this 1st Week of August 2020 thoughts
Updated: Feb 4
Reminiscences of an American Capitalist: “Capitalism…where no one goes bankrupt; the Fed buys corporate bonds and companies have access to unlimited funds a 0%.”
I am bracing clients for higher taxes in the coming years and we have limited strategies to fight back: ROTH IRA conversions, delaying / bundling income, tax-loss harvesting and Qualified Charitable Contributions. While it is uncertain how federal and state governments will deal with lower revenues and higher health care costs, you can bet on taxes going up no matter who is elected in November. We have never had a time where the government has printed so much money knowing all the while that the money being paid out to stabilize the economy will need to be paid back. 😲 Why does this matter to you? You have always heard; “it is not how much you make; it is how much you KEEP. Now more than ever it is critical that your CPA and I work together to estimate your 2020 taxes as the year progresses. ROTH Conversions are one of the most important strategies, as is tax loss selling. We will be very busy this fall!
The Covid-19 pandemic forced investment firm’s employees home and security is front and center as communication has moved to email and Go-to-Meeting. I launched Skye Advisors building out the right “tech stack” knowing cyber-security solutions would make your life easier no matter what the weather was, where you lived or where my office was. Last summer the founder and CEO of RightSize Solutions brought me the same rigorous policies and protocols that major investment firms used and made them affordable to my one-person firm. Who knew that my investment of time, money and the lengthy learning curve would make the transition to working from home work so well? The end result of this time is a highly secure and compliant “environment” without sacrificing data transmission speed or quality. Robust end device management means all of my log-ons and access patterns are tracked and monitored and when those patterns change, the red flags will go up. Security blocks will prevent fraud at any access level and with Right Size I simply have to call my tech team if I find there have been logins from strange locations or multi-factor authentication breaches. 😊Why does this matter to you? If I am safer, you are safer!
What is “Biggest of the Big Tech Worth”? They are all rich in price, but they seem to all have a printing machine that lets them keep churning out cash. Last week I wrote these 4 stocks were worth $6.2 trillion: the combined market cap of Apple, Amazon, Microsoft, and Google is now greater than the GDP of every country in the world if you take out the US and China. Let that sink in: 4 technology companies, are worth more than the world, except the U.S and China. ☹ Why does this matter to you? It may have been 20 years ago, but we all remember the technology crash of 2000.
If you think the economy began unraveling when COVID-19 ravaged New York City in April, look further back to the end of 2019: signs of recession were surfacing even before the pandemic hit. One curious sign: the price of luxury cars had dropped nearly 50% over the prior year because lending standards had tightened to reflect the weakening economy. Another sign of how weak the economy was and will likely remain so for some time: consumption is slowing drastically. The U.S. savings rate is now 20% as people are saving more and making do with less. You cannot have an unemployment rate of 10% and expect that nothing will filter down to the economy! So why is the market holding up? The 3 different stimulus packages have muffled the misery many are experiencing, reports Jeff Gundlach, one of my long-time favorite pundits. Another sure-fire “tell?” Unemployment first hits people on the bottom on the income spectrum, but Gundlach expects layoffs to start climbing up the income ladder. The white-collar job market is going to get a lot worse and the reality is that the skill set of “the middle-management type of people,” may not be needed, or return. ☹ Why does this matter to you? When large swaths of the work force disappear it will take time for those workers to retrain and they will have to adjust to a lower standard of living.
I love it when clients send me pieces like this one from a Houston client! “A joint venture of Mitsubishi Corporation's Diamond Offshore Wind and RWE Renewable is joining with the University of Maine to develop the 12MW Aqua Ventus 1 floating offshore wind demonstration project off the coast of Maine.” This demonstration project, expected to be completed in 2023, will help evaluate this floating technology, monitor environmental factors, and develop best practices for offshore wind to coexist with traditional marine activities. Unlike the fossil fuel industry that was not concerned about the environmental impact of offshore oil projects, an immediate priority for the new development team is to engage with the fishing industry, maritime users, coastal communities and other interested parties to ensure the project can provide economic growth to Maine. Expect for there to be local construction jobs and other benefits during the building and assembly phase: this project could produce more than $150 million in total economic output; create hundreds of Maine-based jobs and reduce dependence on fossil fuels. 😊Why does this matter to you? Chief operating officer Sven Utermohlen said: “We see great potential for floating wind farms worldwide, especially in countries like the US, with deeper coastal waters.” Our portfolios are full of stories like this and you can expect for me to bring you more…I am working on investment solutions that will take us into the renewable energy future, combat climate change and transform our economy.
Hoping you are safe and well and finding ways to impact our community in positive ways!
Best Always, Julie
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