Day: August 17, 2020

Key Words: ‘Don’t vote for a killer.’ Sharon Stone endorses Biden-Harris as coronavirus ravages her family

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Sharon Stone sees the 2020 presidential election as a matter of life and death.

The actress best known for “Basic Instinct” revealed on Instagram FB, -0.03% over the weekend that her sister and brother-in-law are fighting for their lives in Montana after being diagnosed with COVID-19. What’s more, her grandmother and godmother have both died from the coronavirus. So in a followup video posted to her Instagram page on Sunday, Stone, 62, called on her followers to vote for presumptive Democratic presidential nominee Joe Biden and his vice presidential pick, Kamala Harris, which is “the only thing that’s gonna change” the coronavirus health crisis in the U.S.

And while she didn’t name President Donald Trump by name, she laid the more than 170,000 Americans who’ve died from COVID-19 since March (or more than 200,000 already, by the New York Times’ count) at his feet.

“Please vote. And please, whatever you do, don’t vote for a killer.”

Stone’s emotional 3½-minute video described how her sister Kelly had lupus before being diagnosed with COVID-19, meaning she was immunocompromised and vulnerable to the coronavirus. Kelly and her husband had quarantined at home, supposedly only venturing out to go to the pharmacy. But they still got sick, which Stone blamed on “one of you non-mask wearers” in her previous Instagram post. She called out the people “carrying guns” while protesting their “freedom” not to wear masks. She also blamed Montana’s testing policy, noting one must show symptoms of the virus in order to get tested, and test results can take five days to return — which doesn’t stop asymptomatic spread.

Related:If every American started wearing a face mask today, this is how many lives could be saved

“This is the state of affairs in the middle of our country, where you, the people at the middle of our country, are at great risk of dying from COVID,” she said.

“When they say there are tests for everyone, they are lying,” she continued. “When they say there are tests even for the nurses in the hospitals, they are lying. People are dying and fighting for their lives, because there’s nothing but lies.”

Her post drew support from entertainers including Alyssa Milano, Katie Couric, Chelsea Handler and Janella Monae in the comments. It also drew plenty of flak from Trump supporters accusing her of using her family’s health to push a political agenda. It had racked up more than 1.17 million views as of Monday afternoon, ahead of the Democratic National Convention, and was being shared on Twitter TWTR, +0.18% as well.

Stone wrapped her video by calling on viewers to vote for Biden and Harris. “With women in power, we will fight for our families. We will fight for people to live. And we will fight for people to get tested,” she said. “Because the only countries that are doing well with COVID are the ones that have women in leadership.”

Stone is not the first to claim that the countries most affected by the coronavirus are run by men, and those with the best COVID-19 response are run by women.

USA Today analyzed the Our World in Data database and found that the average number of deaths per million people by the end of July was, indeed, higher among male-led countries than women-led countries. And indeed, some female leaders have had success in flattening the curve in their countries, including New Zealand Prime Minister Jacinda Ardern, and Taiwan President Tsai Ing-wen.

Related:‘We’re all in this together’: Dr. Fauci outlines how the U.S. can learn from other countries in the battle against COVID-19

Dr. Anthony Fauci also praised New Zealand and Singapore (run by its first female president, Halimah Yacob) and South Korea (which is run by a man) for having managed to control the coronavirus recently in an interview with actor Matthew McConaughey.

But USA Today also noted that “it’s misleading and lacking context to say those successes and failures are solely due to gender,” and politics may have more to do with the success of a country’s response.

Personal Finance Daily: Not all COVID small-business stories end badly and wealthier parents are more likely to send their kids back to physical classrooms

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Stay safe, MarketWatchers, and don’t miss these top stories:

Personal Finance
Reports of COVID cases are growing on college campuses as schools bring students back for in-person classes

The University of North Carolina moved classes online after reporting multiple clusters of coronavirus cases. Colleges across the country that have brought students back to campus are reporting dozens of positive cases of COVID-19.

‘It’s a huge decision’: Judge hands a win to businesses demanding insurance coverage for lost income due to coronavirus

At least 1,000 lawsuits related to insurance coverage have been filed during the outbreak, according to one count.

Here’s one depressing thing COVID-19 and the 1918 Spanish flu have in common

A new working paper looks at the effects of the 1918 influenza and COVID-19 pandemics on mortality and the economy, plus the role of non-pharmaceutical interventions.

Wealthier parents are more likely to send their kids back to physical classrooms — here’s why

The parents most likely to keep their kids home made less than $50,000 a year, according to a new survey.

Not all COVID small-business stories end badly — sales sprouted at this very vertical Chicago mushroom grower

Business has bloomed beyond the typical restaurant buyers for Guy Furman, who runs the once almost exclusively wholesale Windy City Mushroom in Chicago. The mushroom “factory’s” survival — expansion, even — was the result of evolving consumer palates, home delivery and a push to buy local during food shortages.

