Focus on your overall approach during times of short-term volatility.
As an investor, it can be tempting to get caught up in daily news headlines. Consider how news about the election and COVID-19 vaccines have moved the markets over the past several weeks. But having a financial strategy can help you ignore short-term volatility and focus on your long-term vision. As you know, investing is a process based on your goals, time horizon, and risk tolerance. Interestingly enough, it’s also a process that may help you prepare for life’s financial challenges. For example, did you know that only 44 percent of workers have estimated how much income they would need in retirement? What is more, only 36 percent have calculated how much money they would need to cover healthcare expenses. Creating a financial strategy means thinking about the bigger picture, including a variety of issues like monthly income needs, handling unexpected expenses, and preparing for healthcare costs. People who take a “do-it-yourself” approach can quickly find themselves overwhelmed by all the variables they need to consider. If a current event or headline has caused you to reconsider your financial strategy, please give us a call. Sometimes, a newsworthy event can require a new approach. But many times, it may just be a “speed bump,” a momentary blip that is already factored into your long-term vision.
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In this month’s recap: Stocks closed the year with a solid rally, fueled by the rollout of multiple COVID-19 vaccines and the signing of a new fiscal relief bill. U.S. Markets A tumultuous year ended on a positive note as stocks rose in December, spurred by the rollout of multiple COVID-19 vaccines and the signing of a new fiscal relief bill. The Dow Jones Industrial Average, which lagged all year, picked up 3.27 percent. The Standard & Poor’s 500 Index gained 3.71 percent, and the Nasdaq Composite tacked on 5.65 percent.1 Vaccines Take Center Stage Investors were buffeted by news of rising infections and new lockdowns even as they kept a close eye on the start of vaccine distribution in the U.K., which some observers referred to as “the beginning of the end” of the coronavirus pandemic. Boost from the Stimulus Package Much like November, stocks rallied when Congress made progress on the new fiscal stimulus bill but pulled back as talks seemed to stall. After some posturing, President Trump signed the new law, which helped stocks surge in the final week of trading. All Eyes on the Election As investors grappled with these headline issues, markets also saw several new and secondary equity offerings, including two high-profile technology initial public offerings (IPOs) during the month. This year, companies raised over $167 billion in IPOs, blowing past the record of $107.9 billion set in 1999.2 Sector Scorecard The majority of industry sectors posted gains in December, including Communication Services (+2.35 percent), Consumer Discretionary (+2.18 percent), Consumer Staples (+0.10 percent), Energy (+3.97 percent), Financials (+4.45 percent), Health Care (+2.30 percent), Industrials (+0.12 percent), Materials (+1.58 percent), and Technology (+5.14 percent). The Real Estate (-1.04 percent) and Utilities (-1.69 percent) sectors lost ground.3 What Investors May Be Talking About in January After the November election, markets rallied due to initial tallies that seemed to point to a potentially divided government, which historically has been a positive for the equity markets.4 However, Georgia’s two Senate seats remain undecided and will go to a special election this month. Ultimately, this runoff will determine which party controls the Senate and may give insight into the future legislative agenda of the incoming Biden administration. Check your credit report annually for errors. Under federal law, you are entitled to a free annual credit reports from the big 3 credit reporting agencies (Equifax, Experian, and TransUnion) each year. World Markets International stocks enjoyed a strong month of performance, with the MSCI EAFE Index gaining 5.24 percent.5 Vaccine optimism and an exit agreement between the European Union and the U.K. helped power the markets. Germany gained 3.22 percent while the United Kingdom picked up 3.10 percent. France lagged a bit, tacking on 0.60 percent.6 Pacific Rim markets also enjoyed a solid month. The Hang Seng Index rose 3.38 percent and the Nikkei tacked on 3.82 percent.7 Indicators Gross Domestic Product: The final read on third quarter GDP was revised higher, from 33.1 percent to 33.4 percent.8 Employment: Nonfarm payrolls rose by a disappointing 245,000 in November. The unemployment rate ticked lower, falling from 6.9 percent to 6.7 percent. The labor-force participation rate was 61.5 percent, which is an improvement from April’s low but remains at a historically low level.9 Retail Sales: Retail sales fell 1.1 percent in November, showing a slowdown in consumer spending amid economic lockdowns and continued uncertainty. October’s retail sales number was revised downward, from an increase of 0.3 percent to a decline of 0.1 percent.10 Industrial Production: Rising for the seventh consecutive month, industrial output picked up 0.4 percent in November, powered by a 0.8 percent