In this month’s recap: the Federal Reserve eases, stocks reach historic peaks, and face-to-face U.S.-China trade talks formally resume.
THE MONTH IN BRIEF
July was a positive month for stocks and a notable month for news impacting the financial markets. The S&P 500 topped the 3,000 level for the first time. The Federal Reserve cut the country’s benchmark interest rate. Consumer confidence remained strong. Trade representatives from China and the U.S. once again sat down at the negotiating table, as new data showed China’s economy lagging. In Europe, Brexit advocate Boris Johnson was elected as the new Prime Minister of the United Kingdom, and the European Central Bank indicated that it was open to using various options to stimulate economic activity.
DOMESTIC ECONOMIC HEALTH
On July 31, the Federal Reserve cut interest rates for the first time in more than a decade. The Federal Open Market Committee approved a quarter-point reduction to the federal funds rate by a vote of 8-2. Typically, the central bank eases borrowing costs when it senses the business cycle is slowing. As the country has gone ten years without a recession, some analysts viewed this rate cut as a preventative measure. Speaking to the media, Fed Chairman Jerome Powell characterized the cut as a “mid-cycle adjustment.”
The latest hiring and consumer spending reports from the federal government suggested an economy in good shape, and the latest data on consumer prices showed no great inflation pressure. Employers had expanded their payrolls with 224,000 net new jobs in June, a rebound from the paltry 72,000 gain in May. Both the headline jobless rate and the U-6 rate (a broader measure of joblessness that includes the unemployed and underemployed) ticked up 0.1% to a respective 3.7% and 7.2%. Personal spending was up 0.3% in July, and the pace of retail sales increased 0.4%, taking the yearly gain to 3.4%. Annualized inflation was running at just 1.6% through June, down from 1.8% in May.
The Conference Board’s monthly Consumer Confidence Index reached a year-to-date peak in July: 135.7, a gain of 11.4 points from June. (The final July University of Michigan Consumer Sentiment Index had yet to be released when the month ended.)
The pace of American manufacturing had slowed in June, according to the Institute for Supply Management’s latest monthly Purchasing Managers Index (PMI) for the sector. It declined 0.4 points to 51.7. ISM’s Non-Manufacturing PMI came in at 55.1, 1.8 points lower than it was in May. On a positive note, the federal government said that hard goods orders rose 2.0% in June, and industrial production had improved 0.9% in May.
In late July, the Bureau of Economic Analysis announced that the economy grew at a 2.1% rate in the second quarter. This was the lowest gross domestic product (GDP) number seen since Q1 2017; it was also 1.0% lower than the previous quarter. The drop was primarily attributable to reduced business spending. Consumer spending increased at a 4.3% pace in Q2.5
By the end of July, China and the U.S. had resumed face-to-face negotiations on trade matters. A new trade pact did not appear to be quickly forthcoming: Secretary of the Treasury Steven Mnuchin told the media in late July that he expected there would be “a few more meetings before we get a deal done.” On July 31, Chinese state media agency Xinhua reported that high-level discussions would resume in September.
GLOBAL ECONOMIC HEALTH
On July 25, the European Central Bank stated its expectation that borrowing costs would likely remain at current levels or “lower” through the second quarter of 2020. The ECB also stated that it would examine its “options for the size and composition of potential new net asset purchases” – in other words, it was leaving the door open to possibly restarting the monetary stimulus campaign it had ended only months before. Economists polled by Bloomberg see the ECB making a minor rate cut in September and resuming its bond-buying program in January.
One day earlier and just 99 days prior to the European Union’s Brexit deadline, Boris Johnson assumed the office of Prime Minister of the United Kingdom. When Parliament returns from its summer break in September, Johnson will be tasked with motivating lawmakers to approve a Brexit deal – which, in his words, will be “a new deal, a better deal” than those proposed by his predecessor, Teresa May. That said, he also told the media that a no-deal Brexit could occur if the E.U. leadership “refuses any further to negotiate.”
China’s gross domestic product declined to 6.2% in the second quarter. That was a 27-year low. This implies some present and near-term difficulties for other Asia-Pacific economies, as China imports large quantities of electronics, palm oil, iron, copper, and petroleum products from nations within the region, and less economic activity means less demand.
Major foreign benchmarks were mixed. Three of the biggest losses came in Asia: India’s Nifty 50 dropped 5.69%; South Korea’s Kospi, 4.98%; India’s Sensex, 4.86%. Hong Kong’s Hang Seng fell 2.68%; China’s Shanghai Composite, 1.56%. MSCI’s Emerging Markets index lost 1.69%. MSCI’s World index rose 0.42%, however. Japan’s Nikkei 225 improved 1.15%; Taiwan’s TSE 50, 1.47%; Australia’s All Ordinaries, 2.95%. In Brazil, the Bovespa rose 0.92%. In Mexico, the Bolsa slumped 5.32%.11,12
July was quite positive for the United Kingdom’s FTSE 100 index, which added 2.17%. Spain’s IBEX 35 surrendered 2.48%. In between, the FTSE Eurofirst 300 posted a 0.36% advance, while France’s CAC 40 and Germany’s DAX respectively lost 0.36% and 1.69%.
Silver made the biggest ascent of all the major commodities in July, rising 6.61% to a month-end price of $16.28 on the New York Mercantile Exchange. Meanwhile, gold added only 0.23%, settling at $1,413.30 on July 31. Platinum advanced 3.83%, but copper took a 2.07% July loss.
Outside the major metals, monthly retreats were common; although, the U.S. Dollar Index rose 2.02%, and heating oil gained 1.14%. West Texas Intermediate crude oil fell 0.53% for the month to $57.89 on the NYMEX. The list of July losses in crop and energy futures is long: sugar declined 3.03%; natural gas, 3.32%; unleaded gas, 3.98%; soybeans, 4.19%; cotton, 4.38%; cocoa, 4.61%; corn, 5.32%; wheat, 7.69%; coffee, 8.67%.13,14
Both new and existing home sales reversed direction in June. The National Association of Realtors announced a 1.7% retreat in residential resales, following a 2.9% May advance; the median sales price was $285,700. The Census Bureau said that new home sales rose 7.0% in the sixth month of 2019, after an 8.2% setback in May.
