November 2020 Monthly Outlook – The Big 3

“Life is not about waiting for the storm to pass, it is about learning to dance in the rain.” – Unknown

Right now the Big 3 –  Covid, Election, Stimulus – are making for one heck of a storm.  I definitely have my dancing shoes on!

Let’s look at the Big 3 one at a time:

Covid:

Sadly, we are seeing a significant spike in Covid both here and globally.  While most experts anticipated an uptick in the fall flu season, the magnitude and speed of the uptick is greater than most expected. Just this week France announced a new round of mandatory lock-downs, Germany is closing bars, restaurants and theatres for a month, and Chicago is banning indoor dining/drinking and put a curfew on non-essential businesses.

source: Strategas

The US economy had been rebounding quite nicely from the deep contraction in the second quarter of this year but this recent uptick in Covid is starting to impact consumer behavior again.   On October 18, 2020, TSA air passenger throughput had just surpassed 1,000,000 daily for the first time since March.  With numbers like that, it seemed as though the re-opening track was running relatively smooth.  Unfortunately, the 10 days  following the million passenger reading weren’t nearly as strong.  For ten straight days, the total number of daily passengers on US airlines have been lower than the same day a week before.  That’s the second-longest streak of consecutive daily week/week declines since the start of the pandemic. 

The size of the week/week declines has been relatively small on a percentage basis, so it’s not as though air traffic is crashing to a halt, but if the million passenger milestone was a positive trend towards reopening, the slowdown that has followed it suggests that rising case counts have caused Americans to hunker down a little bit.  That’s the kind of environment we find ourselves in these days where a real-time indicator of economic momentum can indicate a positive trend at one point and then one week later it totally contradicts itself.   Source Bespoke Investments

Election:

Investors tend to conflate their anxiety about politics with anxiety about the financial markets. Although investors are inclined to believe that election outcomes will dictate what happens in the markets and their portfolios (and this may, in fact, be true in the very short-term), the reality for investors is that the future of the market is less sensitive to elections than it is to the fundamental drivers of stock prices including: Corporate profits; inflation; interest rates; job market conditions, consumer sentiment.

The good news for investors is that, regardless of who wins the election, all of these fundamental market drivers generally support stock prices in the intermediate term (one to four years). The Fed seems likely to keep interest rates low until the economy is back at full employment (probably sometime after 2023).  Although the Democrats and Republicans have different visions of coronavirus relief/fiscal stimulus with very different elements and different sizes, both parties recognize the need for incremental assistance for unemployed workers and struggling businesses to keep the pandemic-induced recession from feeding on itself. Despite everything that has happened in 2020 the US consumer has a generally positive outlook:

Source: Capital Group, Election uncertainty looks increasingly certain. Unified government indicates White House, House of Representatives and Senate are controlled by the same political party. Unified Congress indicates House and Senate are controlled by the same party, but the White House is controlled by different party. Split Congress indicates House and Senate are controlled by different parties regardless of White House control.

To be clear, we do not mean to suggest that this election does not matter. On the contrary, the consequences of this election may be as—or more—important than any US presidential election in living memory, just not for whether investors should maintain or change the asset allocation of their portfolios.

Stimulus, Stimulus, Stimulus – All That Matters Near-Term
Whether or not it is the right move long term will be determined later, but unfortunately, the economy does not appear to be strong enough to stand on its own. If the spigot turns off,  real troubles will emerge for equities and the financial sector in particular.  Congress will likely provide additional stimulus once the political pressure of the election is past. The issue is timing.  If the election results in status quo (Republicans win White House and Senate, Democrats win House) we likely get a stimulus bill sooner, but smaller – probably before the end of the year.  If the Democrats sweep the election, we likely get a much bigger stimulus package although it probably doesn’t happen until after the inauguration in late January 2021, as Republicans will have no motivation to act during the lame duck period.  If Biden wins Presidency but Republicans keep control of Senate, sadly I think we get a very small stimulus package, if any, as political gridlock will be in full force.

To recap, delayed or contested election results could fuel short-term market volatility.   Because of the expected surge in mail-in voting due to the pandemic, it’s possible the election results will not be known on election night and a complete vote count may not be available for days or weeks.   While the election may roil markets in the short term, the pace of the economic recovery and the course of the coronavirus pandemic are likely to be more important to stock market returns than who ultimately controls the White House and Congress.

Even though the spread of the virus seems to be accelerating in the United States, and Europe seems to be in the midst of a second wave of infections, progress toward a vaccine continues to hold out hope that one day our work lives and social lives will eventually return to something closer to ‘normal.’

Let’s stay hopeful and keep dancing in the rain!

Please feel free to share this report with family, friends and colleagues.  We appreciate your introduction to anyone who you feel we can help.

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

  • November is National Diabetes Month.   Please consider reaching out to a family member or friend who is dealing with this very tough disease.

