Josie Hodges

Weekly Insights 10/4/21 – 10/8/21

October 1, 2021 by Josie Hodges

(Not So) Sweet Emotions

It is hard not to get emotional about money since your lifestyle depends upon it, especially for those nearing or currently retired, which is why emotions amplify when the stock market goes through gyrations. When the market moves up, the emotions are most likely happiness or euphoria, and depending upon the magnitude when the market moves down the emotions become worry or fear. However, if we do our jobs properly as your investment advisor, we have conveyed that stock market investments are meant to be long-term and therefore remove the short-term emotional swings, which consistently occur within the stock market.

Unfortunately, the major stock market indices closed out September with a monthly loss and the S&P 500 Index broke its seven-month winning streak. Even though the benchmark was lower for the month, it did manage a small gain for the quarter, making it six quarters in a row with positive returns. There were numerous market-moving events during the month, including a continued increase in coronavirus cases, concerns around the Federal Reserve tapering its bond buying program, persistent supply chain pressures, worries in China, and ongoing fiscal policy debate in Washington. While some of these issues might have a short-term impact on the market, they do not impact our longer-term views of the market. We still feel the economy is strong and bullish sentiment will prevail.

Economic Expansion

The economic releases of the past week pointed toward continued growth. Two key reports, Consumer Confidence and the Index of Consumer Sentiment confirmed consumer expectations remain strong. We follow these closely since they are an indication of expected consumer spending, which makes up about 70% of the GDP. Also positive, a preliminary reading of durable goods orders came in better than expected, which was surprising given the multitude of recent headlines regarding supply-chain issues.

The Fed’s preferred measure of inflation, Personal Consumption Expenditures (PCE), came in higher than expected and at the highest level since May 1991. This data coupled with Fed Chair Jerome Powell’s testimony before Congress last week where he acknowledged inflationary pressures remain elevated and more sustained that previously thought, leads us to believe the Fed may be prompted to act sooner than anticipated with an interest rate increase occurring as soon as the early part of next year. During his testimony, the Fed Chair also stated the Fed’s outlook for next year remains positive with growth rates above normal and continued reduction in unemployment.

Looking Ahead

With the calendar turning to October, we expect market volatility to continue. Eyes will be on Congress as political wrangling continues around proposed spending bills, funding the government and raising the debt ceiling. It is the last item, raising the debt ceiling, that has the most potential to cause movements in the markets. Not raising the debt ceiling prohibits the federal government from making interest payments on its debts, which would push it into default. We view this as being extremely unlikely since it is in the best interests of both parties to avoid this scenario and come to an agreement, but in the meantime, this will weigh on the markets. Also on the radar will be any signs of action from the Fed, specifically clues about tapering the bond buying program and how this affects interest rates.

We remain watchful and focused on the issues affecting the market, which is vital during times of volatility and especially given recent events. If you have not had your portfolio reviewed recently, please call us to schedule ensuring your plan remains on track. Our priority is to position your investments in a manner where you are comfortable and you do not experience the emotional roller coaster often associated with being invested in the markets.

Have a wonderful week!

Nathan Zeller, CFA, CFP®

Chief Investment Strategist

Secured Retirement

nzeller@securedretirements.com

Please contact us if you would like to review your individual financial plan or learn how the TaxSmart™ Retirement Program can help you.

info@securedretirements.com

Office phone # (952) 460-3260

Weekly Insights 9/27/21 – 10/1/21

September 23, 2021 by Josie Hodges

That Escalated Quickly…

After the relatively quiet summer months, the expectation was that market activity would heat up and we would see increased volatility, as is traditionally the case when we transition from summer into fall. This past week exceeded those expectations as it was one of the most turbulent weeks we have seen in the markets in a while.

Last week began with the largest single day stock market sell-off since May, which was attributed to concerns regarding the liquidity of one of China’s largest property developers. The very leveraged Chinese real estate market remains fragile and there are worries it will spill over into the banking sector if the government does not intervene. However, banks in the U.S. have very little exposure to Chinese real estate so any financial damage overseas is not likely to affect the U.S. markets.

The middle of the week brought the highly anticipated Fed meeting. It came as no surprise that the Fed held interest rates steady, near zero, but it did hint that a rise could come sooner than previously anticipated with updated projections now showing a rate hike prior to the end of 2022. The Fed also signaled it plans on reducing (or “tapering”) the monthly bond purchases later this year and fully wrap up the program by the middle of 2022. These signals provided positive support for the markets since they indicated the Fed views the economy as moving past the pandemic recovery and gaining stable footing on its own.

Despite the fear that hit the markets early in the week, they rebounded quickly and were able to realize gains by the end of the week. The major market indices are still slightly negative for the month and the 7-month string of positive returns looks to be in jeopardy. If the markets can make modest gains this week then the winning streak will remain intact.