Republicans and Democrats are split over whether estate and income taxes are ‘unfair’

‘Fairness truly is in the eye of the beholder,’ according to a new study.

Does sunshine kill coronavirus? Will antibiotics help? These are the most widely shared misconceptions about COVID-19

Six months into the coronavirus pandemic, some people are on edge, while others are just plain confused.

‘We’re all in this together’: Dr. Fauci outlines how the U.S. can learn from other countries in the battle against COVID-19

The infectious-disease expert said, ‘To think that you can ignore the biologic and get the economy back, it’s not going to happen. You have got to do both.’

The COVID-19 recession will widen the gender pay gap — but there might be a silver lining

While normal recessions close the gender wage gap by 2 percentage points, a pandemic recession widens the gap by 5 percentage points, new research suggests.

Elsewhere on MarketWatch
House Democrats add $25 billion in support for Post Office to their stand-alone bill

At first, House Democrats said they would only vote to block policy changes at the Post Office favored by the White House. But the final plans announced Monday added the $25 billion in funding.

Here’s how to watch the Democratic convention — plus who’s speaking, and when

Beginning Monday on a computer screen or TV set near you: the 2020 Democratic National Convention.

If history repeats, the stock market will hit a new high by the end of August

The S&P 500 made two failed attempts last week to take out its record close for February, causing some investors to worry the rally is running out of steam. History, on the other hand, suggests — but doesn’t guarantee — that a new high is likely by the end of the month, says CFRA’s Sam Stovall.

CityWatch: New York gyms can reopen on Aug. 24 at 33% capacity with mandatory masks

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Gyms and fitness studios can reopen across New York state as early as Aug. 24 if they pass safety inspections and follow strict health guidelines, Gov. Andrew Cuomo announced in a news conference Monday morning. Capacity will be limited to 33%, and guests will be required to wear masks at all times.

Exercise facilities will also be required to have sign-in sheets to facilitate contact tracing, and HVAC systems with Minimum Efficiency Reporting Value (MERV) ratings of at least 13 to improve air quality and minimize potential spread. Local authorities will be responsible for inspections in advance of reopenings, as well as determining whether gyms will be allowed to open for group fitness classes.

“Gyms are one of the areas where you have to be very careful; that’s why we went slow on [reopening],” Cuomo said.

The announcement comes less than a week after a group of more than 1,500 gym owners filed a class-action lawsuit against Cuomo, New York state, and the state attorney general in a bid to push for reopenings. 

Also on MarketWatch: New York City is ‘dead forever,’ according to this proud New Yorker

In light of the reopening announcement, the class action lawsuit will be dismissed, but a $500 million damages claim against the state is moving forward, Charlie Cassara, founder of the New York Fitness Coalition, the group behind the lawsuit, told MarketWatch.

“The $500 million takings claim, that’s for not letting us reopen. We were kicked out of Phase 4 [of reopening],” Cassara said. “That’s not going away.”

(Both indoor dining and gyms were initially included in phase 4 reopening plans for New York City before being put on pause indefinitely as outbreaks worsened nationwide. While indoor dining has opened in other regions of New York, exercise facilities have remained closed across the state.) 

Cassara also expressed concern over details not yet outlined in the plan, including how local authorities will determine which ventilation systems are up to par, and what will constitute a group fitness class.

Cuomo “didn’t address mixed martial arts, hot yoga, or boxing. There’s nothing up on the website, and the local municipalities have no plan whatsoever. There’s no one to help us answer these questions,” Cassara said. “I’m happy, but we’re still a little confused.”

Read: Is it safe to go back to the gym if you’re over 50?

The reopening plan requires local authorities to inspect gyms before or within two weeks of reopening. If local authorities choose, they can delay the reopening in their areas until Sept. 2. It’s unclear if and how or if localities will be penalized if they fail to reopen exercise facilities by the deadline. (The governor’s office did not immediately respond to a request for clarification, and Mayor Bill de Blasio’s office did not immediately respond to requests for comment on inspection plans.)

“We’re very proud of where the overall infection rate is, but the flip side of the scale is that you need to get the economy back up and get life moving forward,” Cuomo said. “That’s why we’re giving localities an extra week. They have to inspect the gyms. We just went through this with bars and restaurants.”

In the restaurant industry, State Liquor Authority officials are still conducting frequent inspections. They issued 66 violations after inspecting 3,375 bars and restaurants over the weekend.

Coronavirus update: U.S. death toll tops 170,000 as more states see new cases rise

Addressing concerns over allowing gyms to reopen while indoor dining is still on hold in the city, Secretary to the Governor Melissa de Rosa said, “In gyms, we’re requiring masks at all times. Whereas indoor dining, by definition, [masks come off]. And the State Liquor Authority found that in bars, people were drinking, standing, co-mingling, letting their guard down.” 

