Update On Current Times

Dear friend,

I hope this finds you and your loved ones safe and well.

We have been told by our health care officials to prepare for the next few weeks to grow “worse before it becomes better”.

Less important but, in a similar way, so will the stock market reaction.

Your March 31 statements will be arriving soon and they are not going to be pretty. However, as we have talked about before:

Current values are not relevant values unless you need the money now.

We have made adjustments to significantly reduce risk in your portfolio until we see clear skies again.  Additionally, many of you may have income programs and other protections in place.

We may have talked recently but if you want to talk again please let me know.

I leave you with these following thoughts that I subscribe to:

o        We have decided to be guided by history as opposed to headlines. Invited by the media to subscribe to the thesis “This time it’s different,” we respond instead “This too shall pass.”

o        My mission continues to be: not to insulate you from short to intermediate-term volatility, but to minimize your long-term regret. The best way I know to do that is by encouraging you to stay the course on your long-term plan.

o        In my experience, all successful long-term investors are continuously acting on a plan. All the failed investors I’ve ever encountered were continually reacting to current events – and always the wrong way.

o        In politics, the short term is crystal clear, and the long term is murky. In the stock market, the short term is murky, but the long term is crystal clear.  While the near-term is quite uncertain, I remain confident in the long-term resiliency of us all.

Be safe and stay well.

Jim & DWM team

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 – March 30, 2020

Weekly_Market_Notes

For the Week of March 30, 2020

The Markets

Following three days of big gains, stocks slid across the board Friday amid news of a sharp spike in confirmed coronavirus cases. Johns Hopkins University reported the U.S. had 85,000 confirmed cases – the highest number in the world. Despite Friday’s losses, the Dow achieved its best weekly percentage gain since 1938, and the S&P attained its best weekly percentage gain since 2009. For the week, the Dow rose 12.84 percent to close at 21,636.78. The S&P gained 10.28 percent to finish at 2,541.47, and the NASDAQ climbed 9.06 percent to end the week at 7,502.38.

Returns Through 3/27/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 12.84 -23.72 -13.48 4.16 6.67
NASDAQ Composite (PR) 9.06 -16.18 -0.79 9.88 10.17
S&P 500 (TR) 10.28 -20.96 -7.59 4.83 6.44
Barclays US Agg Bond (TR) 2.66 2.67 8.26 4.64 3.29
MSCI EAFE (TR) 11.22 -23.55 -15.15 -2.13 -1.02

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.

 

Gone — 22 million workers worldwide lost their jobs as a result of the 2008 global financial crisis. Global job losses driven by the coronavirus pandemic are projected to be as few as 5.3 million (assuming swift and coordinated actions to contain the virus) to as many as 25 million (source: International Labor Organization, BTN Research).

Almost Interest-Free Cash — The Federal Reserve implemented its second emergency rate cut this month on March 15, effectively pushing short-term interest rates to zero. At the latest emergency meeting, the Fed also cut the reserve requirement for thousands of U.S. depository institutions to zero effective Thursday, March 26, permitting easier lending by banks (source: Federal Reserve, BTN Research).

Big Gain, Big Loss — The U.S. stock market lost $12.1 trillion of value from the close of trading on Feb. 19 to the close of trading on Friday, March 20. The U.S. stock market peaked at $36.1 trillion, having gained $28.5 trillion during the 2009-20 bull market through Feb. 19 (source: Wilshire, BTN Research).

 

WEEKLY FOCUS – Positive Steps to Combat COVID-19

Negative headlines have pervaded our consciousness since the stock market crash began on March 9 and the World Health Organization declared COVID-19 a pandemic on March 11. And, they continue to abound as confirmed cases multiply across the U.S. But there is still encouraging news to be found.

