November 2019 – Market Commentary

November 2019 – Market Commentary

Open Enrollment
Just a reminder that open enrollment for health insurance is around the corner. For no cost, we can assist you with Medicare Supplemental, prescription drug plans, with subsidies, Business health insurance, vision, and dental insurance. Give us a call today because we might be able to save you some money! or (586) 226-2100.

Market Commentary
October was a positive month for both the markets and our portfolios.  November has been off to a good start for the equity markets as they climb above the highs last set in July.  China has announced that tariffs will be phased out during the phase 1 agreement.  The Trump administration has recently chimed in that not all of the details have been worked out.

After hitting all-time highs to end October, our in-house managed portfolios have experienced some losses so far in November. Please keep in mind, our portfolios are not constructed to synchronize 100% with the overall stock market. The stock market had basically gone downward to sideways the last 3-4 months while we have been hitting all-time highs in our portfolios along the way. When the market is trending up in the short term we’re not always going to make as much as the market, but overall our goal is still to outperform over longer periods of time. For instance, last year, when the stock and bond markets were negative, our portfolios were still positive.

We’d like to share two ideas that we think make good common sense, but if you would like to discuss our reasoning more in depth, we’d be happy to dig into the details. 

First: Fear and greed.  Sir John Templeton is considered one of the best investors ever, and he suggested: “It is best to buy when there is blood in the streets (Wall Street).”  When people are greedy, that’s the best time to sell historically.  When people are scared, that’s the best time to buy historically.  Here is the current Greed/Fear index which says the market has moved into Extreme Greed mode:

Greed/Fear index which says the market has moved into Extreme Greed mode:

In addition, we often reference the Smart Money Confidence versus the Dumb Money Confidence levels.123

Dumb Money is non-institutional investors.  Smart Money is what institutional money managers and hedge funds are doing.  In our industry, we know that some investors get their information from the nightly news and friends/family.  This is often flawed in our opinion because by the time the average investor hears about it, it can sometimes be too late.  DALBAR releases a study each year of how well the average investor did versus the index.  Over the past 30 years, the average investor has averaged 3.98% versus the S&P 500 averaging 10.16% over the same period of time (Source:  If you extrapolate that out, the average investor turned $100,000 into $322,473 while the stock market would have turned $100,000 into $1,822,711.  Why would the average investor underperform by that much?  It’s because emotions tell investors to buy high when the market is high, and to sell low when the market is low.  Smart money sells high and buys low.  The spread between smart money and dumb money is the largest in the past 2-years!  This tells us that a big move down is fairly likely based upon history.  When you look at the past couple years, dumb money has been wrong every time in that they sell when the market is bottoming, and buy when the market is topping.  The average investor is also very short term focused in our opinion. 

It is beneficial to think longer term in a lot of cases.  For instance, Warren Buffet, the CEO of Berkshire Hathaway and one of the most famous investors ever, currently has $122 Billion dollars in cash.  He could buy something that was overpriced, but he’s waiting for a drop to buy in lower.  Patience is a virtue in investing.  Here’s a great article about his reasoning:

Within our TD Ameritrade portfolios, we decided to sell high and move into more conservative investments until the next drop occurs.  Recently, that has hurt us.  There are always newsy events that can make the market move higher into the greed category in the short term, but over the weeks ahead, it looks like the market is overvalued.  If we find something that’s on sale, or looks like it’s going to jump higher, we’ll buy it, but we’re not going to buy something in your portfolio if our research is saying there’s a decent probability that it will drop in value very soon. 

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 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, Jim, and Zach
Summit Financial Consulting

Interesting Points

For the first time since the government began keeping track in 1978, the U.S. posted an overall petroleum surplus totaling almost $300 million. Source: -MarketWatch, November 5, 2019

“When everyone is saying the same thing, a different outcome is likely to occur.” Source: – Sir John Templeton

Approximately 1 in 38 people in the United States live in New York City. Source: -BuzzFeed, October 20, 2019

The number of people in the world worth between $10,000 and $100,000 has seen the biggest growth of any wealth segment, tripling since 2000 to 1.7 billion people. CNBC, October 21, 2019

Worldwide, there are now more people overweight or obese (2.9 billion) than there are underfed (800 million). Source: -The Week, October 13, 2019

Charlie Chaplin once entered a Charlie Chaplin look-alike contest and came in third. Source:  -Newsweek, April 16, 2019

It takes 100 times the energy to make an alkaline battery than the battery will eventually release over its lifetime. On a per-watt basis, an alkaline battery will emit 30 times the greenhouse gas as a coal-fired power plant. Source:  -OneZero, October 30, 2019

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.

October 2019 – Market Commentary

October 2019 – Market Commentary

Open Enrollment
Just a reminder that open enrollment for health insurance is around the corner. For no cost, we can assist you with Medicare Supplemental, prescription drug plans, with subsidies, Business health insurance, vision, and dental insurance. Give us a call today because we might be able to save you some money! or (586) 226-2100.

Brokerage Update
Great News! TD Ameritrade made the move to $0 commissions! You may have seen the news…TD Ameritrade is eliminating base commissions for online exchange-listed stock, ETF (domestic and Canadian), and options trades. We already only use NTF (No Transaction Fee) investments in our managed portfolios, however, TD Ameritrade just opened up thousands of more cost-free investment options for us to use moving forward. We will be able to run these new investment options through our rigorious investment screening process to make certain we’re only using the very best options available for our clients.

Market Commentary
The 3rd Quarter has now come to a close and it ended mixed for stocks and bonds depending upon which index you prefer to follow. The tech heavy Nasdaq lost -0.09% in the quarter, and the Russell 2000 (smaller US company index) lost -2.76%, while the DOW Jones and S&P 500 both had gains of about 1.19% (Sources: and ). Monthly statements should be arriving to your home soon if they haven’t already and you can login to your accounts online at TD Ameritrade to view your performance.

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August 2019 – Market Commentary

August 2019 – Market Commentary

Interest Rate Alert
Interest rates are the lowest they’ve been in three years. If you have good credit you can get a 30-year mortgage for less than 4% and a 15-year mortgage for just over 3%. This is also a great opportunity to refinance a home mortgage or auto loan (any debt really). You don’t need to take money out of your house, but your payments could still go way down. If you’re in the market to purchase or refinance, let us know and we can help you with the process.

Auto and Homeowners Insurance
Just a reminder that we offer independent quotes on Auto Insurance, Homeowners Insurance, Umbrella Policies, RV/Boat/Snowmobile Insurance, Workman’s comp, and business liability policies. Give us a call because we might be able to save you some money! or (586) 226-2100.

MARKET COMMENTARY — Trade War Becomes Currency War
The market dropped in May but rebounded in June and July. August is off to an alarming start because of new complications in the trade war between the United States and China. On July 31st, the Wall Street Journal reported that the Chinese were approaching trade negotiations with a new tactic: Slow down. They wanted to appear to be willing to negotiate but insiders revealed that the Chinese now believe the US economy is slowing while the Chinese economy has already bottomed, so their negotiating power will increase in time. They also believe there is a chance a Democratic candidate will be elected in 2020 who may not be as confrontational as President Trump while negotiating (Source:

President Trump did not enjoy the report, and quickly reacted with a new set of tariffs. The previous tariffs were carefully crafted to avoid pinching the overall economy. The new tariffs impose a tax on nearly all $540 Billion of Chinese goods that come into the US in a year (Source: In response, China weakened their currency and has suspended all purchases of US agricultural products.

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June 2019 – Market Commentary

June 2019 – Market Commentary

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:

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. 

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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.

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