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

Weekly Market Notes – September 8, 2020

For the Week of September 8, 2020

The Markets

Despite August’s positive jobs report, stocks fell Friday, and the three major indices saw steep declines for the week. The S&P experienced its worst day in nearly three months. For the week, the Dow fell 1.73 percent to close at 28,133.31. The S&P lost 2.27 percent to finish at 3,426.96, and the NASDAQ dropped 3.25 percent to end the week at 11,313.13.

Returns Through 9/04/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)-1.730.279.3211.1414.57
NASDAQ Composite (TR)-3.2526.9143.2421.9520.61
S&P 500 (TR)-2.277.4818.9413.6414.57
Barclays US Agg Bond (TR)0.156.766.115.134.24
MSCI EAFE (TR)-0.92-5.492.871.695.23
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.

All This During a Pandemic — The median sales price of existing homes sold in the United States was $304,100 in July 2020, the first time in U.S. history that the median sales price has exceeded $300,000. The $304,100 median price is also a record on an inflation-adjusted basis, besting the $230,200 median sales price from July 2006, equal to $293,096 in 2020 dollars (source: Nat’l Association of Realtors, BTN Research).

Money to Help — The Economic Impact Payments of $1,200 per adult and $500 per child (under the age of 17) that were part of the CARES Act were the third time the government has issued direct stimulus payments in the last 20 years. The previous payments were made in 2001 and 2008 (source: CARES Act, BTN Research).

Our Number — As of June 30, the U.S. government’s debt-to-GDP ratio was 137 percent, i.e., $26.5 trillion of government debt divided by our $19.4 trillion economy (source: Treasury Department, BTN Research).

WEEKLY FOCUS – Things to Know About Life Insurance

September is Life Insurance Awareness Month, making it a good time to review things you may not know about life insurance, such as:

Policies differ widely. Term life insurance pays out a death benefit if you die within the specified period, often 20 or 30 years. Because it only pays for untimely deaths, it is less expensive. Permanent policies, whole or universal, cost more than term insurance because they cover the insured during their entire life (as long as premiums are paid) and include a savings component.

Whole life offers a guaranteed cash value and fixed premiums. A universal policy allows you to change the death benefit and to increase, decrease, or stop premiums (provided you maintain a sufficient cash balance to cover the insurance cost). You can take a loan or a withdrawal from the cash portion of both permanent policies. Beneficiaries will not receive money left in the cash portion of either policy when you die.

People overestimate costs. Most people think life insurance costs much more than it does. Particularly if you purchase a policy when you’re young, term insurance can be surprisingly affordable. On average, a 30-year-old male can get a $250,000, 20-year term life policy for around $150 a year. Even if he waits until turning 50, the average policy is only $465 a year.*

You may qualify with health conditions. Many people assume they can’t get life insurance if they have a pre-existing condition. This is often not the case, although extra screening might be required, and you may pay higher premiums. However, providing proof that a condition – such as high blood pressure, high cholesterol, or anxiety – is being managed effectively can improve your risk assessment.

Riders can add options. Riders are additional benefits that can be added to a basic policy. Some of the more common cover long-term care costs, let an insured use death benefits during a terminal illness, allow the insured to increase coverage without additional medical testing, or waive premiums if disability causes the insured to lose their income.

Please contact our office if you need help evaluating how much life insurance you need or determining whether your current coverage is adequate. We can handle your insurance needs at our office, work with your existing insurance agent, or recommend an agent to work with you.

*https://www.nerdwallet.com/blog/insurance/average-life-insurance-rates/

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#3232113.1

September 2020 Monthly Outlook – Dog Days of Summer

Historically, August is the 2nd worst month for the stock market.  Yet again 2020 proved to be an unprecedented year. We just had the best August for stocks since 1984.     Having said that, I am still concerned about the lack of breadth in the market.  While the S&P 500 Index has made a new all-time high, only 13% of S&P stocks are making all-time highs, while 50% of the stocks have made no gains in 2 years (source: CNBC/Carter Worth).  Even worse, some 29% of S&P stocks are actually down 20% YTD (source: BTN Research).

An additional worry is that the stock market seems completely detached from the economy.  While we did see a significant economic rebound in June, with most states re-opening, the pace of the rebound in July and August slowed.  This is can be seen in employment as weekly new unemployment claims rose back above 1 million and we still have some 15 million people still out of work.  Potentially more impactful is that an estimated 33% of the pandemic-driven layoffs in the United States that occurred from March through May will be permanent, i.e., the workers will never return to their old jobs at their former employers (source: Brookings Papers on Economic Activity, BTN Research). That 33% equates to roughly 9 million jobs.

