Market News Client Letters

March 2021 Client Letter: The Return of Normal is Approaching

March 4, 2021

Dear Valued Investor:

It’s now been over a year since COVID-19 first hit American shores. While the pandemic has affected everyone to varying degrees, we can all agree that everyone’s life is different today than it was a year ago. It’s difficult to remember what normal looks like at this point.

Now that Johnson & Johnson’s vaccine has been approved, we have three vaccines available in the United States—and some semblance of normal is fast approaching. COVID-19 cases and hospitalizations have dropped significantly over the past two months. More businesses have reopened. Kids are going back to school. More diners are headed to restaurants. Air travel has picked up.

The US economy—though not back to normal yet—is poised to potentially recover all of its lost output from last year’s recession during the first half of this year. Shoppers are doing their part as retail sales jumped 5.3% in January—the strongest month-over-month increase in seven months. Consumers’ coffers were replenished by the federal government’s roughly $900 billion stimulus package passed in December 2020. US household savings are now $1.4 trillion above last year’s levels, according to the Bureau of Economic Analysis, which should provide fuel for more pent-up spending after restrictions are lifted.

The bridge policymakers began to build a year ago to the end of the pandemic is getting even stronger. Congress is expected to pass another fiscal stimulus package in mid-March, potentially worth over $1.5 trillion and including more direct aid to consumers and supplemental unemployment insurance. Meanwhile, the Federal Reserve continues to provide unwavering support for the economy. Our economy’s resilience, coupled with this significant fiscal and monetary support, has enabled stocks to do even better than normal—and early in bull markets, normal is pretty good.

Some fear the economy has too much support. A healing labor market with about 10 million fewer jobs than a year ago suggests that more help is needed. But, as the economy fully opens, we will have to watch inflation closely for signs of overheating. The Federal Reserve may have to pump the brakes sooner than anticipated.

Normal is approaching—or at least the post-pandemic version of normal—and it’s looking pretty good. Stocks and bonds are both telling us we have a lot to look forward to as the economy moves closer to a full reopening. COVID-19 still presents risks of course, and stocks may be due for a pause after such a strong run. But ultimately, we believe the backdrop of improving economic growth, supportive fiscal and monetary policy, rebounding corporate profits, and improving COVID-19 trends will be a favorable one for stocks over the balance of the year.

Please contact me if you have any questions.







Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of March 4, 2021.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All index data from FactSet.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.


Market News Client Letters

February 2021 Client Letter: Stay The Course

Dear Valued Investor,

“In the short-term, the market is a popularity contest. In the long-term, the market is a weighing machine.” Warren Buffett

2021 is under way, as our nation and the rest of the world look to begin to put the global pandemic behind us. The path forward for the US economy, as well as that of the global economy, will continue to depend heavily on the success of combating the virus.

While many of the risks presented by the outbreak of COVID-19 persist, it appears we may be in the later innings of the pandemic. Following increased restrictions to quell the holiday surge, new daily COVID-19 cases and hospitalizations have peaked, and are down significantly the past few weeks (source: COVID Tracking Project). Reopening is taking place as well, highlighted by New York City’s plans to bring back indoor dining by Valentine’s Day. Meanwhile, the distribution of currently approved vaccines is well underway—and accelerating. The United States has added over 1 million shots per day over the past week (source: CDC) and 1.5 million per day is quite possible soon. Adding to this optimistic trend, new vaccine candidates from Johnson & Johnson and Novavax have also shown efficacy in combatting the effects of the virus and new mutations. If these two candidates are authorized for use as most experts expect, the boost in supply will be a welcome development in the US and abroad.

Despite the positive trends in COVID-19 data, volatility began to return to the stock market in the final days of January, as retail traders set their eyes on GameStop (GME) stock and other heavily shorted securities, captivating the nation’s imagination. As Warren Buffett explained above, while many of these securities may be popular now, the real winners will likely be investors with longer-term horizons. While these developments could be another sign of excessive optimism in certain segments of the equity markets, we do not believe they represent a sign of a broader market bubble or indicate a major correction is forthcoming.

