Message from Jon

Market Update

What World Is This?

The reality of our current situation is that the markets are taking from those that underestimated the risk that was present previously and will soon be rewarding those who did.

Those that felt like they could take more risk in their investments because the market was doing better and not because their situation could handle it...those clients are the ones who are panicking and selling when they should be buying and preparing to buy.

What we believe we know

We have seen the market as of this writing (Monday 3/23) decline by 33.52%, and while it is A LOT, during 2008, the markets declined 54%, so let's not forget that in this consideration. A quote from Scott Judds in the alphadroid newsletter sums this past month up pretty well though;

"A Black Swan Event
The market is indeed in the midst of a Black Swan event of epic proportions. Black Swan events are defined as rare, unpredictable, and beyond the realm of normal expectations. The market's fall from its high on February 19th to bear market territory was the fastest on record. It was about 3x faster than 1929, 4x faster than 1987 and 6x faster than 1990 - the three prior record holders. Just as the Coronavirus caught healthcare professionals without therapeutics or vaccines, so also did this never-before-seen Black Swan catch algorithms and investors unprepared."8

We believe that the Bond Market is decoupling from normalcy and behaving in an unnatural state currently.

We know that the FED is hyper aware of this decoupling and is resolved to asset the situation and bring it back to normalcy by any means necessary.2,6,7 Look, if I have a friend of mine that drops on my driveway due to a heart attack, do I argue with the medics about what they use to revive him? Don't I just tell them by any means necessary and then let's talk about how to proceed from there!? So for all of you that are the "Well, I disagree with the stimulus and the free money going to big corporations" and "How will we ever pay that back?"

Save it-right now, if the patient is allowed to die, what does it matter what kind of life he will have afterwards!?

Vanguard's Chief Economist indicates that they are seeing a "Deep but short-lived recession," and as of this writing, it's what our models have been saying is a possibility for some time.1 I have been saying that we have been long overdue for a recession, and "if I am a betting man, I think we see it between 2020-2022" in previous newsletters. Just because we are showing that in our forecasts, what we are not saying is what the catalyst will be and without the catalyst, you cannot know the details enough to time your exit and entry perfectly.

We are however, seeing many wealthy investors beginning to buy and have been buying for some time. Mark Cuban, Herb and David Simon of Simon Properties, Warren Buffett, to name but a few. The sad thing is that for many, they are panicking and selling only to have the "rich" get richer and continue the cycle once again.4,5

Why is my bond fund declining?

In our opinion, we are seeing an increase in the underlying credit risk of individual bonds held in many bond funds. We believe we are seeing where bonds are being sold to satisfy liquidity needs for investors, causing yet another behavior that is uncharacteristic. We believe this is short-term. Why? Because the FED is doing everything they can do to arrest this behavior and return it to normalcy. They are providing liquidity to banks, they are buying Treasuries, they are buying Municipal Bonds, and they are even considering buying corporate bonds directly to not only impact the yield curve but also to provide a back stop for investors to reduce their fear levels and risk levels back to a point where the market mechanics can operate normally again.2,6,7

Question:

If you were 100% in cash in Jan of 2020 and were still in cash today, would you be buying right now or still 100% in cash right now?

Answer:

I would absolutely be buying (nibling more like).3

Maybe only at 2% or 3% increments, but buying for sure since what I feel like I know is that on the lowest side of the S&P 500 we could probably see around 1750-ish, and that is the most bearish models we could find that made any sense-and on the more rational side, 1960-ish and at present, we are at 2200 and seemingly holding. Could we decline more, yes. Are the odds we do, yes-but not much lower, and then it becomes the question of vaccine, testing, quarantine measures and spread rates that will help determine how long we stay in the acceptance phase before transitioning into recovery mode. For those who are in cash-congrats, but you better be good at buying in or you will lose any advantage you had of being in cash in the first place in my opinion!

Till we speak again-stay calm and keep your wits about you cause you're gonna need them.

Jon

Sources:

More Coronavirus Volatility

WEEKLY UPDATE - MARCH 23, 2020

The Week on Wall Street

The stock market suffered through another volatile week as it wrestled with the health and economic fallout of the domestic spread of the coronavirus. Swift and decisive actions by the Federal Reserve and policy responses from the federal government did not keep stocks from recording losses for the week.

