2020 Market Year-End Review

2020 Market Year-End Review

2020 Year-End Market Review: A Year That Suprised Everyone

There is a high probability that you feel a sense of relief with the conclusion of 2020 after the hardships and pain some have endured due to Covid-19. To say 2020 was an eventful year is an understatement. Between the once in a hundred-year Coronavirus pandemic, the presidential impeachment, and the presidential election, 2020 kept us on our toes! There was much uncertainty in 2020 with quarantines, a surge in unemployment rates, Covid cases spiking then lowering then spiking again, and the fiercely contested election lawsuits. With this in mind, our number one priority in 2020 was not to lose you big chunks of money as we began to expect the unexpected in 2020. Since we don’t have a crystal ball, we limited losses and missed gains. In 2020, the S&P 500 stock market index had drops of -34% (February-March), -8.2% (June), -9.3% (August), and -8.9% (October). It was one of the most volatile years ever for random, violent drawdowns.  Remarkably, the S&P 500 finished positive for the year because of a rally after the election, which surprised many market participants because of Biden’s plan for higher corporate taxes by repealing that portion of the Trump tax cuts (Source:  https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC).

 

What to Expect in 2021?

As we look forward to 2021, historical financial data provides a sense of optimism. These are some of the powerful positive forces that support the markets in 2021:

  1. When the market looks at corporate earnings, they consider year over year statistics. For most companies in the S&P 500 and DOW, it should be easy to beat the Covid impacted year over year performance of 2020.
  2. Tremendous progress has been made with respect to medical solutions to combat COVID-19, and this has given hope for a more “normal” 2021. The economy can expect a boost from the shift to a post-vaccine phase.
  3. Historical data tells us that people spend the most money between the ages of 35 and 54. That is when many people rise on the corporate ladder, get married, buy houses, and have kids. In the 1980s and 1990s, the baby boomers were the most considerable portion of the population. They were in their peak spending years, and as a result, the market and economy shot up. For the past 20 years, the baby boomers have been decreasing their spending as they got closer to and entered retirement, and that has pulled the average annual return of the stock market down significantly. The good news is that there are more Millennials than baby boomers, and starting in 2021, Millennials and Generation X’ers have more spending power than the Baby Boomers for the first time in history. That should be a HUGE tailwind for the economy for the next 15-20 years like it was in the 1980s and 1990’s when the Baby Boomers were in their peak spending years.

We will continue to provide daily portfolio monitoring to optimize investments in 2021. Our strategy moving forward is to buy the dips to try to take advantage of market drops. We also plan to shift our most aggressive Sector Rotation portfolio into more individual stocks in 2021 to increase risk and potentially increase the return potential.

 

Any Questions?

  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 info@summitfc.net at your earliest convenience. If you have had any changes to your income, job, family, health insurance, risk tolerance, or overall financial situation, please contact us to discuss it.   Thank you for your confidence and referrals!   Bob Wink, Ken Wink, Jim Wink, and Zach Bachner

Market Commentary – December 2020

Market Commentary – December 2020

How the Markets are Performing After the Presidential Election

After two months in a row of losses for the S&P 500 and DOW in September and October, election day in November immediately created a nice relief rally that we participated in at TD Ameritrade (Source:  https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC).  We encourage you to meet with us for a review meeting to discuss your individual performance.

We mentioned in our last market commentary that while past performance does not necessarily predict future performance, during presidential election years in the past 70 years, on average the stock market has rallied to end the year after the election is over (Source:  https://www.forbes.com/sites/kristinmckenna/2020/08/18/heres-how-the-stock-market-has-performed-before-during-and-after-presidential-elections/?sh=5393bc7e4f86). There is a good chance that Congress will create a new stimulus program before year-end that may also help the stock market have a positive end to the year in December.  There are also promising results from multiple vaccine trials that is encouraging the markets, despite the delay of 3-6 months before most people would have access to it.

How could the senate race affect the market?

