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  • Writer's pictureJulie Skye

this 3rd Week of April 2021 Thoughts

Updated: Jun 8, 2021

ESG | ESG | ESG Matters

Don’t let the headlines convince you capital gains rates drive the market. Liz Ann Sonders, Schwab’s Chief Strategist writes; “there is virtually no relationship between capital gains tax rates and the S & P 500 returns the year rates changed. The last time capital gains went up (in 2013) the S & P 500 was up 30%.” The proposal to raise taxes is on those making more than $1 million a year in INCOME, not those who have accumulated more than a million. This is not a tax on the middle class or even the “average” wealthy family. There is no relationship between tax rates and economic growth…a fact that many are surprised to learn.

No inflation, they say? Here is the increase in prices of “stuff” since each hit their lows last year: Yes, prices are up.

Required Disclosures: Always read the fine print!

The foregoing content reflects the opinions of Sustainable Advisors Alliance LLC and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that any statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principal. There is no assurance any investment plan or strategy will be successful.

During times of rapid change companies and products that sound like the next sliced bread come to life and few industries have as many potential opportunities to suck consumers in as the investment industry. 2020 found too many people with too much time on their hands and time will tell if those good ideas can stand the test of time. Robinhood, a newer entrant to the investment landscape, had a goal to democratize stock trading by offering $0 stock commission. The good news is firms like Schwab responded to the competitive challenge by also cutting commissions to $0…and I am thrilled we have benefited. BUT…Last week the Massachusetts securities regulator Galvin sought to revoke Robinhood Markets’ license in the state, saying Robinhood has “continued a pattern of aggressively inducing and enticing trading among its customers—including Massachusetts customers with little or no investment experience.” Robinhood pushed back against Galvin on Thursday, filing a lawsuit seeking to quash the new state rule that holds brokers accountable for a fiduciary standard of care, which means putting customers’ interests above their own. “This lawsuit is another example of Robinhood’s complete rejection of responsibility to their customers,” Galvin said in a statement. “It’s a tactic I’ve seen employed by parties subject to enforcement actions in my tenure.” 😊Why does this matter to you? The Founding Members of SAA have decades of experience in seeing, and avoiding, the potholes that could negatively impact your financial well-being. We have the right balance of knowing when to be innovative and forward thinking, but also knowing when to give new companies, products, and services the time necessary to see if there could be any unintended consequences.

Like the new King Kong and Godzilla blockbuster I watched with my grandsons last week, another battle is waging in the large-cap U.S. Stock market: the battle of Growth (think big tech) and Value (think out of favor companies.) Each of these sectors zig when the other zags and are in, or out of favor, from one day to the next. How much of the expected economic rebound is already priced in? What happens if the vaccine promise falls short? What if this is as good as it gets? It leaves us seeing as many perceived red flags as there are theories as to what’s causing it all. “The observation we get from clients is that markets don’t “feel right”, and we absolutely get that” wrote Nicholas Colas, co-founder of DataTrek Research. “For us, a big piece of this unease comes from seeing capital markets go from distress to euphoria in such a short period of time.” Other weird stuff is going on, mused Evercore ISI’s Dennis DeBusschere, as he attempted to explain the government-bond rally: “Older investing models are bumping up against new ones and it seems we’re no longer processing reality, we’re processing information, and markets can turn on a headline.” 😲 Why does this matter to you? We all are feeling a sense fatigue…no doubt about it. Just know, though…this is what 9th Inning Investing looks like…as major market cycles come to an end…and new ones come to life.

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