Private Client Newsletter
The bull market that began in March of 2020 came dangerously close to an end. From March 23, 2020 through January 3, 2022, the S&P 500 Index gained 114% (excluding dividends). From that January 3 closing high through the recent low on May 19, the S&P 500 fell nearly 19%, narrowly avoiding the level at which bull markets end and bear markets begin.
While we wait uncomfortably to see if the S&P 500 can hold its recent lows, it is somewhat reassuring to know that bear markets that are not accompanied by recessions tend to be milder:
- Bear markets without recessions tend to last an average of about seven months, and we’re already five months into it.
- The only bear markets that took more than 46 days to bottom after the initial 20% decline were associated with recessions—1970, 1973, 1982, 2001, and 2008.
- Bear markets not accompanied by recessions have historically experienced smaller declines, losing an average of 24%.
- Five of the past six non-recessionary bear markets saw the S&P 500 lose 22% or less.
Bottom line, if the U.S. economy is able to avoid recession over the next 12 to 18 months—as we expect—then this selloff may be over soon and stocks could potentially make a run at their previous highs by year-end.
Read the entire letter on our website here.
Maxing your IRA Early, and Nondeductible IRAs
Looking to retire early or for tactics and strategies to get ahead of the curve? Consider these two tactics.
We are going through a market correction and, in many cases, we can buy equities at a lower price than two years ago. While dollar-cost averaging is typically a smart method of investing and many professionals will warn clients against attempting to time the market, there are some reasons to consider it. This doesn't always work well with employer matches, so make sure you talk to a professional.
Some of us can use our company retirement plan and an IRA, depending on income. Some of us must use the Nondeductible IRA. Looking for a place to put more savings? Trying to shore up an early retirement? A nondeductible IRA is funded with after tax dollars, so it will benefit from tax-free growth on the invested dollars.
Our Latest Research
It finally happened. On Monday the S&P 500 Index moved into a bear market, finally closing 20% beneath the January 3 high.
WCF Quarterly Blood Donation
On June 22, members of the WCF team will be visiting our local American Red Cross as part of our new quarterly blood donation initiative.
We're excited to start this new tradition, and make a continuing difference!
Financial Planning Tip of the Month
Revisiting Your Household Balance Sheet
Budget! Did you wince? It's a hard thing to do in the summer. It's easy to get derailed with vacations, activities with the kids and, for some of us, more free time.
Heading into the halfway point of the year, it is a good time to revisit your cash flow.
Update or do a household balance sheet.
You can revise your Balance Sheet by:
- Reaffirming your goals or setting new ones.
- Accounting for any life changes (bonuses, raises, job changes) and adjusting your plan. Start saving or planning for those dollars.
- Making room for fun or miscellaneous expenses.
- Planning for the other big uptick in spending at the end of the year, the Holidays.
- Making sure you are maxing retirement accounts if you can.