August 2021 Monthly Outlook – Tortoise and the Hare, Sometimes the Tortoise Wins

“We don’t get paid for activity, just for being right. As to how long we’ll wait, we’ll wait indefinitely.” – Warren Buffett

“ Patience is the calm acceptance that things can happen in a different order than the one you have in mind.” -David G. Allen

I start this report out with 2 quotes that reflect where I am in terms of the market and your portfolio.

While the stock market (S&P 500) has continued to climb, there are a number of factors facing the markets in the near-term that have me in a patiently waiting mode.

The first factor is that August is historically the weakest month of the year for stocks.  “August has been the 2nd worst performing month for the S&P 500 index over the last 30 years (1991-2020), losing an average of 0.2% (total return) over the period.”  (BTN research)

The second factor is that the market is WAY over due for even a mild decline.  “US equities have continued their stellar performance despite high valuations that have raised correction concerns. Following last week’s performance speedbump, the S&P 500 has persisted upward. It has now been 184 trading days since the last 5% S&P 500 drawdown. This marks the 15th longest period without a meaningful pullback and is significantly above the historical average of 97 days.” (Goldman Sachs)

Source: Goldman Sachs Global Investment Research. As of July 29, 2021.

The third factor I am watching is the market history during a new President’s 1st term.  This year it is especially important as the economic reopening is threatened by the spread of the Delta variant of Covid, primarily in the unvaccinated population.  The other issue is the Infrastructure legislation currently working its way through Congress.  While the Senate appears poised to approve the bill, the House will not even address the bill until September and there are members in both parties not happy with the Senate bill.

Having said all of the above, we continue to look for opportunities that can be taken advantage of.  For example, during the last week of July a number of major companies reported earnings, and while reporting phenomenal numbers, in almost every case the stock prices for these companies fell.  We saw this as an opportunity to invest in high quality companies like Apple, Amazon, Google, Facebook and a few others, at discount prices.  Time will tell if I was correct but I feel these are wonderful long-term investments.

Please let me know if you have any questions on this report.

August 2020 Calendar of Events   (comments and suggestions always welcome)

                August is National Immunization Awareness Month – How ironic given the Covid-19 virus and so many of our fellow citizens refusing to get vaccinated

August  8th        My birthday!   It is also International Cat Day.  Meow to all the cat lovers out there

August 16th      National Tell a Joke day – we can all use  some humor these days

August 24th      National Waffle Day – yum           

August 26th      Women’s Equality Day – as the son of a single mom and the father of 3 wonderful daughters and 2 amazing granddaughters, I support improving quality for women in all areas.

Please stay safe and well.


Sources: Goldman Sachs, Oppenheimer, Macro Analytics, BTN Research

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

July 2021 Monthly Outlook – “Halftime Score” & “Making Predictions”

First, I want to wish you and your loved ones a safe and happy July 4th holiday. Hopefully it is close what we use to consider “normal”.

If felt that 2 quotes were in order for July!

There’s not many things less important than the score at halftime.” – Bill Self

This one relates to both the markets and the virus.  The financial markets posted very solid growth in the first half of 2021 – putting in the 2nd best first half since 1998. But that score won’t matter depending on what happens over the rest of the year.  The same is true about the virus – major progress has been made but vaccine hesitancy and the Delta variant and future new variants could risk the economic reopening and a stock market decline.

“It’s tough to make predictions, especially about the future.” – Yogi Berra

This quote also relates to both the markets and the virus. With the markets and the economy, the solid growth so far this year means stock valuations are high, investors have piled into stocks and inflation is rising.  The high bar set in the first half of the year could lead to disappointment which could serve to limit growth over the next 6 months. As for the virus, the test will come in the fall when schools reopen and people move back inside.

My outlook is that the economy continues to reopen, albeit at a slightly slowing pace.  This should be supportive of continued growth in stocks, again at a slower pace.  At the moment, we remain broadly diversified with a tilt towards stocks over bonds but will adjust accordingly as we move forward.

