This Time Is Different - Adviser Investments

This Time Is Different

March 18, 2020

In This Issue:

This Time Is Different
Exclusive Podcast: Coronavirus and Your Portfolio
Fear-Driven Selloffs Create Wealth-Building Opportunities
Financial Planning in Volatile Times
Tax Payment Deadline Delayed

This Time Is Different

We haven’t seen much good news on the financial pages these days, and it’s natural for investors to be worried. Market drops like the ones we’ve experienced the last two weeks can’t help but remind many investors of the Financial Crisis of 2008 when stocks fell 50% before rebounding for a decade-long bull run.

But the good news is that this is not a repeat of 2008: This time truly is different.

The U.S. is not facing a financial crisis. Banks remain strong, in part because of changes made after the 2008–2009 rout. Our health care industry is both healthy and innovative. Unemployment remains low, though we recognize that this will change as businesses either close or curtail their hours and consumers stay home rather than venturing out to shop, to dine and to be entertained. The travel industry is being particularly hard-hit right now, but even the most downtrodden sectors (airlines, travel and leisure) will eventually soar when the crisis is past. The energy sector is a wild card—yet while oil companies may suffer, lower gas prices are a tangible boost to consumers’ wallets.

The current crisis is already revealing some potential long-term opportunities. For instance, the need for companies to maintain business continuity will be a boon for the technology industry. And more robust and diversified supply chains, spreading demand through more parts of the globe, could be another result of companies looking to bolster operational continuity.

The market’s fall this month has been shocking because it has been so abrupt. If there’s one thing that history teaches us, it’s that sharp falls often reverse swiftly, too—though it can take quite some time to climb back to old peaks.

In the meantime, as investors with long-term perspectives, we all should have what some dismissively refer to as “rainy day” money—savings held aside for emergencies that can be personal or structural. Well, this is a structural emergency, and that’s what those savings are for. As investors, we can watch, maybe painfully, as our portfolios go down, but if we’ve done our homework correctly, we aren’t tapping those portfolios right now for our day-to-day expenses.

In sum, this remarkable period of social and market upheaval shall pass. In the meantime, we remain the adviser you can talk to and hope you’ll take advantage of that if you feel the need to talk to level-headed wealth management professionals. You can contact us by calling (800) 492-6868 or emailing us at info@adviserinvestments.com.

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Exclusive Podcast: Coronavirus and Your Portfolio

We are in the midst of very unsettling times, both from a world health perspective and as investors. Given the unknown scale, duration and toll of the pandemic, it’s understandable to be fearful.

In this timely podcast, Chief Investment Officer Jim Lowell, Director of Research Jeff DeMaso and Vice President Steve Johnson discuss what’s changed since the markets were trading at new highs less than a month ago. How are they seeing the coronavirus in the context of markets and the economy?

Topics include:

  • How bonds have been working as expected in diversified portfolios
  • The role of dividend-paying stocks when bond yields are low
  • The economic impact of an oil-price shock on top of virus unknowns
  • The opportunities they are seeing in the markets today

Fear tends to fill the vacuum when information is scarce. But fear-based portfolio moves can do more harm than good. To learn more about how our team views investing during a crisis, click to listen now.

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Special Report: Fear-Driven Selloffs Create Wealth-Building Opportunities

Uncertainty and fear surrounding the coronavirus pandemic have sent market volatility spiking higher. At times like these, it’s natural to want to park your portfolio in cash until things calm down. But letting anxiety be your broker can mean you miss the market’s inevitable rebounds. At Adviser Investments, we believe that learning how to manage your emotions in up-and-down markets is one key to long-term success.

In this exclusive special report, we distill our philosophy for navigating rough markets into five key steps. Armed with the knowledge and confidence to make wise decisions during periods of market volatility, you will be able to find opportunities in the markets.

Topics include:

  • The importance of time in the markets, not market-timing
  • Stocks’ superb long-term track record compared to other asset classes
  • The value of diversification
  • How to view full market cycles when selecting fund managers for your portfolio

It’s never too soon to be a more informed investor—especially when markets are unsteady. Click here to read this piece today.

