1Q2020 Market Review Newsletter

January 7, 2020

Happy New Year! No matter where you are reading this, we hope 2020 finds you well-rested, restored and excited about the year to come. Before looking forward to 2020 with clear vision (sorry couldn’t help it), let’s take a quick look back at 2019.

2019 Recap: Unfortunately, we start with some sad news. William Patton, who had been an advisor with Integra since 2011 passed away in December. Bill was a valuable member of the team, we will all miss his wisdom, vision in the financial services industry and presence.

What a year it’s been for the market! Just about every asset class, from US equities to treasury bonds showed substantial gains throughout the year.


2019 US Market Returns MIS Index

The only significant, negative market reactions throughout the year came from global political tensions. Between US/China trade tensions, political unrest in Europe including a messy, still in-process Brexit and protests in Hong Kong, global markets were unsettled. If any of them get resolved, in general it’s likely positive for the economy and markets.

To combat these global tensions, central banks lowered interest rates and began buying assets in the open market to ease lending rates. Lower rates should lead to an upside and we likely haven’t seen the full impact that these rate cuts will have.

Looking forward: 2020 has us cautiously optimistic for a few reasons. Besides the support from central banks and upside potential of political tensions easing, the economy, overall, is in good shape. The unemployment rate is below 4% (near a 50-year low) and wage growth has been good, up 5+% over the last year. Additionally, consumer spending, often considered the motor of the economy, is robust. While we can never predict the future of the market, we continue to be bullish, and will position you where we see upside.


One question that people often have is, "should I be worried about my portfolio because it’s an election year?" The answer is: not if you have a long-term mindset. While elections have historically caused the market to be more volatile, elections have not had any correlation to long-term investment returns. Since 1932, stocks have trended up the following year no matter if a Democrat or a Republican are in the White House (see figure 2). While the ride may be a little bumpier, the outcome is mostly positive.

One major policy item that will affect us all was the passing of the SECURE Act. Right before their recess, congress passed a massively bi-partisan bill known as the SECURE Act. The bill updates many of the rules around retirement and investment accounts, most of which are positive in our opinion. For more information on the bullet points below, please reach out to us:

  • Required Minimum Distributions (RMDs) for retirement accounts will start at age 72, not 70½. Current RMD’s being taken will remain unchanged.
  • You can contribute to a traditional IRA after age 70½, provided you are still working (beginning in 2020) and you have earned income.
  • Upon death of the account owner, Inherited Retirement Account distributions to individual beneficiaries must be made within 10 years instead of the previous "stretch provision". This does not change for anyone currently taking distributions, just those going forward.

Volatility during primaries is often followed by strong returns

Integra Financial News: We wanted to cover the news of Charles Schwab acquiring TD Ameritrade. It is not clear at this point what the administrative implications will be; the good news is we’ll have plenty of warning as the acquisition is not expected to be approved until the end of 2020. We will be flying to Orlando at the end of January to meet with TD’s management to get more answers. As things become more clear, we’ll be sure to keep you informed.

For some closing business, enclosed is our Privacy Policy. We only share your information to process your business and at your request to help with taxes or other planning. Also, if you would like an updated copy of our ADV just ask and we will get a copy to you. This is the information document filed with the government on how we are compensated, how we run our company, our biographies, and other regulatory matters. Please, remember e-mail is not a secure form of communication, and cyber thefts are a serious and growing problem.


Thank you for the trust you place with us. We are truly honored to help build your financial future.


Our best,

Willis
Willis Ashby, President and CFP®
Integra Financial, Inc.

Nick
Investment Advisor Representative
Integra Financial, Inc.


Reference Data: Capital Group, Blackrock Investments, First Trust, JP Morgan Investment Management, Thompson Reuters and Morningstar


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