Please let us know if you have any questions or concerns.

For the historically minded, March 16, 2020 will be added to the list of key dates in Internet history:

  • 1972: Email invented
  • 1975: Personal computer invented
  • 1983: The Internet is created
  • 1989: The World Wide Web is born
  • 2020: The work world went virtual. You were there!

July Calendar of Events   (comments and additions for future months are always welcome)

  • July is National Picnic and National Parks month – please enjoy being outside with family and friends.

July 1st             Bureau of Internal Revenue (the IRS) founded in 1862– betcha nobody celebrates this birthday 

July 4th            Independence Day  – it will certainly be a different kind of celebration this year

July 11th          My daughter Ryan’s birthday

July 23rd         National Ice Cream Day   – Breyers vanilla with Hershey’s chocolate syrup is my go-to

I hope you find this information helpful.  Please share it with family and friends.

Best regards

Jim

Sources:  Nottingham Advisors, CNBC

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

Weekly Market Notes – June 14, 2021

For the Week of June 14, 2021

The Markets

Stocks climbed slightly Friday. The S&P reached a new record, and the NASDAQ posted its fourth winning week in a row as investors shook off a report showing the Consumer Price Index jumped 5 percent in May from a year earlier. For the week, the Dow fell 0.78 percent to close at 34,479.60. The S&P rose 0.43 percent to finish at 4,247.44, and the NASDAQ climbed 1.85 percent to end at 14,069.42.

Returns Through 6/11/211 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)-0.7813.6539.9813.3816.74
NASDAQ Composite (TR)1.859.5049.2923.6424.78
S&P 500 (TR)0.4313.8443.7317.3117.41
Barclays US Agg Bond (TR)0.47-1.71-0.205.503.17
MSCI EAFE (TR)0.3411.6035.248.0410.41

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond, NASDAQ and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

Dollar Is King — 59 percent of the world’s foreign exchange reserves, i.e., cash holdings of central banks around the world, were held in U.S. dollars as of the end of calendar year 2020, its lowest level in 25 years but still making the dollar the most popular currency in the world. The Euro, representing 21 percent of global foreign exchange reserves, is the second most widely held currency (source: International Monetary Fund, BTN Research).

Babies — When America recorded 4.32 million births in 2007, it broke the nation’s all-time high of 4.31 million births from 1957. Since 2007, the number of U.S. births has fallen in 12 of 13 years to 3.61 million births in 2020, the same number of U.S. births that took place in 1980 (source: Centers for Disease Control and Prevention, BTN Research).

Work From Home, Start a Business — Americans filed 4.33 million new business applications in 2020, up 24 percent from 3.49 million filed in 2019, and up 75 percent from 2.48 million filed in 2010 (source: Census Bureau, BTN Research).

WEEKLY FOCUS – The Importance of a Good Withdrawal Plan

So, you’ve developed a financial plan for your future. You know how you’re going to accumulate the savings and investments needed to provide a comfortable retirement. But do you have a plan for withdrawing savings during retirement? If you don’t create a well-thought out plan for accessing funds from your accounts, you could lose savings to taxes or even run out of money.

Here are some things to keep in mind when developing your budget and withdrawal plan.

Budget for your future lifestyle. Your budget is a good place to begin determining your monthly retirement withdrawals. Will you continue your current financial lifestyle? Adopt a more conservative approach? Or do you have goals, which will require a higher budget? In addition to living expenses, include travel, entertainment, and the possibility of life-changing events like marriage or health issues.

Know how taxes will affect your assets. Having assets in accounts, which vary in terms of their tax treatment, could be wise. Your assets likely fall into tax-deferred, taxable, or tax-free categories. Knowing how your savings will be taxed is important when developing your withdrawal plan. For example, depending upon your circumstances and goals, it might be best to use the profits from taxable investment accounts first and later look to your tax-deferred accounts, such as a traditional IRA or 401(k). Most experts agree Roth IRAs should be the last account to tap, giving them as much time as possible to grow tax-free.

