With COVID-19 cases surging in some states and uncertainty abound, sometimes it can be best to take a look at the past to guide investor's moving forward. Throughout history, there have always been reasons to not invest. The chart below includes a World War, the Great Depression, multiple other expensive and traumatic military conflicts, a dozen or so recessions and the current global pandemic. However, $1,000 invested in the S&P 500 in 1928 would be worth $169,428 today which would give an investor an annualized 6% compound return before dividends .
After a sharp rebound in April, off of the March lows, May continued to show strength in a stock market rally as the S&P 500 was up 4.5% month over month. May's rally was largely fueled by the positive news of progressing vaccine trials and hopes for a fast-tracked vaccine, which could be available by the end of 2020 in a best-case scenario. This news coupled with the reopening of many states' economies fueled optimism that the US economy is bottoming and starting recover from a deep decline in economic activity.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, which passed the House in a sweeping 417-3 vote, was incorporated into an end-of-year spending bill and was signed by President Trump on December 20, 2019. This legislation was a bipartisan
effort and puts into place numerous provisions that are intended to enhance retirement security. The act itself contains 29 separate provisions, but we will highlight some of the key changes and discuss how this may impact your financial plan.
Last week, the United States Congress passed, and President Trump signed, the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The CARES Act is a $2 Trillion emergency fiscal stimulus package that aims to bridge and ease the effects of the Coronavirus on the US Economy. The bill has provisions for loans, payments and tax credits aimed at helping individuals, businesses, and municipalities meet short-term cashflow needs. While the bill is hundreds of pages in length, here are a few things we believe our clients should be aware of.
The 2019 Market year was anything but boring! After a historically bad end to 2018, in which the S&P 500 was down over 9% in December, the first quarter had its best start since 1998, up over 13%. The market continued to coast until May when slowing global economic growth and the on-going trade wars spooked investors. The market suffered a 6+% pullback in May. This proved to be a flash in the pan as the market recovered what it lost in June and July. August supplied more drama when the 2-year Treasury and 10-year Treasury yields inverted, which is often a recession indicator. Headlines swirled about a potential economic slowdown and the market dropped almost 2% in August. Again, this was short lived as the market recovered in September and then put its foot on the gas adding nearly 8.5% in the fourth quarter to finish up 28.9% for the year.
The stock market continues to react to coronavirus headlines on a daily basis - with both negative and positive market swings. As the death toll rises (primarily in China at the moment), the fact that this is a human tragedy and not just an economic or financial one should not be diminished.
This time of the year is often referred to as the giving season and for the right reason: Americans tend to give more in the last quarter of the year than any other. With the end of the year coming up, there are a few things to be mindful of if you are charitably inclined.
For informational purposes only. Not intended as legal, tax, or investment advice, or a recommendation of any particular security or strategy. Please contact your legal or tax professional for more information regarding your individual circumstances. Information prepared from third-party sources is believed to be reliable though its accuracy is not guaranteed. Opinions expressed in the above commentary reflect subjective judgments of the author based on conditions at the time of writing and are subject to change without notice. Past performance is not indicative of future results. For more information about Souders Financial Advisors, including our Form ADV Part 2A Brochure, please visit https://adviserinfo.sec.gov or contact us at 513-598-2400.
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