Other New York developments:
  • New York state’s infection rate was 0.71% on Sunday, the lowest it’s been since the start of the pandemic. The three-day-average daily death toll was six, compared with 763 at the virus’ apex.

  • In New York City, murders are up 29% and shootings are up 79% year-to-date, and “over 90% of victims are Black and brown New Yorkers,” Cuomo said. Citing recent protests and demands for police reform, Cuomo is calling for “reimagined” police departments that address concerns over police conduct while effectively keeping crime rates low, and has sent a letter to 500 jurisdictions demanding urgent action. “I’m saying in the letter today that if you don’t have a plan that is a reimagined police department for next April, there will be no state funding for that jurisdiction,” Cuomo said. “I’m trying to force attention and focus and action on this issue.”

Read next: New York said ‘action,’ but many film and TV cameras won’t get rolling until September or later

TaxWatch: Republicans and Democrats are split over whether estate and income taxes are ‘unfair’

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Talk of tax rates and big-picture economic efficiencies may quickly glaze over plenty of eyes.

But when you talk about tax rates and someone’s fair share, you’re likely get plenty of people fired up.

There are several different ways to think about tax policy, but a new study suggests many Americans view the topic of taxation through the lens of fairness.

That could be helpful context for viewers as the Democratic and Republican national conventions approach and talk of taxes and economy recovery from the coronavirus will surely be a theme.

The shared feelings about fairness is good news for a deeply-divided country. The bad news is, there’s a deep divide on what counts as fair when it comes to income taxes and estate taxes.

‘While everyone cares about fairness, the meaning of this concept greatly differs across respondents: fairness truly is in the eye of the beholder.’

— Harvard University Professor of Economics Stefanie Stantcheva.

“‘Fairness’ is highly-mentioned and evenly distributed across the political spectrum,” wrote Harvard University economist Stefanie Stantcheva. “But while everyone cares about fairness, the meaning of this concept greatly differs across respondents: fairness truly is in the eye of the beholder.”

Two different profiles of taxpayers emerge, Stantcheva said, working off two 2019 surveys, each with more than 2,000 participants. (The economist conducted the survey two years after President Donald Trump enacted tax cuts that lowered the rates for most income brackets and lowered the corporate tax rate.)

Don’t miss:This is how much American workers saved during the first year after Trump tax overhaul

On income taxes, one profile typically says the tax code is unfair, adding that money in the country should be more evenly distributed. The other doesn’t think the tax code is unfair or that inequality is a serious problem. Republican affiliation was the strongest predictor for someone to fall into the second profile, she said.

As for estate taxes, one group of taxpayers didn’t worry about the personal effects on them and their family — but they were worried about rich-poor divides when thinking about the tax. The other side thought most people were being wronged by estate taxes, which they viewed as unfair.

Again, Republican affiliation was the strongest predictor for fitting the second profile, Stantcheva said.

Using open-ended questions and word clouds, Democrats’ key words about income taxes touched on words and phrases like “fair share,” “rich,” “lower class,” “middle class,” “tax wealthy” and “loopholes.” Republicans focused on phrases like “hard work” or phrases that referenced government spending and waste.

Democrats used words like “middle class” and “rich” when talking about estate taxes, while Republicans used words like “already taxed/paid” and “grieve.”

On estate taxes, Democrats’ key words included “middle class” and “rich.” But Republicans focused on phrases like “already taxed/paid,” and words capturing the personal effect, like “grieve” or “bury.“

Under the Trump 2017 tax overhaul, the 40% federal estate tax starts at estates valued above $11.4 million and $22.8 million for couples. In 2026, it reverts back to 2017’s exclusion of estates under $5 million, adjusted for inflation.

Americans have been linking taxes with fairness since before they were Americans: Patrick Henry’s 1765 argument of “no taxation without representation” became a rallying cry for the 13 colonies. Meanwhile, well over 90% of taxpayers have consistently told the Internal Revenue Service that every American has a civic duty to pay taxes, according to the tax collector’s annual data.

But the study, circulated Monday by the National Bureau of Economic Research, lands just ahead of the Democratic National Convention.

Joe Biden, the former vice president under Barack Obama and presumptive Democratic nominee, wants to increase the top income bracket from 37% to 39.6%, the Obama-era rate. He wants to raise the corporate income rate from 21% to 28%, which is underneath the 35% Obama-era rate. He would put the estate tax rate exemption at “historical norms” and get rid of the “step up in basis”, where an asset’s value resets in tax purposes when an heir receives it.

On Biden’s own website, he says he’ll bring on economic recovery with programs and funds that come by “reversing some of Trump’s tax cuts for corporations and imposing common-sense tax reforms that finally make sure the wealthiest Americans pay their fair share.”

On the other side of the aisle, Trump has floated the idea of fewer taxes on capital gains and an income tax cut for the middle class.

“We are looking at expanding the cuts that we have already done, but specifically for middle -income families, and you will be hearing about that in the upcoming few weeks,” Trump said at a news conference last week.