The Conference Board Leading Economic Index® (LEI) for the U.S. Increased in July Despite improvement, pace of economic growth will likely weaken in final months of 2020 “The US LEI increased for the third consecutive month in July, albeit at a slower pace than the sharp increases in the previous two months,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “Despite the recent gains in the LEI, which remain fairly broad-based, the initial post-pandemic recovery appears to be losing steam. The LEI suggests that the pace of economic growth will weaken substantially during the final months of 2020.”

Much of the government support provided earlier this year expired at the end of July and Congress has returned to their partisan bickering. While I do expect them to get to an agreement, the longer they delay the more long lasting the negative effect on the economy.

So what’s ahead for us in September.  Well, we are getting into the heart of election season, which means increased volatility.  The economic recovery is slowing down and the economy is still well below its pre-Covid level. September is traditionally a poor month for stocks.  However, 2020 has proven to be about as unpredictable as any year in history.  We also have the Federal Reserve which is committed to doing what it takes to support the economy. As show in the chart below, September tends to be a weak month. In fact, it is the weakest month on average since 1950. Additionally, the last two times August was up more than 5% were 1986 and 2000; the S&P 500 fell 8.5% and 5.4% in September those years.

Our approach is to remain invested but take some profits in some of the big winners, offsetting some of the declines from earlier this year.  We are keeping equity allocations in line with your overall risk tolerance but we are making some shifts between industries/sectors.

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

I want to extend a special thanks to clients & colleagues who have recently referred us to family and friends:   Steve K.,  Dave P., Dennis A. 

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

  • September is National Suicide Prevention month – let’s look out for friends and loved ones having a hard time in 2020

Sep 7th             Labor Day

Sept 11th          Patriot Day- honoring those who lost their lives on 9/11/01

Sept 18th          Rosh Hashana begins – wishing all our family, friends, and colleagues of the Jewish faith Shanah tovah um’tukah

Sept 22nd         Autumn begins – let’s pray it doesn’t include a bad flu season

Sept 27th          Yom Kippur- Chag Sameach

Best regards,

Jim

Sources:  LPL Research, Bloomberg, CNBC

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

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

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

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

Weekly Market Notes – August 31, 2020

For the Week of August 31, 2020

The Markets

Stocks rose Friday. The Dow erased its losses for the year, and the NASDAQ and the S&P reached new record closes. July’s U.S. consumer spending encouraged investors, along with the Federal Reserve’s announced policy shift to allow inflation to run higher. For the week, the Dow rose 2.64 percent to close at 28,653.87. The S&P gained 3.29 percent to finish at 3,508.01, and the NASDAQ climbed 3.40 percent to end the week at 11,695.63.

Returns Through 8/28/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)2.642.0312.7412.1214.22
NASDAQ Composite (TR)3.4031.1750.3424.3020.68
S&P 500 (TR)3.299.9723.8615.0414.32
Barclays US Agg Bond (TR)-0.516.606.125.084.27
MSCI EAFE (TR)1.69-4.587.392.354.60
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.

Find a New Job — An estimated 33 percent of the pandemic-driven layoffs in the United States that occurred from March through May will be permanent, i.e., the workers will never return to their old jobs at their former employers (source: Brookings Papers on Economic Activity, BTN Research).

It Will Take Time — Economists from the second largest bank in the United States predict the U.S. economy will not recover to its pre-pandemic level until early 2023 (source: Bank of America, BTN Research).

When Demand Drops — In 2019, the world production of crude oil was 101 million barrels a day. The pandemic caused a global collapse in oil consumption, forcing the major oil players of OPEC and Russia to implement an output cut of 9.7 million barrels a day in April. The drop in demand forced U.S. oil producers to cut output by 2.4 million barrels a day since mid-March (source: U.S. Energy Information Administration, BTN Research).

WEEKLY FOCUS – Credit Card Companies Respond to COVID

In these unprecedented times, many companies are coming up with new ways to help those who have experienced economic challenges and to better serve customers whose lifestyles have been altered because of health concerns. Credit card companies are no exception.

Many major credit card companies have added to their existing hardship programs to help customers in financial stress due to the coronavirus. On a case-by case basis, a variety of measures may be approved, such as deferred or lower monthly payments, waived interest and late fees, or increased credit limits.