*****

Financial Planning in Volatile Times

General financial planning wisdom says that it’s important to “stay the course” during times of market volatility. But keeping the tiller steady is a lot easier said than done in stormy markets like the ones we’ve experienced in recent weeks. Here are four tips to help you to steer straight and stay afloat when the markets are roiled.

  1. Review your goals. If the life events you’re planning for are 10-plus years away, a sequence of down days in the market is unlikely to imperil your ability to reach your goals. But pulling your investments out of the market during times of distress could (see the chart below showing the historical probability of a gain in the stock market over various periods of time). Simply put, by standing pat through a period of decline, you’ll be positioned to fully participate in the rebound whenever it arrives—instead of committing the classic mistake of selling low and buying high.

Shorter-term goals are a slightly different story. If you have funds you expect to need in the next year or so, that money is typically best held in cash so that it isn’t affected by the whims of the stock market’s day-to-day moves.

  1. Keep your emergency fund robust. No matter what your financial goals are, it’s important to have enough rainy-day savings to weather an unexpected situation. Your emergency funds should never be invested in the stock market. We recommend a simple checking account with your local bank or even a money market account with check-writing privileges.
  2. Diversify. Nobody knows which way the market is going to turn from day to day. That’s why effective portfolio diversification is your best friend when it comes to warding off the inevitable ups and downs of the stock market. At Adviser Investments, we believe that a well-diversified portfolio made up of domestic and international stocks as well as a broad swath of bonds, depending on your goals and risk tolerance, helps smooth the ride when markets get choppy.
  3. Talk to your adviser. Stock market drops aren’t easy to take no matter how experienced of an investor you are. Fear is a strong emotion. That’s where we come in as advisers. Our seasoned team of wealth managers has helped hundreds of clients “stay the course” and remain focused on long-term financial goals through some of the most dramatic market corrections in history. We are happy to assist during periods of volatility such as this.

One final thing to keep in mind: All bargain-hunters love a good sale—and stock buyers are no different. Experience tells us that mutual fund managers view stock market drops as a massive opportunity to add values to their funds. Even the worst market storms don’t last forever. Give us a call if you’d like our perspective on the situation (for example, if you’ve been considering converting your traditional IRA to a Roth IRA, this could be good time to save on the taxable gains generated by the move). Our experience shows that bear markets are often viewed as scary and heart-stopping when they occur, but when they are finally in the rear-view mirror they are seen as opportunities.

Note: Chart shows percentage of rolling periods when returns were positive for the S&P 500 index from 1927 through 2019.
Sources: Bloomberg, Morningstar.

*****

Tax Payment Deadline Delayed

In a move to give people impacted by the coronavirus outbreak some relief, the Treasury Department and IRS announced that Americans will have an extra 90 days to pay their taxes this year.

Here’s what you need to know:

  • Unless you file for an extension, you must file your taxes by April 15, as usual
  • Individual taxpayers can defer up to $1 million in taxes due for 2019 until July 15; anything over that amount is due as of April 15
  • Deferred payments will not be subject to interest and penalties through July 15, after that the IRS will penalize you for late payment
  • The deadline for making traditional and Roth IRA contributions has not been extended—these must be postmarked to the account custodian (Fidelity, for example) by April 15, 2020 to qualify for tax-year 2019
  • Note for Adviser Investments clients: If you are planning to mail a check to us for a 2019 IRA contribution, make sure you get it to us as soon as possible—the check must have your account number (for your IRA) and a note that it is for tax-year 2019. With the potential for additional disruptions due to the coronavirus outbreak, we believe it is to your benefit to do this sooner than later this year. If you have any questions about how to get your 2019 contributions deposited into your IRA on time, please call your wealth management team and they will be happy to assist you
  • Check with your home state’s tax authority to see if its deadlines have changed; some states have extended deadlines or are offering payment relief, others are not
  • The estimated tax payment due April 15 has been extended to July 15 (if you owe less than $1 million combined between the estimated payment and your 2019 taxes due); it appears the payment due June 15 has not been postponed
  • Estate, gift, payroll and excise tax payment and filing deadlines have not been extended

If you haven’t filed your taxes already, Tax Day has not been postponed, so you will need to get your return to the IRS by April 15 and make any contributions for tax-year 2019 to retirement savings plans (like traditional or Roth IRAs) by then. For those who are expecting to receive a refund, it makes sense to file sooner than later. Those who will owe money may wish to take advantage of the deferred payment option or file for an extension to have more time to settle up.