It’s the economy (stupid)…

We are not intending to offend anyone, but this statement made famous by James Carville during the 1992 presidential election, which is still quoted frequently, does come to mind. While the stock market does not always sync with the economy, there is little argument that a strong economy lends itself to a strong stock market and vice versa – a weak economy brings the markets down. Despite global events, the domestic economy remains on solid footing and is showing no signs of slowing down. The current economic expansion continues to drive robust corporate profits and earnings growth, which is why we are not overly concerned with events that impact markets on a short-term basis. We maintain our belief that the markets will continue to march higher over the months ahead. We also think inflation is not transitory, but rather a longer-term issue, which the Fed even acknowledged last week. A longer-term threat we do see facing the markets is the possibility of entering a period of stagflation, which is inflation without economic growth. As of now we place a low level of likelihood of that occurring since the economy continues to expand.

Looking Ahead

The real estate situation in China appears to be contained for now but other risks still abound in the market. The usual suspects from the past few months remain at play – extended stock valuations, spread of the delta variant of Covid, continued inflation, and potential changes in fiscal policy. Our thoughts are that stock valuations will normalize through earnings growth and the concerns over the impact of Covid will continue to diminish. In the short-term, legislative action, especially debate around raising the debt ceiling and the potential passage of massive spending bills, has the potential to cause further market volatility. And we continue to believe sustained inflation, while not always making daily market headlines, remains the largest threat to portfolios over longer times periods for the foreseeable future.

This past week has displayed the benefits of being patient and adhering to a long-term investment strategy during times of volatility. This is not only true on a daily and weekly basis, but also on a monthly and quarterly basis. Successful investing involves time and patience. Do not hesitate to contact us if you would like to review your portfolio or investment strategy.

Have a wonderful week!

Nathan Zeller, CFA, CFP®

Chief Investment Strategist

Secured Retirement

nzeller@securedretirements.com

Please contact us if you would like to review your individual financial plan or learn how the TaxSmart™ Retirement Program can help you.

info@securedretirements.com

Office phone # (952) 460-3260

Weekly Insights 9/20/21 – 9/24/21

September 17, 2021 by Josie Hodges

Being Above Average

The transition from summer to fall entails children returning to school, which holds special meaning this year given the challenges with Covid over the past two school years. Overcoming these challenges has proven that the children of Minnesota are indeed above average as has been touted, which from our biased opinion has always been a factual statement. Speaking of averages, we are seeing aspects of the markets and economy that are also above average. Let’s begin with the stock market, specifically the S&P 500 since it is regarded as the most common benchmark used for overall market performance. Over the past three-, five-, and ten-year periods this index has provided average annual returns in the neighborhood of 16-17%, all better than the long-term average of 10%. Some might argue that the market will “revert to the mean” which can either occur via a market pullback or slowly over time with below average returns. Our thoughts are the latter is more likely than the former and we will see a steadily increasing market, albeit at a slower pace than what we’ve experienced over the past decade. Another strong possibility is the long-term average returns of the stock market trend higher given current easy monetary policy and technological advances driving further growth. As a side note, the strong market returns mentioned above include a period of time where economic activity came to a near standstill due to a pandemic which led to a short-lived bear market where stock prices dropped dramatically. This demonstrates the importance of staying the course and adhering to your investment strategy, especially during times of volatility.

Inflation (again) and the Consumer

In what may seem like a broken record, we again want to mention inflation but it is difficult not to since we continue to feel this has the potential to have a very large impact on retirement savings over the next few years. Headlines last week proclaimed the inflation situation was improving since the twelve-month change in the Consumer Price Index (CPI), which is a measure of the prices for consumer goods and services, was below consensus estimates. However, what the headlines overlooked is this change in the CPI level remains well above long-term averages and is at the highest rate since 2008. Core CPI, which removes food and energy since they tend to be somewhat volatile, is increasing at the highest rate in 30 years!

In some good news, retail sales figures for August were released last week and they showed a surprise increase versus an expected decrease caused by concerns about rising Covid cases. This indicates consumers are continuing to spend money and since consumer spending makes up about two-thirds of the U.S. GDP (Gross Domestic Product, which is the value of all goods and services produced within a country) this was a good sign for the economy and points toward continued growth.

Looking Ahead

Not surprisingly, September has been a somewhat volatile month with the major market indexes taking a breather from their upward trajectory and pulling back from their recent highs. This volatility is typical and not unexpected since historically September is the most challenging month of the year for the stock market. From a historical perspective the last three months of the year tend to be the strongest quarter for the markets. We hope this is the case again this year but with the strong performance year-to-date that may be difficult to achieve. But even if the market is flat or does not live up to historical expectations over the next three and a half months, we will still end the year with above average returns.

