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Knox Notes

Fall Arrives

10/01/2022:  On this fall day, while enjoying the changing leaves, I will share some thoughts to consider:

  • October 17th is the due date for those requesting extensions on their 2021 tax returns.  If you didn't file by April 18th, the IRS initiates an automatic minimum late filing penalty of $435, or 100% of the tax owed if less.   https://www.irs.gov/payments/failure-to-file-penalty
  • At the end of 2021, global wealth totaled an estimated $463.6 trillion, an increase of over 9.8% versus 2020.  There was 24,480,000 millionaires in the U.S, about 39% of the worldwide total.  The average wealth per U.S. adult was $91,340, with a mean of $579,051.  Credit-Suisse
  • A recent survey found that about 33% of Americans who make more than $250,000 live paycheck to paycheck.  An annual income of $250,000+ puts you in the top 5% of incomes in the US.  About 78% of those surveyed said they were doing ok financially or living comfortably.     Bloomberg
  • On September 21, the Federal Reserve raised interest rates by another 0.75%, bringing the rate to 3.00-3.25%.  Federal Open Market Committee signaled the intention of raising rates until the funds level reaches a "terminal rate" of 4.60%.  The Federal Open Market Committee's next scheduled meetings are November 1-2 and December 13-14.  
  • For the first time, the Old-Age and Survivors Insurance Trust Fund (Social Security) paid out more than they in took in last year.  Social Security trustees project the fund will runt out of money in 12 years.  Unless Congress acts before then, the benefits will be reduced by 23%, with payroll taxes continuing to fund the remaining 77% of scheduled benefits, according to the most recent Trustees Report.
  • Preparations for Queen Elizabeth's death were in the works for decades.  Less than half of U.S. adults have a will that outlines what they want to have happen with their assets.  If you haven't started an estate plan, please consider doing so.  One of the easiest plans to overlook, failing to plan may be some of the most costly financial events or our lifetimes.  Our Look Forward planning services can help.  Our Family Documents Checklist is a way to get started, by gathering your important information.  
  • The value of the entire cryptocurrency market has fallen below $1 trillion, as selloffs have erased about $2 trillion of value.  CNBC
  • About 56% of U.S. households said they are experiencing economic stress due to inflation, up from 49% in January, according to Gallup's August survey of 1,500 consumers.  About 25% of surveyed consumers said they are cutting back on spending, while almost 20% said they are canceling vacations and driving less.   Consumer spending accounts for about 70 cents of every $1 of U.S. economic activity.  The national average gas price is now $3.75 per gallon, down from the high of $5.02 on 6/14/2022, but still $0.57 higher than a year ago.
  • In 17 of the 19 midterms since 1946, the market performed better in the six months following an election than it did in the six months leading up to it.  As always, past performance may not be indicative of future results.
  • October 3, 1863, President Lincoln issued a proclamation designating the last Thursday in November as Thanksgiving Day.
  • With the constant headlines about "Recession or No Recession", "Out of Control Inflation", or "Rising Interest Rates", it may cause one to be worried about their financial future.  Market volatility constantly occurs and the economy constantly evolves.  Market downturns, even severe ones, and changing rate environments are an inevitable part of investing.  Our Financial Planning process assumes market volatility and changing environments will happen over time.  A thorough financial plan may help you stay on course to meet your goals.  If you have a plan, let's revisit it.  If you haven't used our planning services, let's take a look to see if you are on track to meet your desired financial destination.  Plan Well. Invest EfficientlyRelaxThat is my best advice.

If you are concerned about the markets and your portfolio, Let's talk.   If you are curious about the opportunities available in the market, Let's talk.


Jason Knox, AIF®, CRC®

The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. Nothing contained herein should be construed as a recommendation to buy or sell any securities. No person or system can predict the market. All investments are subject to risk, including the risk of principal loss. S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market.  Investors cannot invest directly in an index.  Past performance is no guarantee of future results. Diversification does not guarantee a profit or protect against a loss.