In a CNBC interview last week, Ben Bernanke, who served as the Federal Reserve Chairman during the 2008 financial crisis, predicted the coronavirus would cause a very sharp recession, but he expected a fairly quick recovery if we are able to effectively combat the virus.* The nation is now social distancing to slow the disease’s spread and create a preventative vaccine. Dozens of vaccines and coronavirus treatments, including existing drugs used for other illnesses, are being tested. Some anecdotal evidence appears promising.

Companies are stepping up. Last week, Ford Motor Company announced it is teaming up with 3M and General Electric to produce air respirators, ventilators and 3-D face shields. Other auto makers have also offered to help. Apple will donate 10 million face masks to relief efforts. Facebook, Tesla and other companies are following suit on a smaller scale. Several garment manufacturers plan to start producing face masks.

Cisco, Bank of America and JP Morgan have pledged $250 million, $100 million and $50 million respectively to address health and economic impacts. Many other corporations are making gifts to their communities or providing aid or extra benefits to employees. Despite 3.28 million new claims for unemployment in mid-March, Walmart, Amazon, Lowes, drug stores, groceries and others plan to hire 435,000 employees.

The Federal government is taking measures to reduce economic hardship until companies can resume normal business activities. In addition to actions by the Federal Reserve and legislation Congress passed earlier this month, Congress just passed a $2 trillion stimulus, which President Trump signed on Friday. The 880-page bill includes lending measures and economic policies to support small businesses, industries, taxpayers and the unemployed.

While there are reasons for hope, the unknowns we currently face are stressful. We appreciate the trust you have placed in us, and we are available to answer questions or address concerns you may have.

*https://www.cnbc.com/2020/03/25/bernanke-says-this-is-much-closer-to-a-natural-disaster-than-the-great-depression.html

DWM Plan Well logo

* 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 March 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3018274.1

Weekly Market Notes – March 9, 2020

Weekly_Market_Notes

For the Week of March 9, 2020

The Markets

The U.S. added 273,000 jobs in February, and the unemployment rate dropped to 3.5 percent. But despite the strong employment news, stocks fell Friday as the number of confirmed coronavirus cases topped 100,000. Still, at the close of a roller-coaster week, the three major indexes had eked out small weekly gains. For the week, the Dow rose 1.79 percent to close at 25,864.78. The S&P gained 0.65 percent to finish at 2,972.37, and the NASDAQ climbed 0.12 percent to end the week at 8,575.62.

Returns Through 3/06/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 1.79 -8.95 3.21 9.82 10.35
NASDAQ Composite (TR) 0.12 -4.25 15.47 14.83 12.98
S&P 500 (TR) 0.65 -7.67 9.39 9.91 9.71
Barclays US Agg Bond (TR) 1.88 5.71 13.62 5.89 4.17
MSCI EAFE (TR) 0.33 -10.64 -0.37 3.93 2.41

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.

 

From the Beginning — After the recent global stock market fall, the nearly 11-year bull market run for the S&P 500 that began on the morning of March 10, 2009, gained 449 percent (total return) through Friday, Feb. 28, an annualized return of 16.8 percent per year (source: BTN Research).

Who Loves a Bull Market? — The wealthiest 1 percent of American households owned 56 percent of the entire value of all U.S. equities as of September 2019 (source: Goldman Sachs, BTN Research).

Let Me Correct You — During the nearly 11-year bull market that began on March 10, 2009, the S&P 500 index has had seven separate corrections of at least 10 percent but less than 20 percent. The ending dates of the seven corrections were July 2, 2010; Oct. 3, 2011; Aug. 25, 2015; Feb. 11, 2016; Feb. 8, 2018; Dec. 24, 2018; and Friday, Feb. 28. The latest correction (through Feb. 28) came just nine days after an all-time closing high was achieved (source: BTN Research).

 

WEEKLY FOCUS – Staying on Course in a Choppy Sea

The stock market isn’t known for its emotional stability. At times, it appears euphoric over a good jobs report. At other times, rosy employment data convinces investors the Fed will likely raise or decline to lower interest rates, resulting in a market drop. Throughout 2019, reports on the progress or setbacks of trade negotiations with China alternately pushed stocks up or dragged them down.

