Biweekly Market Interpretation Commentary from The Boh Heppe Group

The Biweekly Commentary features Tom Boh and Kelly Heppe. Watch, listen or read every other week on their interpretation on what's happening in the markets! Click "subscribe" to directly receive our updates. Bonus: Karen Ogard is featured in many of the editions prior to June 2021!


11/12/2021: Taking a Deep Breath

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Hello everyone and welcome to our Biweekly! My name is Tom Boh, Director of the Boh Heppe Group, and today we find ourselves in that strange time period after Halloween, when we begin to quickly gain speed towards Thanksgiving and Christmas! Time to take a deep breath…now exhale…ok, here we go!

As we hurtle through Q4, what is it that we know so far? For S&P500 companies, we know that Q3 earnings, revenue and profit margins have been outstanding overall, in addition to record levels of cash listed on respective balance sheets. And while cost pressures continue to be a common theme for reporting companies, both pricing power and strong demand have also been widely commented upon. Indeed, corporate America continues to experience a somewhat robust recovery.

What about inflation? Well, we are starting to hear the word “persistent” more often than “transitory.” And from the consumer perspective, we all know firsthand just how much goods & services are rising in cost, and it is so aggravating. However, from the investor perspective, inflation is not all-bad for our stock holdings. In fact, historical data evidenced by the S&P 500 shows that stocks tend to perform well during periods of moderate inflation. Of course the hope is that inflation does indeed stay moderate, and if it does, the economy should adjust accordingly.

What about the Fed? Thus far, the action has been all about tapering monthly bond-buys, but not the raising of short-term borrowing rates as of yet. As usual, this is really where-the-rubber-meets-the-road, and we will be keeping you posted as we move forward.

Thank you for your trust and confidence! Don’t forget to breath.

10/29/2021: Ghostly Greetings!

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It’s scary how soon 2021 will come to a close. In this edition of our biweekly, we thought it would be timely to remind you of some planning tips to consider over the next several weeks before it’s too late…

Gifting: Whether you are gifting to a charity or family member, it is important to pay attention to the completion of the gift. For example, if you give funds to a family member on December 15th, but the recipient does not deposit the check until January 2nd, the gift was NOT completed in 2021. Don’t risk waiting until the end-of-year to complete your gifting/QCDs/RMDs. Let’s get them done now!

Tax planning: 2021 has presented particularly challenging tax situations for some individuals: large, realized capital gains, high capital gain distributions from mutual funds and at this time, few to no significant tax-loss-harvest opportunities to be found. Please review your tax situation and consult with your CPA or tax software to run year-end tax projections and whether they affect estimated payments.

Tax Codes Expiring at Year’s End: There are several tax provisions set to expire at the end of this year. Of particular interest for our clients: through the end of 2021, you can deduct up to 100% of your AGI with charitable donations. Click here for a list of other expiring provisions.

Interested in more tips? SAVE THE DATE: Year End Tax & Financial Planning Webinar 11/17/2021 12:00 CT. Registration and details available soon.

Please remember that everyone’s investment and tax situation is unique. Let us know if we can help in any way.

Now for a Halloween Treat
We so enjoy having a close relationship with you, both personally and professionally. To that end, we thought it would be fun for you get to know some tidbits about us. Click here to complete the “Keys to your Financial Puzzle” game. Hint: we have been dropping clues throughout the summer for this very treat! Hint: we have been dropping clues throughout the summer for this very treat!

10/15/2021: Q4: Year-end Outlook

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Hello and welcome to our biweekly. My name is Tom Boh, Director of the Boh Heppe Group, and this week we had our quarterly conference call featuring one of our favorite market experts, Mark Keller, CEO/CIO of Confluence Investment Management. Please click here to access the replay from our website and referenced disclosures. This link is also on our website and available upon request.

Mark made the important distinction between the often-negative messaging that we may see in the media vs. what the economic data is actually showing. In his view the most important consideration is where we are in the economic cycle. Once GDP (and earnings) hit their lows in a recession, the “Recovery” stage begins and continues until GDP/earning reach the previous levels before the recession. Believe it or not, the data shows that we have already recovered, and in fact have entered the “Expansion” phase. Historically speaking, this is usually a good time to be invested in equites.

We also discussed inflation, and the fact that our economy has experienced four decades of low inflation due primarily to globalization and deregulation. Mark drew the distinction between goods and services. The inflation we are experiencing right now is mostly in the “goods” category, due to supply chain disruption. The “services” category has not reacted in the same way as of yet, which in Mark’s view is notable. To quote Mark regarding inflation: “It won’t be the ‘70s, but it won’t be the last two decades either.” Over time, especially as supply disruptions subside, inflation may very well settle down.