Waiting Patiently

09/02/2022:  On this beautiful, sunny and warm September day, I will share thoughts to consider:

  • For August, nonfarm payrolls rose by 315,000.  The unemployment rate rose to 3.7%, slightly higher than the 3.5% expectation.   August was the lowest monthly jobs gain since April 2021.
  • Wages also rose, with average hourly earnings up 5.2% from one year ago.   Workers who recently switched jobs received wage increases of 6.7% over the last year vs 4.9% for those who stayed at their jobs.  This is the widest gap since 1997.
  • President Biden announced student loan forgiveness on August 24th.  The announcement indicates those individuals earning less than $125,000, for married or head of household earning less than $250,000, may have up to $10,000 of loans forgiven.  If the borrower also received Pell Grants, the forgiveness amount is up to $20,000.   The pause on student loan repayments is extended for a "final time" to 12/31/2022.   Visit https://studentaid.gov/manage-loans/forgiveness-cancellation for other loan forgiveness options.   In April, the Federal Reserve estimated this will cancel at least $321 billion in debt, based on the $10,000 forgiveness amount, so the forgiveness will be higher by including the Pell Grant recipients.  The estimated cost per taxpayer is estimated at about $2,500.  The National Taxpayers Union calculates the cost at about $400 billion with about 158 million taxpayers.  Student loan debt presently totals about $1.75 trillion.
  • Wikipedia has banned some users from making edits on its "recession" page as people are feuding over the term's proper definition.  Recessions are often traditionally defined by economists as two consecutive quarters of declining GDP, which occurred in the 1Q and 2Q this year.    The robust labor market we are experiencing commonly doesn't coincide with recessionary periods.  Based on the traditional definition, the US economy was also in a recession in 2020.  
  • On January 8, 1835, President Andrew Jackson achieved his goals of paying off the United States' national debt.  It was the only time in U.S. history when the debt was $0.  Subsequent economic events lead to financial crisis a few year later.
  • While rates vary regionally, the average 30 year mortgage rate is 6.08%, the 15 year rate is 5.25%.   The last time we saw these rates was 2008. 
  • There are about 22,000,000 millionaires in the U.S.  Having $1 million puts you in the top 10% of wealth.  The average millionaire is 57 years old.   
  • Some people on the internet believe the cartoon character George Jetson was born 07/31/2022.  George's work consisted of an hour a day, two days per week. Like the Jetsons, flat screen tv, talking watches, and robot vacuums are available in our present time.    I'll wait patiently for the flying bubble car.   
  • With the constant headlines about "Recession or No Recession", "Out of Control Inflation", or "Rising Interest Rates", it may cause one to be worried about their financial future.  Market volatility constantly occurs and the economy constantly evolves.  Market downturns, even severe ones, and changing rate environments are an inevitable part of investing.  Our Financial Planning process assumes market volatility and changing environments will happen over time.  A thorough financial plan may help you stay on course to meet your goals.  If you have a plan, let's revisit it.  If you haven't used our planning services, let's take a look to see if you are on track to meet your desired financial destination.  Plan Well. Invest EfficientlyRelaxThat is my best advice.

If you are concerned about the markets and your portfolio, Let's talk.   If you are curious about the opportunities available in the market, Let's talk.


Jason Knox, AIF®, CRC®

The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. Nothing contained herein should be construed as a recommendation to buy or sell any securities. No person or system can predict the market. All investments are subject to risk, including the risk of principal loss. S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market.  Investors cannot invest directly in an index.  Past performance is no guarantee of future results. Diversification does not guarantee a profit or protect against a loss.


Why Diversification Matters

08/01/2022:  On this beautiful, warm August day, I will share thoughts to consider:

  • July had the Federal Reserve's 0.75% rate increase and news of GDP shrinking 0.9% in the second quarter.   The second quarter of 2022 was the 2nd consecutive quarter of negative growth, meeting the technical definition of a recession.   
  • Last month, equity markets had the best month since 2020.  -cnbc.com
  • Over and over the stock market has experienced short bursts upwards (usually after drops) that provide a disproportionally large portion of the total return the market offers.  Put simply, if you miss approximately the best 10 days out of 5000 (about 20 years of trading days) your return is cut in half.  Easy math show that 4990 days are half the return and 10 days are the other half.  This is one of the main reasons why selling after a dip is often a bad idea. -ccmg.com 
  • Unlike past recessions, hiring has  been strong all year.  There are presently about two job openings for every worker that is looking.  The unemployment rate is presently 3.6%.  Private sector payrolls have replaced all 21 million jobs that were lost in the spring of 2020 - livemint.com
  • Through July 22, FactSet reported that 68% of S&P 500 companies reported positive earnings surprises, and 65% reported a positive revenue surprise.
  • Inflation persists at 9.1% over the last year through June, 2022.  bls.gov/cpi   The last time inflation was at this level, approximately half of the population wasn't yet alive.  Raiders of the Lost Ark was the #1 movie at the time (November, 1981). 
  • As the Federal Reserve raises rates, fixed income (bond) yields have improved.  
  • In 2020, the world’s GDP was $88 trillion and in 2021, $94 trillion. According to the latest projections, the IMF expects the global economy to reach nearly $104 trillion in nominal value by the end of 2022.-VisualCapitalist, July 12, 2022
  • For the past 20 years, stocks and bond returns typically moved in different directions.   "Correlations" are the statistical relationship between asset categories, like stocks and bonds.   In 1990, 2000, 2001, 2002, 2008, core bonds produced positive returns, while U.S. stocks declined.  In the first half of 2022, core bonds produced negative returns along with the stock markets, creating a challenging time for both conservative and more aggressive investors.
  • I reflect on all we have experienced in the last two and a half years:  Global pandemic, shutdowns, high unemployment, low unemployment, two 20% market corrections, return of high inflation, booming housing markets, plateauing housing markets, low interest rates, rising interest rates, and global conflicts.  Volatility constantly occurs in the markets and the economy.  If the future is anything like the past, it is highly likely that the economy will grow over the long term and that financial markets will produce handsome returns for diversified and disciplined investors.  Understanding that downturns, even severe ones, are an inevitable part of investing and may create opportunities for the long-term investor.  

With managed accounts, your assets are diversified across multiple asset categories and the portfolios are designed for market volatility.  If you are invested in managed accounts, I recommend to Relax.  Let us worry.  That is my best advice. 

If you are concerned about the markets and your portfolio, Let's talk.   If you are curious about the opportunities available in the market, Let's talk.


Jason Knox, AIF®, CRC®

The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. Nothing contained herein should be construed as a recommendation to buy or sell any securities. No person or system can predict the market. All investments are subject to risk, including the risk of principal loss. S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market.  Investors cannot invest directly in an index.  Past performance is no guarantee of future results. Diversification does not guarantee a profit or protect against a loss.


Market Outlook  

07/07/2022:  With half of the year done and another half to go in 2022, I will share another "six-pack" of thoughts to consider:

  • The US economy has been in recession 14% of the time since World War II, according to the National Bureau of Economic Research.  A strict definition of a bear market is that it starts on the first day of declines that eventually become 20% downswings.   This definition would suggest the S&P500 has been in a bear market since January 3rd, 2022.    Market "corrections" have occurred on average once every 2.5 years, while bear markets have occurred about every 6.33 years.  History tells us over the Fed's last three rate hiking periods, the average time between the first interest rate increase and the start of a recession was 38 months.  The Federal Reserve first raised rates 0.25% in March, 2022, the first increase since December, 2018.
  • In recent memory, the bull market started on March 9, 2009 and ended February 19, 2020, [COVID], and was followed by another bull market that lasted almost two years.  The S&P 500 all time (to date) closing high on 1/3/2022 was 4,797.  On 7/6, the S&P 500 closed at 3,845.  The P/E on 6/30 was 15.94.  The 25 year average P/E ratio for the S&P 500 is 16.85 (source: JPMorgan).  For a long term investor, risk appropriate equity allocations may present an opportunity, as stocks are on sale or discounted over their long term average.
  • In the 8 rising interest rate environments since 1977, the S&P 500 has averaged 12.7%.   Over the last 12 rising interest rate environments since 1954, the S&P 500 has averaged 9.4%.  The Federal Reserve appears committed to an increasing rate strategy until their target 2% inflation rate is achieved.  Minutes from the last Federal Reserve meeting suggest another 0.50% or 0.75% rate increase is coming in July.  The yield on the 10-year U.S. Treasury topped 3% in June, the first time since 2018.  Yields rise when bond prices fall.  The total yield on a bond is the function of price changes and interest paid.  Over time, rising yields means more income from bonds.   
  • U.S. Department of Labor data indicates there are 1.9 job openings for every unemployed person.  The unemployment rate on 6/30 was 3.6% in May, according to the Bureau of Labor Statistics.  Years ago, one of my economics professor assured us that unemployment "never" goes below 4%.  Times change.  While the "great resignation" continues, demand for workers is very high.  High demand for workers doesn't look like a job market ready to tip into recession.  As always, economic conditions will cycle, and that demand may change. 
  • In 1977, the US consumed about 18.44 million barrels of oil per day.  As of 2021, the US consumed about 18.68 million barrels of oil per day (source: BP).  Cars in 1977 averaged about 12.3 MPG, in 2019 about 26.5 MPG.  A "barrel" of oil is 42 gallons.  A railroad tank car may hold about 25,500 gallons.  The US daily consumption would fill about 29,600 railroad tanker cars, together forming an approximate 330 mile long train, about the same length as US Highway 30 that runs across Iowa.  Oil recently closed at $98.20 per barrel, from a peak of about $127 in March.
  • Berkshire Hathaway snapped up $51 billion in stocks in the first quarter of 2022, more than any other three-month period in its history.  Warren Buffett said, “Occasionally, Berkshire gets a chance to do something, and it’s not because we’re smart.  It’s because we are sane.”-Forbes, May 17, 2022

