Quarterly Newsletters

Stock market returns were effectively flat for the third quarter. July and August experienced fairly strong returns, but losses in September weighed on full quarter results. Mid-cap and small-cap stocks were slightly negative this quarter, but strong performance in the first half of the year has still provided attractive year-to-date returns.

Despite a weak September, the stock market has generally fared well of late. Returns have been strong year-to-date, and over pretty much any trailing period. There have certainly been bumps in the road, such as the COVID correction in March of 2020, but the last major disruption was thirteen years ago in 2008. While rising stocks are generally good, there can be too much of a good thing. We may be getting to that point, and the same may be true for the bond market.

Social Security is a topic that is sure to arouse emotions. The “entitlement” nature of it bothers some folks. Some just don’t like the thought of not working and surrendering their retirement security to the government. Others don’t believe it will be around since the Social Security Trust Fund is basically broke. Also, deciding when to take Social Security involves some uncomfortable topics, such as life expectancy. However, Social Security is really a good thing that should be part of a deliberate retirement income strategy. Spoiler alert: it will be there for you when you need it.

Investments returns were solid across all asset classes in the second quarter, as economic growth continued to rebound from last year’s pandemic.  U.S. stocks, international stocks, alternative investments, and bonds all generated positive returns.

There has been quite a bit of activity lately for one of our alternative funds, and we thought it would make sense to provide an update.

The Stone Ridge Alternative Lending Risk Premium Fund (LENDX) buys small consumer, business, and student loans.  It does this through on-line lending platforms like Lending Club, Square, Sofi, and others.  These loans are made to high quality borrowers with average FICO scores above 700.  The interest rates on these loans are relatively high, as they are generally too small to be of interest to traditional lenders, such as banks.

Traditional retirement savings largely takes place within company-sponsored retirement plans, such as a 401(k) plan. The premise is simple: put money away directly from your paycheck and save money on taxes. However, for those with unique tax circumstances, Roth 401(k) plans are also available. The idea is the same as with a traditional 401(k), except that you don’t get a tax deduction when you make the contribution, and the money grows tax free thereafter and may be withdrawn tax free during retirement.

The first quarter of 2021 was a solid one for stock investors, but not so great if you own bonds. However, for both stocks and bonds it was a period of transition, reversing trends that have been in place for many years.

There is a lot of talk of impending inflation lately. Massive amounts of government stimulus during the pandemic have resulted in the largest rise in money supply on record, and the current administration promises far more in the future. Similar measures have been taken overseas, resulting in unprecedented global liquidity. Lots of money in the system, along with the reopening economy, will create a lot of demand for goods and services.

Some elements of the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act have been extended into 2021. On the positive side, individuals who do not itemize deductions on their tax returns can still claim the $300 universal charitable deduction that was part of the original CARES act. Even better, the 2021 extension has doubled the amount to $600 for couples who file their tax returns jointly.

We are in a highly regulated business, which causes a few headaches, but also offers our clients important protections. There are certain disclosures that we are required to make regularly regarding our policies and procedures, including