November 1st           Healthcare open enrollment – runs through 12/15/18  – for coverage starting Jan 1, 2018  

                                    Note: Medicare open enrollment started 10/15/18 and end 12/7/18

November 1st           Set those clocks back

November 3th           Election Day  – be sure to vote

November 11th         Veterans Day – says thanks a Vet

November21st         Great American Smokeout – encourage a smoker to quit

November 26th        Thanksgiving – have a wonderful holiday 

Best regards,

Jim

Sources:  Charles Schwab, Fidelity, Bespoke Investments, Strategas

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 – October 26, 2020

For the Week of October 26, 2020

The Markets

Stocks ended a downbeat week mixed as investors followed officials’ comments on the status of another stimulus bill. Although unemployment benefits provided by the CARES Act ended July 31, the White House and lawmakers have not been able to agree on a new package. For the week, the Dow lost 0.90 percent to close at 28,335.57. The S&P dropped 0.51 percent to finish at 3,465.39, and the NASDAQ fell 1.06 percent to end the week at 11,548.28.

Returns Through 10/23/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)-0.901.178.149.3112.64
NASDAQ Composite (TR)-1.0629.6443.5921.8419.38
S&P 500 (TR)-0.518.8817.5412.7313.06
Barclays US Agg Bond (TR)-0.426.366.725.114.02
MSCI EAFE (TR)0.11-5.60-0.230.753.96
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.

It’s About Time — Americans have reduced their outstanding balances on their revolving debt, e.g., credit card debt and home equity loans, from March through and including August (source: Federal Reserve, BTN Research).

More Than Twice as Large — The U.S. government had a record $3.13 trillion deficit during fiscal year 2020, smashing the previous record deficit of $1.41 trillion set 11 years ago during fiscal year 2009. The deficit was the difference between $3.42 trillion of tax receipts and $6.55 trillion of outlays (source: Treasury Department, BTN Research).

Cashing In — The median sales price of an existing home sold in the United States in August ($310,600) is the highest ever recorded and is up 11 percent in the last 12 months (source: National Association of Realtors, BTN Research).

WEEKLY FOCUS – Future Retirees Face New Challenges

Preparing for retirement is more complex than it used to be for obvious and not-so-obvious reasons. The most obvious is longer lifespans. Thanks to improved medical care, a person retiring today in their mid-60s may need their savings to last 30 years. The list of less-obvious challenges includes:

Less support from employers. More companies have replaced their pension plans with defined contribution plans – putting added responsibility on the employee. The rise of gig workers and entrepreneurs leaves many without access to an employer-sponsored plan.

Shrinking Social Security. Social Security’s annual cost of living adjustment (COLA) averaged 7.7 percent from 1975 to 1984 – a rate that was higher than inflation. In contrast, COLAs for the last nine years ranged from 0.0 percent to 2.8 percent.1 COLAs are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which many note doesn’t adequately reflect the growth of some of the more costly expenses seniors encounter, such as health care, property taxes, home repairs, and homeowners insurance.

For example, the Social Security COLA for 2020 was 1.6 percent even though health insurance premiums were expected to go up by 5.6 percent in 2020.2 And Medicare premiums often increase faster than Social Security. As a result, part or all of a year’s COLA may be consumed paying for a retiree’s premium increase.  

Rising health care costs. It’s no secret health care costs have risen drastically in recent years. And the later years in life often account for the highest expenditures. According to the Fidelity Retiree Health Care Cost Estimate, an average retired, 65-year-old couple in 2020 may need $295,000 (after tax) to cover health care expenses in retirement.

Low inflation. While low inflation rates sound positive for individuals on fixed incomes, they also provide low earnings on money in savings and conservative investments like bonds and CDs. Purchasing a fixed annuity or bond (except for a Treasury Inflation Protected Security) while inflation is low may result in losing value if inflation rises. Retirees may need to take on some risk to increase earnings.

Planning for and managing retirement is complicated in every economic environment. Whether your retirement is imminent or in the distant future, give us a call. We’d be happy to help you create a personalized plan designed to meet your needs.

1https://www.ssa.gov/oact/cola/colaseries.html

2https://federalnewsnetwork.com/mike-causey-federal-report/2020/01/retiree-colas-vs-workers-pay-raise-why-the-difference/

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 October 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 3301216.1

Weekly Market Notes – October 19, 2020

For the Week of October 19, 2020

The Markets

Stocks were mixed on the final day of a volatile week. Encouraging reports on retail sales and consumer confidence lifted the major indices. The NASDAQ posted its fourth weekly gain. The S&P and Dow snapped three-day losing streaks to achieve their third positive weeks. For the week, the Dow rose 0.07 percent to close at 28,606.31. The S&P gained 0.21 percent to finish at 3,483.81, and the NASDAQ climbed 0.79 percent to end the week at 11,671.56.

Returns Through 10/16/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)0.072.098.4910.1613.42
NASDAQ Composite (TR)0.7931.0245.0522.0420.34
S&P 500 (TR)0.219.4518.7613.0413.65
Barclays US Agg Bond (TR)0.246.817.205.184.09
MSCI EAFE (TR)-1.45-5.700.510.584.11
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.

