The Basics of Estate Planning
June 1, 2020
3 Reasons People Give to Charity (Regardless of Religious Belief)
August 1, 2020
By Brett Freese
Market Highlights:
- Stocks had a very strong 2nd quarter. Interesting note: US Large Cap stocks underperformed US Small & Mid Cap, Emerging Markets, and International Developed Markets over the last 13 weeks
- Bonds were positive with Corporate Bonds and World Bonds leading Short-Term Government and Municipal Bonds
- Gold had another strong quarter with a 7.45% price per ounce growth rate
Economic Notes:
- The world is in recovery mode from the deepest (and likely the shortest) recession in history.
- COVID-19 fears/precautions have caused people, businesses, and governments to shut down many parts of the economy since March. Many of those businesses are closed for good.
- Unemployment has hit numbers not seen since the great depression.
- The unprecedented $2 trillion COVID-19 Stimulus Bill checks/automatic deposits were delivered to Americans.
- Congress has provided approximately $659 billion for the Paycheck Protection Program (PPP)
- The Federal Reserve kept the Federal Funds rate target range to a historic low of 0.00 – 0.25%. Note: The Federal Reserve has a dual mandate to achieve both stable prices and maximum sustainable employment
- Additionally, the Federal Reserve Bank started both in words and actions of becoming a backstop to the banks and credit here and around the world. Specifically buying US Treasury Bonds and Corporate Bonds.
- Even the most optimistic economists and Institutional Investors did not predict the strength of the market’s upward movement since the devastating declines in March.
Historical Stock Market Declines:
Market declines and inclines rarely look the same or even feel the same, but they do happen and the ups and downs are a part of the process – It is important to have a plan/strategy so emotions don’t dictate buying or selling.
A 5% or greater loss occurs about 3 times a year
A 10% or greater loss occurs about once a year
A 15% or greater loss occurs about once every 2 years
A 20% or greater loss occurs about once every 3.5 years
Please know that when stock prices go down the “market collapse gurus” receive the most air time. Likewise, when stock prices go up all the “bull market gurus” talk about how the market will continue to be up BIG. Please know that most “gurus” are great with hindsight to justify how important it is to have their voice heard.
Market Scorecard for the last 13 weeks ending 6/26/2020:
US Equities:
+14.98% S&P 500 (Index of the largest US publicly traded companies)
+17.24% Russell 2000 (Index of 2000 Small-cap US publicly traded companies)
Global Equities:
+19.56% Foreign Large – Morningstar Category
+28.18% World Small/Mid Stock – Morningstar Category
US Bonds:
+13.26% Corporate Bond – Morningstar Category
+1.00% Short Government – Morningstar Category
+5.09% Muni National Bond Index – Morningstar Category
Other:
+9.06% World Bond – Morningstar Category
+7.45% LBMA Gold Price
Market Indicators:
Inflation:
0.33% as of 06/05/20 (Down 2.00% from 2.33% in March)
Unemployment:
13.30% as of 06/05/20 (Up from 3.5 in March)
Fed Funds Target Rate:
0.00 -0.25% as of 06/26/20 (Same as 03/30/20 of 0.00 – 0.25%)
Suggested Next Steps:
- Understand that market cycles are normal. The markets go up and down in mostly unpredictable directions and amounts. The ups and downs of investments many times seem to make sense only after they happen, however, market prediction is very difficult. (i.e. the next stock market crash has been predicted every year since 2008).
- Your investments are just one factor in the success of your life, money, and purpose. Make sure that you are confident in your full financial plan, so you can successfully have an amazing ROL (Return on Life).
- Your investment allocation and diversification are important factors in both risk management and future returns. Therefore, if you have questions about your investment plan, please schedule a phone or in-person meeting with your TrustWell Financial Advisor(s).
