A Strong but Challenging Holiday Retail Season

Plus: Changes Coming to Some Index Funds You are receiving this limited-time email resource as a subscriber to Kiplinger's free e-newsletters. To unsubscribe at any time, simply click the link in the footer below. OCTOBER 20, 2021 [View in browser]( HOW TO PROTECT AND GROW YOUR BUSINESS AND INVESTMENTS NOW The holiday shopping season is upon us, and it promises to be a profitable one, according to the forthcoming lead story in this week’s Kiplinger Letter. Most consumers feel at least as well-off financially as they did a year ago, and on average, they plan to spend more on gifts than last year. They are also likely to spend far more on services like travel and dining around the holidays this year than they did in 2020, when many people stayed close to home because of the pandemic. But, while the willingness and ability to splurge are present, retailers are struggling to keep up with the strong demand. Supply chain woes that stretch from factories in China to U.S. seaports and inland distribution centers are making it nearly impossible to keep inventories and store shelves fully stocked. Every link in the supply chain is having trouble. Fixing one would just move the problem farther downstream. For instance, the push to operate the busy ports in Southern California 24 hours a day won’t do much good on its own. The cargo containers stacked up on ships waiting to unload would just stack up on the docks, due to a lack of trucking capacity to move them inland. And if the trucking problem could be resolved, a lot of the merchandise would just get backed up at railroad terminals, because the rails are congested, too. These interlocking problems mean that many items will be scarce or outright unavailable this holiday season. Low-cost goods like toys and bulky, hard-to-ship merchandise will be especially affected. Even ordering early may not be enough to ensure delivery in time for Christmas. --------------------------------------------------------------- SPONSORED CONTENT FROM SMARTASSET [These Are the Top Financial Advisors in the US]( Hiring the wrong financial advisor can wreak havoc on your retirement and cost a big chunk of your savings. This new tool can help. [READ MORE]( --------------------------------------------------------------- Major changes could be coming to your index funds. The Global Industry Classification Standard (GICS), developed by S&P Dow Jones Indices and MSCI, helps to define which stocks belong in each sector, industry and even sub-industry. It was responsible for real estate becoming a sector in 2016, and [communication services becoming a sector in 2018]( -- and it will be responsible for a few more changes that appear likely to roll out in 2022. Todd Rosenbluth, head of ETF & mutual fund research for CFRA, homes in on a particularly large shift in information technology: “Under the proposed changes, Mastercard ([MA]( PayPal ([PYPL]( and Visa ([V]( would move to the Financials sector as part of the newly created Transaction and Payment Processing Services sub-industry,” he says, noting that the three companies currently make up almost 10% of the S&P 500’s technology sector. The upshot of this? Holders of the Financial Select Sector SPDR ([XLF]( and other market cap-weighted financial-sector index ETFs would see their exposure to banks diluted somewhat – MA, PYPL and V at their current sizes would become top-five holdings, likely spurring funds to pare back their current large positions in American Express ([AXP]( Citigroup ([C]( and Morgan Stanley ([MS](. Rosenbluth adds that four other tech companies -- Automatic Data Processing ([ADP]( Paychex ([PAYX]( Broadridge Financial ([BR]( and Fidelity National Information Services ([FIS]( -- would shift to the industrial sectors in what would be a “relatively muted” reclassification compared to what could be happening to financials. Free download, [The Kiplinger Letter's Forecast](. No information required from you. SPONSORED CONTENT FROM NORTH AMERICAN SAVINGS BANK [Get Your Dream Home From This Trusted National Mortgage Lender]( Find the home loan that’s right for you. At North American Savings Bank, we offer a variety of mortgage and refinance options with nationally competitive rates and personal service. Learn more and apply online today! 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