Big Numbers — The NASDAQ Composite was up 25.3 percent YTD (total return) through the close of trading on Sept. 30. The NASDAQ Composite has gained at least 20 percent in four of the last 11 years, i.e., 2009-2019. (source: NASDAQ, BTN Research).

Can’t Spend What We Don’t Have — Personal income (all pretax income created from employment and investments), declined 2.7 percent on a month-over-month basis from July to August, its fourth down month in the last six months. Personal income had declined on a month-over-month basis only five times in the previous decade (source: Department of Commerce, BTN Research).

Health Insurance — For workers who access their health insurance through an employer, the average annual cost for health insurance coverage for a family plan in 2020 is $20,514, with the employer paying 67 percent of the total ($13,717) and the employee paying 33 percent ($6,797) (source: U.S. Bureau of Labor Statistics, BTN Research).

WEEKLY FOCUS – National Estate Planning Awareness Week

October 19-25 has been named National Estate Planning Awareness Week, an observance that reminds the public how important estate planning is to financial wellness. Unfortunately, common myths convince many people they don’t need to create or update an estate plan, such as:

Only wealthy people need a plan. Without a will, state succession laws and the probate process decide who serves as the estate representative and where assets go. The probate process is publicand can take anywhere from a few months to a year or multiple years.

Proper estate planning considers tax liabilities. Yes, the federal estate tax exemption in 2020 is $11.58 million, thanks to the Tax Cuts and Jobs Act. However, the exemption is set to expire at the end of 2025.And despite this generous federal exemption, around a dozen states levy their own estate taxes (with a lower exemption than the federal), and six states collect an inheritance tax. The highest top rate among state estate taxes is 20 percent; the highest top rate among state inheritance taxes is 18 percent.

I already have a will. Estate plans are not meant to be “one-and-done” documents. They should be reviewed biennially, if not annually, and updated following a major life event (e.g., a birth, death, marriage, divorce, or move to another state). Beneficiary designations trump wills and should be revisited regularly. A complete plan should include a current list of all digital accounts with usernames, passwords, and security questions.

A will is enough. A thorough estate plan includes components designed to protect your income if you become disabled during your working years and protect your assets if you require costly long-term care as you age.It should also provide direction in the event you become unable to make decisions regarding your health and finances. Minimum documents include a Health Care Proxy (designates an individual to make decisions regarding medical treatments), an Advanced Care Directive (provides treatment instructions regarding prolonging life), and a Power of Attorney (names the person you wish to make financial decisions).

Estate planning can be complex. With so much at stake, it’s crucial to get it right. We are happy to work with you, your attorney, and tax professional to secure and make the most of your legacy. Securities America and its representatives do not provide legal or tax advice; consult with an attorney or accountant regarding your specific situation. 

*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 October 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3290367.1

Weekly Market Notes – October 12, 2020

For the Week of October 12, 2020

The Markets

U.S. stocks rose Friday amid renewed optimism over another stimulus package because of talks between House Democrats and the Trump administration. The S&P and NASDAQ had their best week since early July; the Dow had its best weekly gain since August. For the week, the Dow rose 3.31 percent to close at 28,586.90. The S&P gained 3.89 percent to finish at 3,477.14, and the NASDAQ climbed 4.57 percent to end the week at 11,579.94.

Returns Through 10/09/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)3.312.0211.1210.4513.58
NASDAQ Composite (TR)4.5729.9947.9221.9920.43
S&P 500 (TR)3.899.2221.3913.1613.81
Barclays US Agg Bond (TR)-0.176.556.315.224.12
MSCI EAFE (TR)2.98-4.315.501.564.47
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.

Being Careful — Since the beginning of 2020, the size of the money market fund industry in the U.S. (both taxable and tax-free) has grown from $3.63 trillion as of Jan. 1 to $4.40 trillion as of Sept. 30, a YTD increase of $770 billion or $20 billion a week (source: Investment Company Institute, BTN Research).

Maybe Never — 31 percent of 1,018 American workers surveyed in January anticipate they will retire at age 70 or later (source: Employee Benefit Research Institute – 2020 Retirement Confidence Survey, BTN Research).

Simpler — As a result of the expansion in the size of the standard deduction that was part of the 2017 Tax Cuts and Jobs Act, only 10 percent of tax filers itemized in 2018, down from 30 percent in 2017 (source: Tax Foundation, BTN Research).

WEEKLY FOCUS – Medicare Open Enrollment

Medicare’s annual open enrollment period begins October 15 and ends December 7. During this time, Medicare beneficiaries can change their drug plan or Advantage plan for the next calendar year. Supplemental Medigap plans, which have federally standardized benefits that don’t change from year to year, are not included in the fall enrollment.

Medicare Advantage Plans: Medicare Advantage Plans replace Original Medicare with HMO- or PPO-like plans. Because these plans are allowed to refile with Medicare each year, benefits and premiums can change from year to year.

