It’s not too early to get on the calendar for a first of the year check-up. This is an opportunity for us to review your portfolio and touch base regarding your overall financial strategy. Our goal is to meet with each of our clients annually. Please contact our office by phone or email: (425) 453-6353 or firstname.lastname@example.org to schedule your annual review.
1099 Tax Statements
Please watch for your tax forms to arrive in the next few weeks. Most of our clients have opted to receive tax statements by mail and Schwab has indicated their initial mailing will be early February. They anticipate a second 1099 mailing mid to late February with updated/revised figures. Please don’t file your taxes until you’re confident that your 1099 forms are complete. If you have any doubt as to the completeness of your 1099, please don’t hesitate to contact our office, we’re here to help.
Also, many of our clients have us work directly with their tax advisor or CPA. If you’d like us to work closely with other professionals on your team, please put us in touch and we’ll coordinate with them on your behalf.
For those of you making charitable contributions with your annual RMD – please be advised that the charitable designation will not reflect on the 1099 form, but rather on your tax forms. Contact your CPA or call our office for more information.
Ford reassured everyone this week that it has no plans to go full Repo Man after filing a patent for cars that repossess themselves. The company’s patent application describes a system where banks can remotely shut down the air conditioner, the radio, and ultimately the car itself if a lessee fails to keep up with car payments. The patent even includes self-driving cars that bring themselves to impound lots. But Ford says it routinely files patents, and they don’t necessarily mean the products are coming out.
Scientists want to explore blocking the sun. Shooting sulfur dioxide into the atmosphere to reflect the sun’s rays may sound like a far-fetched way to cool the Earth, but an open letter signed by more than 60 prestigious scientists argues the time has come to at least consider it. They say “solar geoengineering” is worth serious study despite the possibility of nasty side effects because we won’t be able to lower the Earth’s temperature enough by reducing greenhouse gas emissions alone. But other scientists don’t want to go near this tech. They claim it’s only really appealing to governments and corporate polluters that don’t want to make significant changes.
The secret to a good night’s sleep. Scientists have a simple (and cheap) solution to keep you from slapping the snooze button in the morning: an eye mask. Wearing a mask to block out light while you slumber can help you stay more on the ball the next day, a new study published in the journal Sleep found. In the study, people performed better on a short-term memory test and were more alert and able to sustain attention after sleeping with a mask on.
Weekly Focus – Think About It
“The intelligent investor is a realist who sells to optimists and buys from pessimists.”
—Benjamin Graham, father of value investing
Unknowns and uncertainty.
Financial markets were volatile last week as investors parsed the risks around bank closures, central banks offered additional protections for depositors, and regulators took a harder look at bank balance sheets.
“For much of last year, volatility was elevated, but the risks were somewhat ‘known’ (chiefly inflation and recession)…Now, the introduction of the banking crisis has created a new unknown, which could ultimately mean a sharper increase in volatility (if worse than expected) or a quick reprieve (if fears prove unfounded),” opined a source cited by Nicholas Jasinski of Barron’s.
Unknown risks create uncertainty, and you know what they say about markets and uncertainty.
Yields on Treasuries dropped sharply as investors sought opportunities they perceived to be safe, reported Lawrence C. Strauss of Barron’s. The yield on the two-year U.S. Treasury dropped from 4.6% to 3.8%, and the yield on the 30-year U.S. Treasury fell from 3.7% to 3.6%.
While Treasuries are considered to be quite safe, one lesson from recent events is that there are circumstances in which even safe-haven investments may produce a loss. For example, in general, bonds expose investors to interest-rate risk. When interest rates rise, the value of bonds falls. If a bondholder must sell a bond before it matures, the seller may realize a loss.
In stock markets, bearish sentiment was high. Almost half (48.4%) of participants in the AAII Survey of Investor Sentiment were bearish. That’s well above the historic average of 31.0%.
In contrast, just about one-fifth (19.2%) were bullish. That’s well below the historic average, which is 37.5%. The Survey of Investor Sentiment is widely considered to be a contrarian indicator and, in general, the market moves in opposition to contrarian indicators.
Despite investor pessimism, the Standard & Poor’s 500 Index and Nasdaq Composite finished the week higher, while the Dow Jones Industrial Average finished slightly lower.
Markets are likely to remain volatile this week. If you find yourself wondering how short-term market fluctuations may affect your long-term financial goals, get in touch. We’re happy to talk about any concerns.
|Data as of 3/17/23||1-Week||YTD||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor’s 500 (Domestic Stocks)||1.4%||2.0%||-11.2%||15.7%||7.6%||9.7%|
|Dow Jones Global ex-U.S.||-2.3||1.1||-11.0||10.0||-1.3||1.4|
|10-year Treasury Note (Yield Only)||3.4||NA||2.2||1.0||2.9||2.0|
|Gold (per ounce)||5.4||8.3||0.6||8.5||8.4||2.0|
|Bloomberg Commodity Index||-1.9||-9.1||-17.5||18.3||3.5||-2.9|
Is Your Money Safe? The run on a California bank brought the Bailey Brothers Building and Loan to mind. If you’re a fan of It’s A Wonderful Life, you probably remember the scene where George and Mary Bailey distribute their honeymoon savings to make sure the Building and Loan remains solvent. George explains to the townspeople:
“You’re thinking of this place all wrong. As if I had the money back in a safe. The, the money’s not here. Well, your money’s in Joe’s house…that’s right next to yours. And in the Kennedy House, and Mrs. Macklin’s house, and, and a hundred others. Why, you’re lending them the money to build, and then, they’re going to pay it back to you as best they can.”
While banking is not that simple or straightforward, programs are in place to protect depositors.
For example, the Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 in qualifying accounts at FDIC-insured banks per depositor. If you have accounts at multiple FDIC-insured banks, each account may be insured up to the maximum. (In many cases, depending on how various accounts are titled, more than $250,000 may be insured at a single FDIC-insured institution.)
Last week, the Treasury Department, the Federal Reserve, and the FDIC augmented FDIC protections by introducing the Bank Term Funding Program (BTFP). The program offers one-year loans to banks, savings associations, credit unions, and other eligible depository institutions.
Participants in the program, “can pledge their assets such as bonds and mortgage-backed securities at par, or the value at which they were originally issued, instead of market value, giving banks a greater borrowing capacity since bond prices have fallen” reported Karishma Vanjani of Barron’s. The measure makes it possible for banks to avoid selling long-dated bonds at a loss when depositors withdraw money.
Federal Reserve officials indicated the BTFP provides enough financial support to protect all of the deposits in the United States, reported Craig Torres and Christopher Condon of Bloomberg.
John Klevens, CFP®
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Securities offered through Securities America, Inc., Member FINRA/SIPC. Financial Advice & Investment Advisory Services offered through PFG Advisors LLC, a Registered Investment Advisor (RIA). Klevens Capital Management, PFG Advisors LLC, and Securities America, Inc. are separate entities.
. 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.