Earlier this month, he signed an executive order that would defer the payroll tax that employees have to pay, beginning in Sept. 1 and ending Dec. 31. The tax helps fund Social Security and the payroll tax deferral has critics on both sides.

Biden says the payroll tax should be applied to people making more than $400,000. Right now, the tax exemption starts for people making $137,700.

Key Words: The new savings target for a modest retirement: $8 million?

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You might want to hold off on that Winnebago.

The 4% Rule has long been used as a guideline for retirees in determining how much they should be able to withdraw from their retirement account while still maintaining a balance that will allow for the same income stream to flow through their golden years.

But here’s a stark reality check from the man behind the popular Financial Samurai blog:

‘The 4% Rule as a safe withdrawal rate in retirement is dead.’

He explained to MarketWatch on Monday that the outdated rule was established back in 1998 by a group of professors at a time when the 10-year bond yield averaged 5%.

“Therefore, of course you could withdraw 4% without any fear of running out of money when you could earn 1% more risk-free,” the Financial Samurai said.

But now that interest rates are hitting rock bottom, retirement savers face a challenging future — one that perhaps, at least according to this blogger, should be shaped by a new rule.

“You can use the 0.5% Rule as a safe withdrawal rate guide once you’ve reached retirement or financial independence,” he said, drawing more than a few virtual spit-takes from readers.

The Financial Samurai laid it all out in this table:

“Or you can use the 0.5% Rule as a stretch net worth target,” he added, operating under the goal of leaving the nest egg untapped. “To find out how much net worth you need to declare financial independence, multiply your desired annual expenses by 200. If you want to live off $40,000, then your stretch net worth goal is to accumulate $8 million.”

The Financial Samurai also took a deep dive into the numbers in a recent blog post.

“Although the 0.5% Rule may sound extreme, it is based on financial reality today,” he explained, amid a growing number of critiques in his comments section. “2020+ is a very different time than 1998. Inflation is much lower and risk asset returns will likely be structurally lower for a while as well. Further, you’ve got to account for a potential bear market after such tremendous growth.”

He went on to apply the unsettling rule to his own situation, in which he’s aiming to generate $300,000 a year in passive income. Good luck with that.

“As two unemployed parents, amassing a $30 million to $40 million net worth appears next to mission impossible,” the Financial Samurai wrote. “However, at least the 0.5% Rule has provided a new net worth target to shoot for. Now we’ve got to figure out whether it’s worth both of us trying to find day jobs again and not seeing our kids all day for the sake of more wealth.”

For more on the topic, check out the full blog post along with all the moans and groans in the comments section, where one reader pretty much summed it all up by saying, “No one could ever retire at the 0.5% Rule. So why read your web page anymore. We just work till we die.”

The blogger’s response: “That might be the point. To pay for the massive stimulus, the Fed and the a central government want more Americans to work longer in order to pay more taxes.”

Meanwhile, the stock market continues to perform relatively well. Although the Dow Jones Industrial Average DJIA, -0.32% moved lower Monday, both the S&P 500 SPX, +0.27% and Nasdaq Composite COMP, +1.03% managed to break into positive territory, trading near records.

Dispatches from a Pandemic: Not all COVID small-business stories end badly — sales sprouted at this very vertical Chicago mushroom grower

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The head-swiveling halt for restaurant dining in foodie-favorite Chicago because of COVID-19 has been painful for many wholesale companies, even as eating out slowly picks back up.

It’s a blip on a growth plan that only inspired Guy Forman.

Forman is the founder at the once almost exclusively-wholesale Windy City Mushrooms where business has bloomed beyond typical restaurant customers to direct consumers playing chef on their own turf. Demand is up, Forman says, because of growing interest in locally grown food including in cities like Chicago, interest that existed before the pandemic and now has expanded because of the crisis.

The mushroom “factory’s” survival — expansion, even — was the result of evolving consumer palates as cooking becomes a creative outlet and working from home allows for more prep time. The popularity of home delivery also has helped, including by inclusion in Community Supported Agriculture (CSA) boxes offering products from several sources, sometimes depending on the season.

Oyster mushrooms grow in their biomass bags.

Windy City Mushrooms

Production shutdowns to protect employees, consumer hoarding and other factors have strained the U.S. food supply chain during the coronavirus outbreak. That pushed some consumers toward local options when shelves at chain outlets and traditional grocery stores were undersupplied. And, yes, restaurants are still buyers for Windy City, often through close communication with the mushroom growers to help shape menus for “meal of the week” promotions, for example. Forman is regularly courting small-scale grocery stores and super markets these days.

Read:We have plenty of food, so why are grocery store shelves so empty?

Increasing appetite for mushrooms as a meat alternative, including for part-time vegetarians, is a trend that has also helped Forman and crew at Windy City. Low-calorie, cholesterol-free mushrooms contain a modest amount of fiber and over a dozen minerals and vitamins, such as copper, potassium, magnesium, zinc and B vitamins, including folate. Plus, home-cooking engages more family members, allows for closer tracking of calories and overall nutrition, and it generally costs less than restaurant-delivered food.