After the powerful snapback of economic growth seen in the third quarter, the economy continued to grow at a solid 4% in the fourth quarter despite the holiday surge in COVID-19 cases. This improving economic backdrop has provided tailwinds to corporate profits, which should help stocks grow into their elevated valuations. S&P 500 Index earnings for the fourth quarter are impressively tracking 9 percentage points ahead of consensus expectations, while more than 80% of companies have beaten earnings estimates (source: FactSet). Meanwhile, housing remains extremely strong nationally and manufacturing data continues to show an economy that is firmly on the mend.

The improving economic backdrop, along with US government and Federal Reserve policies designed to boost the economy, suggest the environment for risk assets may remain favorable in 2021. Don’t get complacent though; after the S&P 500 Index rallied more than 70% since the March 2020 lows, some volatility would be perfectly warranted. Remember, they say that the stock market is the only place where things go on sale, yet people run out of the store screaming. Have a plan in place to be ready to take advantage when the sales come, and don’t run out screaming.

Stay healthy and please contact me with any questions.

Market News Client Letters

January 2021 Client Letter: 2021 Brings A Fresh Start

Dear Valued Investor:

Happy New Year!

A new year offers a welcomed turn of the calendar and a fresh start. However, it’s difficult to put 2020 completely behind us just yet because the COVID-19 pandemic still presents a significant threat. Healthcare workers continue to perform heroically, while the rest of us must continue to make sacrifices until vaccines are widely distributed.

Despite the ongoing threat of COVID-19, it’s important to remember the tremendous progress the US economy has made in its recovery so far:

  • The US economy has created more than 12 million jobs since April 2020—more than half the number of jobs lost during the spring lockdown—and has brought down the unemployment rate from 14.7% in April to 6.7% in November.
  • Holiday shopping was up a better-than-expected 3% year over year according to MasterCard data. And it shouldn’t be a surprise that a 49% increase in online sales was the big driver. This growth is impressive when we remember how different the world looked in late 2019 when businesses were fully open without restrictions, shoppers freely visited brick-and-mortar stores, and unemployment was near record lows.
  • The manufacturing sector has staged a strong recovery. The Institute for Supply Management (ISM) manufacturing index in December tied for its second highest reading in 15 years and has registered above 50—the dividing line between expansion and contraction—for seven straight months.

The economy lost some momentum as 2020 ended with more rapid COVID-19 spread and renewed restrictions. Still, the US economy appears poised to grow through the end of the pandemic, bolstered by the new $900 billion fiscal stimulus package passed December 27, 2020, which provides much-needed aid for small businesses, consumers, schools, and the healthcare system. US gross domestic product (GDP) is expected to grow 4.6% annualized in the fourth quarter of 2020, followed by 2.5% in the first quarter of 2021 (source: Bloomberg).

A better economic backdrop may mean better corporate earnings. Analysts’ consensus estimates for S&P 500 Index company profits have been rising steadily in recent months (source: FactSet) amid the improving economic outlook. S&P 500 companies are expected to return to 2019 profit levels in 2021—a remarkable achievement if realized.

Thanks to the remarkable work of medical researchers and doctors, the end of the pandemic is approaching, and the outlook for the economy and stock market appears promising. But the road ahead may not be smooth. The vaccine rollout is still in its early stages and has significant logistical challenges. US-China tensions aren’t going away any time soon. Higher interest rates and a pickup in inflation could put pressure on stock market valuations at some point. Divisiveness in America is at an extreme. And following the Georgia Senate elections, tax increases may be likely—probably in 2022.

One thing 2020 has taught us as investors is the importance of sticking to a long-term investment plan. That may be easier said than done when volatility arrives—and we had our fair share of that in 2020. Investors who stayed with their plans in 2020 benefited as volatility presented opportunities.

Best wishes for a successful 2021, and please contact me if you have any questions.

Market News Client Letters

December 2020 Client Letter: Outlook for 2021

Dear Valued Investor:

As 2020 comes to a close, we are already looking forward to a new year—and to a world very different from the one we’re leaving behind. Areas of the economy have been damaged and may never fully recover, but other areas will adapt, reinvent, and help reinvigorate growth.

December also brings LPL Research’s annual market outlook Outlook 2021: Powering Forward, which reviews what happened in 2020 and what to expect in 2021. It covers stocks and bonds, the economy, and a post-election policy environment built on new challenges, new opportunities, and new politics.