leap in manufacturing.11 Housing: Housing starts reached a nine-month high, rising 1.2 percent in November.12 Existing home sales declined 2.5 percent in November. It was the first decline in six months.13 New home sales slumped 11.0 percent compared to last month, but were 20.8 percent higher than in November 2019.14 Consumer Price Index: Prices of consumer goods and services rose by 0.2 percent in November, leaving the year-over-year inflation rate at 1.2 percent.15 Durable Goods Orders: Durable goods orders rose by 0.9 percent, marking the seventh consecutive month of gains.16 “Of all the hazards, fear is the worst.” Sam Snead The Fed In its last meeting of 2020, the Federal Open Market Committee (FOMC) detailed its plan to continue purchasing $120 billion in Treasury and mortgage-backed securities.17 Fed officials said that they will continue the program until they see substantial progress toward meeting its inflation and employment goals. Officials at the Fed have indicated that achieving such goals may not happen for years.17 Sources: Yahoo Finance, December 31, 2020 The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Gary G. Blom CRPC | Financial Advisor Michael Howell MBA | Financial Advisor Address: 3340 Tully Rd. Ste B4, Modesto, CA 95350 Website: www.blomandhowell.com Office: (209) 857-5207 | Fax: (209) 857-5098 Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.) This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The FTSEurofirst 300 Index comprises the 300 largest companies ranked by market capitalisation in the FTSE Developed Europe Index. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. Established in January 1980, the All Ordinaries is the oldest index of shares in Australia. It is made up of the share prices for 500 of the largest companies listed on the Australian Securities Exchange. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The FTSE TWSE Taiwan 50 Index is a capitalization-weighted index of stocks comprises 50 companies listed on the Taiwan Stock Exchange developed by Taiwan Stock Exchange in collaboration with FTSE. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The Mexican Stock Exchange, commonly known as Mexican Bolsa, Mexbol, or BMV, is the only stock exchange in Mexico. The U.S. Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting, or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. CITATIONS:
1. The Wall Street Journal, December 31, 2020 2. The Wall Street Journal, December 30, 2020 3. FactSet Research, December 31, 2020 4. HartfordFunds.com, October 2020. “The Election and Your Portfolio.” 5. MSCI.com, December 31, 2020 6. MSCI.com, December 31, 2020 7. MSCI.com, December 31, 2020 8. CNBC.com, December 22, 2020 9. CNBC.com, December 4, 2020 10. TheNewYorkTimes.com, December 16, 2020 11. FederalReserve.gov, December 15, 2020 12. CNBC.com, December 17, 2020 13. CNBC.com, December 22, 2020 14. Census.gov, December 23, 2020 15. BureauOfLaborStatistics.gov, December 10, 2020 16. AdvisorPerspectives.com, December 24, 2020 17. CNBC.com, December 11, 2020 Breaking down the enrollment periods and eligibility.
Medicare enrollment is automatic for some. For those receiving Social Security benefits, the coverage starts on the first day of the month you turn 65. If you are not receiving Social Security benefits at 65, you may be delaying until you reach full retirement age, or until you reach 70. If you’re coming up on 65 and not receiving Social Security benefits, SSDI, or benefits from the Railroad Retirement Board, you can still apply for Medicare coverage. You can visit your local SSA office or visit www.socialsecurity.gov/medicareonly/ to determine your eligibility. If you’re getting Social Security checks and approaching age 65, you’ll get a Medicare card in the mail three months before your 65th birthday. If you are getting SSDI (Social Security Disability Insurance; regardless of your age), the card is scheduled to arrive coincidental with your 25th month of disability. You must be a U.S. citizen or a permanent legal resident of this country. If so, you or your spouse must have earned sufficient credits to be eligible for Medicare, typically earned over 10 years. When can you add or drop forms of Medicare coverage? Medicare has enrollment periods that allow you to do this. *The initial enrollment period is seven months long. It starts three months before the month in which you turn 65 and ends three months after that month. You can enroll in any type of Medicare coverage within this seven-month window – Part A, Part B, Part C (Medicare Advantage Plan), and Part D (prescription drug coverage). As it happens, if you don’t sign up for some of this coverage during the initial enrollment period, it may cost you more to add it later. *Once you are enrolled in Medicare, you can only make changes in coverage during certain periods of time. For example, the open enrollment period for Part D is October 15-December 7, with Part D coverage starting January 1. Do you have questions about eligibility or the eligibility of your parents? Your first stop should be the Social Security Administration (see the contact information in the second paragraph above). You can also visit www.medicare.gov and www.cms.gov. What are the keys to prepare to grow wealthy together?