Read:‘The end of meat is here’? Coronavirus has ‘kicked open the door’ to a vegetarian future, claims N.Y. Times op-ed

Windy City Mushroom’s most popular sellers are oyster mushrooms; chestnut mushrooms come in second.

Even the pandemic’s economic contagion (U.S. GDP in the second quarter plunged 32.9%) didn’t stop Forman from expanding the footprint of his facility in Chicago’s densely populated and fast-gentrifying Humboldt Park neighborhood (this proud, largely Puerto Rican community for much of the last half-century is perhaps changing too fast, sending rents surging, say some of the city’s urban-planning observers). But becoming an integral part of an economically diverse community matters, says Forman, whether that’s through donated mushrooms to food banks or local job creation. That role and ongoing consumer feedback, including a slogan contest, as the grower evolves to more direct sales, are key parts of the unique urban factory-farm’s future.

The nearly-finished remodel, both by opening up vertically and by pushing into additional floor footage, will allow for eventually growing 10,000 pounds of mushrooms per week, doubling the previous 5,000 per week. Forman says gross sales are about $3 million annually. He looks to expand a current full-time staff of three employees to 6-8 once production capacity is met.

Mother Nature remade

At climate-controlled Windy City, a dozen or so varieties of gourmet mushrooms sprout from vertical stacks of grow bags containing hardwood sawdust and organic soy hulls. The hulls can’t be digested by animals so are discarded as livestock feed, a major primary use of soybeans, is produced. Both products are considered waste products that have found a reuse at Windy City.

The mushroom process starts in an on-site lab for early growth and contamination elimination; the final product that most consumers recognize is the fruit of this growing process. A typical grow bag would include five pounds of the soy byproduct, seven pounds of water, and five pounds of mushroom fruit. Excluding the water, the formula equates to a 1:1 ratio between the mushroom feed (the soy hulls) and the end product, which is a desirable and laudable ratio when it comes to sustainable biomass.

Mushroom farm or factory? Both. And in the heart of in Chicago’s Humboldt Park neighborhood, a layered cultural area of ethnic demographic change where young professionals are increasingly pushing in and businesses have turned over.

Windy City Mushrooms

Forman is particular about what types of mushrooms make his business model work.

“The wild market is one market and the commoditized market is another market. We like the middle ground,” says Forman. “We don’t grow [typically mass-produced] shiitake, portobello or crimini varities. Those can be grown on a massive scale, a million pounds a week. That creates a price point we know we can’t compete at.”

Lion’s mane mushrooms are often lauded for medicinal properties, though those findings are open to debate from the mainstream medical community. Windy City sells them for their culinary attributes, popular mostly among consumers who welcome more-exotic mushrooms.

Windy City Mushrooms

Windy City’s most popular sellers are blue oyster mushrooms (Italian oysters are also grown). Chestnut mushrooms, which have a button shape but are more flavorful than white button mushrooms, come in at second-most popular. The rarer lions mane mushroom is also grown, along with, and in smaller cultivated batches, the typically wild caught hen of the woods, and more.

‘Our carbon footprint to distribute our product throughout the city is minimal compared to mushrooms driven in from Pennsylvania and Washington.’

— Guy Forman
‘Shop and eat local’ gains more footing

The pursuit of sustainable food production in smaller batches, unique culinary offerings including meat alternatives, plus home delivery — itself a touchy unresolved debate for sustainably-minded industries as they consider all aspects of their carbon footprint — was accelerated by the coronavirus lockdowns. But these are habits that this food company and many others are banking on lasting past the crisis.

“Because we are located in downtown Chicago, our carbon footprint to distribute our product throughout the city is minimal compared to mushrooms driven in from Pennsylvania and Washington,” said Forman. “It also lets us connect with our customers and grow our relationships with local chefs and supermarkets.”

Opinion:Yes, organic food is purer. But is it eco-friendly too?

Outside the Box: Private equity in your 401(k) — is this a good idea?

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The Department of Labor (DOL) recently issued guidance providing a road map for employers to add certain retirement savings funds into their investment lineup that invest in private equity. For those saving for retirement, this is a promising step in the right direction for expanding investment opportunities.

80% of older Americans can’t afford to retire – COVID-19 isn’t helping

While this guidance does not necessarily enable a new type of investment structure, it does provide clarity around the fiduciary issues associated with a structure that has been in use for some time.

Previously, defined-benefit plans, such as pensions, have been able to include private-equity investments as part of their portfolios, as have many retirement plans globally, but defined contribution (DC) plans in the U.S., such as a 401(k) accounts have not. The benefit? Accessing investment options that have exposure to more asset classes, like private equity, can provide diversification benefits for long-term retirement savers if fiduciaries use this opportunity to take a fresh look at alternative investments.