The Dow Jones Industrial Average slumped 17.3%, while the Standard & Poor 500 lost 14.98%. The Nasdaq Composite index declined 12.64% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 6.64%.[1][2][3]

Stocks Slide Further

The stock market continued its retreat amid fears of a darkening economic impact from the coronavirus pandemic. Despite a Sunday night announcement by the Federal Reserve that it was cutting its benchmark interest rate by 100 basis points to nearly zero and taking steps to increase market liquidity, stocks opened the week sharply lower, setting the stage for another difficult week for investors.[4]

Progress was reported on coronavirus testing capacity and on the efforts to combat the infection. At the same time, Washington, D.C., advanced legislation to provide financial assistance to unemployed workers and affected businesses. Neither did much to help investor anxieties, however. Stocks slid in the closing hours of the trading week, leaving stock indices near their lows of the week.[5]

Central Bankers Go Big

The response of global central bankers to mitigate the economic impact of the coronavirus has been broad ranging. In addition to its 100 basis point cut in the federal funds rate, the Federal Reserve also took actions to provide additional credit access to banks, committed to buy at least $700 billion in Treasury and mortgage bonds, and set up a new lending facility to backstop money market funds.[6]

The European Central Bank also announced an $800 billion-plus bond buying program to support member economies. The Bank of England cut its benchmark lending rate to 0.1% and pledged to buy over $200 billion in government and investment grade corporate bonds, while the Bank of Japan said that it would double its purchases of stocks and increase loans to businesses.[7][8][9]

Final Thought

Investors are struggling with answers to two unknowns: the trajectory of the coronavirus spread and its economic cost. With coronavirus testing beginning to ramp up, these numbers may begin drawing a firmer picture of the growth of coronavirus infections in the U.S. Economic indicators, such as jobless claims for unemployment insurance and the Index of Leading Economic Indicators, may provide clues regarding the economy.

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: New Home Sales.

Wednesday: Durable Goods Orders.

Thursday: 4th-quarter GDP (Gross Domestic Product) Report. Jobless Claims for Unemployment.

Friday: Consumer Sentiment.

Source: Econoday, March 20, 2020

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Nike (NKE), Carnival Corp. (CCL)

Wednesday: Micron Technologies (MU)

Thursday: Lululemon (LULU), KB Home (KBH)

Source: Zacks, March 20, 2020

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Fountain Pen

"Decide what you want to do. Then decide to do it. Then do it."
- William Zinsser

Fork and Knife

Lemon Pound Cake

Serves 8 to 10 Ingredients:

1½ cups all-purpose flour
½ tsp. baking powder
½ tsp. salt
¾ cup unsalted butter, room temperature
1 cup sugar
3 large eggs, room temperature
¼ cup sour cream, room temperature
3 Tbsp. fresh lemon juice
Zest of 1 lemon
1 tsp. vanilla extract

Directions:

Preheat oven to 350° F with rack in the bottom-third.
Grease a loaf pan.
Mix flour, baking powder, and salt, then set aside.
Using mixer, beat butter until smooth.
Add sugar and beat with butter for 2 minutes.
Add eggs, one at a time, with mixer at low setting.
Beat in sour cream, lemon juice, lemon zest, and vanilla extract.
Once added, beat at medium-high until combined.
Move to low speed and add flour mixture, beat until fully mixed.
Turn up to high speed to remove any lumps, but don't overmix.
Pour batter into loaf pan and bake for 45 to 60 minutes.
Test cake with toothpick to see when cake is done.
Optional: poppyseeds. Add them on top of the batter once it's in the loaf pan before placing it in the oven.

Recipe adapted from sallysbakingaddiction.com[10]

Document

Planning A Wedding? Remember These Tax Tips

If you or someone you love is getting married, keep these important tax issues in mind. Taking care of them now can help reduce your stress at tax time.

Change names: IRS rules require that the names and Social Security numbers on your tax return match your Social Security Administration records. To formally change your name, file Form SS-5, "Application for a Social Security Card," with the Social Security Administration.

Change filing status: If you're married on or before December 31, you are considered married for the whole year as far as tax purposes are concerned. You and your spouse can choose to file your federal income tax return either jointly or separately each year. You may want to ask a tax professional to run the numbers and see which status results in the lowest tax liability.

