April 2020 – Market Commentary & Business Owner Update

April 2020 – Market Commentary & Business Owner Update

Reminder
You have until July 7th to contact us if you’d like to contribute into an IRA so you can write it off on your tax return.  In addition, we can help you with tax prep!  Please call (586) 459-5340 to find out how much we can save you on your tax preparation expenses.

Market Commentary
From 1/1/2018-4/2/2020, our Moderate portfolio has outperformed the DOW by about 21% and the Russell 2000 by about 37%.  While we continue to outperform, our portfolios experienced losses in March because a mortgage fund and some of our “safe haven” bonds we have been invested in for years, unexpectedly started to lose chunks of money.  We have since liquidated the funds, and have moved between 35% to 85% (depending on risk tolerance) of our investments to a money market while we wait for the bottom and/or other opportunities to arise. 

In these highly volatile times, it appears that even the most defensive assets were caught in the selloff.  When volatility spikes and even safe assets lose value, this is typically a red flag for the market as a whole.  We took this as a sign to move to cash equivalents.  We currently have an ample amount of dry powder that we are patiently waiting to use to buy back into the market once we believe it has bottomed. Our belief is that this is an opportunity that comes around once every 10-20 years, and since we already avoided huge losses, we are well positioned to turn this into a potentially very profitable situation in the long run.

We believe that any of these three events could potentially create a situation where the bottom is in and a buying opportunity could come to fruition, but a thorough analysis would be required in any case:

1) Evidence social distancing is working via slowing infection growth
2) Approvals on new treatments
3) Timeline on restrictions easing

We’ll continue to provide timely updates and in the case of our in-house managed TD Ameritrade portfolios, monitor your accounts daily.

Business Owner Update
The three most important things to consider:
-Self Employed business owners can now receive unemployment:

https://www.fox17online.com/news/coronavirus/gov-whitmer-expands-unemployment-benefits-to-self-employed-independent-contractors-and-more

-The Federal Government is now offering emergency SBA loans (the first $10,000 is very easy to acquire) that do not need to be paid back if the money is used on payroll, rent/mortgage for the business, or utilities.  Please apply quickly because the pool of money is supposedly limited: https://covid19relief.sba.gov/#/

-Unemployment payouts have increased significantly with the new legislation signed into law: https://www.cnbc.com/2020/03/27/how-unemployed-workers-could-get-more-than-100percent-of-their-paycheck.html

If you have any questions about taxes, your individual investment portfolio, our 401(k) recommendation service, or anything else in general, please give our office a call at (586) 226-2100. Feel free to forward this commentary to a friend, family member, or co-worker. If they would like to receive this commentary in the future, please send us an e-mail at info@summitfc.net at your earliest convenience. If you have had any changes to your income, job, family, health insurance, 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, Jim, and Zach
Summit Financial Consulting

Interesting Points

“The last leg of a bull market (12/2019) always ends in hysteria; the last leg of a bear market always ends in panic (TBD).” -Jim Rogers

A clinical research group in London said it would pay each volunteer $4,480 who agreed to be infected with a virus relative of the novel coronavirus in the hope of finding a vaccine. More than 20,000 people signed up. Source: -The Wall Street  Journal. March 19, 2020

Almost half of the new condos that have come to market in Manhattan since 2015 are currently unsold. One of the reasons: overly ambitious pricing. In 2012, the difference in the average price between a new and a resale unit was 22%. At the end of 2019, the premium was 118%. Source:  -The Morning Brew, January 13, 2020

The average U.S. household bottomed out at 2.52 people last year, the lowest household size in the history of the country. Germany has the lowest household size in the world at 1.99. Source: -NumlockNews, February 11, 2020

“To buy when others are despondently selling and to sell when others are greedily buying requires the greatest fortitude and pays the greatest reward.”Sir John Templeton

Coal now stands as the world’s most expensive fossil fuel on an energy-equivalent basis. Australian Newcastle Coal traded at $66.85 per ton Friday, March 20th, which is equivalent to a $27.36 priced barrel of oil. Source:  -Bloomberg, March 23, 2020

Since residents were ordered to shelter in place, demand for electricity in New York and San Francisco has been down between 300 to 600 megawatts- the equivalent of a midsize gas power plant. On a separate note, marijuana sales are up 159% in California, up 100% in Washington state and up 46% in Colorado. Source: – E&E News, March 23, 2020

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.

March 2020 – Special Market Update

March 2020 – Special Market Update

Market Update
We’d like to start off with some positive news, the whole country and economy is NOT shut down. Most people were at work today and can work from home if need be. China looks to be improving and we’re receiving guidance daily from our state and federal government on how to limit the spread of the Coronavirus.

In the 4th quarter of 2019, we moved our portfolios to a more defensive allocation as our research was saying the market was the most overbought in 80 years and due for a correction. We believe the Coronavirus would have caused stock market volatility regardless, but the fact that the market was so overvalued has amplified the recent drops. We are currently at stock prices not seen since 2018. It’s hard to fathom 2019’s impressive gains in the major US stock market indexes have been wiped out in just 1 month. With all of the news headlines and general panic we’ve seen in the stock market and the media as of late, we wanted to send out a quick update on what our game plan is moving forward.