Know your required minimum distributions (RMDs). When you reach 72 (70½ if you reached 70½ before January 1, 2020), certain types of accounts require you begin withdrawing savings. If you don’t, the tax penalty could be as high as 50 percent of the required distribution. The rules for RMDs can be confusing. Your financial professional can help you understand them and avoid fees.

Just as it’s never too early to start saving for retirement, it’s never too soon to think about how you’ll withdraw from those savings in retirement. There are many approaches to withdrawal plans, but the best plan is based on your future goals and the kind of investment accounts you have. Call our office today. We can help you create a well-thought-out withdrawal plan designed to increase confidence, preserve your retirement assets, and reduce your tax burden.

We do not provide tax advice; please consult an accountant for more information.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright June 2021. All rights reserved. Securities offered through Securities America, Inc., broker-dealer and member of FINRA and SIPC. Investment advisory services offered through Securities America Advisors, Inc. and/or Arbor Point Advisors LLC, registered investment advisers. Securities America, Inc., Securities America Advisors, Inc., and Arbor Point Advisors LLC are separately owned and other entities and/or marketing names, products or services referenced here are independent. Securities America  •  12325 Port Grace Blvd.  •  La Vista, NE 68128  •  800-747-6111  •  securitiesamerica.com #  3631160.1

Weekly Market Notes – June 7, 2021

For the Week of June 7, 2021

    The Markets

Stocks rose Friday. The Labor Department’s May jobs report showed unemployment fell to a pandemic-era low of 5.9 percent, and new job growth was stronger than April’s but short of expectations. The mixed news appeared to assure investors the Fed would retain its accommodating money policies. For the week, the Dow rose 0.69 percent to close at 34,756.39. The S&P gained 0.64 percent to finish at 4,229.89, and the NASDAQ climbed 0.49 percent to end at 13,814.49.

Returns Through 6/04/211 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)0.6914.5534.9214.4517.00
NASDAQ Composite (TR)0.497.5144.7223.1824.08
S&P 500 (TR)0.6413.3538.0817.6517.28
Barclays US Agg Bond (TR)0.12-2.170.165.293.15
MSCI EAFE (TR)0.7311.2232.518.189.95

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond, NASDAQ and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

Did You Need It? — 40.3 percent of college graduates aged 22 to 27 are working in jobs in which they are underemployed, i.e., they are working in a job that typically does not require a college degree. Historically, 33.5 percent of college grads are underemployed (source: Federal Reserve Bank of New York, BTN Research).

Will It Be Spent Eventually? — The personal savings rate in the U.S. in the first quarter 2021 was 21 percent. The personal savings rate in the U.S. in the first quarter 2001 was 5 percent. The personal savings rate is defined as savings (i.e., after-tax income less consumption spending) divided by after-tax income (source: Department of Commerce, BTN Research).

Not a Big Number? — At its peak, 3.7 million home mortgages (out of 52.4 million mortgages nationwide) had requested and received forbearance protection afforded through the CARES Act that was signed into law by President Donald Trump on March 27, 2020. As of March 2021, that total had fallen to 2.2 million home mortgages still in forbearance, or just 4.2 percent of all mortgages (source: Federal Reserve Bank of New York, BTN Research).

WEEKLY FOCUS – June Is Alzheimer’s & Brain Awareness Month

It’s difficult to find someone who has not been emotionally and/or financially impacted by Alzheimer’s. Alzheimer’s is one of our nation’s costliest diseases. According to the Alzheimer’s Association, total payments for all individuals with Alzheimer’s or other dementias are estimated to total $355 billion in 2021 (not including unpaid caregiving). Sadly, afflicted individuals without adequate long-term care insurance frequently lose most, if not all, of their financial assets.