Shortly before open enrollment begins, Advantage policy holders should receive an Annual Notice of Change (ANOC) from their provider. They should review the document carefully for changes to coverage, costs, or service area. Policy holders should also check to see if their preferred doctors, hospitals, pharmacies, or other providers are still in their plan. During Open Enrollment, beneficiaries may: change from Original Medicare (Parts A and B) to a Medicare Advantage plan or vice versa,* or switch to a different Medicare Advantage plan.  

Part D Plans: The company that provides a beneficiary’s current drug coverage will also send an ANOC, so beneficiaries can ensure all their medications are still covered by the plan. During Open Enrollment, beneficiaries may switch to a different Part D plan or enroll in Part D if they didn’t sign up during their general open enrollment period (a late enrollment fee may apply).

Also before Open Enrollment begins, insurers will provide an Evidence of Coverage (EOC), a comprehensive document explaining how the plan works and describing benefits, cost-sharing expenses, and what the plan pays. In addition to reviewing the ANOC or EOC, it is wise to compare other plans each year to see if another plan has become a better fit. The Medicare Plan Finder at medicare.gov/plan-compare/ is a convenient tool to use.     

Health care decisions can be complicated. If you need help evaluating your options or determining how health care costs may impact your retirement, please call our office.

*NOTE: A beneficiary who drops an Advantage plan to return to Original Medicare may be subject to underwriting if  they want to add a Medigap plan once they are past their original enrollment window or have been enrolled in Medicare Advantage for more than a year.

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 October 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3279700.1

Presidents and the Stock Market

With the Presidential election less than a month away, you likely have questions over which candidate is better for the stock market. While conventional wisdom says that Republican Presidents are better for the stock market, historical market performance suggests otherwise.  The table below shows the performance of the DJIA under every President since 1900 from the time they took office to the time they left.  For the 12 Republican presidents since 1900 (including Trump), the DJIA’s average annualized return during their tenure has been a gain of 3.5%.  For Democrats, though, the average is nearly twice as much at 6.7%.  Since WWII, the spread between Democrats and Republicans is a bit narrower (7.5% vs 6.1%), but still favors a Democrat President.

Six Potential Outcomes

In the limited sample size of US electoral history, certain partisan outcomes are frequently viewed as more favorable for investors than others. For example, instances of a divided Congress under either presidential administration since World War II have delivered a 13.4% median annual return historically. The market may appreciate America’s system of checks and balances.

Source: Bloomberg and GSAM.

2020 Election

Odds of a Biden win have increased over the last couple of weeks.  So have the odds of the Democrats winning the Senate. The House of Representatives outcome has never really been in question.  A lot can change in the last 4 weeks of an election cycle so any particular outcome is still possible.

The financial markets – which don’t see Red or Blue, they only care about Green – would likely prefer some form of divided government as this would mean more gridlock in Washington and reduce the risk of significant policy changes in either a far right or far left direction. As you can see from the chart above, Republican President’s tend to do better when Republicans control Congress, while Democratic President actually do best with a divided Congress or a Republican Congress (who’d of thunk that!)

Right now, we think the most likely outcome is some form of divided government.  If Trump wins, the Republicans likely retain the Senate, albeit with a smaller majority than the present 53-47.  If Joe Biden wins the Presidency, it is likely that the Democrats take the US Senate, but it would likely be a very narrow majority.

There’s no question that higher taxes are coming as the Federal debt has skyrocketed and has to be paid for at some point.  If Biden wins, tax hikes are more likely than if Trump wins but it all depends on the outcome in Congress. 

If the Democrats were to sweep, we would imagine at least several Democrats balking at immediately imposing tax hikes. Remember, when President Obama took office in 2009, the Democrats had 59 seats in the US Senate, and taxes didn’t go up until 2013. This was because Democrats were hesitant to hike tax rates when unemployment was high and the economy was slowly recovering from the Financial Panic of 2008-09.  On the other hand, a Democrat sweep likely means significant stimulus spending to boost the economy.  They will also favor sectors like healthcare, infrastructure, and clean technology. Conversely it would be a less favorable climate for several sectors such as fossil fuels, defense, and financial services. 

No matter the outcome THE MARKETS ARE IN THEIR OWN UNIVERSE, stoked by the likelihood of ultra-low interest rates for years to come and a Federal Reserve that is committed to keeping the economy afloat.   Probably the most important point is to stick with the overall game plan and stay invested, as can be seen from the chart below.

Staying Invested vs. Investing in Single Party

Source: Charles Schwab, Bloomberg, as of 10/2/2020. For illustrative purposes only.
The above chart shows what a hypothetical portfolio value would be if a hypothetical investor invested $10,000 in a portfolio that tracks the Dow Jones Industrial Average on 1/1/1900 under three different scenarios: a Republican presidential administration; a Democratic presidential administration; or staying invested in the market throughout the entire period noted. Chart does not reflect effects of fees, expenses or taxes.