Lots more charts and interesting commentary are available for your edification. Our quarterly conference calls are about 60 minutes in duration, and as many of you know from experience, Mark is always worth a listen!

Happy Autumn everyone! As always, thank you for your trust and confidence, and until next time, take care.

09/30/2021: Along for the Ride

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It’s been a busy week for the BHG! We hosted our fundraiser for the Children’s Hospital of Colorado PICU at Topgolf. We celebrated client engagements, we mourned passing’s, and the market is becoming volatile again.

Here are a few specific updates and what we are watching now:

• PICU Fundraiser: We raised over $2500 for the Pediatric Intensive Care Unit at the Children’s Hospital of Colorado. Thanks to all who participated; we had a wonderful time! This donation link will be live through October 8th if you are still interested in donating.
• Volatility: We entered the expansion phase of the market cycle this quarter, which tends to be more volatile than the recovery phase. As you have heard us say over the past several months, we are overdue for a true “pullback”. We expect the next few months to be bumpy.
• Save the Date for Experts Unplugged: Join us on Wednesday, October 13th at Noon MDT for our next virtual webinar. We are excited to host Mark Keller, CEO and CIO for Confluence Investment Management. Mark will share his insights and year-end outlook. 

The events from this week have been a good reminder for us that life is busy and messy and still, somehow must go on. It’s an honor to be a trusted advocate and partner with you on your journey. Thank you for your continued trust and confidence.

09/17/2021: Topgolf, and the Light at the End of the Tunnel

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Today we are going to cover two topics! The first is our Topgolf fundraising event for the Children’s Hospital of Colorado PICU (Pediatric Intensive Care Unit), Tuesday, Sept. 28th, 5:30 – 8:30pm in Centennial. We sent invitations to everyone, and we will resend the information next week. Some of you may know that a year ago my son, Michael (14 at the time) spent 6 days in the PICU, and the amazing doctors, nurses and caregivers essentially saved his life while dealing with my wife and me during a very stressful time. The thing is, they save lives on a daily basis for lots of kids year-round, serving families from Colorado and our surrounding states. We hope you all can participate in some way! Here is the link to register and/or donate directly to Children’s. Even if you can’t attend the event, please consider making a donation. Know that you can choose the amount, you don’t have to go by the suggested amounts and most importantly, 100% of your donation goes to Children’s Hospital.

The second topic is about our continued economic recovery since last year’s recession and the pandemic. As we lookout for “the pullback” that will eventually happen, there are some positive perspectives to ponder. Our friends at RiverFront Investment Group point out that the Delta variant may indeed lead to slower economic growth rates, but on the other hand could very well prolong the recovery. Unemployment should continue to trend lower, and inflation will eventually normalize, likely in the 2-3% range in their view. And as you know, there will be lots of headlines about the legislation being debated in DC, and this could cause volatility in the equity markets, which tends to happen in September & October from a seasonal perspective. For more info regarding RiverFront’s outlook, please click here for their recent Weekly View.

We will keep you posted as we head towards the end of Q3 and the beginning of Q4. As always, thank you for your trust and confidence!

09/03/2021: Leaves of Change

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We are already seeing pops of color in the mountains in Colorado, even though fall officially doesn’t start for another few weeks. Further north in the Rockies, the Fed just wrapped up their annual Jackson Hole summit. Since the stock market is always watching and listening to the Fed’s behavior, we too, have been interested in the impact on the market, if any.

The Fed remains focused on three factors: employment, financial stability, and inflation. According to Chairman Powell, if each variable does not change enough to meet the Fed’s targets, interest rates will remain low. This is where we stand, according to the Fed:

• At this time, unemployment numbers are not where the Fed would like them to be. This is especially evident after the August jobs reports released today.
• Consumer balance sheets and inventory rebuilding are backstopping the US economy, which indicates that financial stability is present.
• Chairman Powell still believes that inflation is transitory.

Does this mean change is on the horizon? The Fed has indicated that tapering (buying fewer bonds each month) will likely start in 4Q2021. This is earlier than previous forecasts, yet the market seemed to be expecting this, so the reaction was minimal. Still, the Fed appears to be committed to waiting on raising rates until late 2022. In the words of Strategas, “But, while the foot is coming off the gas, pressing on the brake (raising rates) is not close.”

What do we do with this information? We rely on our money managers’ expertise to adjust portfolios and prepare us for the future. For example, our active managers have added exposure to companies and sectors that traditionally have performed well in inflationary environments (e.g. materials, financials, energy). Therefore, there are no changes to our approach and philosophy. During times like these, it is particularly important to remain committed to your financial plan. Please contact us if you have questions about your Plan, or if you would like to update your current situation.