But even dementias’ beginning stages and mild cognitive impairment experienced by healthy seniors can put personal wealth at risk. That’s why it’s important to begin having conversations about your aging family member’s finances well before you see signs of mental decline. Obviously, this has to be done with great sensitivity and respect. Make sure they know you don’t want to take control, but you would like to ensure they are protected and their wishes honored in the years to come.

During ongoing dialogs, try to learn what you’ll need to know if it becomes necessary to manage their finances: the names and contact information of their financial planner, accountant, and attorney; financial records and where they are kept; their monthly income and the sources; insurance policies; the location of financial accounts; regular bills and how they are paid; and log-in information for online accounts.

Suggest meeting jointly with their financial professional and/or other family members. Gain an understanding of their priorities and wishes. Ask which assets are most important to them, what causes they want to support, and whether their will is up to date.

Propose having legal documents created that will allow you or another family member to make decisions if your loved one becomes unable to. This can include: a health care power of attorney (POA) or a more limited living will, either a limited or durable power of attorney for finances, an authorization to disclose account information, and a form authorizing a financial institution to contact you if concerns arise about their ability to manage finances. Not having these documents when they’re needed can make helping your elderly relative considerably more difficult. For example, without a POA, you may need to go to court to attain guardianship of your family member to access accounts on their behalf.

Contact our office if you would like more information about protecting your loved one or help creating a plan to care for them.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright June 2021. All rights reserved. Securities offered through Securities America, Inc., broker-dealer and member of FINRA and SIPC. Investment advisory services offered through Securities America Advisors, Inc. and/or Arbor Point Advisors LLC, registered investment advisers. Securities America, Inc., Securities America Advisors, Inc., and Arbor Point Advisors LLC are separately owned and other entities and/or marketing names, products or services referenced here are independent. Securities America • 12325 Port Grace Blvd. • La Vista, NE 68128 • 800-747-6111 • securitiesamerica.com #3621494.1

June 2021 Monthly Outlook – Fully Invested Bear

Financial markets basically traded sideways during May, with stocks gaining 0.5% (S&P 500), while interest rates declined slightly dropping 0.05% (US 10yr Treasury).

We have a number of key economic reports and events in June that may dictate whether the market continues to trend sideways or makes a move either up or down.  On June 4th we get the May Jobs report, which will be an indication of how the job market is recovering with the economy opening up.  June 15-16 is the next Federal Reserve Board meeting, and I will be watching how they respond to the rising inflation we are seeing.  June 30th brings the start of 2nd quarter corporate earnings reports.

June is also a weak month for stocks, producing positive results only 40% of the time over the last 20 years with average returns for the month roughly negative 1%.

Two other factors I am watching closely: 

  1. The total market capitalization (stock price x # of shares) is now at an extreme level compared after a crisis, which then had a multi-month, double-digit pullback before resuming the rally                        
  2. The March 2020 rally to present is starting to resemble a pattern to the 1982 and 2009 recoveries to GDP.  This is one of Warren Buffet’s warning signs that stocks are expensive. 
Expectations (1)

Based on the above, I am operating as fully invested bear.  In the short to medium term, I am cautious about a potential correction.  Longer term, I believe the bull market and economic recovery from Covid-19 has further room to run.  As such, we have tightened up our risk levels but remain fully invested in broadly diversified portfolios and will adjust as conditions dictate.

P.S. Thank you for your referrals. They are making a big difference in my practice. Feel free to share my name with your friends on Facebook or LinkedIn.

I want to extend a special thanks to clients & colleagues who have recently referred us to family and friends:  Greg & Valerie W.

June Calendar of Events   (comments and additions for future months are always welcome)

  • June is LGBTQ Pride Month.  I’m an incredibly proud father of a daughter in an awesome same sex marriage.  So let’s all work towards acceptance and inclusion of people regardless of their sexual orientation.

June 14th        Flag Day                  

June 20th        Summer begins – it’s certainly going to be a different summer.  Enjoy it safely       

June 20th        Father’s Day  – wishing all father’s, grandfathers, and great grandfathers a wonderful day.