While this is the long-term outlook post-election, there is likely to be hightened volatility around election day due to Covid-19.  The virus is causing many more people to vote by mail than in previous elections.  This means that a winner is likely not declared on election night.  Bear in mind, the news media – which loves to be the first to declare anything – is not the final arbiter of the winner. 

The Secretary of State in each state certifies that state’s election result. When Americans vote for the presidential and vice presidential candidate of their choice, either by mail or in-person, this November, they will actually be casting a vote for a slate of electors, equal to the number of a state’s electoral votes, who will cast a vote on their behalf in their respective state capitals on December 14. Most states pledge all their electoral votes to the winner of the popular (citizen) vote.  Some allocate their electoral votes proportionally.

In this highly partisan environment another risk looms – “faithless electors” (electors who do not cast their electoral vote for the candidate to whom they are pledged). This is a real potential in states with divided governments, like Pennsylvania and Michigan, where the Governor is a Democrat and the Legislature is Republican controlled.

There are all sorts rules that are arcane and confusing  – there is even a scenario (extremely remote) where Trump is named President and Harris is named his VP.  I won’t delve into those here other than to say fasten your seat belts – 2020 is likely going to be a repeat of the “hanging chad” in the 2000 election between Bush and Gore.  Recall that election was final until a Supreme Court decision on December 12, 2000.

Most importantly in 2020 it is important for all of us to cast our vote – just be safe while doing so.

Let us know if you have any questions.

Best regards,

Jim

Sources: Bespoke Investments, Bloomberg, Charles Schwab, Goldman Sachs Asset Management, CNN

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 – October 5, 2020

For the Week of October 5, 2020

The Markets

On Friday, the markets reacted negatively to the news that President Trump tested positive for the coronavirus, adding more uncertainty to the upcoming election. The major indices recovered some of the day’s losses after House Speaker Nancy Pelosi’s encouraging remarks about a potential agreement for another stimulus bill. For the week, the Dow rose 1.88 percent to close at 27,682.81. The S&P gained 1.54 percent to finish at 3,348.42, and the NASDAQ climbed 1.50 percent to end at 11,075.02.

Returns Through 10/02/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)1.88-1.258.729.6013.67
NASDAQ Composite (TR)1.5024.3143.6420.5919.97
S&P 500 (TR)1.545.1318.2011.9813.68
Barclays US Agg Bond (TR)-0.096.746.595.234.10
MSCI EAFE (TR)1.53-7.082.690.664.95
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.

Debt Limit — Legislation signed by President Trump in July 2019 suspended our country’s debt ceiling limit until July 31, 2021, so there is no statutory limit on our nation’s borrowing for the next 10 months. The debt ceiling has been raised, temporarily extended, or suspended 87 times since 1960 (source: Treasury Department, BTN Research).

Lots of People — 22 percent of Americans (74 million people) are on Medicaid, the nation’s health care program for low-income Americans that is jointly funded by the federal government and all 50 states (source: Medicaid, BTN Research).

Should We Get a Bite to Eat? — 12 percent of the sit-down restaurant chains (not fast food), that were in business before the COVID-19 pandemic hit the United States in February, are now out of business and have closed for good (source: Black Box Intelligence, BTN Research).

WEEKLY FOCUS – It’s Cybersecurity Awareness Month

The pandemic has made many of us especially grateful for the internet, which makes it possible to work from home, shop online, attend religious services virtually, and stay connected with family and friends. Unfortunately, enjoying all those conveniences is not without risks. Realizing Americans are distracted by the pandemic, the upcoming election, and social unrest, cyber criminals are upping their game. Here are a few ways we can protect ourselves from hacks, scams, and malware.

Look twice before you click. Crooks and spammers will try to get you to act quickly and automatically. Instead, pause to consider before opening any unexpected email attachment. And most importantly, NEVER click on a link in an email asking you to enter your password or change your password. Always go directly to the site you use to enter your password or call the company directly if there appears to be an actual problem.

Use strong passwords. Strong passwords are fairly long and use a combination of upper- and lower-case letters, numbers, and special characters. Using the first letters of an original phrase can make a password difficult for thieves to guess. Don’t keep a list of passwords anywhere near your device. If you keep a list, don’t spell out your phrase or word. Instead, record a hint, followed by the numbers and symbols in the password, ideally unique to each site. Another option is to consider purchasing a password managing system.

Add a second step. For sensitive sites, such as financial accounts, add two-factor identification. After signing in, the institution will either text, call, or email a one-time code.

Stay current. Google your name and delete old, unused accounts that come up. Clear your browser history periodically. Delete apps you no longer use. Use the latest security software, web browser, and operating systems. Regularly check for updates, or better yet, sign up for automatic updates when you can. Back up your data to the cloud.

Stay independent. When signing up for a new service or app, pass up the offer to sign in using Facebook or your Google account, which exposes the data in your accounts.

It is important to stay vigilant about securing your financial and personal information. We can help you develop a strategy to keep this information as secure as possible. Call us to discuss this or any other financial concerns you have.