By late July, interest rates on home loans had crept up just a bit from late June. According to mortgage reseller Freddie Mac, a 30-year, fixed-rate home loan carried an average of 3.73% interest on June 27, while 15-year, fixed mortgages had an average interest rate of 3.16%. By Freddie’s July 25 Primary Mortgage Market Survey, the mean interest rate for a 30-year FRM was 0.02% higher at 3.75%; for a 15-year FRM, it was also 0.02% higher at 3.18%.16
30-year and 15-year fixed rate mortgages are conventional home loans generally featuring a limit of $484,350 ($726,525 in high-cost areas) that meet the lending requirements of Fannie Mae and Freddie Mac, but they are not mortgages guaranteed or insured by any government agency. Private mortgage insurance, or PMI, is required for any conventional loan with less than a 20% down payment.
The Census Bureau’s latest monthly recap of residential construction activity showed June declines for both housing starts (0.9%) and building permits (6.1%).
T I P O F T H E M O N T H
When a student and a parent are cosigners on a private college loan, they must recognize that they are equally liable and responsible for paying the debt back.
LOOKING BACK, LOOKING FORWARD
The S&P 500 recorded its highest-ever close during the month: 3,025.86, on July 26. It drifted downward from there. On July 31, the day of the Fed’s rate cut, it fell more than 1%.17
While the major equity indices advanced less in July than they did in June, the gains were still solid. July brought a 1.31% rise for the S&P, and respective improvements of 0.99% and 2.11% for the Dow Jones Industrial Average and Nasdaq Composite. Where did these benchmarks settle at the closing bell on July 31? S&P, 2,980.38; Nasdaq, 8,175.42; Dow, 26,864.27.14
Sources: barchart.com, wsj.com, treasury.gov - 7/31/1914,18,19
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year Treasury yield = projected return on investment, expressed as a percentage, on the U.S. government’s 10-year bond.
You may have heard the Wall Street saying, “Sell in May and go away.” That expression is based on the idea that investors would be better off out of the financial markets in the summer months. This assertion has been disproven again and again over the years, and that may end up being the case this year (witness the market’s July performance). This is a good time to remember another frequently heard assertion – time in the market often proves more important than timing the market. Any summer doldrums or losses may possibly precede fall gains.
Q U O T E O F T H E M O N T H
“No one can make you feel inferior without your consent.” ELEANOR ROOSEVELT
During the rest of August, key items in the economic news stream are scheduled as follows: the July Institute for Supply Management non-manufacturing index (8/5), the July wholesale inflation reading (8/9), July consumer inflation data (8/13), July retail sales (8/15), a new snapshot of housing starts from the Census Bureau plus the University of Michigan’s preliminary August Consumer Sentiment Index (8/16), July existing home sales (8/21), the Conference Board’s latest index of leading economic indicators (8/22), July new home sales (8/23), July durable goods orders (8/26), the Conference Board’s August Consumer Confidence Index (8/27), the second estimate of Q2 gross domestic product from the Bureau of Economic analysis (8/29), and lastly, the final August University of Michigan Consumer Sentiment Index and July consumer spending data (8/30).
T H E M O N T H L Y R I D D L E
I am very strong and tough, but never rigid. I can be broken, but only in a certain sense. What am I?
LAST MONTH’S RIDDLE: There is a five-letter word that means “nice” in English, and all of the four letters used within this word are also Roman numerals. What is this word? ANSWER: Civil.
We’ve all heard it said: “Records are made to be broken.” We celebrate record-breaking winning streaks from our favorite teams. Conversely, we hope to avoid a long string of losses.
The bull market that began in 2009 is not the best performing since WWII. That title still resides with the long-running bull market of the 1990s. But it is the longest running since WWII (St. Louis Federal Reserve, Yahoo Finance, LPL Research–as measured by the S&P 500 Index).
In the same vein, the current economic expansion is poised to become the longest running expansion since WWII. For that matter, it’s about to become the longest on record.
According to the National Bureau of Economic Research, which is considered the official arbiter of recessions and economic expansions, the current expansion began in July 2009. It has run exactly 10 years, or 120 months, matching the 1990s expansion–see Table 1.
Barring an unforeseen event, the current period is headed for the record books.
While the economic recovery is about to enter a record-setting phase, it has been the slowest since at least WWII, according to data from the St. Louis Federal Reserve.
For example, starting in the second quarter of 1996, U.S. gross domestic product, the broadest measure of economic growth, exceeded an annualized pace of 3% for 14 of 15 quarters. It exceeded 4% in nine of those quarters (St. Louis Federal Reserve).
Growth was much more robust in the 1960s, and we experienced a strong recovery from the deep 1981-82 recession.
Yet, economic booms and long-running expansions can encourage risky behavior. People forget the lessons learned in prior recessions and overextend themselves.
Consumers can take on too much debt. Businesses may over-invest and build out too much capacity. We saw euphoria take hold in the stock market in the late 1990s and speculation run wild in housing not too long ago.
That brings us to the silver lining of the lazy pace of today’s economic environment.
Slow and steady has prevented speculative excesses from building up in much of the economy. In other words, a mistaken realization that the good times will last forever has not taken hold in today’s economic environment.
Causes of recessions
The long-running expansions of the 1960s, 1980s, and 1990s led to a mistaken belief that various policy tools could prevent a recession.
Yet, expansions don’t die of old age. A downturn can be triggered by various events. So, let’s look at the most common causes and see where we stand today.
Where are we today?
Inflation is low, the Fed is signaling a possible rate cut, and credit conditions are easy as measured by various gauges of credit. For the most part, speculative excesses aren’t building to dangerous levels.
While stock prices are near records, valuations remain well below levels seen in the late 1990s (Using the forward price-earnings ratio for the S&P 500 as a guide). Besides, interest rates are much lower today, which lends support to richer valuations.
Now, that’s not to say we can’t see market volatility. Stocks have a long-term upward bias, but the upward march has never been and never will be a straight line higher.
This is why we emphasize an investment process that is rooted in a personalized financial plan. A financial plan is designed, in part, to keep you grounded during the short periods when volatility may tempt you to make a decision based on emotions. Such reactions are rarely profitable.
A sneak peek at the rest of the year
The Conference Board’s Leading Economic Index, which has had a good record of predicting (if not timing) a recession, isn’t signaling a contraction through year end.
But one potential worry: a protracted trade war and its impact on the global/U.S. economy, business confidence, and business spending.