Consumers who have always guarded their credit rating may worry about asking for a deferment. But if a company agrees to defer your payments, it won’t report those payments as late. However, your credit score could still be damaged if a card balance grows while payments are deferred. So, it’s best to discuss reporting concerns with the company.

If you have overdue payments because of COVID, file a consumer statement with the credit bureau explaining the unique circumstances that led to falling behind and your intention to catch up as soon as possible.

Credit bureaus are also stepping up by allowing consumers to check their credit report once a week at no cost through April of 2021 at AnnualCreditReport.com.

Even if you haven’t experienced income loss this year, you may want to take advantage of other limited time benefits from some credit cards. Among these are:

  • giving extra points for restaurant, grocery, or gas purchases
  • allowing holders to redeem travel points at grocery stores and restaurants
  • providing statement credits for grocery or restaurant delivery services
  • offering statement credits for streaming entertainment, wireless phone, or shipping services

To see what your credit card offers, visit its website or call customer service. As with any form of credit, responsible use is crucial. Making your money go farther and protecting your assets are important to us. We can help you evaluate your options for spending, saving, and investing your money to support your financial goals.

*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 August 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 3222715.1

Weekly Market Notes – August 24, 2020

For the Week of August 24, 2020

The Markets

Stocks rose Friday, and the NASDAQ and the S&P achieved record closing highs as several pieces of positive news encouraged investors. New reports showed better than expected corporate earnings reports, a surge in home sales and accelerated manufacturing activity. For the week, the Dow rose 0.09 percent to close at 27,930.33. The S&P gained 0.77 percent to finish at 3,397.16, and the NASDAQ climbed 2.69 percent to end the week at 11,311.80.

Returns Through 8/21/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)0.09-0.599.1711.3613.89
NASDAQ Composite (TR)2.6926.8542.4423.3920.50
S&P 500 (TR)0.776.4718.4414.0613.79
Barclays US Agg Bond (TR)0.277.147.245.314.25
MSCI EAFE (TR)-0.99-6.174.842.034.15
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.

There’s Bad, Then There’s Awful — The U.S. economy fell 10 percent in size between March 31 and June 30. The United Kingdom’s economy fell 20.4 percent in size between March 31 and June 30 (source: Office for National Statistics, BTN Research).

Need a Lot of Money — The U.S. government forecasted on Monday, Aug. 3, that it will borrow $4.5 trillion during fiscal year 2020, i.e., the 12 months ending Sept. 30. That total exceeds the $3.8 trillion borrowed over the previous four fiscal years of 2016-2019 (source: Treasury Department, BTN Research).

Being Cautious — The personal savings rate in the United States was a record 33.5 percent in April as Americans reacted to the COVID-19 pandemic outbreak. The personal savings rate in the United States was 7.5 percent in April 2019. The personal savings rate is defined as savings (i.e., after-tax income less consumption spending) divided by after-tax income (source: Department of Commerce, BTN Research).

WEEKLY FOCUS – Keeping Your Eyes on the Goal

As the struggle to control COVID-19 drags on, many of us experience periodic fatigue from distancing, negative headlines and future uncertainties. Staying disciplined when weary is difficult but crucial to short-term financial wellness and long-term financial success. So, follow these guidelines to maintain your focus:

Don’t fixate on market swings. If you have a solid strategy that addresses market volatility, do the right things regardless of how the market acts. That’s not to say you shouldn’t regularly reevaluate your risk levels or consider rebalancing your portfolio, but don’t make decisions based on emotion. And don’t try to time the market; few who do succeed.

Invest prudently. The natural human tendency is to buy lots of stock when prices are rising and to stop buying altogether when prices are on the down swing. But some stock prices may provide a good value if the market drops, and you’ll be able to buy more for the same amount of money. Just remember, it’s generally best not to purchase equities unless you can keep them a minimum of five years.

Thinking about purchasing a different home in a year or two? This may be a good time for some improvement projects on your current home. Most realtors agree you’ll likely recoup these investments: a new garage or front door, a minor kitchen remodel, finishing a basement or updating a bathroom.

Increase your savings. When we’re stressed, it’s natural to buy something fun. But try to keep splurges small and make the most of unique opportunities to save in the current situation. If you’re working from home, you’re likely spending less on gas and clothes. In your free time, you’re probably spending less on dining out, movies, concerts and travel. Try to see how much more you can put in savings because of reduced spending.