2021 is primed to deliver advances to further limit the impact of COVID-19, and the goal remains keeping the economy as open as possible while keeping people safe. Continued progress in the response to COVID-19, including further stimulus measures by the government, will be key to sustaining the economic recovery. As the pandemic subsides, restrictions are lifted, and consumers’ daily lives return to something close to normal, the pace of the recovery most likely will pick up speed—probably in the middle of 2021.

Another major milestone will be moving past the market uncertainty caused by presidential elections. Historically, the post-election environment has been positive for the stock market. S&P 500 Index returns have been strongest with a divided Congress—one party controlling the House of Representatives and the other party controlling the Senate. A split Congress with President-elect Joe Biden in the White House could be viewed as friendly to the markets.

The makeup of the Senate will have significant policy implications. A fifth COVID-19 relief bill may be the first priority for the new administration, but to be approved by a Republican-controlled Senate, it most likely will need to be smaller than previously discussed. With an effective vaccine coming soon, Republican Senators may balk at another trillion dollar package. That would leave the Federal Reserve potentially as the only other policy support in Washington, DC, if COVID-19 causes further financial and economic stress.

Biden’s proposed corporate tax changes would potentially cut S&P 500 earnings by 10% or more in 2021, but a divided government most likely would take those proposals off the table. Smaller, targeted tax increases might still be possible to fund a scaled-down version of Biden’s green energy and infrastructure investment programs, something that has bipartisan support.

Also, Biden’s administration might reduce or eliminate tariffs, which could grease the wheels of global trade and provide a boost to corporate earnings. Greater clarity on trade may make it easier for some companies to do business, but there’s the potential of a more challenging regulatory environment as well.

Looking back, one constant in this difficult year has been the value of personal and professional relationships. Sound financial advice charted a long-term path for many investors that kept them from getting off course in a turbulent 2020. There still will be risks to navigate in 2021, but it’s important to remain focused on long-term investing goals, stay on course, and power forward.

Happy holidays, and please contact me if you have any questions.

Market News Client Letters

November 2020 Client Letter: Election Clarity For The Markets

Dear Valued Investor:

Former Vice President Joe Biden has been elected the 46th President of the United States, defeating President Donald Trump in a tight race and bringing an end to the highly contested 2020 election. The new president-elect benefited from high voter turnout and solid support among independent and suburban voters. At the same time, Trump kept the race close, which likely helped put Republicans in a strong position to keep narrow control of the Senate. With the presidential election behind us, we can continue battling COVID-19, healing our economy, and bridging our divides as a society.

President-elect Biden will inherit an economy that is improving nicely. Based on gross domestic product, the US economy grew by a record 33% annualized in the third quarter as the economy reopened (Bureau of Economic Analysis), likely bringing the US recession—one of the shortest ever—to an end.

The strength of the US consumer has been a key driver of this recovery, with retail sales already eclipsing their pre-pandemic highs. But it’s not just the consumer driving the rebound. Manufacturing activity has been on the upswing; investment in technology equipment has surged; most housing markets across the country are booming; company results during third quarter earnings season have been much better than expected; and S&P 500 Index earnings are expected to increase significantly in 2021—potentially by more than 20% (FactSet).

Meanwhile, COVID-19 remains a threat as cases and hospitalizations continue to rise. Although the numbers may go higher in the short run, cases are skewing younger and treatments have improved significantly, greatly improving patient outcomes. While widespread shutdowns are unlikely, renewed restrictions in Europe in response to its latest outbreak provide a reminder that this battle is not yet over. Safe and effective vaccines may be identified within the next month or two and become widely available sometime in mid- to late-2021.

Turning to policy, negotiating a stimulus package with Senate Republicans to help fortify the economic bridge to a COVID-19 vaccine likely will be among the first priorities after inauguration day, though a smaller package in the lame duck session of Congress may be possible. With Republicans potentially in control of the Senate, Biden then may turn to scaled-down versions of his key spending priorities—including renewable energy, infrastructure, and healthcare—as major tax increases may be off the table.

While political change may cause market volatility, US political and economic systems are resilient and can, after a period of adjustment, adapt to new realities. Most of our investment horizons extend far beyond this election and any political cycle. Now that the election is over, the focus continues to be on providing independent investment advice and helping you stick to your long-term investment strategies. The commitment to you will not change, regardless of who is in office.