Exports account for almost 14% of U.S. GDP (U.S. BEA). It’s risen over the last 20 years, but we’ve never experienced a U.S. recession caused by global weakness.
By itself, trade barriers with China are unlikely to tip the economy into a recession. Per U.S. BEA and U.S. Census data, total exports to China account for just under 1% of U.S. GDP. Even with higher tariffs, exports to China won’t grind to a halt and erase 1% of GDP.
What’s difficult to model is the impact on business confidence and business spending, which in turn could slow hiring, pressuring consumer confidence and consumer spending.
Simply put, there isn’t a modern historical precedent to construct a credible model. Hence, the heightened uncertainty we’ve seen among investors.
Is a recession inevitable?
Earlier in June, the Wall Street Journal highlighted, “Australia is enjoying its 28th straight year of growth. Canada, the U.K., Spain and Sweden had expansions that reached 15 years and beyond between the early 1990s and 2008. Without the Sept. 11, 2001 terrorist attacks, the U.S. might have, too.”
If trade tensions begin to subside (still a big “if”) and if the fruits of deregulation and corporate tax reform kick in, we could see economic growth well into 2020 (and with some luck, into 2021 and beyond).
But, we caution, few have accurately and consistently called economic turning points.
The Fed to the rescue
Rising major market indexes for much of the year can be traced to positive U.S.-China trade headlines (at least through early May), a pivot by the Fed, and general economic growth at home.
We witnessed a modest pullback in May after trade negotiations with China hit a snag. The threat of tariffs against Mexico added to the uncertain mood until June 4th, when Fed Chief Jerome Powell signaled the Fed would consider cutting interest rates to counter any negative economic headwinds.
While Powell’s not promising to deliver any rate cuts, one key gauge from the CME Group that measures fed funds probabilities puts odds of a rate cut at the July 31st meeting at 100% (as of June 28 – probabilities subject to change).
We'll keep it simple and spare you the academic theory explaining why lower interest rates are often a tailwind for stocks. In a nutshell, stocks face less competition from interest-bearing assets such as bonds.
But let’s add one more wrinkle–economic growth.
Falling rates in 2001 and 2008 failed to stem the outflow out of stocks as economic growth faltered. And, rising rates between late 2015 and September 2018 didn’t squash the bull market.
During the mid-1980s, mid-1990s, and late 1990s, rate cuts by the Fed, coupled with economic growth, fueled market gains.
It’s not a coincidence that bear markets coincide with recessions and the bulls are inspired by economic expansions. Ultimately, steady economic growth has historically been an important ingredient for stock market gains.
Control what you can control.
You can’t control the stock market, you can’t control headlines, and timing the market isn’t a realistic tool. But, you can control your portfolio.
Your plan should consider your time horizon, risk tolerance, and financial goals. There is always risk when investing, but we tailor recommendations to our clients with their financial goals in mind.
If you’re unsure or have questions, let’s have a conversation. That’s what we’re here for.
This research material has been prepared by Horsesmouth.
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 & Associates are independently owned and operated.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, consult with your financial advisor.
Past performance is no guarantee of future results.
Expect volatility, but avoid letting the headlines alter your plans.
Recent headlines have added volatility to the markets. There will always be new headlines, and any of them could mean turbulence for Wall Street.
As an investor and retirement saver, how much will this turmoil matter to you in the long run? Not as much as you may expect. There are many good reasons to remain in the market rather than attempting to intuit or guess when and where big shifts in fortune may arrive.
What is market timing? Michael Tanney, one of the directors at Magnus Financial Group, puts it plainly: “Market timing doesn't work […] Every bear market has historically given way to a bull market […] No one can predict the timing of these moments.” Market timing is the use of predictive tools and techniques to predict how the market may move and make investments accordingly.
When you work with your trusted financial professional and cultivate a financial strategy, your need to factor in market timing diminishes. You also don’t need to sit still if you have concerns. Instead, you have a strategy that is based on your goals, risk aversion, and time horizon. This balanced approach means that you won’t need to make hurried decisions when volatility arises.
There may well be a situation in which you may need to adjust your strategy, but it’s also possible that snap judgements might cause you to undercut yourself. The market reacts to headlines, but it’s just as common that quick dips might see fast relief.
Remember that many investors come to regret emotional decisions. The average recovery time for bear markets (meaning a downward swing of 20% or more), where equities return to bull market levels? About 3.2 years (measuring each recovery since 1900). For that reason, investing with the longer term in mind, with periodic and carefully considered rebalancing (alongside your trusted financial professional), may allow you to better weather headline-induced peaks and valleys.
Breaking news should not dissuade you from pursuing your long-term objectives. The stock market is always dynamic. Episodes of upward and downward volatility come and go. A wise investor acknowledges that downturns are expected and has patience when they do. Decisions made during market turbulence can backfire. While some of these ups and downs may be significant enough to signal a change in your asset allocation, they need not change the fundamentals of your investment policy.
A look at where stocks were in 2009 and how they have performed since.
Where were you on March 9, 2009? Do you remember the headwinds hitting Wall Street then? When the closing bell rang at the New York Stock Exchange that Monday afternoon, it marked the end of another down day for equities. Just hours earlier, the Wall Street Journal had asked: “How Low Can Stocks Go?”
The Standard & Poor’s 500 stock index answered that question by sinking to 676.53, even with mergers and acquisitions making headlines. The index was under 700 for the first time since 1996. The Dow Jones Industrial Average tumbled to a closing low of 6,547.05.2
To quote Dickens, “It was the best of times, it was the worst of times.” It was the bottom of the bear market – and it was also the best time, in a generation, to buy stocks.
The next day, a rally began. Buoyed by news of one major bank announcing a return to profitability and another stating it would refrain from further government bailouts, the Dow rose 597 points for the week ending on March 16, 2009. On March 26, the Dow settled at 7,924.56, more than 20% above its March 9 settlement. The bull market was back.
This bull market would make all kinds of history. In fact, it would become the longest bull market in history – at least by one measure.
While the last 10-plus years have seen some big ups and downs for the benchmark S&P 500, the index has never closed more than 20% below a recent peak in that span, meaning the current bull market is more than 10 years old.
Ten years later (at the close on Friday, March 8, 2019), the S&P 500 had risen 305.5% from that low. The Dow had gained 288.7%.