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 October 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3269073.1

October 2020 Monthly Outlook – A Long SLOG Recovery

The second quarter of 2020 was the mother of all economic contractions. Real GDP shrank at a 31.7% annual rate, the largest drop for any quarter since the Great Depression.  However, based on the economic reports we’ve seen so far, it looks like the third quarter will be the mother of all economic rebounds. The first thing to recognize is that even if the real GDP growth rate in the third quarter equals or exceeds the percentage drop in the second quarter, the economy is still in a very big hole.  It’s harder to grow out of a hole than it is to dig one. The bottom line is that a full economic recovery in the US is still multiple years away.

The surge in growth in the third quarter is largely related to many businesses going from a total lockdown to a new COVID-19 normal. Production and construction six feet apart, no fans in the stands, and 50% occupancy. Meanwhile, many small businesses (and some not so small) have simply disappeared. This suggests that although growth should continue after the third quarter, it’s not going to be nearly as fast.  We don’t think we get back to the level of real GDP we saw in late 2019 until late 2021. And that’s really not a full recovery because, in the absence of COVID-19, the economy would have grown 2% or more, per year, in the interim. If we define a “full recovery” as getting back to an unemployment rate at or below 4.0%, we’ll probably have to wait until 2023. The pace of the recovery in 2021-22 will depend not only on the course of COVID-19, as well as development of vaccines, and therapies, but also public policy.

From here, the economic future of the US will be largely dependent on whether Congress passes further stimulus. The $2.2 trillion CARES Act kept people and companies afloat during the early days of Covid and now those benefits are waning. We’re seeing pickups in layoffs and furloughs at many companies in the travel and leisure space, including theme parks, airlines, hospitality and sports.

It’s going to be a long slog back.   (sources: First Trust, Nottingham Advisors)

From an investment perspective, we are likely to see increased volatility going forward.  That would have been true due to Covid-19, lack of action in Washington, and the upcoming election.  It just increased with reports that the President has tested positive for the virus.

Having said that, the financial markets (basis S&P 500) have weathered a number of turbulent events since the Great Financial Crisis of 2008-2009, as the chart below shows.  More importantly, notice that despite these events and the pullbacks they created, the trend has continued to be consistently upward.  I anticipate that this trend will continue to be the case going forward.

Right now the stock market is stuck between analytical and behavioral factors.  The analytical side is seeing a slowing economic recovery and no fiscal help from Washington.  The behavioral side is following the Federal Reserve’s money printing and buying all the dips.  This has left the S&P500 range bound between 3,200 and 3,400.  The news about the President’s health probably increases the risk to the downside until we see how his diagnosis proceeds.

Therefore our approach is to remain cautious near-term but opportunistic to take advantage of pullbacks to get into high quality investments at lower prices.   Having a plan for you allows us to focus on staying on track and not get caught up in market gyrations.  As Mark Twain said “October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.”

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

  • October is Breast Cancer Awareness and Domestic Violence Awareness month. 

October 7th        4th anniversary of purchasing our office building – we’d love to have you come for a visit   – 141 W Main Street Rockaway

October 12th      Columbus Day

October 15th  Medicare open enrollment    thru December 7th – you can switch from original Medicare to Medicare Advantage, or vice versa. You can also switch from one Medicare Advantage plan to another, or from one Medicare Part D (prescription drug) plan to another, or drop your Medicare Part D coverage altogether. Please call us if you have any questions about your options.   

October 24th   National Food Day – I’m a definite “foodie” person, how about you?          

October 31st    Halloween

Sources:  First Trust, Nottingham Advisors, JP Morgan

Weekly Market Notes – September 28, 2020

For the Week of September 28, 2020

The Markets

It was a choppy week on Wall Street as investors weighed rising coronavirus cases, the upcoming presidential election, and uncertainty over another stimulus bill. Although stocks closed on a high note on Friday, the Dow and the S&P posted four-week losing streaks. But tech shares recovered some of their September declines, giving the NASDAQ its first weekly gain in four weeks. For the week, the Dow fell 1.75 percent to close at 27,173.96. The S&P lost 0.61 percent to finish at 3,298.46, and the NASDAQ gained 1.13 percent to end the week at 10,913.56.

Returns Through 9/25/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)-1.75-3.073.189.3513.47
NASDAQ Composite (TR)1.1322.4836.4320.9119.73
S&P 500 (TR)-0.613.5312.6411.9013.58
Barclays US Agg Bond (TR)-0.096.837.435.144.26
MSCI EAFE (TR)-4.21-8.48-0.820.234.77
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.

The Day the World Changed — The World Health Organization declared the COVID-19 outbreak a pandemic on March 11. In the six months from March 11 through Friday, Sept. 11, the S&P 500 had gained 23 percent (total return) (source: BTN Research).

Plan for Price Increases — As of Aug. 31, the consumer price index was up 19 percent over the last 10 years, up 50 percent over the last 20 years, and up 98 percent over the last 30 years. The consumer price index is a measure of inflation compiled by the U.S. Bureau of Labor Studies (source: Department of Labor, BTN Research).