In the meantime, we will leave the changing to the leaves!

08/20/2021: Back to School

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Here in the metro Denver area, summer is over ☹. The kiddos all went back to school this week. The good news is that previously separated classmates are reunited, teachers are teaching in-person, and sports/activity schedules are back to normal. The bad news is the rapidly spreading Delta variant, and although students are required to wear masks, there is great concern that things may change and become more restrictive again.

Likewise, there are concerns for the global economy, although you wouldn’t know it from watching the behavior of the US stock market. The equity markets respond to earnings, and the Q2 reporting season has been coming in hot, greatly exceeding expectations and year-over-year comparisons. As Kelly talked about last time, the US economic cycle has emerged from the “recovery” stage and is now in the “expansion” phase. This phase tends to be positive for stocks, but also brings with it more volatility and at times periods of sideways movement rather than constantly hitting new highs.

At this time, all eyes are on inflation: Is it merely “transitory” or is it really more “sticky” than we thought? Our friends at Strategas point out that the Fed originally thought that inflation would be fleeting and likely subside as we entered into summer. As we all know, this hasn’t happened, and it looks like inflation is here to stay with us for the unforeseeable future. The Fed is now signaling that it may taper their bond purchases sooner than initially indicated, possibly beginning this year. Add to this the concerns about upcoming tax & stimulus legislation, the resurgence of COVID variants, geopolitical concerns with places such as China and Afghanistan, and it becomes easy to see that there are some mighty, big bricks in the Wall-of-Worry. Will the US equity markets continue to climb…or might there be a stumble? We have been waiting for a correction for quite some time, and it will happen eventually. As we have said time and again, market pullbacks are normal, and actually the sign of a healthy market. So, stay tuned, and we will keep you posted!

08/09/2021: Market Cycles & The Olympic Games

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The return of the summer Olympics has been welcome entertainment in my household this summer. As soon as the theme music starts, our excitement and emotions activate. It is hard to fathom the amount of time, effort, and sacrifice so many people dedicate to making their Olympic dreams come true. And, then suddenly, the Olympics are over, and the training cycle starts over.

As you know, the stock market has its own cycles. And like the Olympics, the average duration of a bull market is 4-5 years. If the market were to behave “normally”, the movement would be reminiscent of a dance: three steps forward, one step backward. Though since the bottom of the market decline in April 2020, the market has kept dancing forward, with no steps back. As of August 4th, the S&P 500 is up 18.19% YTD. Accordingly, we not only believe we are due for a pullback, but we also welcome it.

As a reminder, market corrections are normal and quite common. In fact, a pullback here and there is healthy, and a sign that the market is functioning properly. This article helps to provide more context on this exact subject. Specifically, corrections present attractive buying opportunities, give earnings a chance to catch-up with prices and stabilize future market volatility. We acknowledge downturns evoke emotions (just like when I cry during the Olympic medal ceremonies), which is why we remind you of these inevitable events ahead of time.

Yet, the pullback is not here and there are many variables which indicate it may not be here for a while. Here are the important indicators we are watching:

• Expansion Phase: We are just now entering the expansion phase of this bull market. This is because the US GDP has recently surpassed the GDP level from February 2020 (pre-COVID recession).
• Earnings Strength: As of this writing, 403 companies have reported Q2 2021 earnings. Thus far, 87.6% of the companies have reported earnings above forecast. The forecast reflected a 60% increase from Q2 2020 earnings.
• Cash balances held by households and many businesses remain high.
• The Fed is committed to keeping interest rates low until unemployment levels decrease significantly.

Just as the Olympians train for their big moment, we remain dedicated to help you stick to your Plan—no matter where we lie in the market cycle. In the meantime, we hope you enjoy watching the Olympics wind down!

As always, thank you for your trust and confidence!

07/23/2021: International investing back on the radar…finally!

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We hosted our latest installment of our “experts unplugged” series on July 21st and David Lubchenco, of Chautauqua Capital Management shared his insights about the international markets. Specifically, David reminded us that Harry Markowitz once said, “Diversification is the only free lunch”, which is why we usually have some international exposure in our portfolios.

Here are a few key takeaways:

• There tends to be an inverse relationship between the strength of the US dollar and the performance in the international sector. In other words, in a declining US dollar environment (such as the one we are in now), the international index (MSCI ACWI) has historically outperformed the US index (S&P 500).
• Stock pickers may have the advantage over the passively-managed-indexes at this juncture. For example, the US stock index (S&P 500) has outperformed the non-US index (MSCI ACWI) annually 9 out of the past 11 years. Yet during that same timeframe, 76% of the top performing stocks have been non-US companies.

