Q3 2021 Newsletter

Nick Weisert • Jul 01, 2021

Hello. I hope this letter finds you well and that you were able to enjoy some fun and relaxation with family over the 4th of July. After over a year of uncertainty, stress and often being apart from loved ones, what an amazing and well-deserved turn of events that has us enjoying our time together this summer. Brings a new perspective to Independence Day.

We started the year hitting 300,000 daily COVID cases on January 8th. A little under six months later the US sits at around 4,000 daily new COVID cases. That’s a 98.6% decrease! Truly a remarkable and welcome relief, particularly for those people dealing with COVID daily like healthcare workers. The US economy, in response, is rolling and in many areas getting close to pre-pandemic levels. TSA screening checkpoints, a measure of airport traffic, are at 80%+ of their pre-pandemic levels. Restaurant traffic is at 94% of pre-pandemic levels, a fact I can anecdotally confirm having gone out to a restaurant, sitting indoors for the first time a couple weeks ago. Who would have thought that a stranger sitting next to you at a restaurant would qualify as a novel experience? All told the US economy is now expected to grow 6.5% this year, the highest growth rate since the 1980’s.

Market Return — Greenwood Village, CO — Integra Financial Inc

Similar to the economy, the stock market has experienced solid gains YTD. Through May, the overall Morningstar US index is up 12%, with value continuing to outpace growth. It is the 3rd best start to the year for value over the past 34 years. Despite all this performance, a record amount of cash, ~$4.5 trillion in fact, continues to be on the sidelines in the form of money market funds. A buildup of cash typically happens during recessions. During the last two recessions (2002 and 2008), those funds were then invested over the following year. These movements do not change the long-term outlook for stock market performance but can lead to further increases in prices short-term.

The flip side of the booming recovery coin is, of course, inflation. Between eager citizens ready to be out and spend, a massive multi-trillion-dollar stimulus over two administrations and materials shortages, we are already seeing many price increases over last year (see chart below). The question then becomes, is this a temporary “blip” as we recover or is inflation more long-lasting than we would have thought? We do not know with absolute certainty but right now the evidence suggests it is more likely the temporary sort of inflation.

Customer Price Chart — Greenwood Village, CO — Integra Financial Inc

Taxes are another area we will be keeping a close eye on. As of yet, there is much debate on taxes, namely increases in tax rates, but no real resolution. Just last week, G7 countries agreed on a global minimum corporate tax rate of at least 15%. This is not great news for tech companies that have a large presence in lower tax countries (think Facebook in Ireland). The Biden administration has put forth a proposal to increase the corporate tax rate to 28%. The administration has already signaled a willingness to back off the 28% for a more modest increase in the 24-25% range. What does this mean for investing? Lower corporate earnings and slower growth, which could affect stock prices. We will see where this ends up. On the personal tax side, even more proposals abound including raising the top tax rate back to 39% and a change to capital gains tax for those earning more than $1M per year. While I am hesitant to speculate where everything ends up, it’s fair to say there is a good deal of pressure on taxes rising. This could mean a shift in portfolio allocation based on how an asset performs after-tax. When thinking through your portfolio construction we will continue to take a comprehensive focus on your financial plan; the after-tax consequences of investments will continue to be a major area of focus.

In closing, we would like to wish everyone safe travels and warm wishes this summer. We continue to appreciate the trust you put in us and are humbled we get to play a small role in your lives. Take care, we cannot wait to catch up with you, potentially in person, soon!

My best,

Nick Weisert

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2Q 2024 Newsletter

By Willis Ashby • 08 Apr, 2024

As usual I hope this finds you well. As we welcome spring and having just finished the first quarter, things look good. The broad Morningstar index was up 10.24% through 03-31-24. The large cap companies led the way up 11.08% and the small caps up 5.69%. The S&P 500 experienced 22 “all-time highs” with less than 2% drops in-between. Amazing!

1Q 2024 Newsletter

By Willis Ashby • 11 Jan, 2024

I hope you had a safe and enjoyable holiday season. For the first time since COVID we were able to have our entire family together, including the Australians, it was very nice. I hope yours was as enjoyable. The top news stories of the year were the rapid rise of interest rates effectively slowing inflation without crashing the economy:

4Q Newsletter

By Willis Ashby • 05 Oct, 2023

After the bruising market in 2022 where the broad index was down 19.43%, we are in a better place. Year to date the Morningstar broad index is up 12.81% but down 3.19% for the quarter. That said, we have a lot to keep our eyes on. On the positive side, consumer spending is remaining robust, and the Biden administration passed their TRILLION-dollar spending bill, corporate profits are slowing but still positive, unemployment is a low 3.6% and the Fed again passed on raising interest rates.

