Legacy Wealth Alliance Family,
I hope you all are enjoying your summer and the heat in Arizona. I was thankful to escape to the mountains of Colorado for two weeks last month. The temperatures drop down to the 50s at night, needing a sweatshirt, and rarely got above 80 during the day. Also enjoyed the nice cool breezes that blow in the leaves of the aspen trees. Did some hiking and exploring on trails that meandered by running rivers. For me, it is difficult to find any place in Arizona that compares with the mountains of Colorado in the summer. Happy to report our team took care of business perfectly in my absence and allowed me the time I needed to decompress. I am very fortunate to work with capable individuals that can “hold the fort”. My time away went so well, I was rejuvenated and ready to come back to work. For those of you whose plans have been hampered by the pandemic, I encourage you to get away and recharge regardless.
Through many of my Commentaries, I spend time discussing COVID. Frankly, I have moved from fear, to concern and caution, and am now starting to get irritated and angry. As cases in Arizona, California, and even Colorado continue to escalate to higher thresholds than occurred in the spring, we are now coming across more people that we know that have been infected. Thankfully, many of them have very mild symptoms or were completely unaware, asymptomatic, and never even knew they had it. I have also decided to completely boycott the news and my new feeds have been silenced on anything having to do with the pandemic. The information that is being put out by multiple agencies and entities seems contradictory to the reality of the people who have tested positive that we have spoken to. Once again deciphering or uncovering the “truth” is a rabbit hole itself. Do not get me wrong, I am not opposed to masking up and being cautious. In addition, information that was forwarded to me by friends or recommendations to “watch or read this” by the time I arrived at those suggested sites, the content was removed. While not a conspiracy theorist, I certainly hope that none of this is politically motivated nor gets used as political leverage in any way as we head into the election.
I have shared with you this year about my 18-year-old daughter, Tori, and the “rites of passage” that many teenagers have experienced, like graduation and prom, were not meant to be for her. While not ideal for sure, we have strongly encouraged her to focus on all that she has, regardless of how small it may be, to change her perspective and drama of all that she has lost. Which as parents has been a challenge for us to get her to do. Our hope was that her college selection in California, of which she was preparing to attend this month, would stay open. However, last week they closed the campus and only have online learning. While at least there is an option for her, she will not be living or going to classes on campus and will be living at home. We were afraid this was coming. Many if not all the California public state universities campuses were closed in April for the fall semester. In July, the California governor announced many primary and secondary schools were closed through the end of the year. While her university indicated they were still doing campus learning, they pulled the plug for that option last week. Unfortunately, despite her father’s encouragement, she only applied to three schools. Two of which were in California. Her options to begin her college experience, for the fall semester anyway, is now limited.
As a parent of an 18-year-old teenager, and as adults, I think we learn more by our mistakes and things that do not go according to plan, than when life is running on all cylinders. We attempt to use these disappointing moments for our children, to teach lessons of acceptance and flexibility. For those of you that have teenagers, you know how difficult it is for us to impart our longer life experiences and lessons to them. At some point, they just need to figure it out on their own. You never stop loving them, always there for support, and on those rare occasions they need advice and are willing to listen, find ways to encourage and guide, without judgement or lecturing. To say that this year has not met Tori’s or our expectations, is an understatement. However, we are doing our best to encourage her, get her to stay focused on all the blessings we have, and learn valuable lessons from these disappointments. Helping to increase her “life’s tool kit” the next time unmet expectations and disappointments arise. While Amy, my wife, and I will never give up, I am unsure we are having the impact we would hope to. I will say, Tori is getting better at acceptance and working towards solutions that are still available. Enough about me and our world. I only share some of these challenges with you, so you know we are all in this together. And, for those of you that have been through some of this with your own teenagers, I am open to hearing what worked for you and any suggestions you are willing to impart.
