Reminder: Tax Season is Here!
Wouldn’t it be nice to just have your financial advisor walk all of your investment paperwork down the hall to your tax preparer? What if you didn’t even have to schedule a meeting and you had an option to handle it all through the mail/e-mail? Summit Tax Services offers very cost-effective tax preparation to our clients and their family members, in some cases as low as $99 for a basic return. Please call (586) 459-5340 to schedule and find out how much we can save you on your tax preparation expenses.
We had predicted that 2020 would be a volatile year because of the election, but the Coronavirus outbreak in January provided an additional spike of volatility. The stock market started out the month strong, but ended up losing over 3% from the peak. The DOW and S&P 500 were both negative for the month of January.
Our in-house managed portfolios outperformed because we had a defensive posture and our Income, Conservative, Moderate, and Aggressive portfolios were all positive. The stock market is off to a good start this month as many of the headline risks appear to have been brushed to the side, at least for the time being.
We’re currently monitoring many potential market movers. One of which is the Democratic primaries as we wait for a better read on who will be the nominee. Unfortunately, one of the golden rules of life (not discussing religion or politics) has been tossed to the wayside as the economy and stock market have become married to our presidential election cycle, which seems to have been extended to 24 hours a day, 7 days a week. We’ll have a gameplan for each candidate, whether it’s a Trump re-election, a progressive socialist, and anything in between. We feel you can never be too prepared, and ready for anything.
As an update from our last market commentary:
First: Economic data. Despite the recent rise in the stock market, the underlying economy continues to report slowing data. Not negative, but slowing down rather than speeding up. 40 of the 75 top industrial companies have reported earnings for the 4th quarter (Source: www.hedgeye.com). So far, profits have declined 7% versus last year. Again, companies are still profitable, but their profits are declining. We’re hopeful that recent trade deals will re-accelerate things, but as of today, manufacturing and production numbers continue to decline, GDP and aggregate earnings continue to slow, and unemployment is expected to rise as we are already near full employment.
Second: The Coronavirus has taken over 1,300 lives, and the Chinese Government has confirmed almost 60,000 infections. This virus can kill healthy, middle aged people (average age of 55), and could potentially slow down the global economy if it is not controlled sooner rather than later.
The price of Oil has dropped nearly 20% in less than a month because of disruptions to factories and a decrease in international travel (Source: https://www.nytimes.com/2020/02/04/world/asia/coronavirus-china.html). Hyundai, the world’s 5th largest carmaker, said on Tuesday that is was suspending production lines at all car factories in South Korea because of supply chain issues due to the Coronavirus. In China, factories have been shut down owned by Hyundai, Tesla, Ford, and Nissan. Similar shut downs and restrictions on travel are going to hurt the global economy. It will be helpful when the medical community discovers how it is transmitted (bodily fluids, airborne, etc.). We will continue to monitor the situation and will do everything we can to avoid losses and also potentially find investment opportunities. For instance, we’re considering 3M stock right now because they are helping to supply masks after a huge surge in demand.
Overall, we strongly believe that in the very short term, the best move is to be defensive and wait for a dip 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. When the market dips again, we will most likely make some money and then reposition for the market rebound.
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. Please 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 email@example.com at your earliest convenience. 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.
There are approximately 2,700 rules that govern Social Security benefits. Source: –Investment News, November 26, 2019
Someone who saved $10,000 a day since the construction of the Egyptian pyramids would still be 80% less wealthy than the world’s five richest billionaires. Source: -CNBC, January 20, 2020
In the United States today, there are roughly 76,000 electric vehicle charging stations, compared with 168,000 stations that serve gas. -Source: MarketPlace, January 9, 2020
There are now more dollar stores in the U.S. than Starbucks and McDonalds combined. Source: WNYC Public Radio, December 11, 2019
Since 2018, forty-nine high end hotels have reported that a mattress has been stolen off their premises. -CNN, December 9, 2019
The economy has expanded for an unprecedented 126 straight months, marking the first time in history the U.S. has skirted a recession for an entire calendar decade. Source: -MorningBrew, December 20, 2019
The billionaire founder of the Lotte Group, the fifth-largest conglomerate in South Korea, recently died at 97. Today, Lotte is a household name in South Korea, running 90 affiliates that together generate 100 trillion won, or $86 billion, in annual revenues. He died without a will. Source: -The Economist, January 22, 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.