When you marry or simply share a household with someone, your financial life changes—and your approach to managing your money may change as well. The good news is that it is usually not so difficult. At some point, you will have to ask yourselves some money questions—questions that pertain not only to your shared finances but also to your individual finances. Waiting too long to ask (or answer) those questions might carry a price. In the 2019 TD Bank Love & Money survey of consumers who said they were in relationships, 40% of younger couples described having weekly arguments about their finances. First off, how will you set priorities? One of your first priorities should be simply setting aside money that may help you build an emergency fund. But there are other questions to ask. Should you open joint accounts? Should you jointly title assets? How much will you spend & save? Budgeting can help you arrive at your answer. A simple budget, an elaborate budget, or any attempt at a budget can prove more informative than none at all. A thorough, line-item budget may seem a little over the top, but what you learn from it may be truly eye-opening. How often will you check up on your financial progress? When finances affect two people rather than one, credit card statements and bank balances become more important. Checking in on these details once a month (or at least once a quarter) can keep you both informed, so that neither one of you have misconceptions about household finances or assets. Arguments can start when money misunderstandings are upended by reality. What degree of independence do you want to maintain? Do you want to keep some money separate? Some spouses need individual financial “space” of their own. There is nothing wrong with this approach. Can you be businesslike about your finances? Spouses who are inattentive or nonchalant about financial matters may encounter more financial trouble than they anticipate. So, watch where your money goes, and think about ways to pay yourselves first rather than your creditors. Set shared short-term, medium-term, and long-term objectives, and strive to attain them. Communication is key to all this. Watching your progress together may well have benefits beyond the financial, so a regular conversation should be a goal. If an investor chooses a non-human financial advisor, what price could they end up paying?
Investors have a choice today that they did not have a decade ago. They can seek investing and retirement guidance from a human financial professional or put their invested assets in the hands of a robo-advisor. What exactly is a robo-advisor? Robo-advisors are a class of financial advisors that provide financial advice or investment management online with moderate to minimal human intervention. They offer digital financial advice based on mathematical rules or algorithms. Signing up walks the user through a series of questions, and based on their responses, creates portfolio choices for the investor. Which begs the question: why would you trust your finances to a robo-advisor? Robo-advisors are an attractive option for those just starting out investing. Some robo-advisor accounts offer very low minimums and fees and can be a solution for younger investors who want to "set it and forget it." Even so, less than 8% of investors responding to a survey from data analytics firm Hearts & Wallets said they had used a robo-advisor. Out of the $43 trillion in the North American wealth management market, an estimated $410 billion is invested with robo-advisors. That number may grow to $830 billion by 2024. The inherent problem is robo-advisors lack the human element to ask questions and dig deeper. Investors in all life stages appreciate when a financial professional takes time to understand them and their situation. A software program struggles to gain that understanding, even with input from a questionnaire. The closer you get to retirement age, the more challenges you may face with a robo-advisor. The software continues to evolve and understand retirement investing. After 50, people have financial concerns far beyond investment yields. Investment management does not equal retirement preparation, estate strategies, or risk management. Many investors are taking advantage of a hybrid model that has emerged. Per the Hearts & Wallets research study, more than half of investors use robo-advisors only as an extension of their existing wealth manager. Once their balance reaches a certain threshold, investors may transition to working with an actual financial professional. It appears the traditional approach of working with a human financial professional may be hard to disrupt. The opportunity to draw on experience by having a conversation with a professional who has seen his or her clients go through the whole arc of retirement is essential. These responses point to uncertainty about the process of financial and retirement strategies. The process is quite worthwhile, quite illuminating, and quite helpful. It is not just about improving "the numbers," it is also about discovering ways to sustain and enhance your quality of life. Here are some things you might consider before saying goodbye to 2020.
