We have been providing market commentary for the last few months since the market decline in October. It is also important to report the positive headway made in January. The Dow Jones, made up of 30 stocks, reached its lowest point on Christmas Eve to close at 21,792.20. As of January 31, 2019, The Dow closed at 24,999.67. The index closed up 3,207.47 or 14.72% Keep in mind you are much more diversified than 30 stocks and your personal experience will likely not mimic these results due to the lower risk and volatility found within a more diversified portfolio. While these are great results, The Dow is still not back to where it was on October 3, 2018 closing at 26,828.39. Many have not recovered their losses based upon the October high though the market was able to make some good strides towards that recovery in January.
There are still some unknowns and points of interest we are watching:
- Government Shut Down – The lack of agreement between the political parties on funding the government continues. This event, in and of itself, typically causes market volatility due to the uncertainty attached to it. However, for the month of January, it seems to be a non-event. On one conference call I was on last month, the question was asked why the market was so robust in the shadow of the shut-down. The response was that “Wall Street” was expecting the shut down due to the lack of consensus across party lines. In other words, “The Street” was anticipating the shut-down.
- Trade Agreement with China – This appears to be “THE” agreement among the US trading partners. While these talks continue, no agreement has been signed as of today. I do believe that an agreement may happen sometime in the near future. Some believe the strong rebound in January, has been driven by this expected trade agreement being finalized.
- Mueller Investigation – The Investigation, from reports, is nearing conclusion. While no one knows the true outcome, many of The President’s advisors are receiving criminal sentences. If the Mueller Report has found something condemning against our President, the next question becomes a discussion of possible impeachment proceedings. Regardless of the outcome, this event could create a large amount of uncertainty and the markets in general, don’t perform favorably during uncertain times.
- Rising Rates Expected to Continue – Along with the market volatility in December and January, interest rates were increased again by the Fed in December. We know of FDIC insured money market rates that are paying 2.20%. Rising interest rates are expected to continue in 2019. When the Fed increased rates in December, they announced they expect to continue these increases 2 – 3 times this year.
As we have shared with you previously, market timing (investing at the low point and getting out at the high point), has a greater probability of failure than it does of success. We spend a lot of time determining your individual tolerances for risk and use that as a primary motivator in developing your portfolios. We also look at each of you as individuals, your timelines and goals, along with your performance expectations to prepare for volatility and uncertainty in advance versus responding to it. Volatility is common in healthy markets and we are expecting it to continue.
As my father used to share with me, “Focus on what you can control and not on what you can’t control.” Here is what you can:
- Retirement Contributions – Almost all contributions were increased for the 2019 tax year. IRAs and Roth IRAs increased from $5,500 to $6,000, for those under 50, and from $6,500 to $7,000 for those 50 and over. In addition 401k contributions increased from $18,500 to $19,000, under 50, and $24,500 to $25,000 for those 50 and over. If you make any of these contributions with us, and want to increase them to the new limits, please contact Pattie.
- Investments – Some investments by design respond more favorable during flat or declining markets while others do better during periods of growth. I encourage you to assess your risks by recalling your timeframes and not the losses and volatility. We review both your risks and timelines during your reviews and only suggest changes when your personal variables change, not the political or economic environments.
- Invest Cash – For those of you waiting to invest for the market to recede from its high point, things are more favorable. However, if the growth trend continues into February as it did in January, this opportunity may fade quickly.
While we got some sunshine onto the forest floor in January, a few months do not make a market cycle and we are certainly not forecasting a market direction. Your money, your goals, and your families and businesses are very important to us. We are watching what is going on continually and will continue to provide you information, as we have gathered it on a monthly basis. As always, we are here if you need to talk through any of this or in making adjustments to your individual investments if needed.
This month I also need to ask for your assistance. Legacy Wealth Alliance (LWA) has experienced strong growth over the last few years and, thanks in large part to you and those that introduce us to others than need our help, we had our best year ever in 2019. Our team had been busy in January planning on the next phase of development for our firm to continue building and growing your wealth and provide a high level client expertise. Towards that endeavor, we have identified some new positions that require talented people to fill. However, with our continued strong economy and low unemployment, we have had challenges finding the skill sets and character that fits our culture through our usual search methods. This is where we need your help.
We are currently pursuing adding 3 – 4 new professionals to our team. While we will continue to pursue our typical avenues of recruiting, we also have a large client and strategic partner base from which to seek valuable candidates or whom our clients may know. Here is a short list of the ideal qualities and experiences we are looking for to expand our team:
- 2 – 4+ years of financial industry experience
- Accountable, responsible and take ownership for the work they produce
- Outgoing, friendly, happy, with a warm personality that enjoys working with and helping others
- Good with numbers, solution oriented, and enjoys research and paperwork
- Enjoys playing on a successful team and setting goals to achieve both personally and corporately
- Wants to advance in their career and willing to learn and take classes to get to the “next level”
- Investment licenses (Series 6, 7, 63, 65, 66) and Arizona insurance license preferred for a few positions or have a desire to become licensed as part of their career development
The two career tracks we offer is Operations and Advisor. We are willing to train and provide education reimbursement for those that want to grow in our field. All we are looking for from a talented and proven candidate is a 45 minute phone conference. In my career in this industry, many times your best people come from others who know great people and not from “traditional” recruiting sources. This is exactly how we found Pattie. Please help us if you know anybody that meets the qualifications above and are open to playing on a new and growing team. Please have them send their resume to Pattie at Pattie@legacywealthalliance.com.
Thank you as always for your business and continued patronage of LWA. We value our relationships with all of you and hope you find these commentaries helpful. Please let us know if there is ever more we can do to help. We are also open to feedback if there are other services or offerings you would like us to provide. All of these changes are being considered for you and your families and to be the planning firm of choice in the Southwest. We would not be looking for more team members if it was not for you. Thank you again.
All the Best,
Todd C. Martin