We’re still laser-focused on the Senate runoff in Georgia, as that will ultimately determine the balance of power in Congress.  The stock market usually does not like uncertainty.  If the House is controlled by the Democrats and the Senate is controlled by Republicans, there’s a good chance they’ll argue and not accomplish too much.  We are currently in a low tax environment historically speaking, so no change when it comes to tax policy is considered positive by most stock market participants.  Bottom line:  We plan to do everything in our power to protect and grow your money in 2020, despite the coronavirus and the election.  By reviewing your portfolio holdings at TD Ameritrade daily, we believe we have the potential to accomplish that goal.

Any Questions?

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 info@summitfc.net 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 Wink, Ken Wink, Jim Wink and Zach Bachner

Interesting Points

The average receipt at CVS is 2.5 feet long.  Source: -Green America

About 26% of U.S. adults now get their news from YouTube. Source: -Pew Research, September 28, 2020

“It’s so hard to forget pain, but it’s even harder to remember sweetness. We have no scar to show for happiness.” -Chuck Palahniuk

Apple sold up to 2 million iPhone 12 units in the first 24 hours after release, up from 800,000 units of the Apple iPhone 11. Source: -CNBC, October 20, 2020

In a typical year, 3.6 million eviction cases are filed. However, if present conditions persist and there is not a new round of federal relief, as many as 40 million people could be at risk of eviction in the coming months.  Source: -Reuters, October 31, 2020

A report by the House Ways & Means Committee shows that Americans pay on average nearly four times more for prescription drugs than 11 economically similar countries. The United States could save $49 billion annually on Medicare Part D alone by pricing drugs similarly to the other countries studied. Source: -Becker’s Hospital Review, September 24, 2019

Voters who back a losing presidential candidate can experience as much as a 30% temporary reduction in all-around life satisfaction following the election. That’s a larger drop in happiness than Boston residents experienced following the Boston Marathon bombing. Source: -The Atlantic, November 5, 2020

 

 Investment advisory services are offered through Summit Financial Consulting, LLC, a MI registered investment advisor.  Summit Financial Consulting Investment Advisor Representatives do not render tax, legal, or accounting advice.  Insurance products and services are offered through Summit Financial Consulting, LLC. 

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, and all dividends and distributions earned are reinvested and included in the performance numbers.  The S&P 500 index and Dow Jones 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 and because of this, especially if you are a brand new client that was invested in the middle of the month or if you made a deposit or withdrawal in the month, adviser’s clients may have had materially different results from the results portrayed in the performance numbers disclosed. 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. The performance data in this report represents past performance and does not guarantee or imply future results. Current performance may be lower or higher than the performance data quoted in this report.  Because we use bond funds and inverse funds as hedges, there will be months where we underperform the Dow Jones and the S&P 500 index, but also months where we will outperform.  We do our best to manage stock market volatility, but anything is certainly possible. 

The returns are calculated using a true daily time-weighted rate of return (“TWRR” as a primary performance return methodology). TWRR is the CFA Institutes Global Investment Performance Standards (“GIPS”) required calculation for managed accounts. TWRR provides a measure of how an account was managed regardless of the dollar value and is unaffected by external cash flows. TWRR is required in GIPS Guidelines for managed accounts for two primary reasons:

  1. Impact of external flows on TWRR: Since an advisor typically does not control the timing or magnitude of investor cash flows, TWRR is deemed appropriate as it isolates performance regardless of the portfolio/account’s dollar value and external flows.
  2. Comparison across portfolios and benchmarks: TWRR can be used to directly compare performance with other portfolio/accounts and is an appropriate metric to use when comparing portfolio/account performance to benchmarks.

 

Please update Summit Financial Consulting LLC if your investment objectives have changed or if the personal or financial information previously provided has changed.  The investment advisory disclosure document that describes Summit Financial Consulting investment advisory services account is provided to you annually. Please consult Summit Financial Consulting for a copy of this document should you need an add

November 2020 – Stock Market Commentary

November 2020 – Stock Market Commentary

Coronavirus Anxiety Round Two 

For the second month in a row, the re-surging Coronavirus, anxiety about the presidential election, combined with a lack of new stimulus measures pushed the stock market lower towards the end of the month. In October, The S&P 500 was negative -2.77%. (Source: https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC).