Please contact me if you have any questions.

Market News Client Letters

October 2020 Client Letter: Signs of Strength in the Economy

Dear Valued Investor:

Autumn has arrived, with students back in school, baseball playoffs beginning, and football in full swing. Life is trying to get back to as normal as possible despite the ongoing impact from COVID-19. While the number of new daily cases and hospitalizations from COVID-19 has steadied in the United States, cases in Western Europe are increasing again, and many are concerned the United States could follow Europe with another spike higher.

Although there are still reasons to worry, a number of positives are on the horizon. A major vaccine breakthrough possibly could be here by the end of the year. The US government has plans to ship 100 million Abbott Labs 15-minute COVID-19 tests over the next several weeks to help accelerate reopening of the economy. Meanwhile, Pfizer’s clinical trial is expected to produce conclusive results later this month, with Food and Drug Administration (FDA) authorization potentially coming soon thereafter. Johnson & Johnson’s vaccine is in the final stages of testing, and promising vaccines from AstraZeneca and Moderna are in the pipeline as well. All of these point to the potential for an improving global economy in 2021.

In another sign of strength, the S&P 500 Index rallied 60% off its March 23 bottom through early September, although it has pulled back some over the past several weeks. After such a strong rally, a 10% correction is perfectly normal and to be expected. Add to this seasonal weakness—the historically poor stock market performance typical of September and October—and investors’ pre-election jitters, and this pullback could be viewed as an opportunity for suitable investors to consider adding to longer-term holdings.

Technology stocks have shown strength during the pandemic, but this group also has pulled back lately, causing many to claim this might be another “tech bubble” similar to the late 1990s. This seems unlikely, as the technology sector has experienced explosive growth, with tech earnings estimates above their pre-pandemic levels, justifying the valuations.

While the economy is showing signs of improvement, it also continues to reflect areas of concern. Initial jobless claims have remained stubbornly high. Dave and Buster’s reported revenue in the second quarter was down 85%, and Live Nation’s revenue was down 98%, as no one was seeing live shows. On the other hand, existing and new home sales both recently hit 14-year highs, and manufacturing has increased for four consecutive months, suggesting the recession is likely over. Amazon has announced it will hire 33,000 new employees at an average salary of $150,000. Certain industries may be years away from fully recovering, while others are moving along like nothing is wrong.

The contrasts in Washington are evident as well, with the presidential election only one month away, but all isn’t lost. There’s growing optimism that a new coronavirus relief package may still be possible before the end of the year. The Federal Reserve also is doing what it can to help spur confidence and liquidity in the markets. November’s winner will inherit an improving economy and one that will likely see strong growth in 2021, as multiple vaccines and therapeutics help spur the economy to open up more fully.

These signs of market and economic strength tell us that better times likely are coming in 2021. Stay safe these final months of what’s been a very challenging year. And please contact me if you have any questions.


Market News Client Letters

August 2020 Client Letter: Positive Territory

Dear Valued Investor:

The battle versus COVID-19 continues. The spread in some of the recent hotspots like California and Florida is slowing, while states in the Northeast and Midwest are now experiencing increases in cases. According to the World Health Organization, 27 vaccines are in human trials, and the chances of an approved vaccine by late this year or early next year are quite high. By staying on the side of scientists, and through humankind’s resolve as the entire world is working together, it’s possible to believe we will beat this latest adversary.

In good news, the S&P 500 Index has moved into positive territory for the year (as of August 5) after being down more than 30% in March, making 2020 one of the largest reversal years ever. Going back to 1950, however, August and September historically have been the two worst months of the year for stocks. In addition, signs of recent weakening in the job market, based on stubbornly high jobless claims, combined with evidence of reduced consumer mobility from several high-frequency data points suggest the stage could be set for stocks to take a well-deserved break.

At the July 29 Federal Open Market Committee meeting, Federal Reserve (Fed) Chair Jerome Powell made it very clear that the Fed has additional tools to support the recovery, and that low interest rates may be here to stay well beyond this year and next. The economy has improved off the March lows, but it isn’t near the record-breaking levels we saw earlier this year. Powell also noted that further relief from Congress was “essential” to help support the economy.

