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Knox Notes

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.