Because of the last two months, combined with the Coronavirus fueled shutdowns earlier in the year, the DOW is now negative year to date -7.14%, and that makes it an extraordinarily rough year for investment accounts. The DOW is very close to where it was in January of 2018, so almost three years of market performance have not amounted to much for the DOW. Our TD Ameritrade portfolios have performed much better because of our active, daily management approach. We encourage you to meet with us for a review meeting to discuss your individual performance during this difficult time.

The first two weeks of the month were positive, and we used that opportunity to sell high some of our stocks that we bought lower last month. Later in the month when we saw trouble brewing, we added a position that profits when the stock market declines, and that helped us partially offset the losses in the market. Long story short, our trading is helping. As a result, our Moderate portfolio was down 0.58% for the month, which is great outperformance compared to a 2.77% loss for the S&P 500. In the past two months, in a down market, we’ve outperformed the market by a margin of 5.27% in our Moderate portfolio. We understand no one is ever excited about losing money, but we have worked hard at limiting risk to keep losses as low as possible.

How Will The Election Effect The Markets? 

While past performance does not necessarily predict future performance, during presidential elections in the past 70 years, on average the stock market has rallied to end the year after the election is over (Source: https://www.forbes.com/sites/kristinmckenna/2020/08/18/heres-how-the-stock-market-has-performed-before-during-and-after-presidential-elections/?sh=5393bc7e4f86). This year, there is a good chance that congress will create a new stimulus program, possibly as soon as a week or two from now, regardless of who wins the election.

To predict the election results at this point is nearly impossible, because we learned in 2016 that you cannot trust the results of polling. As a result, we have prepared two separate plans: One for a Trump victory and one for a Biden victory. Our goal is to take advantage of the situation whoever wins, whether that means buying stocks in bulk, or potentially hedging against the stock market in case of a larger downturn. As we mentioned last month, we have already added hedges to the portfolio to potentially avoid losses, because we are not gamblers, we’re investors. We know both names on the ballot have a chance at victory. There is also a chance we won’t know after election night who is the victor because of mail in ballots, and we anticipate the market will not enjoy that uncertainty.

Increasing the complexity is what may happen in the Senate and House of Representatives, because a large swing to one party or the other will also affect the markets. Bottom line: We plan to do everything in our power to protect and grow your money in 2020, despite the coronavirus and the election. By reviewing your portfolio holdings at TD Ameritrade daily, we believe we have the potential to accomplish that goal. If there is a year end rally, like there has been for the past 70 years after a presidential election, we aim to take advantage of it, quickly.

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 info@summitfc.net 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 Wink, Ken Wink, Jim Wink and Zach Bachner

Interesting Points

Value stocks have outperformed growth stocks for six months after every presidential election since 1980. Source: -Marketwatch, October 12, 2020

Since 1972, the stock market has rallied from Election Day (or shortly thereafter) until the end of the year on 10 of 12 past such occasions, with an average gain of 7.2%. Source: -MarketWatch, August 18, 2020

In August, the value of the top five companies in the S&P 500- Apple, Microsoft, Amazon, Facebook, and Alphabet- was 9% greater than the total market cap of the bottom 300 companies in the index. Source: -Axios, February 7, 2020

Tesla helped bring battery costs down from over $600/kWh to about $150/kWh…but it needs to land at about $100/kWh to achieve what is referred to as “petroleum parity.” Source: -The Wall Street Journal, September 22, 2020

The fourth quarter is usually the best performing quarter for equities, being higher 79% of the time and on average, up 3.9%. Source: -Yahoo Finance, October 1, 2020