Our work of reviewing economic data and studying market themes so we can best position portfolios to protect against risks and profit from opportunities continues. We also endeavor to keep our clients informed of what is happening in the market and how it impacts your portfolio. We are not satisfied with being above average in this regard but rather strive to excel. Please let us know if we can be doing anything differently or if there is any other information you would like to see.

Have a wonderful week!

Nathan Zeller, CFA, CFP®

Chief Investment Strategist

Secured Retirement

nzeller@securedretirements.com

Please contact us if you would like to review your individual financial plan or learn how the TaxSmart™ Retirement Program can help you.

info@securedretirements.com Office phone # (952) 460-3260

Weekly Insights 9/13/21 – 9/17/21

September 10, 2021 by Josie Hodges

Summertime Blues

A few weeks ago we were honored to have longtime sports personality Patrick Reusse join us for our monthly Lunch & Learn. Not only did he provide his thoughts on the Vikings upcoming season, but he also shared some stories including one of how the late Sid Hartman was able to track him down in a pasture in Prior Lake back in 1963 when a young Mr. Reusse thought he would skip work on a nice summer’s day. While many of us maybe have had thoughts of skipping work when the weather is nice, the financial markets do not take summer breaks but they often slow down. Fortunately, this year was a little different as the stock market did not show signs of slowing and continued its steady march upward. However, now that we are past Labor Day, which marks the unofficial end to summer, it seems some changes are beginning to occur.

The S&P 500 reached 53 new highs year-to-date through the end of August, which is the most ever through the first eight months of a year. September has gotten off to a rocky start with the markets being slightly more volatile and not continuously providing the gains we had become accustomed to (and spoiled with) over the past few months. Some of the culprits being blamed for this change in market activity include the withdrawal from Afghanistan, damage from Hurricane Ida, and continued concerns about Covid’s prolonged impact. While we are mindful of these events, we are more focused on those factors which we think will have longer term impacts including a potential slowdown in economic growth, changes in Fed policy and impending spending bills in Congress. As we have been anticipating for a while, a lot of market action could occur over the next month so we expect volatility to continue.

Inflation Continues

Last week’s major economic release was the Producer Price Index (PPI) which measures prices of goods at the producer level before they are passed along to the final consumers. An increase in PPI will most likely lead to an increase in consumer prices, as measured by the Consumer Price Index (CPI). The year-over-year change in the PPI is the highest since this measure began being kept in 2010 and the fact it has been accelerating over the past few months indicates inflationary pressures will continue to persist.

We currently view inflation as being a very substantial risk to long-term investor’s portfolios since it has potential to erode purchasing power, having an especially profound impact on retirement savers. This is why it is vital you have an income plan in place that takes into account inflation and invest in assets which benefit from higher prices.

Looking Ahead

On the economic front this week, we will receive further inflation figures with the Consumer Price Index (CPI) which will garner a great deal of attention in light of last week’s PPI data and fact that inflationary pressure no longer appears to be transitory from the pandemic. Also due to be released are retail sales numbers from August, which are expected to fall slightly due to concerns with the Delta variant and the anticipation of stimulus payments ending. Retail sales are a strong driver of the U.S. economy and an indicator of future spending so a significant surprise in either direction has the potential to move the markets.

If you missed seeing Patrick Reusse in our office and want to hear the stories he shared or his insights into the local sports teams, you can watch the replay on the Secured Retirement YouTube channel. Even with summer winding down and fall sports seasons starting, we remain focused on watching the markets and economy so we can best position portfolios and keep our clients informed.

Have a wonderful week!

Nathan Zeller, CFA, CFP®

Chief Investment Strategist

Secured Retirement

nzeller@securedretirements.com

Please contact us if you would like to review your individual financial plan or learn how the TaxSmart™ Retirement Program can help you.

info@securedretirements.com

Office phone # (952) 460-3260

The TaxSmart™ Retirement Summit

September 8, 2021 by Josie Hodges

One of our main goals at Secured Retirement is to help educate all retirees and retirees to be about their finances and help facilitate the best decisions about retirement for each family.

We have many tools to help us accomplish this goal, webinars, lunch and learns, the weekly newsletter, the radio show. By far our greatest tool to reach the most people is the TaxSmart™ Retirement Summit.

We hold a large scale seminar semi-annually featuring a keynote speaker that is THE expert on some aspect of retirement. Due to the pandemic we haven’t been able to to hold this event, but the TaxSmart™ Retirement Summit is back now.