Recently, headlines on the spread of the coronavirus, quarantines, travel restrictions and related deaths have rocked the market. Last week, stocks rose after Federal Reserve Chairman Jerome Powell hinted the Board might cut rates — but plunged when it did. Stocks rebounded after Super Tuesday results came in but fell the next day. Market free falls and rebounds have made investors feel like they’re tethered to a bungee cord and suffering from severe whiplash.

When the markets react emotionally, it’s imperative to think rationally. Although no one can predict the future, panicked selling during a downturn is often the worst thing you can do. Think of investors who sold their stocks during the 2008-2009 market dive; they missed a massive comeback in the next five years that could have obliterated their losses.

Prevention is the best medicine for our health – washing our hands, not touching our face in public,  getting enough rest, eating healthy and avoiding contact with individuals who are ill or have been exposed to someone ill. Similarly,  planning for potential volatility before you experience it is vital.

It’s important to understand market volatility is normal. Risks and returns are linked together; you usually have to take some risk to make money. Particularly in a low-interest rate environment, overly safe investments – such as bonds, CDs or bank accounts – won’t provide much growth. So, you may need to balance potential market loss against the danger of flat savings not keeping up with inflation or not lasting through 20 to 30 years of retirement.

There is no magic strategy that always works in every environment. There will be times your account balance drops in value. Consulting your financial plan and talking to us when you have concerns can give your logic the boost it needs to keep emotions from running roughshod over your financial goals. If you have questions or would like to review your existing financial plan, please call our office.

DWM Plan Well logo

* 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 March 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2986491.1

Weekly Market Notes – March 2, 2020

Weekly_Market_Notes

For the Week of March 2, 2020

The Markets

Stocks plunged Friday and closed the worst week since the financial crisis amid growing concerns about the impact of the coronavirus. The World Health Organization issued a warning that global level risks were growing as the virus continued to spread across multiple countries. Meanwhile, Fed Chairman Jerome Powell said the central bank would “act as appropriate” to support the economy. For the week, the Dow fell 12.26 percent to close at 25,409.36. The S&P lost 11.44 percent to finish at 2,954.22, and the NASDAQ dropped 10.52 percent to end the week at 8,567.37.

Returns Through 2/28/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -12.26 -10.55 0.44 9.42 9.63
NASDAQ Composite (PR) -10.52 -4.37 14.94 14.94 12.80
S&P 500 (TR) -11.44 -8.27 8.19 9.87 9.23
Barclays US Agg Bond (TR) 1.26 3.76 11.68 5.01 3.58
MSCI EAFE (TR) -9.56 -10.94 -0.57 3.92 1.96

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.

 

One Is a Lot Bigger — Student loan debt in the U.S. was 62 percent larger than credit card debt as of Dec. 31, i.e., $1.51 trillion to $930 billion. Both totals are all-time record highs (source: Federal Reserve Bank of NY, BTN Research).

Smaller Household Size — There were 2.52 people on average living in every American household in 2019, the lowest average household size in U.S. history. There were 3.33 people on average per household in 1960 (source: Census Bureau, BTN Research).

New Homes — The construction of 888,100 new single-family homes began in 2019, the 8th consecutive year of increasing home building. In the 2010s, construction was started on 6.8 million new homes, down 44 percent from the 12.3 million new homes started in the 2000s (source: Census Bureau, BTN Research).

 

WEEKLY FOCUS – How Contagious Will the Coronavirus Prove Economically?

With constant coronavirus updates in the news, it’s tempting to buy surgical masks, don plastic gloves and avoid airplanes and crowded stores. Experiencing anxiety over the virus’ potential economic impact is also natural. Although market volatility is inevitable, watching the value of your portfolio ricochet or plummet – even temporarily – stresses novice and experienced investors alike.