In 2006, a Subway franchise in Ireland applied for a refund on paid taxes, arguing that since its products include bread, a “staple food,” it should be exempt. The Irish Supreme Court decided against Subway because under a 1972 law, the sugar content in bread can’t account for more than 2% of the weight of the flour in the dough. In all of Subway’s bread options, sugar accounts for 10% of the flour’s weight, therefore it is a confectionary, not bread. Source: -NPR, October 1, 2020

Back in 1845, Election Day was designated as the Tuesday following the first Monday in November. At the time, officials calculated that farmers needed a day to get to the country seat to cast ballots but did not want to interfere with church on Sunday, so they chose Tuesday. Source: -History, December 2, 2019

Investment advisory services are offered through Summit Financial Consulting, LLC, a MI registered investment advisor. Summit Financial Consulting Investment Advisor Representatives do not render tax, legal, or accounting advice. Insurance products and services are offered through Summit Financial Consulting, LLC.

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, and all dividends and distributions earned are reinvested and included in the performance numbers. The S&P 500 index and Dow Jones 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 and because of this, especially if you are a brand new client that was invested in the middle of the month or if you made a deposit or withdrawal in the month, adviser’s clients may have had materially different results from the results portrayed in the performance numbers disclosed. 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. The performance data in this report represents past performance and does not guarantee or imply future results. Current performance may be lower or higher than the performance data quoted in this report. Because we use bond funds and inverse funds as hedges, there will be months where we underperform the Dow Jones and the S&P 500 index, but also months where we will outperform. We do our best to manage stock market volatility, but anything is certainly possible.
The returns are calculated using a true daily time-weighted rate of return (“TWRR” as a primary performance return methodology). TWRR is the CFA Institutes Global Investment Performance Standards (“GIPS”) required calculation for managed accounts. TWRR provides a measure of how an account was managed regardless of the dollar value and is unaffected by external cash flows. TWRR is required in GIPS Guidelines for managed accounts for two primary reasons:
1. Impact of external flows on TWRR: Since an advisor typically does not control the timing or magnitude of investor cash flows, TWRR is deemed appropriate as it isolates performance regardless of the portfolio/account’s dollar value and external flows.
2. Comparison across portfolios and benchmarks: TWRR can be used to directly compare performance with other portfolio/accounts and is an appropriate metric to use when comparing portfolio/account performance to benchmarks.

Please update Summit Financial Consulting LLC if your investment objectives have changed or if the personal or financial information previously provided has changed. The investment advisory disclosure document that describes Summit Financial Consulting investment advisory services account is provided to you annually. Please consult Summit Financial Consulting for a copy of this document should you need an additional copy.

Stock Market Commentary – October 2020

Stock Market Commentary – October 2020

S&P 500 and Nasdaq have another poor September showing

For the stock market, Septembers historically are gloomy and September of 2020 was no exception.  The S&P 500 was negative 3.92% and the tech heavy Nasdaq lost 5.16%.  (Source:  https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC and https://finance.yahoo.com/quote/%5EIXIC/history?p=%5EIXIC).  We’re always looking for opportunities to buy low, so we purchased some stocks in our portfolios in an attempt to buy the dip in the market, but the market kept heading south.  As a result, our Moderate portfolio was down 0.84%.  With the market down around 4%, losing less than 1% is not bad.  The market has been recovering for the last week and has started October off positively as well despite the President’s recent Covid test.  Our short term research continues to be optimistic for the stock market, and we plan to hold these stocks for a bit longer.  However, everyone has their eyes on one thing:  The presidential election.

How will a Trump or Biden win effect the market?

To predict the election results at this point is nearly impossible, because we learned in 2016 that you cannot trust the results of polling.  As a result, we have prepared multiple plans:  One for a Trump victory and one for a Biden victory.  Our goal is to take advantage of the situation whoever wins, whether that means buying stocks in bulk, or potentially investing against the stock market to try to profit from a downturn.  In the days leading up to the election, we plan to monitor the situation and we will consider hedging to potentially avoid losses, because we are not gamblers, we’re investors.  We know both names on the ballot have a chance at victory.  There is also a chance we won’t know after election night who is the victor because of mail in ballots, and we anticipate the market will not enjoy that uncertainty.