Use your time wisely. Improve your culinary skills and reap rewards for years to come as you save on prepared food costs, eat healthier and entertain economically. Earn a professional certification or take a class to improve your desirability as an employee. Or, develop skills and a network to start a business or side gig.

Even difficult times can present real opportunities. If you’re looking for or considering ways to thrive in the midst of the pandemic’s economic fallout, give our office a call.

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 August 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 3213534.1

Weekly Market Notes – August 17, 2020

Weekly_Market_Notes

For the Week of August 17, 2020

The Markets

Stocks ended mostly flat on Friday, with the S&P still failing to achieve a record high. The market appeared to be treading water as investors reacted to modestly improving retail sales and stalled stimulus talks as the Senate adjourned for its August recess. For the week, the Dow rose 1.87 percent to close at 27,931.02. The S&P gained 0.69 percent to finish at 3,372.85, and the NASDAQ climbed 0.09 percent to end the week at 11,019.30.

Returns Through 8/14/20 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 1.87 -0.68 12.29 10.86 12.54
NASDAQ Composite (TR) 0.09 23.53 43.13 21.50 18.20
S&P 500 (TR) 0.69 5.66 21.07 13.22 12.29
Barclays US Agg Bond (TR) -0.91 6.85 7.08 5.29 4.32
MSCI EAFE (TR) 2.46 -5.23 7.33 2.27 3.39

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.

 

Tough Year — The number of operating oil rigs in the U.S. (both on land and offshore) as of last Friday, Aug. 7, was 247, down 69 percent from 805 operating oil rigs as of Dec. 31, 2019 (source: Baker Hughes, BTN Research).

Reducing Your Monthly Cost — 64 percent of mortgage applications filed during the week ending Friday, July 31, were current homeowners refinancing existing mortgage debt as opposed to new home purchases (source: Mortgage Bankers Association, BTN Research).

Record Low — The yield on the 10-year Treasury note closed at 0.514 percent last Tuesday, Aug. 4, 2020, within 0.013 percentage points of its all-time record low close of 0.501 percent from March 9, 2020 (source: Treasury Department, BTN Research).

 

WEEKLY FOCUS – The Mixed Blessing of Longevity

Thanks to better nutrition, smarter health choices and medical advances, people now live longer. The average life expectancy for a newborn in 1950 was 68. Today, it is just short of 79.1 And according to the Social Security Administration, one in four 65-year-olds will live past 90 and one in ten will live past 95.2

Realizing your retirement could last 25 or 30 years is the first step to prepare financially – ideally, starting in your youth to reap maximum rewards of compound growth. Suppose, for example, you begin saving $475 per month when you’re 22 and earn an average annualized return of 8 percent. When you’re 67, you’ll have a $2,379,328 retirement fund. Wait until you’re 42, and that nest egg will only be $450,040.But don’t dismay if youth has passed. There is still a lot you can do, such as:

Continue working. If you can, keep working beyond the typical retirement age. This will help you accumulate more wealth, delay using savings and postpone drawing Social Security to let your benefits grow. If you retired early this year because of COVID risks, take heart. The pandemic has also increased remote work opportunities. Consider tutoring, customer service, sales, accounting, tech support or administrative work, just to name a few.

Protect your health. It’s no secret healthcare costs have grown disproportionately. It’s estimated the average couple will need $295,000 for medical expenses in retirement (not counting a potential need for long-term care).4 So, anything you can do to safeguard your health is bound to pay off in quality of life and financial savings.

Invest wisely. Although inflation has been low since the 2008 recession, it still adds up over time. Keeping all your money in overly low-risk (and likely low return) investments may not actually be wise over the long-term. Particularly in a low-interest environment, it’s difficult to grow ultra-low-risk investments. Investing a portion of funds you won’t need for a decade or more in the market provides growth potential while giving you more time to ride out market volatility.

Whatever your age, there are always ways to improve your situation. If you’d like help creating or reviewing a written strategy for retirement saving, investing or distribution, contact our office today.

1https://www.macrotrends.net/countries/USA/united-states/life-expectancy#:~:text=The%20current%20life%20expectancy%20for,a%200.03%25%20decline%20from%20201

2https://www.cnbc.com/2018/01/12/failing-to-plan-for-longevity-can-hurt-your-finances.html

3https://blog.massmutual.com/post/swp-save-retirement

4https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs

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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 August 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 3204664.1