Sources:  Bloomberg, Ned Davis Research, Day Hagan Asset Management, CNBC

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

Annual Credit Report Reminder

Summer is just around the corner, and with the barbecues and cicadas comes another reminder from us that you should check your credit report.

The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. Here is a link to the Federal Trade Commission website   http://www.consumer.ftc.gov/articles/0155-free-credit-reports

To get your credit report online visit this site:  https://www.annualcreditreport.com/index.action  Click on request your free credit report.

Since you get 1 report each year from each reporting company my suggestion is to spread them out during the year.  For example, request Equifax in January, Experian in May, and TransUnion in September.  That way you can see any changes made throughout the year.

If you would rather make the request by mail , print and complete the attached Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.  Again, I would print 3 copies and make separate requests throughout the year.

Review each report for inaccuracies or incomplete information and follow the supplied instructions on how to get these corrected.

Please call me if you have any questions on this information. annual-report-request-form

Weekly Market Notes – May 10, 2021

For the Week of May 10, 2021

The Markets

Stocks rose to record levels Friday despite negative economic news. The Labor Department reported just 266,000 non-farm jobs were added last month, far from the 1 million forecasters expected, and the unemployment rate rose 6 percent. Bad news seemed to be good news to investors expecting the Fed to keep interest rates low. For the week, the Dow rose 2.72 percent to close at 34,777.76. The S&P gained 1.26 percent to finish at 4,232.60, and the NASDAQ dropped 1.48 percent to end at 13,752.24.

Returns Through 5/7/20211 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)2.7214.3348.7315.2417.13
NASDAQ Composite (TR)-1.486.9454.3624.9225.05
S&P 500 (TR)1.2613.2549.3518.7917.79
Barclays US Agg Bond (TR)0.28-2.340.175.313.21
MSCI EAFE (TR)2.599.3646.887.2510.11

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond, NASDAQ and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

Tax Cheaters — In September 2019, the government projected our nation’s tax gap, i.e., the difference between what all taxpayers should have paid compared to what they actually paid, was $441 billion per year. On April 13, IRS Commissioner Charles Rettig testified before the Senate Finance Committee the tax gap could be as high as $1 trillion annually, or more than double the previous estimate (source: IRS, BTN Research).

Wood — The average cost of building a new single-family home in the U.S. has increased by 8 percent in the last year ($24,000) solely because of the rising cost of lumber. Lumber mills shut down nationwide in 2020 for as long as four months, leading to a lumber shortage as homebuilding demand accelerated. Lumber imports into the U.S. have been impacted by a beetle plague ravaging Canadian forests (source: National Association of Homebuilders, BTN Research).

Half — 49 percent of the United States’ 330 million population maintain their health insurance through an employer’s health insurance plan either as an employee or a dependent of an employee (source: Kaiser Family Foundation, BTN Research).

WEEKLY FOCUS – Make Your Tax Refund Work for You

If you’re one of the millions of Americans receiving a tax refund this year, why not use that money to reap long-term benefits? The following seven options could make a lasting impact on your financial well-being:

  1. Having an emergency fund to cover basic living expenses is an important step to achieving your financial plans and keeping your retirement funds secure. If you don’t have six months of living expenses set aside in a high-interest savings account, use your tax refund to get closer to that goal.
  • If you have credit card debt, pay down your balance to get out of debt quicker. Then invest the money you save each month.
  • If your emergency fund is set and you don’t have high-interest debt, invest your tax refund in your retirement plan. If you want to reap the full benefits of compound interest, the sooner the better.
  • If there’s a course you’ve been wanting to take to boost your career, use your refund for tuition. Or, perhaps you have a hobby you’ve always wanted to turn into a side business. Why not use the money to create a website or build the inventory you need to get started?
  • Increase your home’s efficiency with new windows or appliances. You’ll save money on utility bills now and make your home more valuable when it’s time to sell.
  • Purchase a term life insurance policy to guarantee your loved ones an equal standard of living should tragedy strike.
  • Donate part or all of your tax refund to a charity and lower your taxable income in the process.

