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.
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.
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.
Despite this significant headwind, our in-house managed portfolios outperformed because we already had a defensive posture. Our Income, Conservative, and Moderate portfolios are all still positive year-to-date, while our Aggressive and Sector Rotation are flat to slightly negative. Across the board, we are significantly outperforming. In the 4th quarter of 2019, the Price/Earnings ratio and many other research tools showed that the stock market was the most overvalued in 80 years. We moved to a more defensive approach, which was a bit early, but our concern about the market being overdue for a drawdown was warranted.
The stock market was negative in 2018, up nicely in 2019, and now solidly down in 2020. Since January 1st, 2018 until today, despite the gains in 2019, the DOW JONES index is actually negative. Our Moderate portfolio has earned over 12% over the same period of time and was positive in 2018, 2019, and now 2020 so far. We aim to build on those gains this year by continuing our daily managed portfolio process.
The World Health Organization raised its risk assessment of the coronavirus to “Very High” on Friday, citing the risk of spread and impact. The Coronavirus has now taken 2,800 lives, and 52 countries have confirmed a total of 82,000 infections. While the virus can cause death, the stock market is most concerned about travel restrictions, as well as factories shutting down and the resulting negative impact to the supply chain (Source: https://www.cbsnews.com/live-updates/coronavirus-outbreak-death-toll-infections-latest-news-updates-2020-02-28/).
We are expecting the Federal Reserve to step in soon to offer some form of stimulus to resuscitate the stock market. They will likely start with an interest rate cut and may resort to more extreme measures if that doesn’t work. This worked in the past for the 2008 financial crisis and the correction at the end of 2018, however this situation is not only financial, it’s a potential global pandemic, reaching every continent so far aside from Antarctica. You have likely noticed several trades placed in your TD Ameritrade accounts this past week. That is us actively working for you. This is by far the most active and time-consuming week of investment management we’ve experienced since the financial crisis in 2008. It has been an all hands-on-deck type of situation. If we feel the situation gets out of hand, we may move all or a large portion of the portfolios into cash. Rest assured we only place trades in your best interest, and we are always keeping a close eye on the markets and your money.
We are now 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 back up the truck and fill up the portfolio with aggressive stocks again. We are patiently waiting for the right time to make a shift in our portfolios.
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
NFL football accounted for 47 of the 50 most-watched shows on TV last year. Source: -AXIOS, January 31, 2020
Every female secretary of state in U.S. history- Madeleine Albright, Condoleezza Rice, and Hillary Clinton- was at one time a Girl Scout. –Girlscouts.org
In the U.S., Valentine’s Day ranks 94th in the year for consumer spending at local restaurants, which is even below Cinco de Mayo. Unsurprisingly, Mother’s Day weekend is ranked both #1 and #2 as the top-grossing days of the year. Source: -Morning Brew, February 12, 2020
The Coronavirus is hammering a global freight industry that relies on China. Shipping rates for the massive ships that carry raw materials have dropped more than 90% since the peak of September 2019. Source: -Bloomberg, January 31, 2020
Greece’s 10-year bond yield dropped below 1% for the first time ever, which is remarkable considering yields were nearly 45% during the financial crises. Source: -Yahoo Finance, February 12, 2020
In December of 2019, the United States exported $17.1 billion in petroleum- the highest on record. Source: -Reuters, February 5, 2020
China’s middle class has grown from 29 million people in 1999 to some 400 million today. Source: -China Briefing, February 13, 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.