Interest Rate Alert
Interest rates are the lowest they have been in over a year and a half. This may be a great opportunity to purchase or refinance your home or automobile. If you are curious if you could lower the payments on your home, car, or any other debt payments, let us know and we can help you with the process.
In April within our most recent commentary we gave our clients a warning that the market was potentially overvalued and that we reduced risk within our in-house managed portfolios because the indicator that told us to sell in September of 2018 before the big decline was once again sending us an alarm. We also pay attention to the flow of “smart money” and noticed that a large % of the big institutional investors sold their profits in April and exited the market to a certain degree. That doesn’t always bode well for the “little guys” in the stock market and is sometimes a useful indicator of things to come. Well, the S&P 500 and Dow Jones proceeded to both drop over 6.5% in the month of May (Source: https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC).
We were prepared for increased volatility, so we kept a defensive positioning in May within our in-house managed TD Ameritrade portfolios and gained between 1.5% and 2.35% depending upon your risk tolerance. That means we outperformed the market by over 8.0% last month. We also saw this as an opportunity to buy and ended up purchasing three equity positions (Consumer Staples, Utilities, and REITs) on May 31st after the sizeable drop. This has worked out well to begin the month of June.
The next big question is: What comes next? This may seem far-fetched, but we believe there is a reasonable probability that because there are no elections this year, the President is delaying the implementation of some trade agreements and peace treaties, and other “good news.” The North Korean situation seemed all but solved, but then President Trump left the meeting early when the North Koreans seemed ready to make a deal. They are now testing missiles and the President seems to be remaining uncharacteristically quiet despite the fact that he responded much more harshly in the past (Source: https://www.politico.com/story/2019/05/27/donald-trump-north-korea-1345034)
The recent meeting with Chinese trade officials seemed similar. We believe the President could be strategizing to have as much good news as possible come to fruition in late 2019/early 2020 to help his re-election chances. One thing we do know is that if 2016 is any indicator of 2020 in the stock market and it being an election year, investors should buckle up for a huge wave of volatility and uncertainty next year. This is why we review our investment allocation daily and use technical analysis, fundamental analysis, as well as common sense to actively manage our portfolios.
We cannot predict politics. We do however pay for independent research that tells us what the most likely scenario for the market will be over the intermediate and longer term. We do not always get it right, but we do try to reduce risk when we see signs of danger. Our best research is saying that the market should be sluggish this summer overall because of the trade disputes and the positive effects of last year’s tax cuts wearing off, but there’s a decent chance that the market will pick up in the fall. For now, we’ll look for investments that are “on sale” whenever possible to purchase with the hopes of adding gains to an already solid year of performance.
We will let you know if there is a situation which calls for immediate attention. If you have any questions about taxes, your investment portfolio, our 401(k) recommendation service, or anything else in general, please give our office a call at (586) 226-2100. If you have a friend, family member, or co-worker that would like to learn more about our process, please let us know.
Also, feel free to forward this commentary to someone you know that may find it useful. If they would like to be added to our commentary, please send us an e-mail at firstname.lastname@example.org. If you have had any changes to your income, your job, your family, your health insurance, your risk tolerance, or your overall financial situation, please give us a call so we can discuss it.
Thank you for your confidence and referrals!
Bob, Ken, and Jim
Summit Financial Consulting
Up to 80% of medical bills contain errors. Source: -Healthcare in America, July 30, 2018
There are now 1.2 million more job openings in the U.S. than there are unemployed Americans. Source: Associated Press, May 7, 2019
Amazon is buying dozens of machines that could eliminate the difficult and physically taxing job of packing boxes in its fulfillment centers. The CartonWrap packs 600 to 700 boxes per hour, which is about four to five times the rate a human can. Source: –Reuters, May 13, 2019
Roughly 10.6% of homes sold in the fourth quarter of 2018 had been owned for less than two years. It’s the highest level of “flips” since early 2006, the peak of the housing boom. Source: -Wall Street Journal, April 10, 2019
Last year, 60 of the Fortune 500 companies paid no taxes on $79 billion in corporate income. Source: –CBS News, April 12, 2019
The Federal Communications Commission has fined robocallers $208.4 million since 2015 but has only collected $6,790. Source: -Wall Street Journal, April 24, 2019
Roughly 40% of parents with kids in youth sports are confident that their child will one day get an athletic scholarship, however, after spending an average of $3,167 per player, only 2% of high school athletes get any amount of scholarship. Source: -The Wall Street Journal April
Disclosures regarding our performance reporting: Because some clients are in the 10% tax bracket and others are in the 37% Federal tax bracket, we have decided to report performance before taxes. If you have a non-qualified account, please feel free to contact us to determine your individualized rate of return after tax. All of Summit’s performance is after our 1.25% advisory fee that is deducted monthly. Your fees may be higher or lower depending upon the amount of assets invested with our firm. Feel free to contact us to receive online access so you can see your personalized rate of return. The Aggregate bond index we use is ticker: AGG. All dividends and distributions are reinvested and included in the performance. The S&P 500 index quoted above does not include dividends within the performance. If a holding within our portfolio does pay a dividend or other income, it is reinvested, so our performance does include dividends. This report has been prepared from data believed reliable, but no representation is made as to accuracy or completeness. Total return and principal value will vary depending upon the deduction of advisory fees, brokerage commissions, reinvestment of dividends and other earnings or fund charges. This information is provided to you in combined form, solely for your convenience and ease of review and is not an offer or solicitation to buy or sell any securities. In order to verify that all account values and transactions are accurate, we encourage you to compare the information provided in our statement with the statement you receive directly from your custodian. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Past performance does not guarantee future results.
Summit Financial Consulting LLC
43409 Schoenherr Road, Sterling Heights, MI 48313
Phone: 586-226-2100 Fax: 586-226-3584 E-mail: email@example.com
Securities offered through Gradient Securities, LLC (Arden Hills, MN (866)991-1539) Member FINRA/SIPC
Summit Financial Consulting LLC is independent and is not an affiliate of Gradient Securities, LLC. Investment advisory
services offered through Summit Financial Consulting LLC, a Registered Investment Advisor in the State of Michigan.