I hope the "six pack" of thoughts to consider are helpful.

Volatility constantly occurs in the markets and the economy.  If the future is anything like the past, it is highly likely that the economy will grow over the long term and that financial markets will produce handsome returns for patient, diversified investors.  Understanding that downturns, even severe ones, are an inevitable part of investing and can create opportunities for the long-term investor.  

With managed accounts, your assets are diversified across multiple asset categories and the portfolios are designed for market volatility.  If you are invested in managed accounts, I recommend to Relax.  Let us worry.  That is my best advice. 

If you are concerned about the markets and your portfolio, Let's talk.   If you are curious about the opportunities available in the market, Let's talk.


Jason Knox, AIF®, CRC®

The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. Nothing contained herein should be construed as a recommendation to buy or sell any securities. No person or system can predict the market. All investments are subject to risk, including the risk of principal loss. S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market.  Investors cannot invest directly in an index.  Past performance is no guarantee of future results. Diversification does not guarantee a profit or protect against a loss.



Market Outlook

05/27/2022:  Friday, as the stock market finished a strong week, I will share another "six-pack" of thoughts to consider:

On May 13th, the NYSE had a 92% up day, that is 92% of the stocks increased in price that day, and repeated this a few days ago.  While markets have experienced several 90%+ down days this year, this pattern may mark the late stage of a bear market.   While volatility is likely to continue, some good economic news prompted a positive week in the market.  While the markets are generally down from a year to date perspective, a one year return is approaching positive.  Keep a long perspective.

Inflation appears to be declining, at least a little.  The  Consumer Price Index  rose 0.3% in April, far less than the 1.2% in March and 0.8% from February.  While some items like eating out and new vehicles increased, food at home, energy, used cars and apparel declined.  Supply chain disruption still persists in some sectors.  The Federal Reserve raised their rate 0.50% in May as a means to achieve their 2% target inflation rate.  

Secular markets tend to last over longer periods of time, such as years or decades.  Secular markets may be bullish (up) or bearish (down).    Secular markets tend to impact almost every sector of our economy, such as employment, technology developments, revenues and profits.  Examining broad economic data may help better under secular markets trends and how long they may last.  Cyclical markets are shorter in duration, and may also be bullish or bearish.  Cyclical markets generally tend to be confined to fewer sectors of the economy.   While we we must go past a peak or trough to determine when a secular or cyclical market actually begins or ends, so we can see the bottom of the "V" or the top of a peak, historical patterns do exist as we move toward the end of cyclical or secular markets.   The S&P 500 index’s forward P/E ratio sits around 17.5, down 20% from its January peak, but still above its 20-year average of 15.5.   Cyclical markets, resulting in some market volatility, are normal cycles of equity investing.

On Friday, a 30 year fixed mortgage national average was approximately 5.28%, a decrease of 0.13% from a week prior.  A 15 year fixed mortgage is around 4.60%.  www.bankrate.com  With demanding for housing remaining strong, new construction continues.  www.census.gov    While rising rates may temper some new construction, wages have also increased over the last 12 months. https://www.bls.gov/news.release/eci.nr0.htm  Perhaps increased incomes will allow  buyers to continue to purchase or build new homes, even at the higher interest rates. 