With the right framework and investment vehicles, access to alternative solutions within workplace savings plans could provide an ample opportunity to help Americans achieve their long-term retirement goals. However, across the industry there has generally been a lack of education for many plan sponsors and advisers as it pertains to the types of investments and overall benefits that access to private equity could offer. Given this lack of requisite knowledge, there are both opportunities and challenges that savers should know when it comes to these types of investments.

Read: The stock market is cheating us all — and here’s by how much

Opportunities for savers

Let’s start with what this means for individuals. Private-equity funds, which fall into the broader category of alternative investments, include a range of investments covering various asset classes, risk levels and other characteristics that could benefit defined contribution participants. Previously these types of investments have only been available to more affluent and institutional investors, but now, this is no longer the case.

Read: The private-equity crowd wants your 401(k) money — yikes!

Why would this be a good thing for retirement savers? For long-term savers, access to different types of alternatives (including private equity or infrastructure, commodities, hedge funds and venture capital) can be an important part of one’s portfolio. Research has found that private equity investing in particular reduces the risk of an investment portfolio through diversification.

Providing greater access to alternative investments can be of particular importance given the significant decrease in investment options in the public markets. Over the past 20-plus years, the roughly 50% decline in the number of public companies in the U.S. has limited the investment opportunities for long-term savers who, in the past, have relied on public equity markets to generate returns to help them achieve their retirement goals. To put this into context, private companies account for approximately 99% of the corporate investment opportunities in the U.S.

Studies have shown private-equity investment have also historically exhibited less downside performance than traditional investments during periods of market stress, when retirement savings are most vulnerable. For example, according to industry data, buyout and venture capitalist funds outperformed the S&P 500 SPX, +0.38% by an average of more than 3% annually between 1987 and 2010. Given the markets today, this can be an especially important consideration.

For individuals with the right balance of risk tolerance, private equity may be an optimal investment for a portion of one’s portfolio. However, it’s important to know that the guidance does not relate to direct investment in private equity by retirement savers. It does not, for example, allow fiduciaries to add a private-equity fund as an investment option alongside registered mutual funds, CITs, and other more traditional defined-contribution plan investments. Instead, the guidance relates to an “in between” structure in which fiduciaries give individuals a careful amount of exposure to private equity by creating a managed fund in which retirement savers can choose to invest, and then directing a modest portion of that managed fund to underlying private-equity funds.

Read: Beware the vultures coming for your 401(k) money

Mitigating risk

Over the years alternative investments have gained popularity due to their history of strong returns. Despite the high returns, private equity also carries unique risks that may make direct investment inappropriate for some retirement savers, including liquidity concerns, particularly in times of market stress, as well as structural complexity.

That said, given the return opportunities and diversification benefits that these funds offer, and the significant loss of market access for individuals as capital has shifted to private vehicles, it is entirely appropriate for fiduciaries to use this opportunity to take a fresh look at allocating a responsible portion of managed funds to private vehicles. It’s also possible for fiduciaries to prudently manage the risks of private funds while offering plan participants enhanced diversification benefits.

Ultimately, it comes down to satisfying the appropriate due diligence, monitoring, and general education. Providing an ample opportunity set of investments is pertinent for sound investment decision-making and plan fiduciaries need access to diversified investments when constructing plan menus, making allocation decisions and selecting plan default investment options.

Sharing access to education and starting the conversation can help create greater outcomes for retirement savers. While it’s exciting to see this step in the direction stemming from the DOL guidance proposed, there is still work to be done.

Charlie Nelson is chief executive of retirement and employee benefits at Voya Financial.

Will Crypto Surpass Gold as a Reserve Currency?

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reserve currency

Gold has been the world’s standard reserve currency for hundreds of years. Even as the world has moved to fiat currency, governments and investors alike still look to gold as a reliable alternative. Given recent volatility, though, it may be crypto’s chance to step in as a different, perhaps more secure option.

On Tuesday, August 11, gold experienced its largest one-day drop in seven years. Prices per ounce fell by 4.7% between Monday and Tuesday, bringing them down from above $2,000 to $1,932.28. This recent drop isn’t the only problem that the precious metal has on its hands, either.

Today’s transactions happen so fast and so frequently that gold transfers can’t keep up. It’s easy enough to transfer tokens representing gold from nation to nation, but moving the actual gold reserves presents a challenge. In the face of these issues, cryptocurrency may provide a solution.

Is Cryptocurrency Less Volatile Than Gold?

Crypto and gold share many similarities, especially in how they compare to fiat currency. Both lack the volatility of fiat currency due to their limited supply, for instance. Gold may not be able to sustain modern markets, though, whereas crypto was born out of the internet age.

Since crypto payments utilize blockchain technology, transaction speed isn’t an issue. Some cryptocurrencies also have measures in place, like Bitcoin halving, that proactively defend against inflation, helping them remain more stable. Still, crypto does have some issues with volatility that gold doesn’t.

