dsmWealth: July 3, 2025

After the economy's wobbly start to the year, when the nation’s GDP fell half a percent in the first quarter (outmatched by a 6.07% drop in Iowa), it has rebounded slightly and is predicted to post a gain of maybe 2.5% percent for the just-closed second period. Inflation is moderate, and unemployment is a manageable 4.2% nationwide.

Against this backdrop, though, consumer sentiment is decidedly negative. So bad, in fact, that this might be a good time to ratchet up your investments.

Chris Cook, chief strategist for the West Des Moines-based financial planners Gilbert & Cook, offered an explanation in a preview of the company's midyear outlook. First, he pointed to the University of Michigan's Index of Consumer Sentiment, which measures how consumers feel about the overall state of the economy and their personal financial situation. It reflects consumer expectations regarding current and future economic conditions, including personal finances, business conditions and buying conditions. Historically, the average score is 84.2 on a scale from 40 to 120.

The current score is 60.5. Every time it's dipped lower, the stock market performance in the ensuing 12 months has been great to spectacular, according to J.P. Morgan Asset Management. After October 1990, it shot up 29%. After November 2008, it surged 22.2%. Following the last dip, in June 2022, it rose another 17.6%.

“Hang in there,” Cook said. The market is ignoring our feelings — to our benefit.

Indexes aside, market watchers are sifting through a pile of other data and new policies from businesses and the government. We're currently in the midst of President Trump’s tariff war, which will raise prices for consumers and lower profits for importers (unless they can pass along duty expenses, in which case consumers will still see prices rise).

The stock market's up-down cycles have caused investors to look for alternatives. Bonds? Real estate? Crypto? In recent years, a lot of money has veered into private equity, or private credit, and Cook sees that trend continuing.

In the 'Big Beautiful Bill,' beauty is in the eye of the beholder
BY STEVE DINNEN

It’s big, all right, but beautiful? Just ask the man or woman with a household income of $39,464, whose financial resources will take a 4% hit with the passage of President Donald Trump’s tax-and-spending bill.

The Congressional Budget Office looked at the financial impact of the "One Big Beautiful Bill" and found that, overall, household resources should increase between 2026 and 2034. That’s due mostly to a reduction in federal income taxes. But the numbers bounce between negative and positive, with the highest positive rating going to the wealthiest.

The numbers are most negative with lowest earners, largely because of cuts to Medicaid and food stamps. The financial impact turns positive, starting with $61, once household income reaches $89,615. The tax benefit gradually climbs to about $12,000 for household incomes in the top tier, starting at $517,103. That’s a 2% bump.

Separately, number crunchers at the University of Pennsylvania’s Wharton School estimate the bottom 20% of U.S. households will lose $1,035 in 2026, while the top 0.1% of earners will get an after-tax boost of $389,000 due to the bill's provisions.

One man's attempt to get a perfect 850 credit score
BY IMANI MOISE FOR THE WALL STREET JOURNAL

Steve Michell had one of the best credit scores in America. But he wanted a perfect 850.

So the 52-year-old Texan started tinkering with his 840s score. He followed tips on his banking app, then came to believe they were bunk. He closed credit cards, tweaked balances and adjusted when he paid his bills. He would make a change, then wait a month to see how his score rose or fell. He adjusted again. He waited again.

“I’m an engineer by trade, so everything has to be perfect,” he said.

Michell spent five years trying to crack the formula on his credit score. In doing so, he put an exclamation point on America’s growing obsession with the three-digit grade of financial health.

Like many, Michell felt that the ups and downs in his score defied explanation. Yes, paying bills on time helps and maxing out cards hurts. But financially responsible moves such as closing old accounts can ding your score, while opening more credit cards can boost it. Credit histories vary so much that what helps one person might not help another.

Credit scores are also playing a more influential role in our lives right now. No longer just a tool to help lenders decide whether to approve loans and how much to charge, credit scores are now an all-purpose ranking system. They are used to decide whether you can rent a home, what your insurance premiums should be and even if you can get a date.

Curious? Read the full story ... for extra credit.

A recipe for doubling your stock returns, again and again
BY JEFF SOMMER FOR THE NEW YORK TIMES

Forget about the upheaval in the Middle East. Don’t dwell on Russia’s war with Ukraine, U.S. tariffs and the budget deficit — or just about anything else that has been dominating news coverage and threatening to undermine the markets.

These issues are critical right now, undeniably. But history suggests that they will be irrelevant in your investing life, if your horizon is long enough.

Instead, focus on just one thing: the remarkable record of compounded, reinvested stock returns over many decades. That’s the message of Charles D. Ellis, a pioneer of diversified index fund investing who has distilled decades of experience and study into a deliberately simple new book, published in February by Wiley: “Rethinking Investing: A Very Short Guide to Very Long-Term Investing.”

“The secret to investing, in my view, is time,” Mr. Ellis, 87, said in a telephone conversation. “How much time is there between now, when you invest the money, and when you’re going to spend the money. By ‘long term,’ most people think six months, maybe a year, maybe even a few years.”

I’ve said in many columns that, based on history, a long-term investor needed to stay in the stock market for at least a decade, and preferably longer, to have a high probability of an excellent return. Mr. Ellis said that’s still too short to enjoy all the benefits of long-term investing. Instead, Mr. Ellis advised, think 60 years — or longer.

Really, I asked? Who has that kind of investing horizon? .. At his age, I said, surely, his investing horizon has become much shorter than 60 years.

“Not really,” he said. Obviously, now that he is in his late 80s, his life expectancy isn’t what it once was. “But if you ask me who am I investing for today, it’s for my grandsons and granddaughters,” he said. “They’ve got a long time ahead of them.”

For the long view, read the full story.