In the world of finance, wanted to make you aware of a change that is occurring. Approximately three weeks ago, our primary asset management company, Brinker Capital, publicly announced that they were merging with another company called Orion. Brinker manages about 25 billion and Orion manages 15 billion in assets. In doing our due diligence on this merger, everything appears to be very positive and there is a lot of synergies in operations and management that should be very beneficial. However, like when you find out your favorite restaurant and under “new ownership and management”, you are hopeful that you will have the same experience and your favorite dish will not be removed from the menu. We are optimistic about this merger. At the same time, we are watching things very closely as time continues to see how things play out. Some of you may have gotten documents that needed to be signed and returned to Brinker Capital. Currently, we are recommending you sign and return those. If any of you with these accounts have any questions regarding this transaction, please feel free to reach out and speak to any member of our team.
As you probably are aware by now, the U.S. economy is officially in a Recession. We are hopeful, that the economy does not take the next downgrade to Depression. There are still some very positive sectors with momentum currently. Technology companies and that sector are doing well along with real estate. Apple announced its earnings last week and was 11% over where it was a year ago. They also announced a stock split again receiving 3 additional shares for every 1 share already owned. This will reduce the price of Apple stock by 75% and make it more favorable for smaller investors to purchase shares. Spurred by low mortgage rates, last week you can get below 3% on 30-year mortgages in some states, new home sales and refinances are up from a year ago, and in Arizona, pushing home prices and valuations. With the market declines that occurred in February and March, some but not all indexes have recovered and are showing positive returns for 2020.
There are also areas we are watching closely beyond the election in November. Unemployment continues to increase pushing the total number of Americans that are unemployed close to numbers not seen since the Great Depression. Many of the initial stimulus packages released with the CARES Act, have now either been extinguished or expired. The biggest one causing the most amount of concern, is the weekly unemployment was raised by $600 per week at the federal level, however that dropped back to pre-COVID levels at the end of July. While Congress continues to work on additional stimulus to prevent the economy from hitting a Depression, nothing has happened at this point. We do expect something, but it may not be nearly as large as we saw with the CARES Act. In addition, companies received stimulus to keep their employee head count and compensation consistent for eight weeks to have the entire loan “forgiven”. That period has now expired, and we could begin to see more businesses go through downsizing, layoffs, or furloughs. Some of our clients have already been impacted. Lastly, many of the state mandated moratoriums on bank’s foreclosing on mortgages or landlords evicting tenants has also expired in many states across the nation. Heard last week that one economist believes that 1 in 3 Americans may already be behind on their mortgage payment. It could be that if banks and landlords begin foreclosures and evictions processes in the next few quarters, this could put pressure on housing values and pricing. However, time will tell for certainty. As we continue to communicate, we also are expecting an increase in volatility as the election gets closer. As Jon shared last week, many of our clients that have cash to invest, we are setting up dollar cost averaging strategies now based upon this possibility. As you are aware much is changing rapidly. While we are not forecasting or prognosticating these areas as truth, we have concerns economically that we are keeping close tabs on.
In closing, and with the progress the markets have made since the correction in March, we are changing our Commentaries to bi-monthly instead of weekly. If the negative volatility picks back up to the levels we saw in February and March, we will consider going back to weekly. We encourage you, for the time being, to continue to stay the course. Most of you have being doing a stellar job. The markets as a whole and investment performance among many asset classes since March has been mostly positive. Should you be expecting to take any distributions from your investable assets in the next 24 months, please reach out to us so we can plan the best course of action. In addition, many of you have seen a large increase in your technology stocks over the last 5 – 10 years. It may be an ideal time to take advantage of some of these large gains and increases and sell some of your highly appreciated stock. Please call us so we can discuss your specification situations before executing. As always, we consider you, your families, and your businesses to be a big part of our success. If there is anything more you need or more we can do to increase our value to you, please let us know how we can help.
Pursuing Wealth, Wisdom, and Well Being Together,
This information does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may view this information. Statements, opinions and forecasts made represent a particular observation and assessment of the market environment at a specific point in time and are not intended to be a forecast of future events or a guarantee of future results. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended. Statements regarding future prospects
may not be realized and may differ materially from actual events or results. Past performance is not indicative of future performance.