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.
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:
-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 firstname.lastname@example.org 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
“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.