How about the Nasdaq Composite? 483.94%. (As you look at these impressive numbers, remember that past performance may not be indicative of future results.)
Those gains did not come without turbulence, and stocks in no way turned into a “sure thing.” The risk inherent in the market is still substantial along with the potential for loss. The lesson this long bull market has taught is simply that the bad times in the stock market are worth enduring. Good times may replace those bad times more swiftly than anyone can anticipate.
Key lessons for retirement savers.
You learn lessons as you invest in pursuit of long-run goals. Some of these lessons are conveyed and reinforced when you begin saving for retirement, and others, you glean along the way.
First and foremost, you learn to shut out much of the “noise.” News outlets take the temperature of global markets five days a week (and on the weekends), and economic indicators change weekly or monthly. The longer you invest, the more you learn that breaking news can create market volatility. While the day trader sells or buys in reaction to immediate economic or market news, the buy-and-hold investor has a long-term perspective and understands that the market can have periods of volatility.
You learn how much volatility you can stomach. Market sentiment can quickly shift and so can index performance. Across 2008-18, the S&P 500 had a cumulative total return (dividends included) of almost 140%, compared to just 8% for the MSCI Emerging Markets Index. During 2003-07, though, the Emerging Markets index returned 391%, while the S&P returned 83%.
Here are the recent yearly total returns of the S&P: 2013, +30.71%; 2014, +13.57%; 2015, +1.30%; 2016, +11.94%; 2017, +21.83%; 2018, -4.38%. Do you see any kind of “norm” or pattern there? That is the kind of year-to-year volatility that leads people to find an asset allocation that is comfortable for them.
You learn why liquidity matters. The older you get, the more you appreciate being able to quickly access your money. A family emergency might require you to tap into your investment accounts. An early retirement might prompt you to withdraw from retirement funds sooner than you anticipate. Should you misgauge your need for liquidity, you could find yourself under sudden financial pressure.
You learn the merits of rebalancing your portfolio. To the neophyte investor, rebalancing when the bulls are stampeding may seem illogical. If your portfolio is disproportionately weighted in equities, is that a problem? It could be.
Across a sustained bull market, it is common to see your level of risk rise parallel to your return. When equities return more than other asset classes, they end up representing an increasingly large percentage of your portfolio’s total assets. Correspondingly, your cash allocation shrinks.
The closer you get to retirement, the less tolerant of risk you may become. Even if you are strongly committed to growth investing, approaching retirement while taking on more risk than you feel comfortable with is problematic, as is approaching retirement with an inadequate cash position. Rebalancing a portfolio restores the original asset allocation, realigning it with your long-term risk tolerance and investment strategy. It may seem counterproductive to sell “winners” and buy “losers” as an effect of rebalancing, but as you do so, remember that you are also saying goodbye to some assets that may have peaked, while saying hello to others that might be poised to rise.
You learn not to get too attached to certain types of investments. Sometimes an investor will succumb to familiarity bias, which is the rejection of diversification for familiar investments. Why does he or she have 9% of their portfolio invested in just two Dow components? Maybe the investor just likes what those firms stand for or has worked for them. The inherent problem is that the performance of those companies exerts a measurable influence on overall portfolio performance.
Sometimes you see people invest heavily in sectors that include their own industry or career field. An investor works for an oil company, so they get heavily into the energy sector. When energy companies go through a rough patch, that investor’s portfolio may be in for a rough ride. Correspondingly, that investor may have less capacity to tolerate stock market risk than a faculty surgeon at a university hospital, a federal prosecutor, or someone else whose career field or industry will be less buffeted by the winds of economic change.
You learn to be patient. Time teaches you the importance of investing based on your time horizon, risk tolerance, and goals. The pursuit of your long-term financial objectives should not falter. Your financial future and your quality of life may depend on realizing them.
It’s common practice for the president or CEO of a company to include a letter to shareholders in the annual report. Berkshire Hathaway’s chairman and CEO, Warren Buffett, doesn’t buck the trend.
Buffett's recently release annual letter captures plenty of attention, and this year was no exception. The focus is on the investments and operating performance of Berkshire Hathaway, but the Oracle of Omaha also includes many sound principles for wealth creation as well as his general thoughts about the U.S. economy.
From 1965-2018, the market value of Berkshire Hathaway has posted a compounded annual gain of 20.5%, more than double the S&P 500’s advance, which averaged 9.5%, including reinvested dividends.
There are two things that pop out here. First, Buffett's enviable record and his ability to create long-term wealth using time-tested principles. Second, the S&P 500’s record illustrates that a well-diversified stock portfolio has been a critical component of a long-term financial plan.
In case you’re wondering, Berkshire Hathaway’s overall gain has been 2,472,627% versus the S&P 500’s still-impressive 15,019%.
One more data point – Buffet continues to perform well, topping the S&P 500 Index in eight of the last 11 years.
Focus on the forest–not the trees
Your financial plan is comprised of many parts. This would equate to what Buffett calls the “economic trees.” In other words, let’s not get to caught up on any one investment.
“A few of our trees are diseased and unlikely to be around a decade from now. Many others, though, are destined to grow in size and beauty,” Buffett writes.
He won’t get every investment right. Neither will we. Berkshire holds a substantial position in Kraft Heinz (KHC), whose shares recently tumbled after the company delivered poor results and slashed its dividend.
But, if we review the portfolio as we’d view the forest, we find a diversity of trees, wildlife, and plants. It’s a work of beauty. This is why we build our client's portfolios from the bottom up. Like the forest, we diversify our client's investments and create a portfolio that's a good fit for them with their financial goals in mind.
As Buffett opines (and we agree), “I have no idea as to how stocks will behave next week or next year. Predictions of that sort have never been a part of our activities.”
That said, you may recall the market decline just a few short months ago, where we experienced a 19.8% drop in the S&P 500 Index (September peak to Dec 24th trough).
How did that decline sit with you? We do our best to gauge our client's tolerance for risk and build their portfolios accordingly because we know how important behavior is in the investing process. The best portfolio we can create for a client is the one they're going to stick with.
If you found yourself fretting over the volatility a few months ago and we haven't spoken, don't hesitate to call us to see if we need to make any adjustments to your portfolio. If on the other hand, you slept soundly, it would suggest your investment mix in relation to your tolerance for risk is on target.