Meanwhile, Congress is inching closer to a new COVID-19 relief bill, but parties remain at odds over several key elements. Although the two sides appear far apart, a deal likely may be struck at the eleventh hour—consistent with typical Washington theater. At this time, Congress is expected to agree to a stimulus package in the neighborhood of $1.5 trillion, bringing the total US fiscal stimulus to more than $4 trillion.

Signs that the economic recovery may be leveling off have not prevented corporate America from delivering earnings well above expectations. Leaders like Apple, Amazon, and Facebook reported extremely strong results in the second quarter, helping these influential stocks move significantly higher. FactSet consensus estimates of future earnings have ticked higher as well, suggesting corporate America may be confident in the eventual economic rebound.

Baseball Hall of Fame catcher Yogi Berra said, “If you torture numbers enough, they will tell you anything,” which fits well with what we’re seeing right now in 2020. Some data appears good, while some data appears troubling. This journey is not over yet, and there may be more twists and turns before society and the economy can fully recover from COVID-19. But like all journeys, this one has an end date, and we will get there.

Until then, please remain diligent and strong, and contact me with any questions.

Market News Client Letters

July 2020 Client Letter: Midyear Outlook 2020

Dear Valued Investor:

We are at the midpoint of 2020, and it would be an understatement to say it’s been a challenging year so far in the United States and around the world. We’ve faced health, social, and economic crises that continue to impact our communities and our economy.

That is why we’re looking ahead for new ways to face these challenges together and to prepare now for better times. LPL Research’s   Midyear Outlook 2020 charts a path forward.

The stock market is forward-looking:  It focuses on what’s happening today and what it sees on the path ahead. Much of the recent real-time economic data—such as transportation activity, home sales, and jobless claims—is showing tangible evidence that economic activity—while still depressed—has begun to make a comeback. The path of the economic recovery remains uncertain, but based on the deep impact and multi-staged recovery, LPL Research expects a 3–5% contraction in gross domestic product in 2020.

Already stocks are pricing in a steady economic recovery beyond 2020 that may be supported if we receive breakthrough treatments to end the COVID-19 pandemic. LPL Research’s 2020 year-end S&P 500 Index target range is 3,250–3,300, based on a price-to-earnings ratio (PE) of just below 20 and a normalized earnings per share (EPS) number of $165. However, the optimism showing in the S&P 500 Index now may limit the size of the gains over the rest of the year.

Turning to the bond market, LPL Research expects interest rates to head higher over the rest of 2020 but remain near historically low levels, with a year-end forecast of 1–1.5% on the 10-year US Treasury yield. If realized, this would be the lowest interest-rate level on record to end a year.

It’s still going to be a challenging environment with significant uncertainty that may lead to more volatility for the next few months, especially with the highly anticipated presidential election in November. It’s important for investors to continue to focus on the fundamental drivers of investment returns and their long-term financial goals.

LPL Research’s Midyear Outlook 2020 provides updated views of the pillars for investing—the economy, bonds, and stocks. As the headlines change daily, continue to look to these pillars as trail markers on your investment journey, and to the Midyear Outlook 2020 to help provide perspective on facing these challenges now and preparing to move forward together.

Please contact me if you have any questions.

Market News Education

Optimism Abounds Despite March Swoon

I want to start off this letter by saying thank you. Thank you for the continued trust you place in our practice. And thank you for sticking with your investment plan, even as the attention-seeking pundits in the press are stoking the flames of panic.

Stock Market Correction: A One-Two Punch from Coronavirus and Oil
As you’ve followed the news, you understand that March of 2020 was historically bad for stock markets. Volatility is here and likely to be with us for a while. But, as I described in a previous message, sticking with your plan is vitally important. That’s because market timing, as a strategy, doesn’t work. But with that said, if your circumstances have changed, such as lost employment or health challenges, that may warrant a shift in strategies. Please contact our office if that’s the case.