Distribution Options for Inheriting Retirement or IRA Proceeds (Beginning in 2020)

By Keith Fevurly • 19 Sep, 2023

Distribution Options...

To Roll or Not to Roll (Rollover IRAs)

By Keith Fevurly • 24 Jul, 2023

Some points to consider: 1) Likely the biggest distribution question that a 401(k) participant asks is: should I rollover the proceeds to an IRA or retain it within the 401(k), assuming the plan sponsor allows that? There is no certain answer to this question, although in the majority of situations, it is preferable to roll the proceeds because of participant control of the account. See Willis, Nick, or Keith to begin the paperwork for a Rollover IRA.

Q3 2023 Newsletter

By Willis Ashby • 10 Jul, 2023

I hope you had a wonderful 4th of July celebration. We have a reading of the Declaration at our gatherings, it is always amazing to me to hear how many people under 30 saying they didn’t understand what was declared and to whom it was sent. After the declaration we (our founders) wrote our Constitution taking the best from the Magna Carta of 1215 and the English Parliament’s Bill of Rights of 1689. We have a lot of issues in our country but when you look at our beginning, it is amazing!

Q2 2023 Newsletter

By Willis Ashby • 13 Apr, 2023

You cannot say we do not live in interesting times; A past president indicted on criminal charges; bank failures; FTX collapse; and high inflation to mention a few. The Morningstar broad index was up 7.40% for the quarter and YTD. Most of this was the rebounding of the large tech companies which had been crushed at the end of last year.

Q1 2023 Newsletter

By Willis Ashby • 30 Dec, 2022

First Happy New Year. I hope you and your families had a pleasant, safe, and healthy start to the year. There are so many things causing headline news and affecting the market: COVID, “Transitory Inflation”, Ukraine, another $1.7 trillion spending bill, FTX’s downfall, snowstorms, Trumps Tax Returns, Fentanyl and the border. It is no wonder we are having a rough market! The S&P was down 19.4% in 2022, the worst since 2008. I think the three things that are most affecting the market are:1) the COVID shutdowns,2) massive government spending, and 3) inflation. The shutdown of an enormous part of our economy during the pandemic, in hindsight, was a mistake.

Q4 2022 Newsletter

By Willis Ashby • 05 Oct, 2022

This is not a pretty quarter or year for the markets. The broad Morningstar index is -4.58% for the quarter and- 24.88% for the year. As I noted a few quarters ago the large-cap growth stocks make up the largest part of the index, so when they go up or down the entire market feels it. The Large Cap Growth section of the market is -40.99%, (Time to buy?). We also know on average every 5 years the stock market loses money. It is the price we have to pay for “investing” and receiving better investment results in the long term. It is interesting to note that with few exceptions there have been no safe harbors. Cash -8%, Gold -8%, Bitcoin -70%, Bonds -15% (depends on the class and type Muni vs Corp vs Govt), so if you wanted to go into the currency market and made a “bet” on the US Dollar rising, you would be very happy; too risky for me. As a reminder, when interest rates go up bonds go down, but the usual result of “stocks go down bonds must rise” is not occurring. This is the time to reflect on how much our accounts have gone up in the last few years and to realize it will do so again. It is just a matter of time! Apple, Google, and Procter & Gamble are not going anywhere, just because the market thinks they are a LOT less than last year really means they were overpriced then and now they are likely underpriced. The S&P earnings are at 8% so why are the markets down? If you strip out energy the number drops to 1% and the market thinks inflation is going to take it away: -no earnings and you get a down market! As much as I do not want to admit it, I agree. We don’t know if wages drive prices or vice versa, but we do know inflation is caused by too much money circulating in the economy. The Federal Balance Sheet in 2007 was $850 Billion, today it is close to $9 trillion. We cannot continue printing and sending out trillions of dollars. The Federal Reserve has said it will continue to raise interest rates until inflation is under control. The economy will likely take a hit but sit tight since it will recover. As a reminder, the market went up 9% in July alone. If you are worried about the markets give us a call, we have been through this before.