Disclaimer: These are the views of Summit Financial Consulting and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
1. If you only have IRA or 403(b) you can most likely submit your tax return now if you received your 1099’s. If you own a non-qualified (non-retirement) investment account, it is prudent to wait until March 15th to complete your tax return because it is always possible a revised tax statement will be sent out.
2. If you would like our tax preparation firm, Summit Tax Services, to prepare your taxes, please let us know and we’ll walk your investment tax documents down the hall for you for preparation. If you would like to receive a quote to see how much we can save you, please give our office a call at (586) 459-5340. Some clients have saved over 50% versus last year’s tax preparation bill. We can mail you an envelope to send in your documents, or we can send you an encrypted document request e-mail for security.
After a very volatile February in the stock market, the numbers are in: The S&P 500 Index lost over 4% during February, and volatility reached its highest level since October of 2011 (Source: finance.yahoo.com). After a steady incline since election day of 2016, this is the first overall monthly loss across the stock market indexes since October of 2016 (15 months ago). A little unnerving, was that this month witnessed a significant sell-off in global equities as well as a sharp spike in U.S. Treasury yields. Meaning there was really nowhere to hide as both stocks and bonds were down for the month.
As we mentioned in our commentary a few weeks ago, the market was likely due for a correction and investors were able to take profits from the last 15 months. Our portfolios took losses but were not down as much as the market overall. Our short-term market indicator turned red for a couple of days but changed back to green fairly quickly. Leaving all three of our stock market indicators (short, intermediate, long) all green. Historically the market performs exceptionally well when this occurs.
During last month’s selloff, we took the opportunity of lower prices to add Consumer Discretionary stocks into the majority of our portfolios. We believe corporate earnings are going to continue to increase, and due to wage increases and tax reform, consumers should continue to use their larger paychecks on discretionary purchases for the foreseeable future. This could continue to fuel the stock market.
We did some research and reviewed historical market corrections dating back almost 40 years and found one underlying consistency: The market tends to thrive off of 10% corrections. This recent selloff was unique in that it was the quickest move from a record high to correction territory (10% or more loss) in history. We attribute this to the fast pace and ever evolving stock market that consists of algorithmic and computer trading. It just moves faster these days. In any case, we found that a year after the lows of a market correction, stocks are up a median of 23% after one year, and after two years later up 36% (Source: https://lplresearch.com/2018/02/09/stocks-enter-correction-territory-but-should-investors-worry/).
One potential market mover on our radar are the steel and aluminum tariffs President Trump spoke about at the beginning of March. Right after the President said he would possibly impose a 25% tariff, or tax, on steel imports and 10% on aluminum, stocks began to sell off again. Trump’s goal of addressing potentially unfair trade in steel and aluminum is to shrink overall U.S. trade deficits and help rebuild U.S. manufacturing industries. Obviously, that won’t happen overnight, and we could incur short-term repercussions and turbulence if the tariffs are applied. One theory is that this is a bargaining chip or scare tactic used by President Trump in hopes of improving current trade agreements with other nations. It has been a hot button issue for the last week or so and we are waiting for more news to come out.
We will continue to take it one day at a time and let you know if there is a situation which calls for immediate attention. If you have any questions about tax season, your investment portfolio, our 401(k) service, or anything else in general, please give our office a call at (586) 226-2100.
Please feel free to forward this commentary to a friend, family member, or co-worker. If they would like to be added to our free commentary, please send us an e-mail at firstname.lastname@example.org at your earliest convenience.
If you are a client and disagree with any of the moves inside your portfolio, if you would like to update us on your risk tolerance preferences, or if you have had a dramatic change to your income or financial situation, please contact us to discuss it.
The rate of layoffs as measured by US jobless claims fell to the lowest level since 1969, reflecting the strongest labor market since the end of the dotcom boom nearly two decades ago. – MarketWatch, March 1, 2018
A recent survey from Redfin found 35% of home buyers did not even visit the property before putting in a bid. In Los Angeles, 57% of buyers bid on a home without visiting it. – Bloomberg, February 26, 2018
A California Girl Scout managed to sell a staggering 300 boxes of Girl Scout Cookies in only six hours, by positioning herself outside a San Diego marijuana dispensary. – USA Today, February 7, 2018
In the 12 months ended June 2017, banks shut 1,700 branches, the fastest decline on record. – MarketWatch, December 26, 2017
The average person walks the equivalent of three times around the earth, grows 590 miles of hair and eats 35 tons of food in a lifetime. – Numberland: The World in Numbers
Creating, or mining, a single unit of the digital currency Bitcoin requires at least as much electricity as an average American home consumes in two years. – The New York Times, January 21, 2018
We have seen the fewest cases of polio ever- in 1988, there were, on average, 20 cases every half-hour. In 2017 there were fewer than 20 all year. – CNBC, December 14, 2017
“Department store Neiman Marcus is selling a Dolce & Gabbana toaster for $600. Or, for the same results, you can buy a regular toaster and just put $600 in it.” – Seth Meyers
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43409 Schoenherr Road, Sterling Heights, MI 48313
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Summit Financial Consulting LLC is independent and is not an affiliate of Gradient Securities, LLC. Investment advisory
services offered through Summit Financial Consulting LLC, a Registered Investment Advisor in the State of Michigan.