Each year, we recommend that our clients consider converting money from an IRA to a Roth IRA. Because of our national debt, we believe that taxes will need to be raised in the future, and tax brackets will correspondingly be much worse. If you are in the 12% tax bracket, we especially recommend that you consider converting whatever you can afford. Please give us a call if you have any questions or if you’d like help putting a tax plan together.


Will We See A “Santa Claus” Rally This Year?

The term Santa Claus Rally refers to the positive stock market performance observed after the holiday season and during the turn of the new year. Over the last 100 years, in the month of December, the stock market has averaged a gain of 1.55% and has been positive 74% of the time. That being said, some analysts point out that the Santa Clause Rally should only be analyzed during the last week of December and the first two trading days of the new year, as this period has been positive 76% of the time.

There are a few potential causes of this phenomenon. One is that many investors sell stocks towards the end of the year for tax loss harvesting purposes. Then, after the first of the year, they can buy them back, potentially depending upon when they sold them (and the avoidance of the wash sale rule).

Another potential explanation is that large institutional money managers go on vacation and close out their positions before year-end, leaving retail investors to more easily control the market, and retail investors are typically more bullish and less likely to short the market.

A final potential explanation is increased holiday spending and a general sense of optimism heading into a new year with lots of vacation time. Whatever the reasons behind the phenomenon may be, we’ll be keeping a very close eye on the markets. This year has been unique because of inflation, the invasion of Ukraine by Russia, and the large drops in the stock market. Our best estimate of the price action this year is that the market will drop the first week or two of December and then rally into year-end.


Daily Managed Portfolios

As you know, we have many tools in our toolbox, including the ability to purchase investments that profit when the stock market goes down. This is called hedging. Our ultimate goal is to make money, so we’re using what we believe to be all the appropriate tools in our toolbox to potentially accomplish that goal. This is why we manage our active portfolios daily.


We Are Here to Help

We’d love to have a review meeting with you to discuss investments, retirement income planning, college planning for kids or grandkids, tax preparation, health insurance, including Medicare supplemental and prescription drug plans, and various other financial planning topics. Please contact our office at (586) 226-2100 to schedule a meeting today!

If you’ve had any changes to your income, job status, marital status, 401K options, address, or any other financial changes, please contact us right away. We hope you and your family have a wonderful, safe, and healthy holiday season!

Merry Christmas and Happy Holidays to All!

Bob, Ken, Jim, Zach, and James