What has changed for you in 2020? For many, this year has been as complicated as learning a new dance. Did you start a new job or leave a job behind? That is one step. Did you retire? There is another step. Did you start a family? That is practically a pirouette. If notable changes occurred in your personal or professional life, then you may want to review your finances before this year ends and 2021 begins. Proving that you have all the right moves in 2020 might put you in a better position to tango with 2021. Even if your 2020 has been relatively uneventful, the end of the year is still a good time to get cracking and see where you can manage your overall personal finances. Keep in mind this article is for informational purposes only and is not a replacement for real-life advice. Please consult your tax, legal, and accounting professionals before modifying your tax strategy. Do you engage in tax-loss harvesting? That’s the practice of taking capital losses (selling securities worth less than what you first paid for them) to manage capital gains. You might want to consider this move, but it should be made with the guidance of a financial professional you trust.1 In fact, you could even take it a step further. Consider that up to $3,000 of capital losses in excess of capital gains can be deducted from ordinary income, and any remaining capital losses above that amount can be carried forward to offset capital gains in upcoming years.1 Do you want to itemize deductions? You may just want to take the standard deduction for the 2020 tax year, which has risen to $12,400 for single filers and $24,800 for joint. If you do think it might be better for you to itemize, now would be a good time to get the receipts and assorted paperwork together.2,3 Could you ramp up your retirement plan contributions? Contribution to these retirement plans may lower your yearly gross income. If you lower your gross income enough, you might be able to qualify for other tax credits or breaks available to those under certain income limits.4 Are you thinking of gifting? How about donating to a qualified charity or non-profit organization before 2020 ends? Your gift may qualify as a tax deduction. For some gifts, you may be required to itemize deductions using Schedule A.4 While we are on the topic of year-end moves, why not take a moment to review a portion of your estate strategy. Specifically, take a look at your beneficiary designations. If you have not reviewed them for some time, double-check to see that these assets are structured to go where you want them to go, should you pass away. Lastly, look at your will to see that it remains valid and up to date. Check on the amount you have withheld. If you discover that you have withheld too little on your W-4 form so far, you may need to adjust your withholding before the year ends. What can you do before ringing in the New Year? New Year’s Eve may put you in a dancing move, eager to say goodbye to the old year and welcome 2021. Before you put on your dancing shoes, consider speaking with a financial or tax professional. Do it now, rather than in February or March. Little year-end moves might help you improve your short-term and long-term financial situation. This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. Citations 1. Investopedia.com, April 18, 2020 2. NerdWallet.com, July 17, 2020 3. Investopedia.com, May 22, 2020 4. Investopedia.com, July 14, 2020 In this month’s recap: Stock prices powered higher and energized investors thanks to a month-long succession of positive news events. U.S. Markets Stock prices powered higher and emboldened investors in November thanks to a series of positive news events. The Dow Jones Industrial Average, which has lagged much of the year, led the rally, jumping 11.84 percent. The Standard & Poor’s 500 Index tacked on 10.75 percent while the Nasdaq Composite rose 11.80 percent.1 All Eyes on the Election Stocks opened the month strong, climbing throughout election week as bargain-hunting investors appeared to swoop in following a weak September and October. While the immediate outcome of the presidential election was undecided, the projected results suggested a divided Congress, which investors interpreted as a productive environment for businesses. Vaccine Booster Stocks climbed higher on news of positive stage-three COVID-19 trial results that suggested a highly effective vaccine may be near at hand. Stocks that had been hurt by economic lockdowns surged on the news, while the stay-at-home stocks suffered steep declines. Bond yields and oil prices both moved higher on expectations of increased economic activity. Positive momentum carried the Dow Jones Industrial Average, the S&P 500 index, and the Russell 2000 to record-high levels, with the Dow closing above the 30,000 mark.2 Companies Report Solid Quarter While the U.S. election and progress on a coronavirus vaccine dominated the news cycle, companies in the S&P 500 reported solid earnings in the third quarter. As expected, the S&P 500 reported a year-over-year earnings of -6.3 percent. But when three hard-hit industries—energy, airlines, and hospitality—were excluded, earnings for S&P 500 