As you often hear us say, asset allocation is our first line of defense. This is why we continuously have an international equity component in our portfolios. As “risk-managers”, we utilize diversification as a tool to help maximize your return-per-unit-of-risk. Afterall just like Markowitz, everyone loves a free lunch 😊.

To listen to the full replay of the event, please click here. Password: JuVK3E9q

As always, thank you for your trust and confidence.

07/08/2021: Second Half Ups-and-Downs

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We hope you had a great 4th of July weekend and that you continue to have a great summer!

The first half of 2021 has been quite the journey! With meme-stock-mania, cryptocurrency-hype, historical fiscal stimulus, widespread COVID vaccinations, post-pandemic opening up of the economy…wow…did I miss anything? And yet stocks are up double-digits over the last 6 months. What about the second half of 2021?

Our macro-economic team at Strategas has shared their “Five Themes for the Second Half” and not surprisingly, the theme of “sticky inflation” is at the top of the list (Click here to read). Thus far the market has had somewhat of a muted reaction to inflation fears, which is likely because the Fed has done a good job convincing folks that the current inflation numbers are transitory, indeed resulting from pent-up demand alongside interrupted supply chains. Many of us, however, are not buying that narrative. Even an increase from an average 2% to 3% (50%!) in inflation would be significant for investors. Also, the Fed is under considerable political pressure to not raise interest rates (to fight inflation) until our economy can add at least another 7.5 million workers to reach pre-COVID levels of employment.

So where do we want to invest in a rising interest rate environment? We agree with Strategas in that the Energy, Materials, Industrials and Financials equity sectors can provide a good hedge. Also, companies that generate better cash flow, have less debt, and return cash to investors quicker via dividends and/or share-repurchases, may have the advantage over companies that rely on more leverage.

Stay tuned! The second half of 2021 will likely have its ups-and-downs, and we will keep you posted.

As always, thank you for your trust and confidence.

6/25/2021: Climb Every Mountain…

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Our macro-economic team at Strategas produced a great piece that we wanted to share with you. It’s a short one-pager, and they discuss one of the most common questions that we are hearing today when we speak with our clients, and that is: Can the markets keep going up from here? Isn’t this thing too high? When will there be a correction? Click here to read!

Strategas developed a bull-market-top checklist that they have been using for two decades. There are nine conditions listed, and as of the beginning of this month, they have checked off only 2 of the 9 (22%). Increasing IPO activity and a “blow-off top” are two conditions that we have experienced, but there are several conditions that still need time to play out. For example, inflows into stock funds have increased recently, but not to the level we would expect for a bull market top. There is still a lot of capitol sitting in money market funds earning very little interest. When might that get deployed? Also, as we experienced in previous quarters, the frequent upward revision to corporate-earnings- estimates has been astounding. When will this phenomenon begin to dissipate? We will find out as soon as next month since Q2 is soon ending and earnings reports will begin in July.

In looking at the chart for the S&P500 index, it is easy to spot that the market has slowed its upward trend since mid-April. For the last several months, the market has been hitting new highs, and then coming down a couple of percentage points until it reaches its 50-day moving average, and then bounces right back up again. A true “correction” would be a downward move to the 200-day trend (or below), which would be about a -9% drop from where the market is trading at this writing. Keep in mind, even if we dropped -9% from here, we would back to March/April levels.

We are still in a bull market, but there will be fits-and-starts, pullbacks and corrections. We will happily keep you posted along the way!

As always, thank you for your trust and confidence, and wishing you a wonderful summer!

6/10/2021: Happy Summer from the BHG!

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(That’s the Boh Heppe Group, not the Big Hairy Giant.)

We are thrilled to issue our first edition of the Biweekly Commentary from The Boh Heppe Group! While there is an exciting energy that emerges from transformation, our focus for the remainder of this year (and beyond!) continues to be stability and consistency.

Accordingly, we want to highlight what you can look forward to and expect from our Team in the second half of 2021.

Summer Fun

The Boh Heppe Group: With over 35 years of combined experience in the financial services arena, we are passionately dedicated to our role as the financial guardian and steward for you and your family. Our summer fun activity kicks off this month, to help you get to know us even better. Throughout the next several biweeklies, we will drop hints about our similarities and differences. If you pay attention, your hard work and curiosity will pay off!

Office Re-open! After more than a year of serving our clients in a hybrid work environment, we are beyond thrilled to have our Team 100% back in the office! Yes, this means we are scheduling in-person meetings. Woo hoo!

Something Special: We are sending you something special . Keep a look-out in the coming weeks for a small token representing how much we appreciate you. Contact the Team with any questions (note: we will not spoil any surprises!).