If you are unsure if it is in your best interests to take advantage of the delayed payment deadline, we recommend that you consult with a trusted tax professional.

About Adviser Investments

Adviser Investments operates as an independent, professional wealth management firm with expertise in Fidelity and Vanguard funds, actively managed mutual funds, ETFs, fixed-income investing, tactical strategies and financial planning. Our investment professionals focus on helping individual investors, trusts, foundations and institutions meet their investment goals. Our minimum account size is $350,000. For the seventh consecutive year, Adviser Investments was named to Barron’s list of the top 100 independent financial advisers nationwide and its list of the top advisory firms in Massachusetts in 2019. We have also been recognized on the Financial Times 300 Top Registered Investment Advisers list in 2014, 2015, 2016, 2018 and 2019.

For more information, please visit www.adviserinvestments.com or call 800-492-6868.


Disclaimer: This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities or choose a particular educational savings plan. Our statements and opinions are subject to change at any time, without notice and should be considered only as part of a diversified portfolio. Mutual funds and exchange-traded funds mentioned herein are not necessarily held in client portfolios. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

You may request a free copy of the firm’s Form ADV Part 2A, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged.

Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional, or licensed insurance professional regarding your specific legal or tax situation, or insurance needs.

Barron’s Top 100 Independent Wealth Advisors

The Barron’s Top 100 Independent Wealth Advisors rankings consider factors such as assets under management, revenue produced for the firm, and quality of practice as determined by Barron’s editors. The award sponsor has not disclosed how many firms were surveyed or considered for this recognition, nor the percentage of total participants that ultimately received recognition. For more information and a complete list of recipients visit https://www.barrons.com/articles/are-ria-firms-growing-too-fast-the-story-behind-the-trend-51568420132

Years Received: 2019, 2018, 2017, 2016, 2015 & 2014

Barron’s ‘Top Advisor’ Rankings by State (Massachusetts)

The Barron’sTop Advisor” Rankings by State (Massachusetts) (also referred to as Barron’s Top 1,200 Financial Advisors) considers factors such as assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. According to Barron’s, “around 4,000” advisory firms were considered for this recognition in 2020; with about 1,200 firms receiving recognition. For more information and a complete list of recipients, click here:  https://www.barrons.com/report/top-financial-advisors/1000/2020?mod=article_inline

Years Received: 2020, 2019, 2018, 2017, 2016, 2015 & 2014

Financial Times 300 Top Registered Investment Advisers

The Financial Times 300 Top Registered Investment Advisers  is an independent listing produced annually by the Financial Times and Ignites Research. According to the Financial Times, in 2019, approximately 2000 firms were invited to be considered for its list; 740 responded with 300 being named to this list. The listing reflects each practice’s performance in six primary areas: Assets under management (70-75% of a firm’s score), asset growth (15% of a firm’s score), years in existence, compliance record, credentials and online accessibility. For more information and a complete list of recipients visit https://www.ft.com/content/44d2b2b2-6cef-11e9-9ff9-8c855179f1c4

Years Received: 2019, 2018, 2016, 2015 & 2014

Awards referenced above do not consider client experience and are not indicative of such. Nor are awards indicative of future performance. Adviser Investments does not pay a fee to participate in any of these awards. Additionally, awards typically only consider and recognize participants that choose to participate; and are often based on information supplied by the participants—such information should not be assumed to be verified by the sponsor of the award.

The Adviser You Can Talk To Podcast is a trademark of Adviser Investments, LLC. Registration pending.

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