Just Five Years — 55 of the last 60 fiscal years in our country have resulted in outlays exceeding receipts. The five surplus years were 1969, 1998, 1999, 2000, and 2001 (source: Office of Management and Budget, BTN Research).

WEEKLY FOCUS – Women’s Retirement Challenges

Although the pandemic has made financial disparities between men and women more pronounced, women have long faced greater challenges in retirement than men, for multiple reasons.

Longevity: On average, American women live five years longer than men. According to recent CDC data, males typically live to be 76, while women reach the age of 81. So while wives are frequently caregivers for their husbands, they may have no one to provide help when they need it. It’s no wonder women account for more than 70 percent of nursing home residents.1 In addition to potentially greater long-term care expenses, longer lives result in increased general healthcare costs.

Pay gap: According to the most recent Census data from 2018, women still earn 82 cents for every $1 their male counterparts earn. Multiple reasons account for the disparities; one significant factor is the types of careers many women traditionally pursue.

Savings gap: Clearly, it’s harder to save when you earn less. But women are typically primary caregivers for children and aging parents as well – creating employment gaps in their careers. This not only impacts their personal savings and career advancement, it also affects their Social Security benefits, which are based on a worker’s top 35 years of indexed earnings.

Dependency: According to Boston College’s Center for Retirement Research, 46 percent of married women in their 50s living in a two-income household are at risk of not being able to maintain their standard of living during retirement. Possible explanations are many two-income households spend more, and frequently, only one spouse is covered by a company retirement plan. Furthermore, a recent UBS survey reports 58 percent of high-net-worth married, divorced, or widowed women defer long-term financial decisions to their spouses or ex-spouses.2

COVID: Recent school and daycare closures impacted women harder than men. And social distancing particularly hits women, who often work in service industries, own small retail businesses, or work part-time (with fewer safety nets).

The good news is, an awareness of these challenges can drive women to gain knowledge, take control of their situation, and save and invest well. Whether you are a single or married woman, we’ll make sure you have the knowledge you need to address your unique challenges and plan for a more secure retirement. 

1https://www.investmentnews.com/long-term-care-womans-issue-192447

2https://www.forbes.com/sites/nextavenue/2019/07/10/the-women-facing-the-greatest-retirement-risk/#57443c5773fb

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 September 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3259197.1

Weekly Market Notes – September 21, 2020

For the Week of September 21, 2020

The Markets

The major stock indices fell Friday, contributing to their third straight weekly loss. Investors demonstrated concern over uncertainty about an additional round of stimulus legislation, new tensions with China, and steep declines of big tech stocks. For the week, the Dow fell 0.01 percent to close at 27,657.42. The S&P lost 0.60 percent to finish at 3,319.47, and the NASDAQ dropped 0.53 percent to end the week at 10,793.28.

Returns Through 9/18/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)-0.01-1.354.349.9413.78
NASDAQ Composite (TR)-0.5321.1133.2819.9318.76
S&P 500 (TR)-0.604.1712.5312.0213.41
Barclays US Agg Bond (TR)-0.096.937.855.244.23
MSCI EAFE (TR)0.79-4.462.731.755.02
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.

Mostly Mortgage Debt — Total household debt in the United States was $14.27 trillion as of June 30, down slightly from the all-time record of $14.30 trillion set as of March 31. 69 percent of the $14.27 trillion household debt total ($9.78 trillion) is mortgage debt (source: Federal Reserve Bank of New York, BTN Research).

Some Relief — A maximum $2,500 of interest expense from student loans is deductible annually from taxable income. Consult a tax expert for details (source: Internal Revenue Service, BTN Research).

All Stocks — The total stock market capitalization of U.S. equities peaked at $36.1 trillion as of Feb. 19, fell to $23.4 trillion as of March 23, and has bounced back to $35.6 trillion as of Friday, Sept. 11 (source: Wilshire, BTN Research).

WEEKLY FOCUS – When You Inherit an IRA

When you lose a loved one, your first thoughts won’t be about what to do with their IRA. But if you’re a beneficiary, it is important to make wise decisions to avoid excess taxes and penalties. Due to changes to the beneficiary rules in the SECURE ACT, the following information applies to deaths on or after January 1 of this year.

Everyone: Any beneficiary can take all the account assets as a lump sum payment without incurring a 10 percent early withdrawal penalty. However, if it’s a traditional IRA, you’ll pay income taxes on the amount distributed, which might push you into a higher tax bracket. And if it’s a Roth IRA that is less than five years old, you’ll owe taxes on the earnings. If the benefactor was over the Required Minimum Distribution (RMD) age, you will need to determine whether the benefactor took their RMD for the year they died. If they didn’t, you must do so before the end of the calendar year or incur a 50 percent penalty on the RMD amount.