In the next few days, you will receive your quarterly statements. It’s likely that you will see a drop in value, perhaps significant. To better understand what’s going on in our markets, I’ll touch on the concepts of “bulls and bears.” A bull market is one that grows by 20% or more. A bear market is one that declines by 20% or more. In an average cycle, it usually takes about 2 years for the stock market to transition from bull, to a bear, and back again. So, just how volatile was the stock market in the month of March? Our stock market just completed that very same cycle in the short span of 17 days! With all the bad news from the stock market, one thing that gets overlooked is the glimmer of hope that the markets recently provided: The week of March 23rd was the best performing week of the stock market since 1938. One great week, however, is little consolation when looking at your statements. But it does mean that the patient (our stock market) does have a heartbeat.

What happened?
The rapid news of Coronavirus resulted in an unprecedented economic shutdown in the history of our country. Internationally, we froze travel, including China and Europe. And soon afterwards, most states shut down schools and non-essential businesses and activities. Most every segment of the economy has been impacted one way or another. Through these shocking developments, the one constant has been the “unknowable.” In other words, we all have lots of questions, but few answers. And as you’ve likely heard me say in previous meetings, the stock market doesn’t react well to the unknowable. Bad news, for example, such as higher unemployment numbers, is something the market can absorb. But the fast and harsh stoppage of everyday life, led to a brutally historic decline in the stock market.

The One-Two Punch
To better paint a picture, let’s call Coronavirus the “punch to the gut.” Metaphorically speaking, while the market was slumped over after that punch to the gut, it took an uppercut to the chin in the form of collapsing oil prices. Oil price collapse was the result of two distinct criteria: one that was organic and one that was artificial. The organic collapse occurred because the world shut down. It’s just a matter of supply and demand. Almost overnight, the world demand for oil drastically declined. The artificial collapse, however, was even more damaging. I’ll take a moment to explain. Back in the 1990s, for example, OPEC came to be known as an obscene four-letter word in American vocabulary. That’s because OPEC would frequently cut oil production to artificially raise the price of oil, and consequently, our price of gasoline at the pump.

Now, back to the present. OPEC held an emergency meeting as Coronavirus began shutting down world economies. Most OPEC leaders wanted to cut oil production, in order to stabilize the price of oil. Although in the past, this was something we came to despise, this was one time when we needed OPEC to cut production. But Russia balked. Russia vetoed OPEC from cutting oil production. Incensed by Russia’s defiance, on March 10th, Saudi Arabia increased production by 300,000 barrels per day. That decision was disastrous to the price of oil. And the stock market, already reeling from Coronavirus news, plunged even deeper.

But just when it seemed that the news was going from bad to worse, we got a reprieve. On April 2nd, President Trump announced a deal (in principal) in which Russia and Saudi Arabia agreed to significant oil production cuts. On that news, the price of oil surged 24% in one day – the best single day increase in history. The stock market followed suit. This is just another example of how crazy and bizarre our markets are right now. If you are looking for a bit of a barometer, watch the price of gas at the pump. This may sound strange, but I’m cheering for higher gas prices. It may act as a trailing economic indicator, letting us know that our economy is roaring back to life.

State of Calder & Colegrove Investment Group
Everyone on our team, including myself, has been touched by the messages of support and the goodwill wishes that many of you have expressed. And on that note, I will take a moment to detail the state of our practice. We are fully operational, fully staffed, and fully employed. Due to the fact that we have been designated as an essential service, we continue to operate out of our office in Suwanee. However, on Fridays, we have transitioned each team member to work from home. We made the decision to transition to our homes on Fridays in order to put our business continuity plan to the test. That way, if the fluid nature of our situation warrants team members to work at home full-time, we will be ready.

I’m Available to Talk
Due to the trials of the Coronavirus pandemic and the rapid decline of the stock market, I am 100% available to talk with you. Since we can’t hold in-office appointments right now, that’s given me more time to talk on the phone. When I spend time with you on the phone, I get energized. You have inspired me through your positive long-term outlook for our markets and economy. You have humbled me with your patience. You’ve reassured me as much as I’ve reassured you. And I thank you.

Help us Transition from Defense to Offense!
The steps we have taken for our practice have been necessary, yet defensive in nature. Due to social distancing, we were forced to suspend in-office appointments; we cancelled our annual meeting; we moved Friday workdays to each of our homes. And we even paused retirement plan rollovers, because I worried, that the time it took to move the money, might result in missed opportunity – a concern that was realized with the best week in the stock market since 1938 (week of March 23rd).