I was reviewing information in my archives.  The S&P500 had fallen to about 1100 in August, 2011, from a high of about about 1340 mid July.  There was fear of the S&P dropping below 1,000.  Articles about "waterfall decline" were the topic on the internet and in magazines (remember magazines?)  By late January, 2012, the S&P was back above 1340.  While there is a not a universal definition for "waterfall" declines, these declines show a steep drop in stock prices, often followed by a small rebound, before flattening out, much like a natural waterfall.  Using a stricter definition of waterfall, there appears to have been 20 waterfalls since 1960, about every 3 years.  A broader definition of waterfall would indicate there were only 10 waterfalls over the same period, or about every 6 years.  Regardless, the waterfall phase tends to last about 2 1/2 months on average, with about a 5 1/2 month average return to the pre waterfall level.   On the week ending 05/27/2022, the S&P closed at 4158.  Keep a long perspective!

The Federal Reserve Bank Atlanta shows GDP growth at 1.9% with 2.4% estimated growth for the second quarter of 2022.  Consumer spending remains strong, although more of our dollars are being spent on necessities.  Over the last 20 years, GDP has been growing at about 2.00%.   https://www.bea.gov/data/gdp/gross-domestic-product


I hope the six pack of thoughts to consider are helpful.

With managed accounts, your assets are diversified across multiple asset categories and the portfolios are designed for market volatility.  If you are invested in managed accounts, I recommend to Relax.  Let us worry.  That is my best advice. 


As we head to our holiday weekend, I think about the fallen that gave the ultimate to preserve the freedoms we enjoy.   We will never forget.  To the families and friends of those fallen, may the cherished memories of those you love comfort you.


Jason Knox, AIF®, CRC®


S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market.  Investors cannot invest directly in an index.  Past performance is no guarantee of future results. Diversification does not guarantee a profit or protect against a loss.


Stock Markets During Interest Rate Increases

Stock Markets During Interest Rate Increases

05/27/2022: U.S. stock markets continue to be volatile, but finished a positive week.   The chart shows how markets performed during historical periods of interest rate increases.

Past performance may not indicate future results and your results may differ.


Managing Market Volatility / Is It A Good Time To Invest?

04/29/2022:  As stock and bond markets experience volatility, we are often asked is it the right time to invest?

While investments have risk, financial markets always go through negative periods, a normal part of investing.  Downturns are invariably followed by a significant rally that has more than made up for any previous declines. 

 Russell Investments recently published a Newsletter that provides excellent overview of how 5 strategies have worked in various market cycles.  I recommend taking a look.

If you are concerned about market volatility, please Contact Us to review your present portfolio risk level and to discuss your concerns.  Our Risk Analysis Tool uses a mathematically driven process to pinpoint how much risk you want, how much risk is needed to reach your goals, and how much risk you actually have in your portfolio.

If you have assets in cash positions, like money markets or bank accounts, inflation is a very real concern.  The Bureau of Labor Statistics indicates inflation rose by 8.5% over the last 12 months through March.   While cash and stable value positions may provide stable value in terms of account value, the impact of rising prices (inflation) is silently eroding your purchasing power.  While cash or stable value is often part of a portfolio, a heavy allocation to these investments may reduce your future purchasing power.

If you are unsure where to invest in today's market,  let's talk.  Today's markets may represent significant opportunity for many investors.

If you are not invested in our managed accounts, let's talk to see if a managed portfolio makes sense for your situation.

With our managed accounts, your assets are diversified across multiple asset categories and the portfolios are designed for market volatility.  If you are invested in our managed accounts, I recommend to Relax.  Let us worry.  That is my best advice. 

Jason Knox, AIF®, CRC®




Tax Season (for some) Comes to An End

04/29/2022:  The IRS deadline for tax returns was 4/18/2022, unless an extension was filed.  Here are some notes on the past and present tax system:

The average American will pay $525,037 in taxes over their lifetime.  About $340,000 of that comes from taxes on earnings, with the rest from sales, property, and automobile taxes. -www.markzinder.com/mark-zinder-blog/

  • The first national income tax, The Revenue Tax Act 1864 imposed a flat 3% tax for any American earning more than $800 a year (about $18,000 in today’s money.) The Revenue Tax Act of 1864, which turned out to be fairly tough to collect, did withstand a Supreme Court Challenge but was repealed by Congress in 1872. 
  • The plan for more efficient national taxation bobbled around for a while in various iterations, but the 16th Amendment made it official in 1913.  In its first year, fewer than 1% of Americans paid an income tax at the rate of about 1% of income.
  • Click Here to see the 1913 Form 1040.  Click Here to see the current Form 1040.
  • The Federal Tax Code today is about 2.5 million words in length (the average book is about 100,000).  
  • In 2021, the IRS received more than 152,000,000 tax returns and issued about 103 million refunds.
  • It costs the IRS about $0.35 for each $100 of tax revenue collected.
  • Taxes provide 96% of the federal revenue.
  • About 160 million tax returns are expected to be filed in 2022.
  • The IRS provides an online account where you may access your tax records, and other personal information.