companies grew by 4.3 percent.3 Sector Scorecard All industry sectors moved higher in November, except Utilities, which fell 1.42 percent. The month saw strong gains in Communication Services (+7.34 percent), Consumer Discretionary (+5.49 percent), Consumer Staples (+3.95 percent), Energy (+34.54 percent), Financials (+17.50 percent), Health Care (+3.35 percent), Industrials (+14.74 percent), Materials (+12.50 percent), Real Estate (+5.96 percent), and Technology (+5.33 percent).4 What Investors May Be Talking About in December After such a powerful rally, investors may be asking themselves, “What’s next for stock prices?” Traders are expected to watch the trajectory of new COVID-19 infections and how they may influence economic activity over the coming weeks and months. While investors recognize that there will be manufacturing and distribution challenges with approved vaccines, they may also be paying attention to when a vaccine may be available to the general public. Some small business owners don’t have succession plans. If you haven’t created one, now is as good a time as any to start. This may not only enable continuity, but also address some legacy-strategy issues. World Markets Riding a global wave of optimism surrounding multiple COVID-19 vaccine trials, the MSCI-EAFE Index jumped 16.86 percent in November.5 European markets were broadly higher, with sharp gains in France, Germany, Italy, and the United Kingdom. European markets appeared to look beyond the new lockdowns and obstacles that prevented the passage of a European Union recovery package.6 Markets in the Pacific Rim also had a solid month. Australia picked up 9.96 percent while Japan tacked on 15.04 percent.7 Indicators Gross Domestic Product: The second reading of GDP growth was unchanged from its initial estimate of up 33.1 percent on an annualized basis.8 Employment: The number of new jobs increased by 638,000 in October, which sent the unemployment rate lower by one percentage point to 6.9 percent.9 Retail Sales: Retail sales rose 0.3 percent, making November the sixth-straight month of increased consumer spending.10 Industrial Production: Industrial output jumped 1.1 percent, although production remains below its pre-pandemic February level.11 Housing: Housing starts increased by 4.9 percent, led by a 6.4 percent rise in single-family home starts.12 Existing home sales rose 4.3 percent in October, touching a 14-year high. Median prices also hit a new record high.13 New home sales dipped 0.3 percent, as declines in the West and South regions weighed on overall results.14 Consumer Price Index: The prices of consumer goods remained unchanged. However, in the last 12 months, prices have increased by 1.2 percent.15 Durable Goods Orders: Orders of long-lasting goods rose by 1.3 percent, which was above consensus estimates. The gain was driven by defense-related purchases.16 “Remember that failure is an event, not a person.” Zig Ziglar The Fed On November 25, the Federal Open Market Committee released the minutes from its November meeting. The minutes showed that the Fed discussed plans to offer more definitive guidance about its purchases of Treasuries and mortgage-backed securities by linking the purchase program to economic conditions.17 This new guidance may be introduced as early as their next meeting on December 15. The minutes also reflected the Committee’s concern about the lack of a new fiscal stimulus. However, the Fed also acknowledged a better-than-expected economic improvement in American households.17 Sources: Yahoo Finance, November 30, 2020 The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Gary G. Blom CRPC | Financial Advisor Michael Howell MBA | Financial Advisor Address: 3340 Tully Rd. Ste B4, Modesto, CA 95350 Website: www.blomandhowell.com Office: (209) 857-5207 | Fax: (209) 857-5098 Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.) CA Insurance License #0C95684. Securities offered through SCF Securities, Inc. – Member FINRA/SIPC. Investment Advisory Services offered through SCF Investment Advisors, Inc. 155 E. Shaw Ave. Suite 102, Fresno, CA 93710 | (800) 955-2517 | Fax (559) 456-6109 SCF Securities, Inc. and Blom & Howell Financial Planning are independently owned and operated. www.scfsecurities.com This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The FTSEurofirst 300 Index comprises the 300 largest companies ranked by market capitalization in the FTSE Developed Europe Index. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. Established in January 1980, the All Ordinaries is the oldest index of shares in Australia. It is made up of the share prices for 500 of the largest companies listed on the Australian Securities Exchange. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The FTSE TWSE Taiwan 50 Index is a capitalization-weighted index of stocks comprises 50 companies listed on the Taiwan Stock Exchange developed by Taiwan Stock Exchange in collaboration with FTSE. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The Mexican Stock Exchange, commonly known as Mexican Bolsa, Mexbol, or BMV, is the only stock exchange in Mexico. The U.S. Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.