How you spend your money will ultimately depend upon your goals and individual financial situation. If you need help deciding your best route, call our office.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America. SAI#1581151.1 

May 2021 Monthly Outlook – Managing Risk – Dangerous Leap

“Risk is good. Not properly managing your risk is a dangerous leap.”  – Evel Knievel

We believe the strategic case for risk assets remains favorable, with ongoing support from: 1) economic reopening and normalization, 2) fiscal support, 3) pent-up savings, and 4) historically easy financial conditions. As we move into the post-COVID-19 world, we believe the recovery will be non-linear and the opportunity set highly dynamic.  We expect the economy to show superior growth for the balance of 2021, while the financial markets have already priced in a good deal of this growth.  The financial markets will need to contend with the potential for rising inflation driven by the economic growth and the potential for the FED to reduce monetary accommodation to fight inflation.   Come 2022, we expect economic activity to fall back into a normal range of 2%-3% per year. 

Chart of the week
Source: Goldman Sachs Global Investment Research and GSAM SAS Market Strategy

On the investing front, we are on alert as despite a barrage of positive economic data recently and amazingly positive corporate earnings reports, there has been a  pattern of sell-the-news profit taking in the past two weeks of April. It also comes at a time when defensive assets are showing relative strength compared to growth assets. The move isn’t large enough to break through recent support, but it was significant enough to establish a divergence between the movement of major market benchmarks and their volatility measures. This kind of price movement is typical when markets are faltering near highs. It implies that institutional investors often want to quietly slip out of their positions before the demand for stocks becomes too weak and creates a rush of sellers.  

The chart below shows that the S&P 500 Index and the Nasdaq 100 Index, have both showed a subtle pattern of higher highs over the past two weeks. Meanwhile, the Cboe Volatility Index (VIX), and the Cboe Nasdaq Volatility Index(VXN) are showing a pattern of higher lows (they should be showing a pattern of lower lows). This makes a subtle implication that market makers are a bit worried about the potential for falling prices.

That seems incongruous given the excessively positive data from both the private and the public sector that the economic recovery is progressing rapidly. But this is the kind of clue that experienced investors look for. When price action doesn’t follow what seems to be obvious for a given narrative, then we start to wonder if a larger, less obvious dynamic is building. It may not materialize into a full blown change of trend, but if it does do so, this is the kind of subtle warning the market might give.

Source: Investopedia

Therefore we have tightened our risk management thresholds while simultaneously shifting our portfolio allocations into areas that continue to show strength.

We hope you find this report informative.  Feel free to call us with any questions or concerns.  Please share this report with anyone you feel will benefit from it.

May Calendar of Events   (comments and additions for future months are always welcome)

·      May is National Mental Health awareness month.  Nearly 44 million American adults, and millions of children, experience mental health conditions each year. Let’s all get educated on this issue and work towards acceptance and inclusion of people dealing with mental health issues.

May 5th                      Cinco De Mayo – stay thirsty my friends                 

May 9th                     Mother’s Day – wishing all mom’s, grandmothers, and great grandmothers a wonderful day. Hopefully soon we can get together to celebrate.

May 15th                   Armed Forces Day.  Dedicated to recognizing those presently serving in our armed forces

May 23rd                    My daughter Caryn’s birthday  

May 31st                   Memorial Day – let’s remember and give thanks to all who served our country

Jim

Sources: Investopedia, Bespoke Investment Group, Goldman Sachs

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

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Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

Weekly Market Notes – April 26, 2021

For the Week of April 26, 2021

The Markets

Stocks rebounded Friday after dropping Thursday following reports President Biden planned to propose doubling capital gains taxes on individuals earning $1 million or more. But the S&P ended Friday close to its record high amid expectations of a strong earnings report this week. For the week, the Dow fell 0.42 percent to close at 34,043.49. The S&P lost 0.11 percent to finish at 4,180.17, and the NASDAQ dropped 0.25 percent to end at 14,016.81.