But now, I’m ready to go on offense. And I need your help.
Chances are good, that you have a friend or family member who is asking questions about their investments. Maybe you know someone who is getting close to retirement and is concerned about how these market declines will impact their ability to retire. Or perhaps you know someone younger, who has been putting off their investment planning. So, I’ll make this short and sweet:

“Please refer me to your close friends and family.”

In America, when the going gets tough, the tough get going. And frankly, I am ready to get going but I need your help to do so. I ask that you refer our practice to your close family members and best friends. Your family and friends have questions about what’s happening in the market today. And I want to help. I ask that you help us go on offense and refer new prospective clients to our practice. We have the capacity to take on new clients. We have the time. And I have the drive, determination and desire to help more clients just like you.
Referring us is easy.

  1. Ask your friend/family member if they would like to hold an informal chat with me.
  2. If they agree, just call our office at: 678-482-0686, ext. 1 or simply complete this contact form with the names and phone numbers of your close friends and family.

Bold Predictions of Economic Prosperity
There is so much gloom and doom in the news these days. And some of it, is understandable, because this is a scary time. But I have confidence, that the finest minds in medicine will solve this issue. They just need time. And we’ve given them time by locking down the country. Let there be no doubt that the finest scientists, physicians, and equipment exists in the United States. And the leadership we have seen from President Trump’s team has been fantastic. Regardless if you are a fan of the President or not, he closed the country to travel with China and Europe amid cries of racism and nationalism. He took the reigns of leadership on the heals of a partisan impeachment proceeding. I agree that his twitter rants can be hard to swallow, and sometimes, just plain mean, but President Trump has risen to the occasion. He has led our response, opened up the purse strings of the federal government, and moved mountains to help states and hospitals. He even invoked the war-time powers of Defense Production Act to force the few non-patriotic American companies to transition to the creation and local distribution, of needed medical supplies.

So, what’s next?
None of us know when we will be able to come out of our homes. But that time will come. Our leaders are hard at work, finding a way to separate the healthy from the sick. That’s the key to it all, as I’m sure you know. Once we are able to complete that task, we can open up our economy for business. And here’s where I will make a bold prediction. There is so much “pent up” spending power in the country right now. Once Americans all go back to work, I believe that retail businesses, including shopping centers and restaurants, are going to see a boom the likes of post-World War II America. There will be so much buying going on, that shelves may empty for reasons other than a run on toilet paper. And the markets…I think they will be due for an increase in historic proportions. The Dow Jones Industrial Average, for example, was sitting at about 29,000 before this invisible enemy attacked the United States. I believe that seeing the Dow Jones pass through 40,000 is not out of the question, especially if President Trump is re-elected. Of course, even if this occurs, there are wounds to address, both the tragic loss of life, and also, the financial burdens of unprecedented U.S. Government deficit spending. But our country is due for an economic boom and a joyous celebration like no other.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

Economic forecasts set forth may not develop as predicted.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Market News Education

Bizarro World: Where Toilet Paper is Worth More than Oil

When I was a kid growing up, the innocence of Saturday morning included my favorite TV show: The Superfriends. And my favorite superhero was none other than Superman, of course. One of Superman’s arch nemesis was known as Bizarro. And on Bizarro’s home world, everything was completely backwards or upside down. For example, Bizarro had freeze vision, while superman had heat vision. And Superman, of course, fought for truth, justice, and the American way. Whereas Bizarro was evil and sought to wreak havoc and destruction.

I wanted to paint the picture of “Bizarro World,” because to me, that’s what we are enduring right now in the U.S. Economy. The stock market has taken a beating, yes, but it’s a lot more bizarre than just that. Kids are home from school. High School seniors are wondering if they are going to march at graduation or not. Concerts have been cancelled. Vacations and business conferences have been shuttered. Even the Disney parks have closed for the remainder of March.

To illustrate my point about Bizarro World, take a look at these two images for a moment:


Now, ask yourself this question. In today’s Bizarro World, which is more valuable to you: a roll of toilet paper or a quart of motor oil?

At face value, I believe that most of us would say the roll of toilet paper. That’s because if you visit your local grocery store or big box store, you are likely to find empty shelves, where once there was plentiful and cheap toilet paper.