CITATIONS: 1. The Wall Street Journal, November 30, 2020 2. CNBC.com, November 23, 2020 3. FactSet Research, November 20, 2020 4. FactSet Research, November 30, 2020 5. MSCI.com, November 30, 2020 6. MSCI.com, November 30, 2020 7. MSCI.com, November 30, 2020 8. CNBC.com, November 25, 2020 9. The Wall Street Journal, November 6, 2020 10. The Wall Street Journal, November 17, 2020 11. The Wall Street Journal, November 17, 2020 12. MarketWatch.com, November 18, 2020 13. The Wall Street Journal, November 19, 2020 14. Reuters.com, November 25, 2020 15. The Wall Street Journal, November 12, 2020 16. MarketWatch.com, November 25, 2020 17. The Wall Street Journal, November 25, 2020 Federal borrowing has increased due to the coronavirus pandemic.
America’s debt is now nearly as large as its economy. On September 2, the Congressional Budget Office announced that by the end of the 2020 fiscal year (September 30), the federal government is projected to owe debt equaling 98% of the nation’s gross domestic product.1 The CBO also projects that the country’s debt is expected to be greater than its GDP by 2023. Federal debt last exceeded GDP in 1946, the year after World War 2 ended.1 Some analysts thought federal debt would reach these levels by 2030. They did not see this happening now. Then again, who could have foreseen the sudden arrival of COVID-19, let alone its economic impact? This spring brought the nation’s worst quarterly GDP contraction in almost 75 years. The CBO says federal income tax revenues are expected to fall by $280 billion this fiscal year ended September 30, leading the federal government to borrow heavily as it launched its economic stimulus program for businesses and households.1,2 All this borrowing has also expanded the federal budget deficit. The CBO projects a deficit of $3.3 trillion for fiscal year 2020, more than tripling the deficit of fiscal year 2019.1,2 The deficit could stay near this level for some time. The rebound may be slow and gradual, and the economy might need additional stimulus, implying additional federal borrowing and spending. What’s next? Economists have raised concerns about the high levels of debt but are quick to point out that interest rates are low and are projected to remain low for some time. This year, the Federal Reserve cut the benchmark U.S. interest rate to 0-0.25%. Other central banks around the world followed the Fed’s lead. If interest rates remain low, that can help the federal government manage the deficit. Indeed, the CBO notes that the 2020 surge in spending has not significantly altered its 10-year deficit projection.2,3 Main Street may get more financial help, and that may mean much more spending in Washington. While taking all this in, it is worth remembering that federal debt levels, and federal deficits, can also shrink under different economic conditions. As recently as 2008, U.S. debt amounted to 39% of GDP.1 This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. Citations. 1. New York Times, September 10, 2020 2. Washington Post, September 2, 2020 3. Federal Reserve Bank of Chicago, September 10, 2020 In this month’s recap: Inaction on a second American fiscal stimulus bill and a rise in global COVID-19 cases put pressure on stock prices in October. U.S. Markets Inaction on a second American fiscal stimulus bill and a rise in global COVID-19 cases put pressure on stock prices in October. The Dow Jones Industrial Average, which has lagged much of the year, dropped 4.61 percent. The Standard & Poor’s 500 Index lost 2.77 percent and the Nasdaq Composite slipped 2.29 percent.1 All About Stimulus The perceived progress by lawmakers to pass a new fiscal stimulus bill continued to move markets. When negotiations appeared to be on track, stocks moved higher but retreated as talks stalled. Investor optimism regarding a second stimulus bill was highest at the start of the month, igniting strong gains as October got underway. Market sentiment was further buoyed by news of advances in COVID-19 treatments and a growing conviction that November’s election may be less contested than initially feared. COVID’s Influence As the month wore on, market optimism waned as the window to pass a stimulus bill closed. As hopes for a fiscal stimulus faded, an increase in new COVID-19 cases in the U.S. and Europe continued to sour market sentiment. This caused many investors to contemplate what a second coronavirus wave might do to the economic recovery. Strong Earnings Amid the attention the stimulus talks and COVID cases garnered, earnings season