Thursday Afternoon Club (TAC): For our clients who live in the Denver area, we will be hosting a handful of happy hours this summer. The agenda? Creating opportunities to see you live and in-person. Stay tuned for more details; we hope to see you soon!

Private Client Event, Celebrating Women Trailblazers: We are excited to extend an exclusive invitation to our clients to participate in this virtual event featuring Anne Sempowski Ward (CEO, Spectrum Brands) and Jessica Alba (CEO, Honest). Join us Wednesday June 23rd, 4:00 CST; contact the Team to RSVP.

Concierge service you can count on.

One-on-One Meetings: These will be pre-scheduled by Alisha & Micki. Of course, we will reach out in between these meetings to stay up to date on your lives as well as to keep you apprised of any relevant financial planning-related topics. As always, you are welcome to reach out to us at any time

Biweekly Commentaries: Every other week, we will continue to send you our thoughts on the markets and financial planning. Our objective is that you hear about these topics in a condensed and timely manner.

Monthly Strategy Webinars: Presented by Baird, these monthly webinars provide a deep dive into wealth management topics. Up Next: What You Need to Know About the Proposed Tax Law Changes on June 16th at Noon CST. Click here to register.

Every day we wake up grateful for the opportunity to partner with you on your financial journey. As always, thank you for your trust and confidence.

Here’s to a great rest of the year!

5/27/2021: Changing of the Guard: Planning for Continuity

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Karen: In my final bi-weekly appearance I want to thank you with all my heart for entrusting me to guide you in your financial journey…it has meant the world to me. As I transition from Director to Client, I could not be more thrilled to have Tom and Kelly at the helm of the new financial advisory team: The Boh Heppe Group. Tom and Kelly have over 35 years combined experience in the financial services arena and their credentials and dedication to total wealth management with concierge level services is unwavering. I’m looking forward to what lies ahead for all of us.

Tom: Partnering with Karen since coming to Baird, over 11 years ago has been an amazing journey. It has been a privilege and a blessing to work side-by-side with one of the most talented and charismatic human beings I have ever met. The main objective of our partnership since the beginning, was to implement not just a succession plan, but a continuity plan. We wanted someone we could trust to take care of not only our own families, but especially our clients in case something happened to one of us. As planners we know at some point, we are going to have a transition like this, so we wanted to be prepared. And that is one of the many reasons we were so happy to find Kelly eight years ago!

Kelly: For 38 years, Karen has served multiple generations of families, advising them (firmly and lovingly!) in the many facets of financial stewardship. We have learned so much from Karen about this incredible vocation we practice, and all the while enjoying the adventure! While we will miss Karen, it is her turn to check off items from her bucket list and execute the final part of her financial plan. Tom and I are ready and excited to take charge! Partnering with each of you to help you create the financial future that you want—both for yourself and the people you care about – is not a responsibility that we take lightly. We are committed to you and endeavor to continue to earn your trust every day.

As always, thank you for your trust and confidence.

5/14/2021: Jobs, Inflation…and Clutching-our-Pearls

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There is always something to worry about when it comes to the financial markets, and sometimes these concerns turn out to be legit, but oftentimes they are just another step in the wall-of worry.

For example, we had a BIG miss in the payrolls report this past week, and of course this became headline news and even seemed to affect the stock market for a few days. As our Private Wealth Management Research Team points out in this article, the raw data in April showed a gain of 1.1MM jobs, but by the time the data was seasonally adjusted, the final number did not meet expectations. In other words, the actual number wasn’t bad, but the estimates indeed were inaccurate, so time-will-tell whether or not we have a downward trend…most likely not in our view.

The other topic in the news is inflation. Inflation expectations are important and do affect the stock market. Anecdotally, we are seeing inflation all over the place. E.g., my teenage son even noticed that gasoline prices have really gone up recently, was very annoyed and wanted me to explain why! Also, you may have noticed that certain car dealerships have no inventory sitting out on the lot, due to the shortage of computer parts needed to manufacture the final product. There are numerous other examples of rising prices in the wake of disrupted supply chains. The big question really is whether the inflation we are experiencing is transitory, or is it permanent? At this time, the “experts” at the Fed and elsewhere argue that the inflation we are experience will be fleeting. In time, we will figure out if this is the case. In my mind this is a legit concern at this juncture.

As we have noted often, stocks really are the best hedge against inflation. And keep in mind that our equity mangers are tweaking their portfolios to handle potential inflation and account for where we are in the economic cycle. As always, we will keep you posted as time goes on.

As always, thank you for your trust and confidence.