“At Berkshire, the whole is greater–considerably greater–than the sum of the parts.”
We feel the same way about your financial plan.
The American tailwind
Warren Buffett is bullish on America.
In 1942, he invested $114.75 in three shares of Cities Service preferred stock. At the time, the country was mobilizing for what would be a massive war effort.
If Buffett had invested his $114.75 into a no-fee S&P 500 index fund, and all dividends had been reinvested, his stake would have grown to $606,811 (pre-taxes) on January 31, 2019 (the latest data available before the printing of his letter).
The U.S. was victorious in WWII, but challenges never cease.
We’ve endured the cold war, the divisiveness of the 1960s, OPEC’s oil embargo, double-digit inflation, soaring interest rates, a rising federal deficit, the tragedy of 9-11, the war on terrorism, the financial panic of 2008, the ensuing Great Recession, falling home prices, and more.
Let’s say that you had had the foresight to see the oncoming explosion in the federal deficit, one that is up 40,000% over the last 77 years.
“To ‘protect’ yourself,” Buffett said, “You might have eschewed stocks and opted instead to buy three ounces of gold with your $114.75. And what would that supposed protection have delivered? You would now have an asset worth about $4,200.” Compare that to the performance of the S&P 500!
What is this nation’s secret sauce? The answer is complex and difficult; yet, the overarching theme lies in front of us.
The experiment called the United States has birthed and attracted the best and the brightest. Freedom and opportunity are its calling cards. Today, we are the wealthiest nation on Earth, and we continue to ride the wave of innovation and enjoy the benefits.
But, is that wave about to crash on the shore?
A recent piece by Morgan Stanley entitled, Millennials, Gen Z and the Coming ‘Youth Boom’ Economy, complements Buffett’s optimistic viewpoint. The population of the Millennials will overtake the Baby Boomers this year, and “Gen Z, born between 1997 and 2012, will overtake the Millennials as the country's largest cohort by 2034,” it said. For the U.S. economy, “The demographic tailwinds created by these high-population cohorts could be significant, delivering the kind of ‘youth jolt’ that the Baby Boomers were famous for.”
Sure, we can’t know when the next recession will ensue or some of the challenges we’ll face as a nation in the coming years. Yet, as Buffett sums up his annual letter, “Over the next 77 years, the major source of our gains will almost certainly be provided by The American Tailwind. We are lucky–gloriously lucky–to have that force at our back.”
2019 – A bright start to the New Year
First, let’s go back to December. A headline in the Street.com summed it up well: "Dow Gains on Last Day of Worst December Since the Depression." Even a 7% bounce in the final week of the year didn’t prevent a performance that was compared to the early 1930s.
When the S&P 500 Index touched its bottom on Christmas Eve, the broad-based index of 500 large U.S. companies had shed 19.8% from its September 20 peak. We were barely 0.2 percentage points from officially entering a bear market.
Market turmoil in the fall and December’s action were especially ugly. Steep market corrections are not something we look forward to; they are impossible to consistently predict, but they come with the territory.
As we've repeatedly said, your investment plan must incorporate unexpected detours. The disciplined investor, who divorces the emotional component from the investment plan, chooses the best path to meet his or her long-term financial goals.
That said, 2019 has been much better:
There are no guarantees a deal will be inked, but a March 4 headline in the Wall Street Journal summed up recent sentiment:
"U.S., China Close In on Trade Deal"
Both countries could lift some tariffs imposed last year, and Beijing would agree to ease restrictions on American products
A trade deal that pries open Chinese markets to U.S. products and services, protects U.S. intellectual property rights, and ends forced technology transfers (and one with strong enforcement provisions) would not only benefit the U.S. economy, but a deal between the world’s largest economies would sweep away one cloud of uncertainty that has plagued investors over the last year.
10 years gone
On March 9, 2009, the Dow Jones Industrial Average closed at 6,547. It marked the bottom of the last bear market. On February 28, 2019, the Dow finished the day at 25,916, less than 1,000 points from its prior peak.
The bull market turns ten years old this month. How much life is left in the bull? We are in the latter stages of the cycle, but much will depend on the economic fundamentals going forward. With the Fed on hold, inflation contained, and the economy moving forward, the fundamentals are currently sound.
But never discount volatility. Stocks seem to take the stairs up and the elevator down.
In the spirit of celebrating the last ten years, let’s look at a partial list of the worries that temporarily sidelined the bull market (and caused short bouts of volatility), but didn’t sideline those with a long-term view:
The European debt crisis…Greece... global growth worries…U.S. growth is slowing...China is slowing...the dollar is too strong...Japan earthquake/tsunami/nuclear disaster...U.S. debt downgrade...fiscal cliff...Obama will be re-elected...Trump will get elected...Hillary will get elected...the Fed will end bond buys...Fed will start hiking interest rates...falling oil prices...Ebola scare...Russia invades Ukraine...North Korea...ISIS...Syria...Brexit...trade tensions...acrimony in D.C....and stocks have risen too quickly.
Shorter-term risks never completely abate. But Warren Buffett’s message has been consistent. Don’t bet against America.
That truth must always be recognized.
When financial markets have a bad day, week, or month, discomforting headlines and data can swiftly communicate a message to retirees and retirement savers alike: equity investments are risky things, and Wall Street is a risky place.
All true. If you want to accumulate significant retirement savings or try and grow your wealth through the opportunities in the markets, this is a reality you cannot avoid.
Regularly, your investments contend with assorted market risks. They never go away. At times, they may seem dangerous to your net worth or your retirement savings, so much so that you think about getting out of equities entirely.
If you are having such thoughts, think about this: in the big picture, the real danger to your retirement could be being too risk averse.
Is it possible to hold too much in cash? Yes. Some pre-retirees do. (Even some retirees, in fact.) They have six-figure savings accounts, built up since the Great Recession and the last bear market. It is a prudent move. A dollar will always be worth a dollar in America, and that money is out of the market and backed by deposit insurance.
This is all well and good, but the problem is what that money is earning. Even with interest rates rising, many high-balance savings accounts are currently yielding less than 0.5% a year. The latest inflation data shows consumer prices advancing 2.3% a year. That money in the bank is not outrunning inflation, not even close. It will lose purchasing power over time.