also began last month. By October 30th, with 64 percent of the S&P 500 companies having reported earnings, 86 percent had performed above Wall Street estimates and above the five-year average of 73 percent.2 These strong earnings results had little effect on a market overwhelmed by large-scale issues. Selling accelerated in the final week of trading with no movement on the fiscal stimulus bill, a bump up in COVID-related hospitalizations, and a reinstatement of partial lockdowns in Germany and France. Sector Scorecard Pressure Utilities (+5.05 percent) was the only sector to post a gain in October. Communication Services (-0.34 percent), Consumer Discretionary (-2.73 percent), Consumer Staples (-2.87 percent), Energy (-4.11 percent), Financials (-0.87 percent), Health Care (-3.62 percent), Industrials (-1.44 percent), Materials (-0.72 percent), Real Estate (-3.18 percent), and Technology (-5.00 percent) closed lower.3 What Investors May Be Talking About in November The U.S. election will take center stage this month, with the critical concern being whether the election results will be clear and decisive. Should President Trump remain in office, investors may expect him to follow similar policy initiatives during a second term. If former Vice President Biden is elected, investors will be listening closely to public statements and potential cabinet appointments to gain insight into his policy priorities. Regardless of who is elected, the markets are expected to look for signs of a new stimulus measure. Check your bank account regularly for fraud? If you don't bank online - do you carefully check your monthly statements? If not, you should. World Markets A resurgence in COVID-19 infections, new economic lockdowns, and the growing prospect of a hard Brexit sent the MSCI-EAFE Index tumbling by 4.06 percent in October.4 Countries at the epicenter of the coronavirus resurgence in Europe were especially hard hit, with losses in Germany (-9.44 percent), France (-4. percent), Italy (-6.90 percent), and the U.K. (-4.92 percent).5 Pacific Rim stocks performed better, as Australia picked up 1.92 percent, and Hong Kong added 2.76 percent.6 Indicators Gross Domestic Product: The economy expanded at a 33.1 percent annual rate in the third quarter, recouping about two-thirds of the pandemic-induced contraction suffered earlier in the year.7 Employment: Nonfarm payrolls grew by 661,000 in September. Hiring was slightly below expectations, but it was enough to drop the unemployment rate to 7.9 percent, down from the previous month’s 8.4 percent.8 Retail Sales: Consumer spending rose 1.9 percent, led by a 3.6 percent jump in motor vehicle sales. It was the fifth consecutive month of higher retail sales.9 Industrial Production: Industrial output fell 0.6 percent in September after four straight months of gains. Industrial production was 7.1 percent below its pre-pandemic February level.10 Housing: Housing starts rose 1.9 percent, as single-family home starts outweighed a decline in the more volatile multi-family segment.11 Existing home sales increased by 9.4 percent. Tight inventories drove the median home price higher to $311,800, a 14.8 percent jump from September 2019.12 After four straight months of increases, sales of new homes fell by 3.5 percent.13 Consumer Price Index: The cost of consumer goods rose by 0.2 percent in September, with a 6.7 percent jump in used cars and trucks. Additionally, inflation remained low, recording a 12-month increase of 1.4 percent.14 Durable Goods Orders: Orders for long-lasting goods rose 1.9 percent in September, the fifth consecutive month of increasing orders. Orders for nondefense capital goods, a proxy for business investment, went up by 1 percent.15 “I have no special talents. I’m only passionately curious.” ALBERT EINSTEIN The Fed The minutes from September’s Federal Open Market Committee meeting reflected a Federal Reserve highly focused on the economy’s current state. Members expressed concerns about the lack of additional fiscal stimulus, and some suggested this stimulus gap could derail a full economic recovery. Members supported providing forward guidance on the federal funds rate, which has a current target rate of between 0.00 and 0.25 percent. They also supported the new Federal Open Market Committee language, indicating inflation would have to average above 2 percent for a period of time before adjusting short-term rates would be considered.16 Sources: Yahoo Finance, October 31, 2020 Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year Treasury