The extended impact on the U.S. economy is anyone’s guess. Until the number of new cases in China drops off, the coronavirus is likely to significantly affect the country’s economy, already weakened by slowing growth and the trade dispute with the U.S. A recession in China would create global ripples but not necessarily full-blown waves. The size, strength and diversity of the American economy may provide some insulation.

However, if China’s manufacturing continues to slow, the rest of the world may experience supply chain disruption, challenging production elsewhere. Shortages could cause inflation to rise, although many American companies have already diversified their supply chains because of the protracted trade conflict. And should the Federal Reserve become concerned about inflation, it could cut interest rates to try to slow it down.

While emotional reactions often lead to unfavorable financial decisions, market volatility provides a good time to objectively evaluate your risk tolerance and asset allocation and make sure you are sensibly diversified for your present situation and long-term goals.

If current market gyrations are pushing you past your pain threshold, it may be time to consider moving part of your portfolio to safer harbors. You may need to rebalance your portfolio because recent stock gains misaligned your original allocation ratios. It’s also important to ensure your investments are appropriate for your age. Perhaps you are nearing or have recently entered retirement. Withdrawing living expenses when investments are depressed can drain a portfolio quickly, and retirees don’t have as much time to recoup losses.

If adrenaline is tempting you to make a decision you may regret later, please give me a call. We’d be happy to discuss concerns you may have and help you evaluate your investment program in light of today’s market conditions and your individual situation.

DWM Plan Well logo

* 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 March 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2975642.1

Weekly Market Notes – February 24, 2020

Weekly_Market_Notes

For the Week of February 24, 2020

The Markets

The three major indexes dropped on Friday and also ended the week lower. Concern over the economic impact of the coronavirus and data indicating U.S. business activity slowed last month led investors to move to safe haven assets like gold and Treasuries. For the week, the Dow fell 1.36 percent to close at 28,992.41. The S&P lost 1.22 percent to finish at 3,337.75, and the NASDAQ dropped 1.55 percent to end the week at 9,576.59.

Returns Through 2/21/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -1.36 -0.89 15.79 15.15 13.21
NASDAQ Composite (TR) -1.55 2.03 27.03 18.96 15.88
S&P 500 (TR) -1.22 -0.04 21.68 14.54 12.37
Barclays US Agg Bond (TR) 0.57 1.92 9.64 4.62 3.01
MSCI EAFE (TR) -1.24 -2.09 12.10 7.76 5.12

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.

 

Coronavirus Impact — China forecast it would use 25 percent less oil per day in February when compared to its actual usage in February 2019, a drop of 3.2 million barrels a day from 12.9 million barrels to 9.7 million (source: International Energy Agency, BTN Research).

Hard to Enjoy Retirement — 54 percent of American workers have not started a defined contribution retirement plan at work (e.g., a 401(k) plan) or do not have access to a defined benefit pension plan funded exclusively by their employer (source: Center for Retirement Research at Boston College, BTN Research).

Financially Ready? — The life expectancy of a 65-year-old American is 19½ years or 234 months (source: Center for Disease Control, BTN Research).

 

WEEKLY FOCUS – America Saves Week, Feb. 24-29

According to a recent Bankrate survey, 21 percent of Americans don’t save any portion of their annual income. Twenty percent save 5 percent or less, and only 16 percent save more than 15 percent. No matter where you find yourself, the following psychological tricks may help you increase your savings rate in 2020.

Think big but start small. Break your long-term goals into mini goals, e.g., a target amount you want to save in the next three months. As an added incentive, you might plan a small reward when you reach your immediate goal.

Calculate purchases differently. To weigh how much you really value something you’re tempted to buy, look at its price tag in the number of hours you’d need to work to pay for it. Or, picture a stranger holding the item you’re considering in one hand and the amount of cash it costs in the other. Which is more appealing?

Put off the urge to splurge. It’s easier to delay gratification than deny it. So, wait 24 hours before making small discretionary purchases or 30 days before making bigger purchases. The passion for the item will often wane as time passes. Accelerate your savings and reset your purchasing appetite by designating a few weeks or a month as a period of no unnecessary purchases.