Consider some of the recent yearly advances of the S&P 500. In 2016, it gained 9.54%; in 2017, it gained 19.42%. Those were the price returns; the 2016 and 2017 total returns (with dividends reinvested) were a respective 11.96% and 21.83%.
Yes, the broad benchmark for U.S. equities has bad years as well. Historically, it has had about one negative year for every three positive years. Looking through relatively recent historical windows, the positives have mostly outweighed the negatives for investors. From 1973-2016, for example, the S&P gained an average of 11.69% per year. (The last 3-year losing streak the S&P had was in 2000-02.)
Your portfolio may not return as well as the S&P does in a given year, but when equities rally, your household may see its invested assets grow noticeably. When you bring in equity investment account factors like compounding and tax deferral, the growth of those invested assets over decades may dwarf the growth that could result from mere checking or savings account interest.
At some point, putting too little into investments and too much in the bank may become a risk – a risk to your retirement savings potential. At today’s interest rates, the money you are saving may end up growing faster if it is invested in some vehicle offering potentially greater reward and comparatively greater degrees of risk to tolerate.
Having a big emergency fund is good. You can dip into that liquid pool of cash to address sudden financial issues that pose risks to your financial equilibrium in the present.
Having a big retirement fund is even better. When you have one of those, you may confidently address the biggest financial risk you will ever face: the risk of outliving your money in the future.
We hope you had a wonderful holiday season. Whether you reached your personal goals in 2018, faced challenges, or are looking for a 2019 reboot, let's take a moment to hit on the key themes from the past year.
Flashback. Before we get started, let's reflect back one year ago as we left 2017 and began 2018. To jog your memory, 2017 was an excellent year for stock markets. In the U.S., the S&P 500 had increased more than 19% and global markets fared even better. Perhaps the most remarkable element of the 2017 stock market though was the unprecedented lack of volatility. The entire year, at no point did the S&P 500 have an intra-year drop of more than 2.8%.
To give you some perspective on this, between 1998-2017, the average intra-year stock market pullback was 15.6% (Charles Schwab, Investing Insights, Oct. 2018).
Volatility Strikes Back. So January 2018 began on a firm footing, building on highs in the wake of tax reform, low interest rates, low inflation and strong corporate profit growth. If stocks rise or fall on the fundamentals (and they usually do), the outlook was quite favorable as the year began.
However, while we will always believe no one can consistently time the peaks and valleys of the market, when there’s too much good news priced into stocks, any disappointment can create volatility.
A spike in Treasury bond yields tripped up bullish sentiment early in 2018. President Trump’s decision to level the playing field of international trade created uncertainty in the first half. Then, investors decided trade wasn’t important—until they decided late in the year that it was.
Another bout of selling began in October and the decline accelerated in December. Several factors contributed to the weakness, including fears that continued rate hikes by the Fed might stifle economic activity in 2019 and quash profit growth.
We’re also experiencing heightened uncertainty brought on by the ongoing trade war with China. In addition, key tech stocks (in particular, the FANG stocks – Facebook, Amazon, Netflix, and Google) that had been market leaders for several years lost their mojo and pulled on the major averages.
As the year came to a close, the peak-to-trough decline in the S&P 500 Index totaled 19.8% (St. Louis Federal Reserve thru 12.24.18). We exceeded the long-term average annual peak-to-trough drawdown by 4 percentage points. Still, we’re just shy of the 20% threshold, which is the commonly accepted definition of a bear market.
If Christmas Eve marks the bottom of the sell-off, it won’t be the first time we’ve had a steep correction that side-stepped a bear market. We witnessed similar declines in 2011 and 1998. In both cases, a profit-crushing recession was avoided.
But let us offer a little bit of perspective. The Q4 (quarter four) decline may have been unsettling. Nevertheless, the total decline in the S&P 500, including reinvested dividends, amounted to just over 4% (S&P Dow Jones Indexes) for calendar year 2018.
Overseas stocks fared quite a bit worse, as the global economy shifted into a lower gear earlier in the year, and trade tensions, which are more likely to rattle foreign economies, added to woes.
Many in their 20s and 30s don't even blink at a stock market decline. In fact, these can be some of the best times for younger investors (and if you have more than 10 years before retirement, we'd classify you as a younger investor) to be scooping up more shares at discounted prices.
Take note of this if you fit that description and consider your mindset. If you're still decades out from retirement and maintain a long-term time horizon, the near bear market declines we've recently seen shouldn't scare you, they should excite you. This is especially true if you have 401(k) and Roth IRA contributions on autopilot. By purchasing shares at a fixed interval every month, you take advantage of a strategy called dollar-cost averaging, which allows you to purchase a greater number of shares over time.
As we age though, we can't take such a sanguine view, and a more conservative mix of investments becomes paramount. Though we are unlikely to match major market indexes on the way up, we can still anticipate longer-term appreciation and sleep at night when the unpredictable market sell-offs materialize.
The same can be said of accounts that hold college savings, especially if the beneficiary is in college and doesn’t have the time to recover from a sharp dip in stocks. For those in the most conservative portfolios, the drop in the major market averages had little impact on your overall net worth.
Our recommendations are based on many different factors, including risk aversion. It’s rarely profitable to make decisions based on current market sentiment (i.e., panic selling or euphoria that sends us chasing the latest trends).
What’s in store for 2019
While 2018 began with unbridled optimism, caution quickly entered the picture and most major U.S. indexes had their first downturn since 2008.
In 2019, we have the mirror image. There is no shortage of cautious sentiment. But the fragrance that’s in the air today doesn’t always determine market direction throughout the year. As we’ve seen, markets can be unpredictable as investors try to anticipate events that may impact the economy and corporate profits.
Discerning Market Trends. We've always found it interesting that some analysts hope to discern trends from various calendar-like indicators. We’ve just entered a new year, and typically the so-called January barometer gets some play in that arena. Loosely defined, some say that how January performs sets the tone for the rest of the year.
Of course, if stocks perform well in January, the bulls already have a leg up on the bears. Throw in reinvested dividends and a natural upward bias in stocks, and it helps explain why a positive January usually results in a positive year.
But, that wasn’t the case for 2018. And by the same token, 2016’s weak start didn’t carry over into the rest of the year.
Then, there was this October 4th article in the Wall Street Journal: “Midterms Are a Boon for Stocks—No Matter Who Wins.” On average, the months of October, November and December have been the top-performing months during any year that included a midterm election (1962-2014). In 2018, though, there was a failure to launch.
