this 3rd Week of July 2020 thoughts
Updated: Feb 4, 2021
The bad news is nothing lasts forever, the good news is nothing lasts forever. J. Cole
We are all on information-overload and some days seem to last forever or end too soon. It feels like this hard time will never end but this week I was puzzled by this headline; “Clients Complain Advisors Go AWOL During Pandemic.” Two-thirds of investors work with financial advisors, but a third have not heard from their advisor since the pandemic began. It seems too many financial advisors are MIA at a time when you need us most, reports a new study by J.D. Power. According to JD, “their financial advisors were slow to offer guidance to clients if they offered any at all. How can this be? 31% of clients said they had not been in contact with their advisor since the COVID - 19 pandemic began. 28% said they had heard from their advisor once; 23% said they had been in contact with their advisor twice; and just 18% said they had heard from their advisor three or more times! This makes me ask the question: “Do you hear from me too much? How often do you want to hear from me? What do you want more of: a phone call; an email or virtual meeting, like Go-to-Meeting? What can I do more of to help you navigate this changing landscape? 😊 Why does this matter to you? Clients who connect with any of their advisors more often have better results. With investments, they often avoided making rash decisions like selling out and were twice as likely to say they planned to rebalance their portfolio / look for opportunities, when the time felt right. This year there have been so many changes in the tax rules, like the IRS filing deadline moving to July 15th and “No RMDS in 2020,” we need to connect more often to help you “flex with the times.” I would love to know if you feel you hear from me too much…not enough, or just right? Find time on my calendar here to share your thoughts: https://calendly.com/skyeadv/how-do-i-like-to-hear-from-you
Is there an easy way to get the upside of stocks without exposing yourself to the downside? “No” says MSCI managing director Peter Shepard. “There isn’t some fancy thing you can do with option strategies that gets around that.” The cost of hedging your portfolio with options is high right now, with missed opportunities being the bigger risk. The market’s recovery can be quick, swift: market timing may lull you into feeling better, but it could translate into lower returns, long-term. If you are worried about the next leg down, tilt your stock portfolio to higher-quality, defensive names. With bonds, balance high-quality with “junk bonds” and build your income stream by owning companies that will get through the coming year. 😊 Why does this matter to you? Recessions and market downturns are always front and center with me: we own companies I believe will get us through the downturn and into the recovery that we know will come.
Can you “set it and forget it?” An established portfolio should not have the same allocation to stocks in the 10th year of a bull market as it had in 1st year. Defensive sectors like consumer staples (think Coca Cola and things you buy every day), utilities and health care hold up better than companies that “cycle” with the economy, like financials, industrials and building stocks. Your Schwab “Jumbo Money Market” SWVXX is back down to paying a measly .03% but at least it adds stability to your portfolio. 😊 Why does this matter to you? There is no holy grail in the market today that lets you ride along with in every economic cycle. The key will be to preserve as much as possible today while looking forward to adding more in stocks as the economy improves. Sometimes NOT LOSING is better than looking for quick gains.
We spend a lot of time on SRI: Socially Responsible Investing. Also called ESG, here are the areas we investigate: Environmental / Social / Governance. What do investors value? 89% of investors look for Environmental Impact; 52% look for Human Rights; 51% look for negative screens, i.e. avoiding guns, tobacco, gambling; 37% look for Corporate Governance/ Ethics; 32% look for Corporate / Workplace Diversity; 31% look for Faith-Based Investments and 26% drill into Political Spending / Lobbying activities. 😊 Why does this matter to you? You CAN change the world by moving your money in the direction of your values. You CAN do Well and do Good…what I call “Pragmatic Optimism.”
This week the headline “Banks Set Aside Billions to Cover Losses” hit me like a ton of bricks. With tens of millions of Americans out of work and many businesses shut down or operating under restrictions due to COVID -19, three of the biggest banks, Chase, Wells Fargo and Citi, gave the broadest glimpse yet into how badly the pandemic is impacting the financial health of consumers and business alike. Borrowers are increasingly in danger of defaulting due to the downturn. The prediction of the U.S. economy returning to “normal” once businesses reopened has not played out. Bankers now are bracing for the economy to keep struggling in the months ahead and last month, the Fed told bank executives to brace for a potential double-dip recession with things deteriorating once again later this summer and into the fall. 😊 ☹ Why does this matter to you? The good news is that if you cannot imagine why the market is at these lofty levels, you might find you are smarter than it is. The bad news is we might be right anticipating another leg down.
Questions or want to talk? Book time on my calendar: https://calendly.com/skyeadv/ask-julie-about
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