4/28/2021: The Ride Continues:

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Can you believe that it has been over a year since the COVID-19 recession? So much has transpired since then! During our most recent “experts unplugged” educational webinar, Randy McLaughlin portfolio manager of the Strategic Asset Management strategy, illustrated a straightforward account of what happened last year and why he believes there is still a lot of momentum propelling the market upward in 2021. Head to our website for the full replay of the presentation.

Good news for 2021

The stock market’s thrust at the end of 2020, has carried into 2021. This is mostly attributed to economies reopening. There has been an +81% stock market return between the low on March 23, 2020 to the high a year later. As Karen stated in our last biweekly, “don’t fight it, ride it”! Most impressively, corporate earnings have recovered to pre-pandemic levels. Additionally, the consumer has never been this healthy coming out of a recession: house prices are high, debt levels are down, and savings rates elevated to above 20% in 2020.

What can go wrong?

There will always be factors that can disrupt the ride. We will specifically be watching for rising inflation and new policies’ impact on the market. Other potential future concerns include potential for COVID resurgence and variants, delays in vaccine inoculation and sentiment around vaccines.

Takeaways from 2020

While there are plenty of lessons to take away from last year, specifically there are four investment philosophies that were tested and proven successful yet again. Spoiler alert-- these concepts are not new, and you have heard us repeat time and again:

• Appropriate asset allocation is still the best decision you can make for your investments.
• Bonds are buffers for stability.
• Owning quality companies works in times of volatility.
• Time in the market more important than timing the market.

We are committed to keeping you informed and providing many outlets to communicate and advocate for your financial wellbeing. There will be ups and downs in the stock market and in our lives. Do not worry, we will always be riding alongside with you. 

As always, thank you for your trust and confidence.

4/13/2021: Don’t fight it…ride it!

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The path this market continues to take is one of economic recovery and renewed activity on the heels of fiscal stimulus and low interest rates.  At the time of this writing the S&P 500 is over 4100 and the Dow is nearing 34000. 

With earnings season starting this week, the expectations are for significant increases, which may already be already reflected in the stock market valuations.  More telling will be the forward-looking expectations regarding the sustainability of these profit margins as corporations face potential increases in corporate tax rates in a post pandemic economy.

During a panel discussion hosted by the International Monetary Fund, Fed Chair Jerome Powell argued that the economic recovery is not helping everyone equally. He elaborated on this claim by stating that there are still a lot of people who don’t have jobs, and he will do whatever it takes to make sure people don’t feel left behind. The remarks were taken positively by financial markets. It suggests the Fed has no intention to raise rates in the foreseeable future.

Is there trouble ahead?  There is always trouble ahead. But should you rise to meet it or let it wash over you?

Producers are being faced with the dual challenge of increased demand and ongoing supply chain problems causing the inability to sufficiently meet that demand, the effects of which can be seen shown in the jump in March’s (PPI) producers price index report.  The upcoming (CPI) consumer price index report should show whether the higher prices that producers are facing are flowing through to consumers. These reports indicate some headwinds for stock prices as profit margins are tighten and that inflation may return.

Also, there are some thoughts that the market may not be pricing in the risk of a policy shift in the proposed corporate tax rates and the potential new global minimum tax. Our take is that there will be plenty of time to see how this unfolds.

For now, enjoy the ride while it lasts…and know that there will eventually be a correction.  And lest we forget our constant refrain:  “Your asset allocation is your first line of defense!”.  We will continue to stay vigilant and keep you posted.

In summary, we are keeping an eye on it so you can just enjoy the ride…for now.  

As always, thank you for your trust and confidence.

4/1/2021: Keeping-an-Eye on Inflation

Click here to watch the video. 

In our last biweekly, Kelly talked about how owning stocks is a key component of building wealth.  Today I want to talk about inflation, especially since we have a FED policy that is emphasizing job growth at the very same time that Congress is passing multiple economic stimulus bills.  Could this combination cause long-term, 70s-style inflation or god-forbid, hyperinflation?

Inflation measures how much goods and services can we buy for our dollar, or in other words, our purchasing power as time goes on. Core PCE (Personal Consumption Expenditure), which measures the cost of goods and services (minus food and energy) is at about 1.4%. The 12-mth CPI rate, which does include food and energy currently measures about 1.7%. Inflation expectations as reflected in the bond market over the next 5-years are currently running at about 2.6%. In a nutshell, these numbers seem pretty tame at this point in time.

But let’s not allow the current numbers to obscure the amount of inflation that we are experiencing on a personal level.  The included chart breaks out the average inflation rate into some of its component parts, which in our view hits closer-to-home.  There are categories that have been deflationary: TVs, software, cars, and clothing.  And of course, there are higher inflationary items, such as hospital services, college tuition, & childcare.  From a financial planning perspective, this information can be helpful (if not a little daunting!) in helping us formulate your long-term Financial Goal Plan.  That’s why we always include inflation in our probability analyses!