Automate your savings. Since most of us aren’t impulsive savers, we need to be intentional savers – putting money aside before we succumb to temptations to spend. So, increase the amount of your check that goes to your 401(k) or ask your employer to split your direct deposit into your checking and savings accounts.

Make wise purchases. Comparing prices and reading reviews usually results in securing better values and slows impulse buying. Timing is another way to save. When possible, purchase clothes and food in season. Shop for a new computer in April, mattress in May, television in November or home appliance in December.

America Saves Week is an annual reminder to double check your financial stability and encourage you to save. Take the time this week to call our office to set up a review of your retirement plan or to receive help with explaining the importance of savings to younger generations.

https://www.bankrate.com/banking/savings/financial-security-march-2019/

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* 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 February 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2964203.1

Weekly Market Notes – February 18, 2020

Weekly_Market_Notes

For the Week of February 18, 2020

The Markets

At Friday’s close, stocks were mixed. A rising number of coronavirus cases weighed on investors; a report the White House is considering tax incentives to encourage stock purchases encouraged them. Stocks still posted back-to-back weekly gains. For the week, the Dow rose 1.17 percent to close at 29,398.08. The S&P gained 1.65 percent to finish at 3,380.16, and the NASDAQ climbed 2.21 percent to end at 9,731.18.

Returns Through 2/14/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 1.17 3.34 18.34 15.46 13.01
NASDAQ Composite (PR) 2.21 8.45 31.03 18.96 14.74
S&P 500 (TR) 1.65 4.87 25.57 15.35 12.29
Barclays US Agg Bond (TR) 0.03 1.88 9.55 4.61 3.26
MSCI EAFE (TR) -0.02 -0.30 14.20 8.29 4.84

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 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. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

Got a New Car — Americans purchased 17 million new vehicles (cars and light trucks) in 2019, down from a record 17.5 million in 2016, but well ahead of the 10.4 million vehicle sales in 2009. American car buyers also purchased 40.4 million used cars in 2019, an all-time record for the United States (source: Statista, BTN Research).

Looking Ahead — 41 percent of 1,903 young adults surveyed in January 2020 (adults between the ages 24-41) have less than $15,000 saved for their future retirement, while 24 percent of those surveyed have more than $100,000 saved for retirement (source: Bank of America Better Money Habits Millennial Report, BTN Research).

Half of All Taxpayers — 50 percent of American taxpayers reported less than $41,740 of adjusted gross income for tax year 2017. 143.3 million tax returns were filed for the 2017 tax year (source: Internal Revenue Service, BTN Research).

 

WEEKLY FOCUS – Who Will You Trust to Be Your Trustee?

A trust is a valuable tool that can protect your estate long after you’re gone, but it’s critical to choose the right trustee to carry out the plans outlined in the trust.

For many people, the first choice to take on this important responsibility is a trusted relative or friend, who has the best understanding of family dynamics and, in most cases, won’t charge a fee. They should have a basic understanding of investing and be financially responsible themselves. It’s important to be aware of any resentment that may occur if one family member or friend is chosen over another.

You may also consider naming an attorney, accountant, bank or trust company to serve as your trustee.  These types of professionals add structure and oversight to the process, and they cannot legally play favorites with distributions. However, they will cost significantly more than a family member.

When choosing a trust company, be aware there are different types, each offering different types of services. A bank trust company provides services, such as trust accounting, administration and executor services, and may invest the true assets. Advisor-friendly trusts also provide accounting and administration but will delegate the responsibility of choosing an investment advisor to a beneficiary or grantor.

Whether you choose a family member, friend or an outside entity, decide who will be most qualified to manage your trust by considering several questions, such as:

  • Will this person put aside their personal feelings and interests and exercise sound judgement?
  • Will they treat all beneficiaries impartially?
  • Will they take undue risk?
  • Will they have the time to dedicate to their responsibilities?