Crypto markets are substantially smaller than traditional ones, so small movements have a more significant effect. With such a minuscule market, changes in demand affect the value of crypto more heavily. An alternative may be gold-backed crypto, which might offer the best of both worlds.

With gold-based cryptocurrencies, like the recently-launched Tether Gold, tokens represent an amount of gold instead of representing themselves. The value of physical gold anchors these cryptocurrencies, making them less volatile, while they still offer the speed and security of the blockchain. At the same time, if the value of gold fluctuates, it would cause these cryptocurrencies to shift as well.

Crypto Technologies Gaining Legitimacy

The most substantial barrier to crypto becoming a publicly-accepted reserve currency is its perceived legitimacy. In the past, the public has been distrusting of crypto, but that’s starting to change. More noteworthy people, organizations, and countries are starting to dive into crypto and blockchain.

Several financial giants, like Goldman Sachs and Bank of America, have started using blockchain technology. They may not be using crypto, but accepting crypto’s underlying technology is a substantial step forward. If nothing else, it brings them one step closer to cryptocurrency.

In Venezuela, the public turned to cryptocurrency when the nation’s fiat currency caused a crisis. As inflation rose to around 2,616%, businesses started accepting Bitcoin as an alternative. This real-world example of how crypto can act as a reserve currency could inspire countries to make that switch on a national level.

Crypto Still Has a Ways to Go, But the Future is Promising

Cryptocurrency is still a long way from becoming globally accepted as a reserve currency. Too many people, especially governments, are too distrusting. Despite these obstacles, though, recent events paint a positive picture of crypto’s future, especially as traditional systems fail.

With faith in fiat currency falling and gold prices fluctuating, crypto stands as a promising alternative. The world won’t switch to crypto immediately, but changes are likely to start taking place soon.

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Encore: Don’t trust the TRUST Act

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Shivers went up my spine when I heard that the TRUST Act might be included as part of additional action on COVID-19. It sounds like a benign piece of bipartisan legislation, but it could well lead to major cuts to Social Security and Medicare.

The TRUST Act would create “Rescue Committees” for any federal government trust fund spending more than $20 billion annually that faces insolvency by 2035. Under these criteria, the TRUST Act would apply to Social Security’s Old Age and Survivors Insurance (OASI) program, Medicare’s Hospital Insurance (HI) component, and the Highway Trust Fund. (Social Security’s separate Disability Insurance Trust Fund is scheduled to run out of money in 2065.)

Each Rescue Committee would consist of 12 current members of Congress, with three members chosen by the minority and majority leaders in the House and the Senate. The committee’s job would be to come up with legislative proposals to avoid trust fund depletion and assure the long-run solvency of each program. To be voted out by a Recue Committee, the package would require not only a majority but also at least two members of each party.

Once voted out, Congress would have to consider the package without amendment and within a specified time period. Both chambers and the president would have to approve the legislation for the package to become law. (Unlike in the case of the Defense Base Closing and Realignment Commission, the proposals would not go into effect simply if Congress failed to act.)

So, what’s so bad, you might ask? My main concern is Social Security. Indeed, it does have a trust fund that is running out of money and it does need to solve a long-run financing problem. Specifically, the cost of scheduled benefits exceeds scheduled revenues (see figure 1 below), with the difference being bridged by the assets in the trust fund. These assets are projected to be depleted in 2034, and — if Congress takes no action — benefits will have to be cut by 20% to 25%.

Only two options exist for fixing Social Security: raise income or cut benefits. (No, increasing the retirement age is not a third option. It is simply a benefit cut.) And it’s so easy for negotiators to agree to a 50-50 approach — half benefit cuts and half revenue increases.

80% of older Americans can’t afford to retire – COVID-19 isn’t helping

In my view, cutting benefits is unacceptable. People absolutely need at least the current level of benefits to have a fighting chance of security in retirement. The National Retirement Risk Index, which the Center produces, shows that — even with the current level of Social Security — more than half of today’s working-age households are at risk of being unable to maintain their standard of living in retirement.

That outcome is not surprising, given that today’s employer-sponsored 401(k) system results in meaningful asset accumulation only for the top one-fifth of the income distribution. The 401(k)/IRA holdings for those in the middle fifth are actually lower for the most recent cohort than for earlier ones. The result is that Social Security serves as the major or only source of income for millions of retirees. Benefits simply cannot be cut.

The financing problem, however, does need to be solved. Fortunately, that’s what the Social Security 2100 Act does. This proposed legislation slightly enhances benefits and substantially increases the income rate, thereby restoring 75-year solvency.

The legislation, which is co-sponsored by about 90% of House Democrats, increases benefits for all by shifting the price index to adjust for inflation and reduces taxation under the personal income tax, and helps the most vulnerable through an increase in the special minimum benefit and raising the first factor in the benefit formula from 90% to 93%.