Returns Through 4/23/211 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)-0.4211.8647.8714.2616.30
NASDAQ Composite (TR)-0.258.9666.3026.5124.65
S&P 500 (TR)-0.1111.8051.9218.3317.12
Barclays US Agg Bond (TR)0.13-2.43-0.055.323.31
MSCI EAFE (TR)-0.417.4145.966.588.94
Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond, NASDAQ and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

Thirty-Something — The average age of a first-time U.S. homebuyer in 2020 was 36.1 years old (source: New York Fed Consumer Credit Panel, BTN Research).

Need a Charge? — The American Jobs Plan, a $2.3 trillion infrastructure plan proposed by the Biden White House on March 31, includes $174 billion (8 percent of the total plan) to be invested in the domestic electric vehicle market. Funds would be used to build and maintain 500,000 charging stations nationwide (source: Biden White House, BTN Research).

Money In, a Lot More Out — Halfway through fiscal year 2021, i.e., the 6 months ending March 31, 2021, the U.S. government has taken in $1.7 trillion in taxes and spent $3.4 trillion, resulting in a 2021 fiscal year deficit to date of $1.7 trillion with 6 months still to go in the fiscal year. Last year’s fiscal year 2020 budget deficit of $3.1 trillion was our nation’s all-time record (source: Treasury Department, BTN Research).

WEEKLY FOCUS – Without Umbrella Coverage, Your Assets Could Be at Risk

You’ve worked hard to build up your nest egg. But what would happen if you were involved in an accident, which left you liable for an amount above the limits of your homeowners or auto insurance? All your hard-earned assets could be gone over night.

To protect your savings, you may want to consider adding umbrella insurance to your homeowners and auto coverage. Also known as excess personal liability insurance, umbrella insurance provides an extra layer of security, which will pay for a judgment or settlement if you’re found responsible and cover your defense expenses even if you’re not at fault.

If you own property or items that could cause an injury to someone else, such as a pool, a dog, a trampoline, a boat, or a snowmobile, you should consider purchasing umbrella insurance. If you’re a landlord, serve on the board of a nonprofit, coach kids’ sports, or volunteer, you could also benefit from the protection offered by an umbrella policy.

Umbrella insurance is typically sold in increments of $1 million. The price of a policy will vary by risk and where you live. Because the insurance only pays if a claim exceeds the liability limit of your homeowners or auto insurance, coverage is generally affordable. You can expect to pay $150 to $300 per year for $1 million of coverage.

For an additional $100 to $200, you can add excess uninsured or underinsured motorist coverage, which covers you if you’re injured by another driver who doesn’t have enough coverage. For about $1,000 a year, you can tack on an endorsement that will provide additional protection from lawsuits if you serve as an officer or volunteer on a nonprofit board.

To keep premiums low, it’s best to purchase your umbrella insurance from the same provider you purchase your home and auto insurance from. It’s common for an insurance carrier to require you to have $250,000 in auto insurance and $300,000 of homeowners coverage before you can purchase an umbrella plan. (Make sure you don’t have a coverage gap between your original and umbrella policies.)

If you would like to learn more about umbrella insurance and other ways you can protect your finances, call us today to schedule an appointment.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright April 2021. All rights reserved. Securities offered through Securities America, Inc., broker-dealer and member of FINRA and SIPC. Investment advisory services offered through Securities America Advisors, Inc. and/or Arbor Point Advisors LLC, registered investment advisers. Securities America, Inc., Securities America Advisors, Inc., and Arbor Point Advisors LLC are separately owned and other entities and/or marketing names, products or services referenced here are independent. Securities America • 12325 Port Grace Blvd. • La Vista, NE 68128 • 800-747-6111 • securitiesamerica.com SAII# 3564999.1

Weekly Market Notes – April 12, 2021

For the Week of April 12, 2021

THE MARKETS

Despite an unexpected jump in jobless claims, stocks rose Friday amid the accelerating vaccine rollout and reopening optimism. Both the Dow and the S&P hit record closing highs. For the week, the Dow rose 1.99 percent to close at 33,800.60. The S&P gained 2.76 percent to finish at 4,128.80, and the NASDAQ climbed 3.13 percent to end the week at 13,900.19.

