Housekeeping – Happy Holidays!
In our continued effort to improve your information delivery and provide excellent client support, we are adding a “Housekeeping” section to the Commentary. This section is designed to inform you of significant financial dates, Securities America related changes and revisions in financial guidelines.
As part of our normal portfolio management services, within the next week or two we are conducting tax loss harvesting in an effort to reduce/manage portfolio gains. We will take losses where we can and harvest gains to offset the losses – the goal is for a net neutral tax consequence. If you notice trades in your account more than likely this is the activity but if you have any questions, comments or concerns please don’t hesitate to reach out to our office.
Also remember that you won’t be obligated to take your usual Required Minimum Distribution this year (if you are eligible) due to legislation surrounding the pandemic. If you would like further information, please contact John or Robert at 425-453-6353.
In March, Jeff Gerson was admitted to New York City’s NYU Langone Tisch Hospital suffering from Covid-19. He was intubated the next day , and when he woke up a month later, Gerson had no recollection of his recovery, but still wanted to thank the heroes who saved his life. So he tracked down the names of all 116 doctors, nurses, and therapists by looking through his insurance records and treatment charts. Then, he sent a letter of thanks naming each one. Health-care workers, “often go without appreciation”, Gerson said, “and the point of my letter was to give them the recognition that they’re due”.
If you follow Neil deGrasse Tyson – December 21 is a significant day from an astronomy perspective:
- It’s the winter solstice in the northern hemisphere, which means that at 5:02 am ET the sun will have appeared directly over the Tropic of Capricorn. You probably know it as the shortest day of the year and the formal start of winter!
- Keep your eyes peeled for Jupiter and Saturn appearing closer together than they have in 800 years. Saturn is the planet with the huge rings on it.
Weekly Focus – Think About It
“Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence.”
–Helen Keller, Author and lecturer
Congress is at $900 billion, will they hear $1.4 trillion, $1.4 trillion, governments at $900 billion, who’ll go $1.4 trillion, $1.4 trillion…
The stimulus auction continued last week. Early on Sunday, The New York Times reported, “Lawmakers are on the brink of agreement on a $900 billion compromise relief bill after breaking through an impasse late Saturday night, with votes on final legislation expected to unfold as early as Sunday afternoon and very likely just hours before the government is set to run out of funding.”
Among other items, policymakers’ plan to deliver new stimulus and fund the government is expected to include:
- $600 relief checks
- $300/week of enhanced jobless benefits through early spring
- $15 billion for airlines
- $14 billion for public transit systems
- $10 billion for state highways
- $2 billion for airports
- $2 billion for motorcoach, school bus, and ferry industries
The Federal Reserve met last week, too. It affirmed it will continue to hold rates near zero and purchase $120 billion of bonds every month. Nalak Das of Nasdaq reported:
“A low interest rate will reduce the cost of capital for businesses, while consumers will have a lesser propensity to save due to a low deposit rate. Therefore, higher spending by businesses and consumers is likely to bolster the overall economy and raise stock prices. In its latest projection, the Fed forecast the GDP [*] to decline 2.4 percent in 2020, reflecting an improvement over September’s projection of a decline of 3.7 percent.”
*Gross Domestic Product is the value of all goods and services produced in the nation.
Major U.S. stock indices moved higher last week.
|Data as of 12/18/20||1-Week||YTD||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor’s 500 (Domestic Stocks)||1.3%||14.8%||16.2%||11.8%||13.1%||11.5%|
|Dow Jones Global ex-U.S.||1.6||8.1||9.0||1.9||6.6||2.8|
|10-year Treasury Note (Yield Only)||1.0||NA||1.9||2.3||2.2||3.4|
|Gold (per ounce)||-2.1||23.4||27.5||11.2||12.1||3.1|
|Bloomberg Commodity Index||3.3||-4.4||-3.5||-4.9||0||-6.8|
If you can keep your head when everyone around you is bullish… (Apologies to Rudyard Kipling for paraphrasing his poem, If.) Tis the season when everyone assesses where we’ve been and where we might be going. Last week, a lot of research companies and publications explored investor confidence and expectations. Here is a brief review of the commentary being offered:
“The Great Reflation Trade of 2021: Most Optimistic Survey in its Six-Year History.” Absolute Strategy Research published its survey of probabilities, which asked chief investment officers, asset allocators, economists, and multi-asset strategists to describe their 12-month outlook for financial markets. The results the most optimistic result in six years with 81 percent of those participating saying they were bullish.
“Froth or fundamentals? What explains investors’ enthusiasm for risky assets?” The Economist wrote, “…equities have become more attractive than bonds – at first probably because bond yields fell so quickly, boosting the relative appeal of stocks, but lately thanks to the vaccine heralding the return of growth and profits, which a modest increase in yields has not offset. The rise in share prices alone, then, is probably not enough to indicate a mania…”
“The S&P 500 Could Gain Another 10% Next Year, Experts Say.” Barron’s cover article sported this optimistic headline and confidently reported, “This year brought heartache to Main Street but joy to Wall Street. Next year, if vaccines vanquish the coronavirus, as expected, and the economy rebounds, it could be a time of celebration for both.”
“Gleeful consensus on equities sparks concern over ‘groupthink’” Financial Time’s Naomi Rovnick spoke with the head of behavioral finance at a British consulting firm about exceptional levels of bullishness. He said, “‘This year has been dominated by one story, which is COVID, and this is a very new and unusual situation that financial forecasters have no pre-existing framework to use to form their views…It is likely they are cleaving to consensus more than they otherwise would.’”
No matter what you read about what’s to come, the important thing to remember is this: “No one can predict the markets. The overwhelming evidence from decades of academic research is that nobody can reliably and accurately forecast what the stock market will do,” reported Jeff Sommer of The New York Times.
John Klevens, CFP ®
P.S. Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.
Securities and Advisory Services offered by John Klevens through KMS Financial Services, Inc. Member FINRA/SIPC and an SEC Registered Investment Adviser. Klevens Capital Management and KMS are separate and unaffiliated. Portions of this newsletter have been prepared by Peak Advisor
* These views are those of Carson Coaching, and not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.