What should we have in our portfolios to hedge against inflation?  Equities…which brings us back to Kelly’s message about building and sustaining wealth.  While past performance is no guarantee of future results, stocks have returned about 9.8% annually since 1928 while inflation has run at about 3%.  That represents a real return of almost 7% above inflation.  We all know firsthand that stocks can be volatile, which is why we customize your asset allocation to fit your risk tolerance.

As always, thank you for your trust and confidence.

3/18/2021: Dieting and Building Wealth: The secret to the success is the same.

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We have all tried multiple approaches to find ways to lose weight and eat healthier. Believe it or not, the same phenomenon plagues wealth building strategies.

The secret to building wealth (and eating healthier) is not rocket science, it is discipline. Discipline to make sacrifices now, to achieve a future goal. Sacrifices so important, it can make the difference of millions of dollars by retirement.

The secret? Let’s start with the basics:

Are there shortcuts? Sure. But they involve more luck than skill and usually are not for the long term.

To highlight the importance these of these tactics, our friends at Riverfront Investment Group recently released a report with examples illustrating the impact these rules have to your financial journey. Based on the assumptions from the report, adopting these basic rules will enhance your financial success by millions of dollars. Click here to read the report. While the report is geared towards younger investors, we find it applicable to all investors still in the accumulation phase of their journey.

We are so passionate about helping you create and build a healthy financial plan. To that end, we are your accountability partners helping you to be disciplined in your approach, just as we are with ours. Here’s to avoiding the shortcuts, following the rules and enjoying the journey together!

The IRS has extended the 2020 Tax Filing deadline to May 17th.

If you have not yet filed your 2020 tax return, you have extra time this year. Which also means you have extra time to contribute to a Roth or Traditional IRA for 2020! Contact the team for more information.

2/19/2021: New highs often lead to…more new highs!

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Sorry to disappoint, but we are not referring to cannabis stocks…maybe another time.

The most amazing thing happening right now may not even be on planet Earth, but rather, planet Mars!  Yes, while many earthlings are tentative to travel at this time (but not for long!), the NASA rover named "Perseverance" just completed its seven-month, 292-million-mile journey to the red planet, and successfully landed.  The fact that we human beings can engineer something like this and make it happen is remarkable.  In addition to inspiring hope, it proves once again that when we earthlings put our mind towards a goal, we can accomplish just about anything.

Meanwhile, here on Earth, there has been lots of talk about stock market highs, and elevated valuations.  What are we to make of these crazy Price/Earnings (P/E) ratios?  The S&P 500 index has a P/E multiple of about 22.2x forward-12-month earnings, which is about 25% higher than the five-year average of 17.7x earnings.  If we only look at P/E multiples as the sole variable, then yes, they may seem crazy.  However, if we add context, such as the current interest rate environment, in addition to how quickly earnings are recovering, then maybe not.  In the financial marketplace, the alternative to stocks is typically bonds.  With bond yields so low (well below inflation), investors don’t mind paying more for stocks that may grow and/or pay a stable dividend.  If earnings continue to grow, then yes, the stock market may continue to establish new highs.

This doesn’t mean that there won’t be an occasional correction!  At this time, the S&P 500 index is trading about 10% above its 200-day moving average.  For you folks that like to look at charts, it is common for pullbacks to test the 200-day moving average.  From our perspective, a market correction would be healthy, likely temporary, and a good time to consider buying.

Perseverance is now on Mars!  (Way to go, NASA!).  And let’s remember that perseverance, tenacity and determination continue to thrive here at home.  We wish you all-the-best as we get vaccinated, head towards springtime and hopefully get back to traveling and doing the fun things we’ve been waiting for!

As always, thank you for your trust and confidence.

2/3/2021: Bubble, Bubble, Toil, and Trouble

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This seems to be the number one topic on the minds of most investors. Is the market in a bubble?

Yes, a bullish outlook indeed for stocks.

This is completely understandable based on the surprising resilience and recovery of the stock market last year, rallying to a point that is seemingly ahead of earnings.

Price to earnings ratios seem lofty (at least on some stocks like Tesla), Speculation in stocks discussed on internet message boards have also sent a few stocks skyrocketing like Gamestop; and then there is the ever gut-wrenching roller-coaster ride of bitcoin. All these seem reminiscent of the tech bubble in 1999 where investment reason was abandoned, and stock prices just ran rampant.

