Home Guides & Resources chevron_right Weekly Update A November to Remember November 30, 2020 Table of Contents Traders Give 30,000 Thanks Social Security FAQs Strategy Activity Update Adviser Investments’ Market Takeaways Looking Ahead Please note: This update was prepared on Friday, November 27, 2020, before the market’s close. The Dow Jones Industrial Average closed above 30000 for the first time on Tuesday in a pre-Thanksgiving rally fueled by promising results from potential vaccines and ebbing election uncertainty. While the latest upbeat vaccine announcement from AstraZeneca was tempered later in the week by mistakes in their methodology and reporting, traders remained hopeful and we were all able to approach our holiday meals with even more reasons to be thankful. Positive economic data helped drive the rally: Manufacturing registered a nice rise in new orders in November and economic activity in the service sector picked up. That news was tempered by the fact that the number of Americans applying for unemployment benefits rose for a second consecutive week to reach 778,000, exceeding analyst expectations and providing further evidence that the U.S. economy and job market remain under pressure as additional layoffs loom. Through Wednesday, the Dow Jones Industrial Average was up 6.9% for the year, while the broader S&P 500 index was up 14.2%. The MSCI EAFE index, a measure of developed international stockA financial instrument giving the holder a proportion of the ownership and earnings of a company. markets, is up 3.7%. As of Thursday, the Bloomberg Barclays U.S. Aggregate BondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. index’s yieldYield is a measure of the income on an investment in relation to the price. There are several ways to measure yield. The current yield of a security is the income over the past year (either dividends or coupon payments) divided by the current price. stood at 1.34%, down from 2.31% at the end of 2019. On a total return basis, the U.S. bondA financial instrument representing an IOU from the borrower to the lender. Bond issuers promise to pay bond holders a given amount of interest for a pre-determined amount of time until the loan is repaid in full (otherwise known as the maturity date). Bonds can have a fixed or floating interest rate. Fixed-rate bonds pay out a pre-determined amount of interest each year, while floating-rate bonds can pay higher or lower interest each year depending on prevailing market interest rates. market has gained 7.1% this year. Traders Give 30,000 Thanks The Dow’s rally certainly gave Wall Street something to be grateful for this week. After flirting with 30000 in February, the index dipped below 19000 in March as the coronavirus continued to spread. But in the past few weeks, vaccine hopes and a brightening economic landscape have helped boost the Dow—which has trailed the S&P and the NASDAQ—and accelerated its recovery from the March lows. While market pundits can’t resist the heady allure of big round numbers, the significance of Dow 30000 is largely symbolic. Simply put, as the index continues to rise, each 1,000-point increment is a smaller (and smaller) percentage of its total value. It took the Dow fewer than 220 trading days to go from 29000 to 30000, which sounds like something to cheer about. But there’s another way to look at this: It took nearly 220 trading days for the Dow to go up a mere 3.5%, making the feat a little less impressive from that perspective. Given the Dow’s 7.6% average annual rate of return over the past century, one could expect the index to pass another 1,000-point milestone in six months. This year has been anything but average, of course, and the stock market’s volatilityA measure of how large the changes in an asset’s price are. The more volatile an asset, the more likely that its price will experience sharp rises and steep drops over time. The more volatile an asset is, the riskier it is to invest in. means gains never come like clockwork, as you can see from the table below. But the bottom line is that a point on the Dow isn’t worth as much as it once was—and the milestones are likely to arrive quicker and mean less in the years to come. Source: Adviser Investments, S&P Dow Jones Indices. Even if this week’s milestone is more psychological boost than blockbuster benchmark, it’s a positive sign nonetheless, indicating that the market rally may be broadening beyond the handful of stocksA financial instrument giving the holder a proportion of the ownership and earnings of a company. that were beneficiaries of stay-at-home trends and the pandemic economy. Positive vaccine news and manufacturing data of late have helped boost health care and industrials, and have elevated the Dow for now—we’re hopeful that they may do the same for the overall economy in the months to come. Financial Planning Focus: Social Security FAQs Social Security is a complex topic. While you may understand the basics (like when to file and what family benefits you’re entitled to), you might still be left wondering how to claim benefits, manage taxes associated with Social Security, and more. At Adviser Investments, we field Social Security