Overall, we are trying to remain extremely diligent in managing our portfolios during this time of extreme volatility. We picked our least favorite stock market index currently, the Russell 2000, and are betting against it as a hedge. As of Monday’s massive drop, our Inverse (short) Russell 2000 fund is up over 45% since we added it to the portfolio earlier in the year and that has helped to offset market losses. Included in our stock selections are sectors we expect to continue to outperform, such as consumer staples, which includes many of the items people are currently scrambling for (like hand sanitizer, toilet paper, cleaning supplies), as well as healthcare, which is not laying off their labor force anytime soon! We feel we are positioned appropriately given the current circumstance and volatility.

In our most recent market commentary at the end of February, we suggested the Federal Reserve would likely cut interest rates in the very near-term and would possibly resort to more extreme measures if that proves to be ineffective. Well, it’s amazing how much can happen in just 2 weeks time! The Fed has since cut interest rates twice and begun a $700 billion quantitative easing program. The likes of which we have not seen since the 2008 financial crisis recovery.

So far the Federal Reserve action seems to have missed the mark as the stock market once again had a monumental drop to start the week. We believe the market will rally before the election because President Trump will do everything in his power to get re-elected. The market may get much worse, however, before it gets better. Depending on the progress of the current quarantine measures, President Trump may wait for the dust to settle on the Coronavirus hysteria to implement a potential payroll tax cut for the middle class. It would probably make sense to save some of the economic stimulus closer to the election to heighten its effect.

We are still patiently waiting for evidence that the worst is behind us, in which case we plan to buy in low and take our hedging strategies off. Overall, we strongly believe that in the short-term to intermediate term, the best move is to continue to be defensive and wait for the appropriate signals before we go long and fill up the portfolios with stocks again. Rest assured we are watching the markets every day and will move 100% into cash if we deem it necessary. We are working harder than ever to protect your money.

If you are a client of ours, we encourage you to go online to see your performance, but for the average client who is moderately invested, since the market peaked, our Moderate portfolio has outperformed the Dow Jones Industrial Average by 31%. Please share this information with your friends and family who do not have an advisor that manages their money daily like we do for you. There’s a chance this market will get worse before it gets better, so now is a good time to move to our management.

If you do have any questions about your investment portfolio, signing up for our 401(k) recommendation service, your taxes, or anything else in general, please give our office a call at (586) 226-2100. Feel free to forward this commentary to a friend, family member, or co-worker. If they would like to receive this commentary in the future, please send us an e-mail at info@summitfc.net at your earliest convenience. If you have had any changes to your income, job, family, health insurance, 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, Jim, and Zach
Summit Financial Consulting

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.

March 2020 – Market Update & Commentary

March 2020 – Market Update & Commentary

IRA Contribution Reminder:
You have until April 7th to contact us if you’d like to contribute into your Roth IRA, or Traditional IRA so you can write it off on your tax return. In addition, we can help you with tax prep! Please call (586) 459-5340 to find out how much we can save you on your tax preparation expenses.

Special Request:
If you have a friend or family member who has investments and they are concerned about losing money in the market, please have them contact us to receive a complimentary second opinion. We can analyze their existing holdings and show them through independent research what hidden fees they may be paying, as well as provide a risk assessment.

Market Commentary
Four weeks ago, we mentioned that the Coronavirus outbreak would likely provide an additional spike of volatility. The DOW JONES lost money in January, and started out February positive, but then lost over 14% from the peak.
(Source: https://finance.yahoo.com/quote/%5EDJI?p=^DJI)

read more…

February 2020 – Market Commentary

February 2020 – Market Commentary

 

Reminder:  Tax Season is Here! 
Wouldn’t it be nice to just have your financial advisor walk all of your investment paperwork down the hall to your tax preparer?  What if you didn’t even have to schedule a meeting and you had an option to handle it all through the mail/e-mail?  Summit Tax Services offers very cost-effective tax preparation to our clients and their family members, in some cases as low as $99 for a basic return.  Please call (586) 459-5340 to schedule and find out how much we can save you on your tax preparation expenses.

Market Commentary
We had predicted that 2020 would be a volatile year because of the election, but the Coronavirus outbreak in January provided an additional spike of volatility. The stock market started out the month strong, but ended up losing over 3% from the peak. The DOW and S&P 500 were both negative for the month of January.

read more…

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Contact Us

Phone: 586-226-2100
Fax: 586-226-3584
info@summitfc.net

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We are located at:
43409 Schoenherr Road
Sterling Heights, MI 48313
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Summit Financial

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Investment advisory services are offered through Summit Financial Consulting, LLC, a MI registered investment advisor. Insurance products and services are offered through Summit Financial Consulting, LLC.  Summit Financial Consulting, LLC and its representatives do not render tax, legal, or accounting advice. Summit Financial Consulting, LLC is not affiliated with or endorsed by the Social Security Administration or any government agency.