While there’s still time left on the calendar, history indicates that Year 2 Q4-Year 3 Q2 is regularly the best three-quarter performance period of the 16-quarter cycle that begins just after a president has been elected or reelected. That’s using data on the performance of the Dow going back to 1896.
Finally, we could hang our hat on one other midterm indicator. That is, the S&P 500 has finished in positive territory in every post 12-month midterm period since 1950.
We say “could” because, while reviewing past election-year patterns to gain useful insights can be interesting (or nerdy depending on your perspective), we must stress this doesn't substitute for a well-thought-out plan that takes unexpected detours into account.
Table 1: Key Index Returns
Source: Wall Street Journal, MSCI.com, Morningstar
YTD returns: Dec 29, 2017-Dec 31, 2018
**in US dollars
We know that stocks can be unpredictable over a shorter period, and sell-offs are normal. And they aren’t pleasant. But we take precautions to minimize volatility and, more importantly, keep you on track toward your long-term financial goals.
We came across a recent piece by LPL Research that highlighted this. They found that the S&P 500 has lost an average of 31% every five years since WWII. Yet, the index has registered an annual advance 75% of the time (Macrotrends) and almost 80% when dividends are reinvested (NYU Stern School of Business Stock/Bond Returns).
Further, the S&P 500 has averaged an annual advance of nearly 10% since the late 1920s (CNBC/Investopedia).
During up markets and down markets, we like to stress the importance of your investment plan and the progress you're making toward your financial goals.
Stocks will hit small bumps in the road, and occasionally hit a major pothole, but the long-term data highlight that stocks have easily outperformed bonds, T-bills, CDs, and inflation.
As Warren Buffett opined a couple of years ago, “It’s been a terrible mistake to bet against America, and now is no time to start.” (Investment U, Motley Fool).
We trust you’ve found this review to be educational and helpful. As always, we're humbled to be in a position to serve and provide financial advice and guidance for each and every one of our clients. If you have questions or would like to discuss any matters above, please feel free to give us a call.
As 2019 gets underway, we want to wish you and your loved ones a happy and prosperous new year!
Gary Blom & Michael Howell
The views and opinions expressed herein do not necessarily represent the views and opinions of SCF Securities, Inc. or any SCF-related entity.
This research material has been prepared by Horsesmouth
Things you can do for your future as the year unfolds
What financial, business, or life priorities do you need to address for 2019? Now is a good time to think about the investing, saving, or budgeting methods you could employ toward specific objectives, from building your retirement fund to lowering your taxes. You have plenty of options. Here are a few that might prove convenient.
Can you contribute more to your retirement plans this year?
In 2019, the yearly contribution limit for a Roth or traditional IRA rises to $6,000 ($7,000 for those making “catch-up” contributions). Your modified adjusted gross income (MAGI) may affect how much you can put into a Roth IRA: singles and heads of household with MAGI above $137,000 and joint filers with MAGI above $203,000 cannot make 2019 Roth contributions.1
For tax year 2019, you can contribute up to $19,000 to 401(k), 403(b), and most 457 plans, with a $6,000 catch-up contribution allowed if you are age 50 or older. If you are self-employed, you may want to look into whether you can establish and fund a solo 401(k) before the end of 2019; as employer contributions may also be made to solo 401(k)s, you may direct up to $56,000 into one of those plans.1
Your retirement plan contribution could help your tax picture. If you won’t turn 70½ in 2019 and you participate in a traditional qualified retirement plan or have a traditional IRA, you can cut your taxable income through a contribution. Should you be in the new 24% federal tax bracket, you can save $1,440 in taxes as a byproduct of a $6,000 traditional IRA contribution.2
What are the income limits on deducting traditional IRA contributions? If you participate in a workplace retirement plan, the 2019 MAGI phase-out ranges are $64,000-$74,000 for singles and heads of households, $103,000-$123,000 for joint filers when the spouse making IRA contributions is covered by a workplace retirement plan, and $193,000-$203,000 for an IRA contributor not covered by a workplace retirement plan, but married to someone who is.1
Roth IRAs and Roth 401(k)s, 403(b)s, and 457 plans are funded with after-tax dollars, so you may not take an immediate federal tax deduction for your contributions to them. The upside is that if you follow I.R.S. rules, the account assets may eventually be withdrawn tax free.3
Your tax year 2019 contribution to a Roth or traditional IRA may be made as late as the 2020 federal tax deadline – and, for that matter, you can make a 2018 IRA contribution as late as April 15, 2019, which is the deadline for filing your 2018 federal return. There is no merit in waiting until April of the successive year, however, since delaying a contribution only delays tax-advantaged compounding of those dollars.1,3
Should you go Roth in 2019?
You might be considering that if you only have a traditional IRA. This is no snap decision; the Internal Revenue Service no longer gives you a chance to undo it, and the tax impact of the conversion must be weighed versus the potential future benefits. If you are a high earner, you should know that income phase-out limits may affect your chance to make Roth IRA contributions. For 2019, phase-outs kick in at $193,000 for joint filers and $122,000 for single filers and heads of household. Should your income prevent you from contributing to a Roth IRA at all, you still have the chance to contribute to a traditional IRA in 2019 and go Roth later.1,4
Incidentally, a footnote: distributions from certain qualified retirement plans, such as 401(k)s, are not subject to the 3.8% Net Investment Income Tax (NIIT) affecting single/joint filers with MAGIs over $200,000/$250,000. If your MAGI does surpass these thresholds, then dividends, royalties, the taxable part of non-qualified annuity income, taxable interest, passive income (such as partnership and rental income), and net capital gains from the sale of real estate and investments are subject to that surtax. (Please note that the NIIT threshold is just $125,000 for spouses who choose to file their federal taxes separately.)5
Consult a tax or financial professional before you make any IRA moves to see how those changes may affect your overall financial picture. If you have a large, traditional IRA, the projected tax resulting from a Roth conversion may make you think twice.
What else should you consider in 2019?
There are other things you may want to do or review.