Increasing the complexity is what may happen in the senate and house of representatives, because a large swing to one party or the other will also affect the markets.  Bottom line:  We plan to do everything in our power to protect and grow your money in 2020, despite the coronavirus and the election.  By reviewing your portfolio holdings at TD Ameritrade daily, we believe we have the potential to accomplish that goal.

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 info@summitfc.net 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 Wink, Ken Wink, Jim Wink and Zach Bachner 

Special Request:  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.  Call us (586) 226-2100 or respond to this e-mail and we’ll contact them.

Interesting Points

In August, it only took 22 days to sell a home in America, matching the fastest rate on record.  Source:  CNBC, September 22, 2020

Since 1972, the stock market has rallied from Election Day (or shortly thereafter) until the end of the year on 10 of 12 past such occasions, with an average gain of 7.2%. Source: -MarketWatch, August 18, 2020

This year has been topsy-turvy and upside down for so many reasons. So, it’s probably little surprise that something else you thought would never happen, happened: Vinyl records have outsold compact discs for the first time in 34 years. Source: -Bloomberg, September 10, 2020

A Confederate memorial that stood on the courthouse lawn in Lake Charles, Louisiana, for 105 years was toppled by Hurricane Laura’s historic winds – just two weeks after local authorities voted not to remove it. Source: -New York Times, August 27, 2020

A surge in home renovations and do-it-yourself projects during the pandemic has driven lumber prices up 134% year over year. That adds around $14,000 to the cost of building a new home.  Source: -Fortune, August 31, 2020

The U.S. imprisonment rate is at its lowest level in more than two decades, with the greatest decline coming from black Americans, whose imprisonment rate decreased 34% since 2006. Source: -Pew Research Center, May 6, 2020

In July, even though there were 75% fewer screened airport passengers than the previous July, the TSA found guns at three times the rate. Eighty percent of the guns were loaded. Source: TSA, August 10, 2020

  Investment advisory services are offered through Summit Financial Consulting, LLC, a MI registered investment advisor.  Summit Financial Consulting Investment Advisor Representatives do not render tax, legal, or accounting advice.  Insurance products and services are offered through Summit Financial Consulting, LLC. 

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, and all dividends and distributions earned are reinvested and included in the performance numbers.  The S&P 500 index and Dow Jones 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 and because of this, especially if you are a brand new client that was invested in the middle of the month or if you made a deposit or withdrawal in the month, adviser’s clients may have had materially different results from the results portrayed in the performance numbers disclosed. 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. The performance data in this report represents past performance and does not guarantee or imply future results. Current performance may be lower or higher than the performance data quoted in this report.  Because we use bond funds and inverse funds as hedges, there will be months where we underperform the Dow Jones and the S&P 500 index, but also months where we will outperform.  We do our best to manage stock market volatility, but anything is certainly possible.

The returns are calculated using a true daily time-weighted rate of return (“TWRR” as a primary performance return methodology). TWRR is the CFA Institutes Global Investment Performance Standards (“GIPS”) required calculation for managed accounts. TWRR provides a measure of how an account was managed regardless of the dollar value and is unaffected by external cash flows. TWRR is required in GIPS Guidelines for managed accounts for two primary reasons:

  1. Impact of external flows on TWRR: Since an advisor typically does not control the timing or magnitude of investor cash flows, TWRR is deemed appropriate as it isolates performance regardless of the portfolio/account’s dollar value and external flows.
  2. Comparison across portfolios and benchmarks: TWRR can be used to directly compare performance with other portfolio/accounts and is an appropriate metric to use when comparing portfolio/account performance to benchmarks.

 

Please update Summit Financial Consulting LLC if your investment objectives have changed or if the personal or financial information previously provided has changed.  The investment advisory disclosure document that describes Summit Financial Consulting investment advisory services account is provided to you annually. Please consult Summit Financial Consulting for a copy of this document should you need an additional copy.

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