For more information about filing taxes as a newlywed, consult a tax professional in your area.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov[11]

Golfer

A Wright Way to Work on Driving Distance

Mickey Wright is justifiably regarded as one of the greatest golfers of all time. The superstar of the LPGA Tour during the late 1950s and 1960s, she won 82 tournaments during her career, and she was known for her prodigiously long drives.

Wright believed that the key to hitting it long off the tee was in the right foot. In particular, she felt that weight placed on the right foot during the swing should never stray from the instep. To reinforce that feeling, she would often tuck a golf ball under the outside spikes of her right shoe on the driving range. As she wrote in Sports Illustrated, "The immediate increase in distance using this gimmick is astonishing." Try it for yourself.

Tip adapted from Sports Illustrated[12]

Medical Cross

Finding Inner Peace Inside (and Indoors)

Practiced for thousands of years, yoga has had a revival in the last couple decades. Yoga can be an optimal exercise choice for many individuals of all ages. But before getting started with any fitness regimen, make sure to discuss any medical concerns with your health care provider; this information is not a substitute for medical advice. While there are many styles of yoga, most are considered low impact. But in addition to the fitness benefits, it can help you learn relaxation and breathing techniques as well as how to regulate emotions and quiet your mind. It's also a great form of exercise to do indoors, and there are thousands of free classes on YouTube. So, if you're still enduring the remnants of winter and practicing social distancing, you can practice "quieting your inner monologue," doing yoga from the comfort of your own home. Tip adapted from MedicalNewsToday.com[13]

Leaf

Gardening in the City

Do you live in a city or an apartment without a yard? That doesn't mean you can't create your very own garden.

If you have a rooftop to use or even a small yard, raised garden beds will do the trick. You can purchase premade garden beds, but building your own is easy too. Line the bottom with gravel and chicken wire to encourage drainage and discourage pests. Raised garden beds will save your back and knees, since you won't have to bend over too much to tend to your plants.

One of the easiest things to start growing is herbs. You don't have to have a green thumb or any yard space at all. Most herbs will flourish in a windowsill, and they're hardier than most plants. Plus, you'll have a delicious and easy way to season your meals right at your fingertips.

Tip adapted from Green America[14]

Share the Wealth of Knowledge!

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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia, and Southeast Asia.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Platinum Advisor Strategies, LLC, and not necessarily those of the named representative,

Broker dealer or Investment Advisor and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

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The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

[1] The Wall Street Journal, March 20, 2020

[2] The Wall Street Journal, March 20, 2020

[3] The Wall Street Journal, March 20, 2020

[4] CNBC.com, March 15, 2020

[5] CNBC.com, March 20, 2020

[6] The Wall Street Journal, March 19, 2020

[7] CNBC.com, March 19, 2020

[8] Pension & Investments, March 19, 2020

[9] Financial Times, March 16, 2020

[10] Sally's Baking Addiction, March 20, 2020

[11] IRS.gov, March 5, 2019

[12] Sports Illustrated, March 20, 2020

[13] Medical News Today, March 20, 2020

[14] Green America, March 20, 2020

Summit Financial Group
Summit Financial Group of Indiana
4050 Britt Farm Dr
Suite C
Lafayette, IN 47905
866-582-5721
jon@summit-fp.com
http://www.summitfinancialgroupofindiana.com

Securities offered through Regulus Advisors, LLC. Member FINRA/SIPC. Investment advisory services offered through Regal Investment Advisors, LLC, an SEC Registered Investment Advisor. Registration with the SEC does not imply any level of skill or training. Regulus Advisors and Regal Investment Advisors are affiliated entities. Summit Retirement Advisors, LLC and Summit Financial Group of Indiana are affiliated entities. Summit Retirement Advisors, LLC and Summit Financial Group of Indiana are independent of Regulus Advisors and Regal Investment Advisors.

Message from Jon

More Coronavirus Volatility

WEEKLY UPDATE - MARCH 23, 2020

Phase 1 – Where You Are

Phase 2 – Your Retirement Planning Needs

Phase 3 – Finalizing Goals and Details

Phase 4 – Putting Your Retirement Investments into Action

Phase 5 – Keeping Your Plan Effective into the Future