real yield = projected return on investment, expressed as a percentage, on the U.S. government’s 10-year bond. Gary G. Blom CRPC | Financial Advisor Michael Howell MBA | Financial Advisor Address: 3340 Tully Rd. Ste B4, Modesto, CA 95350 Website: www.blomandhowell.com Office: (209) 857-5207 | Fax: (209) 857-5098 Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.) CA Insurance License #0C95684. Securities offered through SCF Securities, Inc. – Member FINRA/SIPC. Investment Advisory Services offered through SCF Investment Advisors, Inc. 155 E. Shaw Ave. Suite 102, Fresno, CA 93710 | (800) 955-2517 | Fax (559) 456-6109 SCF Securities, Inc. and Blom & Howell Financial Planning are independently owned and operated. www.scfsecurities.com This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The FTSEurofirst 300 Index comprises the 300 largest companies ranked by market capitalisation in the FTSE Developed Europe Index. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. Established in January 1980, the All Ordinaries is the oldest index of shares in Australia. It is made up of the share prices for 500 of the largest companies listed on the Australian Securities Exchange. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The FTSE TWSE Taiwan 50 Index is a capitalization-weighted index of stocks comprises 50 companies listed on the Taiwan Stock Exchange developed by Taiwan Stock Exchange in collaboration with FTSE. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The Mexican Stock Exchange, commonly known as Mexican Bolsa, Mexbol, or BMV, is the only stock exchange in Mexico. The U.S. Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.
CITATIONS: 1. The Wall Street Journal, October 31, 2020 2. FactSet Research, October 30, 2020 3. FactSet Research, October 31, 2020 4. MSCI.com, October 31, 2020 5. MSCI.com, October 31, 2020 6. MSCI.com, October 31, 2020 7. The Wall Street Journal, October 29, 2020 8. The Wall Street Journal, October 2, 2020 9. The Wall Street Journal, October 16, 2020 10. The Wall Street Journal, October 16, 2020 11. CNBC.com, October 20, 2020 12. CNBC.com, October 22, 2020 13. Reuters.com, October 26, 2020 14. Reuters.com, October 13, 2020 15. The Wall Street Journal, October 27, 2020 16. CNBC.com, October 7, 2020 3340 Tully Rd, Suite B4, Modesto, CA 95350 | t: 209.857.5207 | f: 209.857.5098 | www.blomandhowell.com Dear friends, I am excited to write to you today to share some exciting news that recently occurred at Blom & Howell Financial Planning. Please join me in congratulating my friend and colleague, Michael Howell, who recently received the CERTIFIED FINANCIAL PLANNER™ designation. Becoming a CFP® professional is one of the most difficult and stringent processes in the financial services industry, as I am sure Michael can attest. To become certified, candidates must meet education and experience requirements, as well as pass the difficult and comprehensive CFP® Certification Exam before they can call themselves a CFP® professional. Successful passage of this exam requires a deep knowledge and understanding in areas of retirement, investing, education, insurance, taxes, and estate planning. Furthermore, the CFP® professional makes a commitment to the CFP Board to abide by standards set forth in CFP Board’s Code of Ethics and Standards of Conduct. They are also held to a fiduciary standard of care, committing to serve the best interests of their clients at all times. I have known and worked alongside Michael for eight years and have played a part in his understanding and growth in this industry. Without reservation I can say he loves to provide guidance and counsel in all areas of his client’s financial planning as it relates to their objectives. This is just another area in which we are committed to you, our clients, here at Blom & Howell Financial Planning. We know financial planning is a dynamic process and means something different for every family and we are committed to providing you a high standard of financial planning to the best of our abilities. Please join me in congratulating Michael Howell. If you’d like to send him well wishes, his email is michael@blomandhowell.com. Best Regards, Gary G Blom Securities offered through SCF Securities, Inc. • Member FINRA/SIPC
Investment advisory services offered through SCF Investment Advisors Inc. 155 E. Shaw Ave., Suite 102, Fresno, CA 93710 • 800.955.2517 • 559.456.6109 FAX SCF Securities, Inc. and Blom & Howell are independently owned and operated. |
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