are as

of December 31, 2019. †Annualized return as of October 5, 2019. SOURCES: Coinbase,

Morningstar Inc., Kitco.com.

A BANG-UP END TO THE DECADE

HOME PRICES HEAD HIGHER

From The Kiplinger Letter

STATE PENSION FUNDS GET HEALTHIER

BOEING’S LONG SHADOW

Aerospace giant Boeing has a

market value of $186 billion,

employs 153,000 people and

vies with France’s Airbus for

dominance of its industry. So,

until the government okays

the 737 Max’s return to service

(which could happen as early

as March, according to some

analysts), Boeing’s decision to

halt production of the aircraft

in the wake of two horrific

crashes will have far-reaching

financial ripple effects ...

...on the stock. A new chief

executive took over in Janu-

ary, possibly presaging more

turbulence for Boeing stock

amid management and

strategy changes. The

shares have slipped

26% from their

March 2019 high. Cannacord

Genuity analyst Ken Herbert

rates the stock a “hold.”

... on suppliers. Dozens of

firms make bespoke parts for

the 737 Max, Boeing’s most

popular aircraft as measured

by its backlog of orders. For

example, Spirit Aero-

Systems makes the

fuselage for the

737, among other

parts, and more than half of

the company’s annual reve-

nue comes from Boeing.

... on the economy. The pause

in production could cut U.S.

gross domestic product

growth over the first three

months of 2020 by as much as

0.5 percentage point—a sub-

stantial nick, given expecta-

tions for growth of just 1.8%

for all of 2020. Growth should

be back on track when the

Max comes back on line.

Market

2019

return

10-year

annualized

return

Highest

return

of decade

U.S. stocks (including dividends) 31.5% 13.6% 31.5% (2019)

Foreign stocks (developed mkts) 22.0 5.5 25.0 (2017)

Emerging-markets stocks 18.4 3.7 37.3 (2017)

Bonds 8.7 3.7 8.7 (2019)

Gold 18.4 3.4 29.2 (2010)

Bitcoin 274.0 404.3† 1,271.4 (2017)