Comparing Stock Performance of Toilet Paper and Oil:
But the comparison between these two products goes beyond the empty grocery store shelves. I did a little more research, to study stock companies that make toilet paper and oil, and the results are quite surprising.

Let’s take a look at a comparison of Proctor & Gamble and BP Oil. Proctor & Gamble makes Charmin bathroom toilet paper. And BP is a well-known global petroleum company. As of the close of business on March 16, 2020, Proctor & Gamble has lost 12% of its value, year-to-date. BP Oil, on the other hand, has lost a whopping 51% of its value, year-to-date.

Did Bizarro Just Defeat Superman?
Just take a moment and ask yourself, does it make sense – I mean, any type of logical sense, that BP Oil lost 51% of its value? Or, is that fact about as believable as Bizarro defeating Superman. Simply put, our world is upside down right now. What was up is down (oil). What was once cheap and readily available, is now sold out (toilet paper). Handshakes have stopped. Social distancing is now part of our vocabulary.

Translating this to Investment Decisions
The analogy regarding Superman and Bizzaro World might seem silly, but it really does a good job of painting the importance of normal conditions as it pertains to our investment decision-making policy. At Calder & Colegrove, we believe in crock-pot planning, not microwave advice. The time that we have taken, through the years, to determine your investment direction, was crafted with you in mind – and you alone. It was not done so based on the short-term swings of the market. I have never, nor will I ever, put my trust in the markets when it comes to their short-term direction. I will, however, recognize that some of the greatest gains in our stock markets have risen out of some of darkest days of our history. Here are two quotes that might help paint that picture. But first, a little context. If you are old enough or you’ve read enough history, do you know what happened in the USA in 1974? Take a moment to think on that time in our Nation’s history, and then read on.

In 1974, President Nixon resigned. And the turmoil from that event and the Vietnam War, ushered in an awful and long-lasting downturn in the U.S. Economy – including the stock markets. Jim Fullerton, who was the CEO of the Capital Group (parent company of the American Funds), made this providential statement:

Bear markets do come to an end. And they usually come to an end when all the news is still bad and while the economy itself is still deteriorating. They come to an end not because of some visible external piece of good news, but because raw emotion has carried prices too far down.

Here’s another watershed moment.

In 1932, the United States was in the grips of the Great Depression. The stock market collapse back in 1929 made today’s stock market challenges look like a walk in the park. In May of 1932, Dean Witter had this to say:

Some people say they want to wait for a clearer view of the future. But when the future is again clear, the present bargains will have vanished. In fact, does anyone think that today’s prices will prevail once full confidence has been restored?

Stay the Course or Make a Change?
With all this said, it should come as no surprise that I recommend that we stay the course. Going back to my story about Bizarro World: Does it makes sense to formulate a new strategy based on the backwards and upside-down information available to us today? As I alluded to in our message from February 28th, the Cornerstone from which I formulate investment direction has been temporarily turned upside down.

Are We Worried?
If you are still worried, you’re not alone. In the long run, I believe our markets and economy will rebound, and, as a result, will be stronger than ever. But yes, I’m worried too. Frankly, I’m worried about you. Just in my household alone, both my girls are now home from school. It’s only Monday, and Savannah, my older daughter, is already telling me that she’s bored. She’s bored because she doesn’t want to sit around and play video games. This is her Spring Break. And she was scheduled to engage in a meaningful mission trip, which of course, was cancelled. She wants challenges. She wants to serve. She wants to run track with her team. She wants to get up in the morning and endure the challenges of her classes at school. Most everything is put on hold temporarily here at our home. And I’m sure it’s that way at your home too. So yes, I’m worried about you and your family. Because what’s playing out here at my home, is undoubtedly, playing out at your home and every other home across America.

Risk Quiz
I know that I may sound like a broken record, but if you still want to do a double-check of your risk tolerance, please take 5 minutes, click here, and take our risk quiz. And even if you are confident in your investment course, it’s still a wise and prudent exercise. The process of taking that quiz will help both of us understand what, if any action, should be taken on your investments. That way, we can continue to make sound investment decisions together—not in Bizarro World—but rather, in a clear-minded way, in which once again, oil is worth more than toilet paper.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.