Source: ww.irs.gov

Are you interested in seeing if you may reduce your income tax?  Contact Us to arrange a review of your situation.



Lincoln Investment Offers Virtual Client Event 

02/28/2022:  Lincoln Investment offers Virtual Client Event: The Economic Impact of Russia's Invasion

Russia’s invasion of Ukraine on February 24, 2022 has had a significant impact across the world.  With new sanctions added to the world's 11th largest economy and one of the largest producers of commodities, investors want to know how this will affect inflation, supply chain and the market.

Join us for an exclusive virtual client event with Lincoln Investment's Chief Investment Officer, Steve Mayhew and Chief Investment Strategist, Shashi Mehrotra for the latest insight and implications of the invasion. 

REGISTER | Wednesday, March 2 at 4:00 p.m. ET


How Long Will This Last?

02/28/2022:   After our recent Knox Notes (below), some clients had additional questions about market volatility, the Russian/Ukraine event, and the potential economic effects from those.  Below is another "six-pack" of thoughts to consider: 

How Long Will The Russia / Ukraine War Last?

The military assets of Russia are estimated to be approximately 10 times the military assets of Ukraine.  However, some strategists believe the potential advantages and resolve of Ukraine of fighting on their homeland, the independent mindset of Ukraine, and the geographical size of Ukraine may make this conflict might go on for awhile.   

What Is SWIFT And What Happens If Russia Is Kicked Out?

SWIFT is the Society for Worldwide Interbank Financial Telecommunication that is based in Belgium, and handles payment requests and messages between 11,000 financial institutions around the world.  SWIFT handles about 42 million messages per day.  In basic concept, it is something like email for banks where they can send and receive money quickly.  Russia and other countries can still do bank deals with other countries without SWIFT, but, like cutting one of us off from our email, the alternatives would take more time and increase costs.  Russia and China already have their own alternative payment systems.  Removing Russia from SWIFT would limit their ability to trade efficiently, likely severely impacting the Russian economy, but also would impact countries that purchase items from Russia, as an example, Germany that regularly purchases Russian gas and oil.  

Will The Russia / Ukraine War Impact Inflation?

Oil, natural gas, grains and some precious metals prices have already experienced substantial price increases.  The U.S. presently imports 11% of its crude oil from Russia.  If the supply is reduced, prices will likely continue to rise. The US Bureau of Land Management released 80 million acres of development and 511 drilling permits in the 4Q of 2021.  Development of these resources will take time.   The Baker Hughes Rig Count presently shows 650 rigs in the US, a substantial increase from the 400 one year ago.  Last week, new oil and gas leases and permits were put on hold over a legal battle over climate change cost estimates.

Will The Federal Reserve Still Raise Rates In March?

The Federal Reserve was widely expected to start raising interest rates in March.  Given the Fed's prior message of methodical and cautious increases, and recent comments late last week from Federal Reserve Governors, it seems "how much" is the questions instead of "when".   Last week, a few of the Governors appeared to be making the case for either a 0.25% or 0.50% increase in March, while some analysts believe given the Russia / Ukraine War, the FOMC will be less aggressive, or defer raising rates until the May meeting.  The next Federal Open Market Committee meeting is March 15-16.   That's a few days for them to consider their strategy.  

Last Thursday, markets had a great day.  Is Market Volatility Over?

Likely not, as markets always fluctuate and with the present uncertainty, volatility will likely continue.  On Thursday, 2/24, the S&P 500 Index opened at 4,131.72, finishing positive on Thursday and again closed positive on Friday at 4,384.66, more than a 6% increase over the two days.  On March 1st, 2021, the S&P opened at 3,870.29 and is 13% higher about one year later.  Historically, markets have shown resiliency following global events, but volatility didn't always "instantly vanish."  While the positive swing upward at the end of last week was perhaps an encouraging sign of reversal of recent downtrends, market volatility will likely continue, given the potential global impact of economic sanctions, continued uncertainty about the Russia / Ukraine War, and what the Federal Reserve will do in March.  We believe these volatile times, as with any other prior market decline in prices, may be a great opportunity for our long-term investors.   Maintain a long-term perspective.  Stock markets never move in a clean, straight line.  