questions from clients daily. Here are some of those most frequently asked along with our answers. How do I file for Social Security? You can apply online, via phone at (800) 772-1213 or at the nearest Social Security office. If you prefer an in-person meeting, make an appointment beforehand to save time and frustration. Do I have to pay taxes on my Social Security benefits? Generally, yes—but at a reduced rate. If your total income is between $25,000 and $34,000 (or $32,000 to $44,000 for a married couple filing jointly) then up to 50% of the benefits you receive from Social Security are taxable. If your total income falls below those levels, you do not pay taxes on your Social Security income. And if you are fortunate enough to surpass those thresholds, then 85% of your benefits are taxable. Note that this only applies to federal taxes—13 states apply their own taxes to Social Security benefits. Does work overseas count toward my Social Security? In many cases, yes. More than two dozen countries (including the U.K., Australia and Japan) have agreements with the U.S. allowing you to accrue Social Security credits for your time working abroad. Additionally, these agreements prevent you from facing a potentially nasty double-taxation situation. What are Supplemental Security Income (SSI) benefits and do I qualify for them? SSI is a separate program administered by the Social Security Administration that aids adults with disabilities and children with little to no income or assets. To qualify, you must be disabled, blind or at least 65 with limited (as determined by several different means tests) income and resources. If you or a loved one may be eligible for SSI, we often recommend setting up a special needs trustAn estate-planning tool that allows beneficiaries with a disability or additional needs to retain assets while still receiving government benefits like Medicare or Supplemental Security Income, even if the inherited amount puts them over those programs' income limits. to set funds aside for them. These trustsA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process. are exempt from certain means tests and can allow the beneficiary to still receive federal aid like SSI. Social Security is a significant source of retirement income for many Americans, and the rules governing it are confusing. We’re proud to say that we have some terrific expertise on the subject and are happy to share it. If you have questions about your specific situation, please contact us to receive a personalized breakdown. Strategy Activity Update See below for a summary of the trades we executed over the week through Thursday and our current tactical strategy allocations. Please contact us if you have any questions about any of the moves or our strategies. DividendA cash payment to investors who own stock in the company. Income No trades this week. AIQ Tactical Global Growth Sell Amplify Online Retail ETFA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index. (IBUY). Buy Invesco Dynamic Leisure and Entertainment ETF (PEJ). AIQ Tactical Defensive Growth No trades this week. AIQ Tactical High Income No trades this week. AIQ Tactical Multi-Asset Income Sell iShares TIPS Bond ETF (TIP). Buy iShares Core U.S. Aggregate Bond ETF (AGG). Adviser Investments’ Market Takeaways You can find two new Market Takeaways videos on our website. Research Analyst Liz Laprade spoke about Amazon’s decision to launch prescription deliveries, and Vice President Steve Johnson discussed how diversification has paid off during this November to remember. Looking Ahead Next week will bring manufacturing and service sector data, the Federal Reserve’s Beige Book survey of business activity, factory orders and two private sector employment reports, including the unemployment rate for November. As always, you can visit www.adviserinvestments.com for our timely and ongoing investment commentary. In the meantime, all of us at Adviser Investments wish you a safe, sound and prosperous investment future. About Adviser Investments Adviser Investments is a full-service wealth management firm, offering investment management, financial and tax planning, managed individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trusts, institutions and foundations since 1994. Adviser Investments and its subsidiaries have over 5,000 clients across the country and over $8 billion in assets under management. Our portfolios encompass actively managed funds, ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index., socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868. Please note: This update was prepared on Friday, November 27, 2020, before the market’s close. 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. 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. Purchases and sales of securities listed above represent all securities bought and sold in each strategy during the period stated. Each strategy’s portfolio generally includes more holdings in addition to the transactions listed above and in some cases the securities listed above may only represent a small portion of the particular strategy’s complete portfolio. 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