To pay for these benefit enhancements and, more important to eliminate the 75-year deficit, the legislation: 1) raises the combined OASDI payroll tax of 12.4% by 0.1% a year until it reaches 14.8% in 2043; and 2) applies the payroll tax on earnings above $400,000 (and on all earnings once the taxable maximum reaches $400,000). The legislation includes a small offsetting benefit for these additional taxes.

With this legislation on the table, we don’t need “Rescue Committees.” Let’s have an open debate, then a vote, and see where we are.

The Moneyist: ‘I refuse to go through that painful test again’: My roommate tested positive for COVID-19. The nursing home where I work told me to come in. What do I do?

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Dear Moneyist,

I wanted to ask you a moral or ethical question concerning COVID-19. Here’s my situation: my sister-in-law who currently lives with me has tested positive for COVID as of yesterday. I have not been tested within the past 30 days.

I work in a long-term care facility/nursing home, in Pennsylvania as a certified nursing assistant. I informed my employer of the positive case in my home. I volunteered to stay home 14 days because I don’t want to risk infection to my residents I take care of, or fellow employees.

My employer says they want me to wear a mask and face shield and come to work, and make sure other employees are wearing a mask properly OR go get tested again. I do NOT want to put my residents at risk and I refuse to go through that painful test again.

They said they are my only two choices. Force me to work as a possible carrier or force me to test again, which I feel is against my rights. Can they give me this ultimatum? I’m assuming if I don’t follow through, they are going to fire me.

Trapped between working, quarantine and a test

Dear Trapped,

This isn’t about you, as much as it is about your patients. Quarantining and having a clearer idea if you have contracted coronavirus or not are the responsible courses of action. That applies to everyone, but it particularly applies to you. A nasal-swab may be uncomfortable for a moment, but a ventilator on one of your patients would be a hell of a lot more uncomfortable.

There are far worse things than a COVID-19 nasal swab. I’ve had one. It was not painful for me. Uncomfortable for a brief moment, perhaps, but it was a small price to pay. There are caveats: A nasal swab test is not 100% accurate, as the doctor or nurse who administers the test will tell you, and there’s nothing preventing you from being infected after you take the test.

However, focusing on that is only going to fuel your indignation and anger against your employer, and distract you from the main issue. This dilemma is about your patients, who are among the most vulnerable population. Nursing homes around the world have been hit hard by the coronavirus pandemic because COVID-19 was transmitted from workers and/or visitors.

The Moneyist: I filed a joint tax return with my estranged wife because she is a gambler and her finances are a mess. But I got NO stimulus check — what can I do?

Unfortunately, not all nursing homes in the U.S. have been following the right protocols. The Centers for Medicare and Medicaid Services in Pennsylvania last week announced that it had imposed $15 million in fines and tripled the most severe type of citations to nursing homes during the first six months of the pandemic. Your employer could be next on that list.

More than 3,400 nursing homes in the U.S. have been cited for noncompliance with infection-control requirements and/or failure to report COVID-19 data, the Pennsylvania Health Care Association said. The U.S. has had the highest number of deaths in nursing homes in the world, and has one of the highest rates of COVID-related nursing-home deaths per capita.

The Moneyist: I didn’t get my stimulus check because I owe back child support. It’s not fair. My stepchildren rely on me — what can I do?

In Pennsylvania, nearly 70% of fatalities associated with COVID-19 have occurred within nursing homes or other long-term care settings, according to this letter from four senators to the U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services and Centers for Disease Control and Prevention.

This is all useful information to have when responding to your employer. In the meantime, you can also fill out this online form provided by the Pennsylvania Department of Health to report workplace violations. You should NOT go to work if you have been in contact with someone who has tested positive for COVID-19. Know your rights. Know the rules. And act upon them.

Coronavirus update: COVID-19 has now killed at least 776,157 people worldwide, and the U.S. ranks 10th in the world for deaths per 100,000 people (51.5), Johns Hopkins University says. As of Monday, the U.S. has the world’s highest number of confirmed COVID-19 cases (5,408,268) and deaths (170,131). Worldwide, confirmed cases are now at 21,720,713.

The Dow Jones Industrial Index DJIA, -0.19% was down slightly Monday, while the S&P 500 SPX, +0.36% and Nasdaq COMP, +0.91% were trading marginally higher as investors await progress on a vaccine and, as Democrats and Republicans debate the details of the next unemployment benefits, round two of the economic stimulus program.

AstraZeneca AZN, +2.04% in combination with Oxford University, BioNTech SE BNTX, +1.26% and partner Pfizer PFE, +0.56%, GlaxoSmithKline GSK, +1.49%, Johnson & Johnson JNJ, +0.56%, Merck & Co. MERK, -1.51%, Moderna MRNA, +0.05%, and Sanofi SAN, -1.33%, among others, are currently working on COVID-19 vaccines.

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