What is A Bear Market?

A bear market is when a market index falls by 20% or more over at least a two month period.  "Cyclical" market cycles tend to be shorter, such as as weeks or months, and are more commonly driven by events or sentiments.  "Secular" markets last much longer, months or years, and are more commonly driven by long-term trends.   Cyclical and Secular market cycles may be bearish or bullish, that is heading up (bull market) or downward (bear).   Cyclical bear markets are viewed by savvy long-term investors as opportunities. 


This may be a time to remember the adage that "Patience Is A Virtue."    Plan well. Invest efficiently.  Relax.

We utilize time proven strategies to determine your overall asset allocation, that are matched to your specific risk tolerance.  This is not the first, and will not be the last market decline we have been through.  Our risk analysis process helps pinpoint how much risk you want, how much risk you have, and how much risk you need to take to reach your goals.  We take care to ensure your portfolio is consistent with your risk tolerance.   

I hope our second "six-pack" of thoughts to consider was helpful to you.  If you wish to review your existing investment allocation, see if there are opportunities for you, or to review your overall situation, please contact me.  As always, I look forward to speaking with you.

Relax.  Let us worry.  That is still my best advice.


Jason Knox, AIF®, CRC®


Past performance of an index is not an indication of future results.  You cannot invest directly in any index.  Performance of any index does not represent actual fund or portfolio performance.  A fund or portfolio may differ significantly from the securities included in an index.  A decision to invest in any such fund or portfolio should not be made in reliance on any of the statements set forth in this web site.  This is not a recommendation to buy, sell, or hold such security, nor is it considered to be investment advice.  Index performance does not reflect any management fees, transaction costs or other expenses that would be incurred by a portfolio or fund, or brokerage commissions on transactions in fund shares. Such fees, expenses and commissions would reduce returns. 


What Should I Do Now? 

02/24/2022:   With recent world events, equity markets have become more volatile.  It is natural to have concern about market volatility and what that means to your portfolio.   Below is our "six-pack" of thoughts to consider: 


Risk level:  Your portfolio is designed around your unique tolerance.  For our conservative investors, we utilize a higher allocation to fixed income (bond) funds and a smaller allocation to equity (stock) funds, reducing your total stock market exposure.  With our higher risk allocations, we still seek diversification across multiple asset classes and fund families, which may help buffer the effects of volatility.  Our recommended portfolios at each level of risk seek broad diversification across multiple asset categories and fund families, and are matched to your risk tolerance.  While diversification doesn't guarantee profits or provide assurances that investments won't fluctuate in value, it does help lower risk.   Our portfolios are also designed with correlations in mind, historically these correlations show that while one asset category may move in one direction, other different asset categories may move in the other.     

Be Opportunistic:  For a long-term investor, market downswings provide opportunities to purchase funds in asset classes that may be undervalued.  As an example, we considered certain sectors in the equity markets to be overvalued in 2021, many funds shares are now available at lower prices than in 2021.  For a long-term investor, with the appropriate risk tolerance, buying certain asset categories now may represent an opportunity!  I believe we all enjoy purchasing things that are on sale!   For our clients in non-retirement accounts, this may be a great time to consider tax-loss harvesting strategies.

Emotional Investing:  Keep a long-term perspective.  Behavioral economics tell us recent events carry an outsized influence on our perceptions.  While Russia's actions in Ukraine are very concerning, sadly there will likely be loss of life and other disruptions from these actions, this is not the first time such types of global events, natural disasters, and other tragedies have occurred.  Historically, markets have shown resiliency following global events and market declines.

Keep A Long Term Look:  In March, 2020, the S&P500 Index low was 2,280.52.  At the time of this writing, it is 4,189.63.  For the last 2 years, that is not too shabby!  While the market always fluctuates and will always fluctuate, downturns don't last forever.

The Media Are Not Financial Advisors:  Clients I have worked with for many years have heard this from me so many times before: I believe the media's job is to sell a story, not provide financial advice.  Creating sensational headlines is not providing personal financial advice.  As your advisor, I systematically review your asset allocation, risk level, and opportunities available.  If you have questions, or wish to review your situation, please contact me.