Make charitable gifts. The individual standard deduction rises to $12,000 in 2019, so there will be less incentive to itemize deductions for many taxpayers – but charitable donations are still deductible if they are itemized. If you plan to gift more than $12,000 to qualified charities and non-profits in 2019, remember that the paper trail is important.6
If you give cash, you need to document it. Even small contributions need to be demonstrated by a bank record or a written communication from the charity with the date and amount. Incidentally, the I.R.S. does not equate a pledge with a donation. You must contribute to a qualified charity to claim a federal charitable tax deduction. Incidentally, the Tax Cuts and Jobs Act lifted the ceiling on the amount of cash you can give to a charity per year – you can now gift up to 60% of your adjusted gross income in cash per year, rather than 50%.6,7
What if you gift appreciated securities? If you have owned them for more than a year, you will be in line to take a deduction for 100% of their fair market value and avoid capital gains tax that would have resulted from simply selling the investment and donating the proceeds. The non-profit organization gets the full amount of the gift, and you can claim a deduction of up to 30% of your adjusted gross income.8
Does the value of your gift exceed $250? It may, and if you gift that amount or larger to a qualified charitable organization, you should ask that charity or non-profit group for a receipt. You should always request a receipt for a cash gift, no matter how large or small the amount.8
If you aren’t sure if an organization is eligible to receive charitable gifts, check it out at irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check.
Open an HSA. If you are enrolled in a high-deductible health plan, you may set up and fund a Health Savings Account in 2019. You can make fully tax-deductible HSA contributions of up to $3,500 (singles) or $7,000 (families); catch-up contributions of up to $1,000 are permitted for those 55 or older. HSA assets grow tax deferred, and withdrawals from these accounts are tax free if used to pay for qualified health care expenses.9
Practice tax-loss harvesting. By selling depreciated shares in a taxable investment account, you can offset capital gains or up to $3,000 in regular income ($1,500 is the annual limit for married couples who file separately). In fact, you may use this tactic to offset all your total capital gains for a given tax year. Losses that exceed the $3,000 yearly limit may be rolled over into 2020 (and future tax years) to offset ordinary income or capital gains again.10
Pay attention to asset location. Tax-efficient asset location is an ignored fundamental of investing. Broadly speaking, your least tax-efficient securities should go in pre-tax accounts, and your most tax-efficient securities should be held in taxable accounts.
Review your withholding status. You may have updated it last year when the I.R.S. introduced new withholding tables; you may want to adjust for 2019 due to any of the following factors.
* You tend to pay a great deal of income tax each year.
* You tend to get a big federal tax refund each year.
* You recently married or divorced.
* A family member recently passed away.
* You have a new job, and you are earning much more than you previously did.
* You started a business venture or became self-employed.
Are you marrying in 2019? If so, why not review the beneficiaries of your workplace retirement plan account, your IRA, and other assets? In light of your marriage, you may want to make changes to the relevant beneficiary forms. The same goes for your insurance coverage. If you will have a new last name in 2019, you will need a new Social Security card. Additionally, the two of you, no doubt, have individual retirement saving and investment strategies. Will they need to be revised or adjusted once you are married?
Are you coming home from active duty? If so, go ahead and check the status of your credit and the state of any tax and legal proceedings that might have been preempted by your orders. Make sure any employee health insurance is still in place. Revoke any power of attorney you may have granted to another person.
Consider the tax impact of any upcoming transactions. Are you planning to sell (or buy) real estate next year? How about a business? Do you think you might exercise a stock option in the coming months? Might any large commissions or bonuses come your way in 2019? Do you anticipate selling an investment that is held outside of a tax-deferred account? Any of these actions might significantly impact your 2019 taxes.
If you are retired and older than 70½, remember your year-end RMD. Retirees over age 70½ must begin taking Required Minimum Distributions from traditional IRAs, 401(k)s, SEP IRAs, and SIMPLE IRAs by December 31 of each year. The I.R.S. penalty for failing to take an RMD equals 50% of the RMD amount that is not withdrawn.4,11
If you turned 70½ in 2018, you can postpone your initial RMD from an account until April 1, 2019. All subsequent RMDs must be taken by December 31 of the calendar year to which the RMD applies. The downside of delaying your 2018 RMD into 2019 is that you will have to take two RMDs in 2019, with both RMDs being taxable events. You will have to make your 2018 tax year RMD by April 1, 2019, and then take your 2019 tax year RMD by December 31, 2019.11
Plan your RMDs wisely. If you do so, you may end up limiting or avoiding possible taxes on your Social Security income. Some Social Security recipients don’t know about the “provisional income” rule – if your adjusted gross income, plus any non-taxable interest income you earn, plus 50% of your Social Security benefits surpasses a certain level, then some Social Security benefits become taxable. Social Security benefits start to be taxed at provisional income levels of $32,000 for joint filers and $25,000 for single filers.11
Lastly, should you make 13 mortgage payments in 2019? There may be some merit to making a January 2020 mortgage payment in December 2019. If you have a fixed-rate loan, a lump-sum payment can reduce the principal and the total interest paid on it by that much more.
Talk with a qualified financial or tax professional today. Vow to focus on being healthy and wealthy in 2019.
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.
1 - forbes.com/sites/ashleaebeling/2018/11/01/irs-announces-2019-retirement-plan-contribution-limits-for-401ks-and-more [11/1/18]
2 - irs.com/articles/2018-federal-tax-rates-personal-exemptions-and-standard-deductions [11/2/17]
3 - irs.gov/Retirement-Plans/Traditional-and-Roth-IRAs [7/10/18]
4 - forbes.com/sites/bobcarlson/2018/10/26/7-ira-strategies-for-year-end-2018/ [10/26/18]
5 - irs.gov/newsroom/questions-and-answers-on-the-net-investment-income-tax [6/18/18]
6 - crainsdetroit.com/philanthropy/what-donors-need-know-about-tax-reform [10/21/18]
7 - thebalance.com/tax-deduction-for-charity-donations-3192983 [7/25/18]
8 - schwab.com/resource-center/insights/content/charitable-donations-the-basics-of-giving [7/2/18]
9 - kiplinger.com/article/insurance/T027-C001-S003-health-savings-account-limits-for-2019.html [8/28/18]
10 - schwab.com/resource-center/insights/content/reap-benefits-tax-loss-harvesting-to-lower-your-tax-bill [10/7/18]
11 - fool.com/retirement/2018/01/29/5-things-to-consider-before-tapping-your-retiremen.aspx [1/29/18]