A surviving spouse: A surviving spouse has the most options.You can designate yourself as the owner of your spouse’s account, transfer the funds into your own IRA, or open an inherited (or stretch) IRA. With the latter, RMD amounts will be based on your age and be recalculated each year based on the factors in the IRS Single Life Expectancy Table.

Other eligible designated beneficiary: If you’re a minor, chronically ill, disabled, or less than 10 years younger than the deceased, you may open a stretch IRA described above. When minors reach the age of majority, the ten-year distribution rule applies.

Another relative or friend: If you don’t fall into the categories above and don’t choose to take a lump payment, you will need to create an inherited IRA account and transfer the funds. You won’t be allowed to make new contributions to the account. There are no annual required distributions, but you must withdraw all the money within 10 years.  

COVID exceptions: Because of COVID, all RMDs have been suspended for 2020. This waiver includes inherited accounts. Consult with your tax advisor regarding the impact of COVID-related legislation on the ten-year liquidation requirement.

This brief article doesn’t cover all the rules and options regarding inherited retirement accounts. But we would be happy to explain different possibilities and their ramifications, and work with your attorney and accountant to guide you through any decisions you may face. Consult your tax advisor regarding your own unique situation.

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 September 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 3249384.1

Weekly Market Notes – September 14, 2020

For the Week of September 14, 2020

The Markets

Stocks ended Friday’s volatile session mixed; the NASDAQ ended lower while the S&P and Dow Jones rose. The three major indices all posted steep losses for the week. The NASDAQ experienced its worst weekly decline since March. For the week, the Dow lost 1.61 percent to close at 27,665.64. The S&P dropped 2.49 percent to finish at 3,340.97, and the NASDAQ fell 4.06 percent to end the week at 10,853.54.

Returns Through 9/11/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)-1.61-1.344.4410.4013.71
NASDAQ Composite (TR)-4.0621.7634.1520.3018.92
S&P 500 (TR)-2.494.8013.4912.5113.52
Barclays US Agg Bond (TR)0.257.037.755.164.32
MSCI EAFE (TR)1.45-5.212.401.504.97
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.

Cheap Money — The yield on the 10-year Treasury note closed at 0.695 percent on Aug. 31, down from 1.91 percent as of Dec. 31. The all-time low close for the 10-year note is 0.501 percent set on March 9 (source: Treasury Department, BTN Research).

Need More, Not Less — The suppliers of lumber cut their production in the first quarter of 2020 as the pandemic was developing in anticipation of a slowing housing market. Instead, an increased demand for home building and renovation projects has pushed the price of lumber to an all-time record price of $858 per thousand board feet, up 111 percent from a price of $406 per thousand board feet at the end of 2019 (source: CME Group, BTN Research).

The Most Paid — The maximum Social Security benefit paid to a worker retiring at full retirement age in 2020 is $3,011 per month, triple the $975 per month maximum benefit paid 30 years ago (source: Social Security, BTN Research).

WEEKLY FOCUS – National College Savings Month

Over the last four decades, the price of a college education has grown disproportionately to other costs. During the 1978-79 school year, it cost today’s equivalent of $8,250 to attend a public university and $17,680 to attend a private university. Now, a year at a public school averages $21,370, and a private college runs $48,510 a year.1 It’s no wonder Americans owe $1.5 trillion in student debt.2  Clearly, saving early and wisely has never been more important. Here are a few avenues to consider.

529 Plan: This qualified tuition plan was created to allow families to save money for future education without paying federal taxes on its growth – as long as it is used for qualified higher-education expenses. (The Tax Cuts and Jobs Act now allows families to use funds toward a private elementary or secondary education as well.) If the original beneficiary doesn’t need the funds for education, the beneficiary can be changed to another family member. Balances can’t exceed the beneficiary’s expected educational expenses. Many states offer a tax credit or deduction for contributions, often limited to their own state’s plan.

There are two types of 529s. A 529 Prepaid Tuition Plan locks in the current price for a block of tuition at a specified list of schools. With the more flexible and popular Education Savings Plan, funds go into an investment account.

UGMA/UTMA Account: Adults can easily make irrevocable gifts to a minor with these custodial accounts. Earnings are usually taxed at the child’s lower rate. The beneficiary must be given control of the account when they turn 18 to 25, depending on the state. Since the child owns the account, the assets may impact the student’s financial aid.

Coverdell Education Savings Account: Like 529 Plans, contributions are not deductible and distributions aren’t taxed. However, these plans are more restricted as individuals or couples who wish to open an account must meet income guidelines, and annual contributions cannot total more than $2,000 per beneficiary from all contributors.

This brief overview doesn’t cover all the rules and considerations of these accounts or other options. If you’d like to learn more or need help planning for a child’s or grandchild’s education, please call our office.

1https://www.cnbc.com/2019/12/13/cost-of-college-increased-by-more-than-25percent-in-the-last-10-years.html2https://www.marketwatch.com/story/americans-save-a-record-352-billion-for-college-in-529-plans-why-thats-not-necessarily-a-good-thing-2019-09-27

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 September 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 3239947.1