If you haven’t participated before, this is the summit you don’t want to miss. The keynote speaker will be none other than America’s IRA Expert Ed Slott. He is a nationally recognized IRA distribution expert, professional speaker, television personality, and best-selling author. He has been named “The Best Source for IRA Advice” by The Wall Street Journal. If you have an IRA or 401(k), come get some advice from the definitive IRA expert.

The Annual Tax Summit 2021 will be held September 30th, 7pm at the Park Place Double Tree. We are so excited to see all of you in person and even more excited to introduce you to Ed Slott.

Weekly Insights 9/6/21 – 9/10/21

September 3, 2021 by Josie Hodges

Work, Work, Work

Happy Labor Day! With the holiday upon us it has most likely evoked thoughts regarding the
end of summer, start of school, and the beginning of football season. Even though Labor Day
has its roots imbedded with organized labor when it became a federal holiday in 1894, the
recognition of the day is about all working people. Therefore, what may also come to mind is the
term “work” since spending time at jobs encompasses a large portion of waking hours for most
American adults.

Not only are jobs a vital part of our individual lives since they allow us to provide for ourselves
and our families, overall employment is an integral part of the economy due to other core drivers
of economic growth, namely consumer spending, being directly affected by employment. This is
recognized by the U.S. government which is why the Federal Reserve operates under a “Dual
Mandate” – the goal of fostering economic conditions that achieve stable prices and maximum
sustainable employment. Because of the importance of the national employment situation,
there is a great deal of attention paid to the monthly Payroll and Unemployment Reports
released by the Bureau of Labor Statistics (BLS) on the first Friday of each month. These
reports currently have an added emphasis as we ascertain how well the labor force is
recovering from the pandemic and how quickly new jobs are being created, giving an indication
of sustained economic growth.

Here at Secured Retirement we focus our efforts on helping people realize their financial goals
as they transition from the workforce. We also want to recognize that the work of Americans,
such as yourselves, over the past several decades has contributed to the strongest economic
growth in history.

Markets Continue Upward

The major stock market indices were all higher for the month of August, with the S&P 500
logging its seventh straight monthly gain. This was primarily attributable to accommodative
monetary policy and strong corporate earnings reports. Our continued market optimism is
based upon earnings growth which has consistently surpassed prior expectations over the past
few quarters and gives no indication of slowing down. Economic data during the month
remained positive but did moderate from the strong year-over-year growth reported the previous
few months, which is to be expected since the comparisons are now reaching a point where a
year ago the economy was normalizing after the post-pandemic shutdown. The one damper on
the markets was the increase in Covid cases attributable to the Delta variant and worry of
restrictions being re-imposed. This especially had an impact on energy prices due to concerns
over global demand. There are now signs the trend in case increases has peaked and fears of
wide-scale restrictions have abated, so hopefully this should be less of a headwind for stocks.

Looking Ahead

September is shaping up to have the potential for volatility in the markets. According to
research firm CFRA, the S&P 500 has been negative 45% of the time since World War II with
an average decline of 0.56%. However, the index has shown positive returns three out of the
past four years. It is not history that concerns us this year, but rather the anticipated events
which have the potential to move markets, specifically political wrangling over infrastructure and
spending bills plus policy changes to the Federal Reserve’s quantitative easing program as we
expect they will begin to taper, or reduce, the monthly bond buying program. The markets have
been fairly steady over the past few months, but these policy actions could be catalysts for
greater volatility and a rotation between favored market sectors. We continuously monitor the
markets and make changes to portfolios as needed to protect against volatility and profit from
opportunities.

Labor Day is generally considered to be the unofficial end of summer, but this is not necessarily
bad news since autumn is arguably the most favored season here in Minnesota. This holiday is
observed for all working people, past and present, so be sure to take time to enjoy it. The
benefactors of our robust American economy and way of life, which is each and every one of us,
thank you for your work.

Have a wonderful week!

Nathan Zeller, CFA, CFP®
Chief Investment Strategist
Secured Retirement
nzeller@securedretirements.com

Please contact us if you would like to review your individual financial plan or learn how the
TaxSmart™ Retirement Program can help you.

info@securedretirements.com
Office phone # (952) 460-3260

We’ve Moved! 6121 Excelsior Blvd. St. Louis Park, MN 55416

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Book Your Free TaxSmart™ Financial Review Today.

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We’ve Moved! 6121 Excelsior Blvd. St. Louis Park, MN 55416

Josie Hodges

Want a Retirement Free From Financial Stress? Book Your Free TaxSmart™ Financial Review Today.

We’ll review your finances and tell you what you can do immediately to get on the right track for retirement.

Download the Top 10 Mistakes That Increase Your Taxes

In this free report, you’ll learn…

Danielle Christensen

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Want a Retirement Free From Financial Stress?
Book Your Free TaxSmart™ Financial Review Today.