Many investors are just looking for signs of a top so they can…what? Get out before? In our experience, that is never a long-term sustainable investment practice. Asset allocation, rebalancing and diversification can help protect you so you can reach your long-term goals*. Ahh, but the sizzle is so exciting, right? Let’s be clear…speculation is not the same as investing.

It's also important to note that the “stock market” is broader than just a handful or individual names that have rallied. There are growth stocks and IPO’s that have seen an amazing move over the last two years, while Value stocks with their clean, boring balance sheets have barely moved. Could there be opportunity still in different sectors?

Our friends at Strategas created a “bull market top” checklist to attempt to identify and categorize key market items that are present at most market tops. As of now with inflation low and the FED promising to remain accommodative, the earnings outlook continues to improve…the checklist remains largely unchecked.

It would not surprise us if investors started taking some profits and rebalancing portfolios, allowing the S&P 500 to reset a little. Corrections are common and instrumental to the long-term success of investing.

We remain steady at the helm and in our reviews we’ll be discussing your individual portfolios to make sure they are balanced and continue to match your risk tolerance and goals.

Educational Event Replay Now Available!

On January 20th, we hosted a virtual education event featuring Doug Sandler, CFA® Head of Globally Strategy for Riverfront Investments. To listen to the audio reply, simply dial 888-899-7904, use playback ID 414920035#.

As always, thank you for your trust and confidence.

1/22/2021: Sunny Outlook for 2021!

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Those of us who live in Colorado are blessed to be surrounded by natural beauty, and that includes the amazing number of sunny days we experience even when the temperatures drop below freezing. Thankfully, lots of vitamin D!

The sun seems to be shining on the stock market as well. According to our friends at RiverFront Investment Group, the world’s economy is experiencing a rebirth. We believe as more and more people become vaccinated, the economy will continue to re-open, and the pent-up demand for goods and services will continue to drive up earnings and GDP. We are in the recovery stages of this economic cycle, and that tends to treat equities well, particularly in a low-interest rate environment

Are there a few clouds on the distant horizon? Oh yes, as always…but how distant? Debt levels are at all-time highs. PE ratios are also quite high. We have record levels of monetary and fiscal stimulus that may eventually lead to higher inflation. Asset bubbles, anyone? The markets will continue to deal with these issues as time goes on, but keep in mind that if earnings and the overall economy continues to grow, then PE ratios will come down, as well as the amount of debt relative to GDP.

So for now, the sun seems to be shining for 2021. We thought the same about this time last year…until COVID surprised us. Hopefully there won’t be that kind of surprise this year.

The sun is also shining on the Ogard Boh Group! Our beloved Karen has decided to retire this year in May. After almost 38 years of serving clients, Karen will now have the opportunity to work on her bucket-list, which somehow gets neglected when running a business full time. Additionally, wonderful Kelly has been promoted to Partner, and we are so excited for her! Our commitment has always been to serve you as multi-generational team serving multi-generational clients, and that will not change.

Here’s to the New Year! As always, thank you for your trust and confidence!

1/6/2021: Carpe Diem: Seize the Day

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Seize the day! And it’s a new day.

Lesson’s I’ve learned from 2020 and COVID-19.

1) It takes more than isolation to get this house organized.
2) I really only wear about 1/3rd of my closet.
3) I started out enjoying working from home.
4) I never knew I was addicted to Netflix and Amazon Prime!
5) I really, really miss my travel and adventure.

As a planner I believe that while planning is paramount to success; so is executing your plan! It’s time to execute the final part of my plan.

After building this team with Tom and making every decision together over the last 11 years, we are ready to have Tom, Kelly and the Team take over while I move towards retirement from the financial services industry this year. I am targeting a retirement date of May 31st 2021. We will take several of our next visits to make sure your plan is secure, and all your needs have been addressed with every member of the team. To that end, we have listed your customized service schedule below.

I am proud of the Ogard Boh Group. Our team has all the qualities to advise you moving forward. They have experience, professionalism, credentials, and a dedication to you that runs deep. I am confident in their abilities to continue to provide concierge service that places you and your needs in the forefront. This is why I will continue to entrust my investments and financial plan to them and am looking forward to having them advise all of us in the coming years.

As I look back over my 37-year career, I have had the great fortune of caring for you and your family in all stages of your wealth journey. You have invited me into your lives and entrusted me with your financial picture. Without a doubt, I am honored (and humbled) with the trust you have placed with me and have loved being an advisor, (sometimes counselor) and friend. You have truly enriched my life and I am forever grateful.

In my next chapter, I plan to dedicate my full time to exploring all the places, people and things I have yet to experience. I want to thank you with all my heart for entrusting me to guide you through your financial journey and, above all, for your friendship.

As always, thank you for your trust and confidence.

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