Dear Friends and Clients,
Before we update the market and our TD Ameritrade portfolios, we wanted to quickly mention that if you have money sitting on the sidelines, we have access to many options that may interest you. For example:
- 4.05% Guaranteed for 5 years or 3.8% for 3 years
- Tax deferral (you already have this with IRA funds)
- No market risk
- Creditor protection
- 10% penalty-free withdrawals annually after year 1
- Full account value at death
- Avoids probate if you name a person(s) as beneficiary
- The above rates are for a $100,000 investment, but additional competitive rates are available for $10,000 or above, so reach out to us to receive all available options; available ages 0-85
Please note we have access to shorter and longer-term options. We also have significantly more upside potential choices that protect your principal, but the rate is not fixed. Don’t hesitate to contact our office at (586) 226-2100 if you would like more details and options.
Recap of Recent Market Trends
2022 has started with a challenging environment, but we believe the worst is most likely behind us. The Russian invasion of Ukraine combined with sky-high inflation, which spurred the Federal Reserve to raise rates, contributed to nervous stock markets. The tech-heavy Nasdaq has dropped 23% year to date, the Russell 2000 dropped 17%, the bond index AGG lost 9.8%, and the S&P 500 dropped 13% (Sources: https://finance.yahoo.com/quote/%5EIXIC/history?p=%5EIXIC, https://finance.yahoo.com/quote/%5ERUT/history?p=%5ERUT, https://finance.yahoo.com/quote/AGG/history?p=AGG, https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC).
It’s very unusual for stocks and bonds to lose simultaneously, so it’s been an extremely challenging environment. One bond fund we have owned for years had a large drop in May, so we decided to sell 100% of it, and we’re glad we did because it continued to lose after we got out of it. May was a rough month because of this drop before we sold, and our Conservative, Moderate, and Aggressive portfolios are negative for the year. Still, they are hanging in there comparatively versus the benchmarks mentioned above. The Stock Rotation showed its volatility potential this year so far with a heavy investment in technology companies. We encourage you to look at your own statements and then give us a call to discuss it if you have questions or want to discuss your returns.
As you know, we have many tools in our toolbox, including the ability to purchase investments that profit when the stock market goes down. Because the current environment is highly challenging with significant ups and downs, we initiated a change recently from previous months this year: We decided to add an inverse fund. We invested in a fund that performs the opposite of the Nasdaq 100, so we are effectively betting against some stocks for now with a portion of our portfolio. As of the time of this writing, that position has a profit so far.
Managing Active Portfolios Daily
We also sold a lot of stocks in May to help reduce risk and volatility in the portfolio coming into what may be a volatile month of June. Our ultimate goal is to make money, so we’re using what we believe to be all the appropriate tools in our toolbox to accomplish that goal potentially. As of today, we expect a drop in the market in the short term (which we are hedging for), and then we plan to sell the inverse and buy stocks and then potentially enjoy a nice bounce up. That is our plan right now, but we could be incorrect, in which case our plans can change, especially with a war going on. This is all part of an overall portfolio strategy that aims to get profitable this year. This is why we manage our active portfolios daily.
Outlook for the Future
Anything is possible in the short term, but we believe that by year-end, stocks will rebound for many reasons, including low unemployment, the Coronavirus fueled shutdowns and restrictions being reduced worldwide (currently, there are lockdowns in parts of China), a very robust housing market, and consumer spending from Millennials. They have hit their peak spending years.
We are Here to Assist
We would love to meet with you to discuss investments, retirement planning, college planning for kids and grandkids, tax preparation, health insurance, and other financial planning topics. To schedule an appointment, don’t hesitate to contact our office by calling (586) 226-2100!
Please contact us if you’ve had any changes to your income, job status, marital status, 401K options, address, or any other financial changes. We hope you and your family have an excellent, safe, healthy start to Summer!
Kindest regards,
Bob, Ken, Jim, Zach, and James
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Notes & Disclaimer: Stock market indices, like the S&P 500 Index, are unmanaged groups of securities considered to be representative of the stock market in general or subsets of the market, and their performance is not reflective of the performance of any specific investment. Investments cannot be made directly into an index. Historical returns data are calculated using data provided by sources deemed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, or correctness. This information is provided “AS IS” without any warranty of any kind. All historical returns data should be considered hypothetical. Past performance is no guarantee of future results.
This communication is only intended for recipients who reside in states where our agents are licensed to sell these products. Investment advisory services are offered through Summit Financial Consulting, LLC, an SEC registered investment advisor. Registration does not imply a certain level of skill or training. Summit Financial Consulting Investment Advisor Representatives do not render tax, legal, or accounting advice. Insurance products and services are offered through Summit Financial Consulting, LLC. Note: Please update Summit Financial Consulting, LLC, if your investment objectives have changed or if the personal or financial information previously provided has changed. The investment advisory disclosure document that describes Summit Financial Consulting investment advisory services account is provided to you annually. Please consult Summit Financial Consulting for a copy of this document should you need an additional copy. All guarantees are subject to the claims paying ability of the issuing insurance company. Past performance cannot predict future performance. It is not possible to invest directly in an index. The Sherman Group, LLC is not associated with Summit Financial Consulting, LLC in any way, other than a research sharing partnership. Back testing is more heavily scrutinized than any other type of investment analysis because it can be updated to take advantage of past data. The algorithms and trading signals that we receive from the Sherman Group, LLC were created using back testing with the goal of creating a sustainable research process. We have reviewed data from the entire 20 year period which was mostly back tested, and have also personally reviewed the live data for the past 5 years and feel comfortable with it, but we encourage you to meet with us and ask questions so you are fully informed on what we plan to do with your investment assets at TD Ameritrade. It is important to look at fees, taxable repercussions, and trading frequency when looking at a rate of return number. There is no perfect system or research feed, and Sherman Group, LLC has had both longer term and short-term periods where they lost money. Investing involves risk, and these portfolios are no exception.