5 FAFSA Tips Every Parent Needs to Know Before They Fill Out Their FAFSA
Filling out the FAFSA is the first step in securing federal student loans, which are often the best loan options available if your family needs to borrow for college.
From time to time, the stock market experiences sharp moves like the -3% decline in the S&P 500 on Monday August 5; the largest one-day decline since September 2022. Although there are always “reasons” behind a market decline, they are often not due to new developments, but conditions that have been hiding in plain sight.
I like the explanation in the New York Times article “The Stock Market Drama Was a Toddler Tantrum” by Juston Wolfers, a professor of economics at the University of Michigan. “They’re unpredictable, volatile, and prone to sharp emotional swings. They have short attention spans and find change difficult because they are frequently scared of new things or overly enthusiastic about them. They are impulsive, demand attention and throw tantrums when they don’t get what they want. I’m not describing toddlers but traders.”
One of the cited causes was an unwinding of the “Yen Carry Trade” where many traders had borrowed at low interest rates in Yen only to turn around and invest in US Dollars and other currencies with higher interest rates. So, when the Bank of Japan raised interest rates on July 31, the yen began to rise thus making these trades unprofitable. In fact, things were much worse in Japan where the Nikkei 225 index dropped -12.4%; its biggest one-day decline since 1987.
So what do we learn from this significant volatility in the market? Not much. By the end of the week, the S&P 500 had regained all of the ground lost on Monday, August 5. The spike in the Volatility Index, or “VIX” also known as the “fear index” was extremely brief. The true take away from all of this is to remember that the stock market is not the economy. Despite some legitimate fears of an upcoming recession, the economy seems on a fairly solid footing. Like encountering a pot hole on the road, this one was large enough to provide a temporary distraction, but should not cause us to alter our long-term course.
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