In some cases, it may be best to name multiple trustees or a trustee board made up of trust professionals and family members to serve as co-trustees who will carry out specific responsibilities. If you need help reviewing your estate decisions, please call our office. Although we cannot provide legal or tax advice, we are happy to work with your attorney or accountant.

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* 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 February 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2956320.1

Weekly Market Notes – February 10, 2020

Weekly_Market_Notes

For the Week of February 10, 2020

The Markets

Despite January’s stronger-than-expected U.S. jobs report, stocks fell Friday amid concern over the impact the coronavirus will have on China’s economy. However, stocks still notched strong weekly gains. For the week, the Dow rose 3.06 percent to close at 29,102.51. The S&P gained 3.21 percent to finish at 3,327.71, and the NASDAQ climbed 4.04 percent to end the week at 9,520.51.

Returns Through 2/07/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 3.06 2.15 18.40 15.87 13.03
NASDAQ Composite (PR) 4.04 6.11 30.63 18.84 14.95
S&P 500 (TR) 3.21 3.17 25.45 15.51 12.39
Barclays US Agg Bond (TR) -0.07 1.86 9.54 4.48 3.21
MSCI EAFE (TR) 1.86 -0.27 14.71 8.53 5.16

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 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. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

Most in a Few — 10 percent of American households own 84 percent of all stocks in the country, including direct ownership of general securities and indirect ownership through mutual funds and other pooled accounts that are held both in pre-tax and post-tax accounts (source: Survey of Consumer Finances, BTN Research).

Fewer Tools Available — The Fed cut short-term interest rates by 5 percentage points during the nation’s last recession (a downturn that ran from December 2007 to June 2009), an action that could not be replicated today since the Fed’s key short-term rate is 1.75 percent  (source: Federal Reserve, BTN Research).

A Downturn Is Inevitable, I Think? — As of Feb. 1, the United States began its 128th consecutive month of an economic expansion, the longest in our nation’s history based on records maintained since 1854 (source: National Bureau of Economic Research, BTN Research).

 

WEEKLY FOCUS – Timing Matters!

You’ve probably heard about potential advantages of deferring retirement. Delaying retirement or even working part-time may allow you to add to your savings and postpone dipping into your reserves – giving them more time to grow. And, you can increase your Social Security benefits by 8 percent for each year you wait to draw them from your full retirement age until you turn 70.

But there’s another way your retirement timing can affect your financial well-being. It’s called sequence of returns risk. Negative returns early in retirement can impair a portfolio more significantly than the same returns later in retirement.

Beginning distributions for living expenses during a bear market can seriously impact retirees who may not have the time to recoup losses. Retirees forced to sell some holdings reduce shares that could grow to offset future withdrawals.

If the markets are down when you plan to retire, it may be wise to keep working in order to delay selling depressed investments. But what if you aren’t able to keep working? What if you retire not knowing the markets are about to drop?

It’s best to take steps well before retirement to reduce sequence of returns risk. One popular strategy is to separate assets into a variety of “buckets” or “pools” for different time periods, ranging from safer, more liquid classes to longer term investments with greater growth and risk potential. Even during retirement, advisors typically counsel retirees to keep some money in equities. Stocks’ growth capacity is critical, given increased lifespans and high inflation in unavoidable areas for older Americans, such as health care.

At the same time, you may want to reduce volatility on assets you’ll need to withdraw during your early years of retirement with short-term CDs, money market instruments or fixed-income investments, like annuities or bond ladders. A bond ladder is created with bonds that mature in ascending years, such as one-, two-, three-, four- and five-year periods.

Because every situation is unique, choosing the right mix of equities, fixed income, cash and possibly real estate is complicated. Whether you’re already retired, you’re approaching retirement or it’s a long way off, we can help you create an asset allocation strategy designed to safeguard your future.

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* 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 February 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2945716.1