Returns Through 4/09/211 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)1.9911.0245.5714.7316.70
NASDAQ Composite (TR)3.138.0571.8227.2324.73
S&P 500 (TR)2.7610.3950.5018.7017.33
Barclays US Agg Bond (TR)0.40-2.900.374.843.14
MSCI EAFE (TR)1.806.0943.856.559.72
Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond, NASDAQ and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

They’re Buying Bonds — The Fed is buying $120 billion of bonds each month – $80 billion of Treasury debt and $40 billion of mortgage-backed securities. On March 31, the Fed confirmed the purchases will continue “until substantial further progress has been made toward the committee’s maximum employment and price stability goals.” (source: Federal Reserve, BTN Research).

Lowest Paid, Hardest Hit — 82 percent of the net job losses in the United States in 2020 were suffered by workers in the bottom 25 percent of wage earners (source: Economic Policy Institute, BTN Research).

Wealthiest — The top 10 percent of U.S. households (as measured by net worth) own 70 percent of all assets nationwide as of Dec. 31, 2020, i.e., $85.6 trillion out of $122.9 trillion. The bottom 50 percent of U.S. households own just 2 percent of all assets as of Dec. 31, 2020, i.e., $2.5 trillion out of $122.9 trillion (source: Federal Reserve, BTN Research).

WEEKY FOCUS – What You May Not Know About Estate Taxes

You have worked hard, managed your finances well, and invested wisely to protect your future and care for your family. It’s crucial not to lessen your vigilance when it comes to your estate. Unfortunately, the Tax Cuts and Jobs Act (TCJA) passed in 2017 has lulled some individuals into a false sense of security.

In 2021, a person’s estate is exempt from federal taxes as long as it is under $11.7 million. (The amount over the exemption can be taxed at up to 40 percent.) But the current exemption, which doubled under TCJA, is set to expire in 2026 barring further legislation. And the Biden administration has already proposed cutting much of the estate tax exemption.

Even estates well within the federal exemption may still be impacted by state death taxes. In 2021, Washington, Oregon, Minnesota, Illinois, Maryland, Vermont, Connecticut, New York, Rhode Island, Massachusetts, Maine, Hawaii, and Washington, D.C., all levy estate taxes on estates above $1 to $5.9 million. Among the list, the highest estate tax rates vary from 12 to 20 percent.

Another six states levy an inheritance tax: Nebraska, Iowa, Kentucky, Pennsylvania, Maryland, and New Jersey. The states’ highest inheritance tax rates vary from 10 percent (Maryland) to 18 percent (Nebraska). All six states exempt spouses from paying inheritance tax; some extend at least a partial exemption to immediate relatives.

Although some states reduced or eliminated estate tax burdens to retain wealthy residents over the past decade, pandemic-related budget woes may reverse that trend. For example, the District of Columbia reduced its estate exemption from $5.67 million in 2020 to $4 million in 2021. And a taxable $10 million estate could owe nearly $1 million in estate tax to D.C.

There may be ways to reduce an estate’s taxes or fees: various types of trusts; transferring assets into a Limited Liability Company or Family Limited Partnership; gifting assets; putting money into a life insurance policy; even moving to another state. Estate planning can be complex, and it’s crucial to get it right. We would be happy to work with you, your attorney and tax professional to find solutions for your situation.  We do not provide tax or legal advice; please consult an accountant or attorney for more information.

*The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright April 2021. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3543659.1