Inflation Is A Concern:  The BLS Consumer Price Index shows the inflation rate rose 7.5% in the last 12 months ending in January, 2022.  We all feel the effects of inflation when we buy gas, food, and all the other things we might need or enjoy.  Seeking safety or stable value in cash accounts or money markets, that are commonly presently yielding less than 1%, creates a new risk - Inflation Risk.  Inflation Risk is the silent erosion of your purchasing power, where the prices of things we might buy increase faster than the rate we earn on our investments.  Investments not only have risk of loss in value, but risk of loss in purchasing power.  While one may focus on equity markets as a potential risk, risk comes in many forms.  Inflation Risk is silent, so it may be easy to overlook.  Consider if you had $100,000 in a cash account last year, yielding 0.25%.  The inflation impact to your cash investment was about $600 per month or just short of $20 per day in reduced purchasing power, meaning your $100,000 in purchasing power a year ago is now reduced to approximately $93,000.  If you have excess cash balances, let's talk about suitable options to potentially improve your situation.  

We utilize time proven strategies to determine your overall asset allocation, that are matched to your specific risk tolerance.  This is not the first, and will not be the last market decline we have been through.  Our risk analysis process helps pinpoint how much risk you want, how much risk you have, and how much risk you need to take to reach your goals.  We take care to ensure your portfolio is consistent with your risk tolerance.   

Plan well. Invest efficiently.  Relax.

I hope our "six-pack" of thoughts to consider was helpful to you.  If you wish to review your existing investment allocation, see if there are opportunities for you, or to review your overall situation, please contact me.  As always, I look forward to speaking with you.

Relax.  Let us worry.  That is my best advice.


Jason Knox, AIF®, CRC®


Past performance of an index is not an indication of future results.  You cannot invest directly in any index.  Performance of any index does not represent actual fund or portfolio performance.  A fund or portfolio may differ significantly from the securities included in an index.  A decision to invest in any such fund or portfolio should not be made in reliance on any of the statements set forth in this web site.  This is not a recommendation to buy, sell, or hold such security, nor is it considered to be investment advice.  Index performance does not reflect any management fees, transaction costs or other expenses that would be incurred by a portfolio or fund, or brokerage commissions on transactions in fund shares. Such fees, expenses and commissions would reduce returns. 


Recent Market Activity, January 2022

01/20/2022:  As we begin 2022, COVID-19 lingers, the 5G rollout causes some disruptions, inflation is at 1980s levels, interest rates are likely to increase, there is tension between Russia and Ukraine, and every day seemingly brings some new potentially concerning headline.  The equity markets finished 2021 well, but have been volatile in the most recent days.    

When markets are volatile, individuals may begin to focus on short-term results, like today's, or last week's change in the market, instead of viewing their long term strategy and results.  While we can't predict the timing of market declines and recoveries, market volatility has been a historical part of investing.  In every decade since 1929, there has been a major decline in the S&P500.    In every case, the five years following those declines have produced positive returns.  In recent memory, 1987, 2001, 2007, 2010, 2015, 2018, and 2020 all had significant market declines, which were followed by increases in the market indices.   Please remember past performance is not indicative of future results. 

When one focuses on short term changes in the market or media headlines, some individuals may let emotions influence their decision-making process. While it is more efficient to "buy low" and "sell high", emotions often make one want to do the other.   The media may sensationalize the events of the day, as I believe their job is to sell a story, which is not personal financial advice.  For a long-term investor, market volatility may provide buying opportunities.

We utilize time proven strategies to determine your overall asset allocation, that are matched to your risk tolerance.    Our risk analysis process helps pinpoint how much risk you want, how much risk you have, and how much risk you need to take to reach your goals.  We take care to ensure your portfolio is consistent with your risk tolerance.   Plan well. Invest efficiently.  Relax.

If you wish to review your existing investment allocation and risk number, to see if there are opportunities for you, or to review your overall situation, please contact me.  I look forward to speaking with you.

Jason Knox, AIF®, CRC®





Knox Notes is a collection of information gathered from multiple sources and contains opinions from Jason Knox, AIF®, CRC®, and is not intended as specific investment or financial planning advice.  Your situation may differ.  Contact your attorney, accountant, tax advisor or financial professional regarding your specific situation.