In the 1993 comedy starring Bill Murray, a weatherman finds himself living inexplicably the same day over and over and over again. As we make our regular calls to clients, we feel like we are delivering the same message over and over “The markets remain in the same range they have been in for most of the last 2 years. When S&P gets to the upper end of the range it finds a reason to sell off and when it sells off for a week or two it tends to rally right back. The market and economy continue trade off focusing on the strong (albeit slowing) domestic economy vs the uncertainties of the trade war and political environment we are in.” For most of the past year we could put this message on repeat and play it each month for our client calls.
Even so, it does seem that some additional reasons for caution are emerging. The attached article from Richard Bernstein Advisors discusses some early signs that are worth watching. Specifically: rapidly slowing corporate earnings and decreasing global liquidity, and the classic late cycle mantra that “the consumer is doing great!” It is critically important to understand the distinction between leading and lagging economic indicators. For example, turn on CNBC and you will hear about the 3.5% unemployment rate which is at a historical low.
This is great, but employment is a lagging indicator. The Conference Board’s Employment Trends Indicator (a leading indicator) has been declining for a few months now.
Our process is driven by the Moving Average discipline we have discussed with clients. We pay very close attention to emerging trends, both economic and market. Not surprisingly, those are a mixed bag as well. The bottom line for us is that while we continue to follow the process, we are leaning away from risk at the margin.
Year-End HouseKeeping
As we enter the end of the year, we want to remind everyone of some items to keep in mind.
RMD’s – If you have hit the magic 70.5 age, the IRS requires you to make mandatory distributions from your IRA and retirement plans. We are on top of your accounts with us, but if you have retirement accounts held away, please make sure to complete your RMD’s. We can help you determine how much you are required to take for all of your accounts. We would like to try to complete RMD’s by December 6 if possible.
Gifting – We are happy to work with you to complete gifting requests. Direct gifts of stock to charitable entities take a bit of work to coordinate so please connect with Becky by December 1. Also, as you consider gifting, many clients have taken advantage of directly gifting from their IRA. This allows the charity to receive the gift, counts toward your RMD and you don’t have to pay the tax on the distribution.
Tax loss selling – At this point we have minimal realized gains in our model accounts, so we don’t anticipate any wide spread tax selling, nor do we have meaningful unrealized losses that we could harvest.
Things to think about as we head into the New Year
The beginning of a new year is a great time to update your financial plan, consolidate accounts, and conduct a portfolio review. If you haven’t completed a financial plan, we would strongly encourage you to engage with us on that.
In 2019 we engaged with clients’ adult children more so then ever before. Whether that meant reviewing a family’s estate plan, providing financial planning for the next generation or simply bringing family members up to speed on our process, we have found that it is a very positive experience for the entire family. Some other things we did this past year for clients include reviewing kids’ resumes, working through debt repayment strategies and mapping a long-term investment plan. In short, we are happy to help your family in any way we can.
We plan to push more research and information to clients in 2020. Additionally, we intend to do some surveying of our clients in an effort to deliver more services to you that will positively impact you.
If you can, please take a moment to complete the surveys when they are sent, they really will help us do a better job for you.
As we enter the Holiday season, we are so thankful for our relationship with you. We are fortunate that our clients are our friends as well as our customers.
If there is anything we can do to help you, please do not hesitate to ask.
Sincerely,
Brett, Steve & Becky
Latest News
Dusting Off The Fire Extinguishers - Read Story
Technical Update - Read Story
The content of this newsletter (the “Content”) is general in nature, does not consider any individual’s specific circumstances, and does not constitute a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction, nor does it constitute investment advice upon which any person should or may rely. This newsletter does not constitute tax or legal advice. Individuals should seek the advice of their own tax or legal advisor for specific information regarding tax or legal consequences of investments. Certain Content is derived from third-party sources TPWA believes to be reputable; however, TPWA has not audited, makes no representations with regard to the accuracy or timeliness of such information, and assumes no responsibility to update any Content in this newsletter. Past performance is no guarantee of future results. Investing involves the potential for gains and the risk of losses. No investment service or strategy can guarantee profitability of an investor’s account or ensure against losses, particularly in declining markets.
References to indexes or benchmarks are provided for illustrative purposes, but do not reflect the performance of any actual investments or accounts. Investors cannot invest directly in an index; results of an index do not reflect the deduction of transaction costs, custodial charges, or the deduction of investment-management fees, which would decrease performance results. Economic factors, market conditions, and investment strategies will affect the performance of a portfolio and there are no assurances that a portfolio will match or outperform any particular index or benchmark. This newsletter refers to the following market indices or well-known investment benchmarks:
S&P 500 Index: The S&P 500 Index is calculated and published by S&P Dow Jones Indices LLC, to reflect generally the U.S. large-cap equity market. It is a market-cap-weighted unmanaged index comprised of the stocks of approximately 500 companies with the largest market capitalizations trading in the United States.
Dow Jones Industrial Average Index (the “Dow”) is a price-weighted stock market index that indicates the value of 30 large, publicly owned companies based in the United States, covering all industries except transportation and utilities. The value of the Dow represents the sum of the price of one share of stock for each component company, corrected by a factor which changes whenever one of the component stocks has a stock split or stock dividend, in order to generate a consistent value for the Dow. Published and maintained by S&P Dow Jones Indices LLC, www.spdji.com.
