Commentary
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US Equity is the biggest beneficiary of investment flows in 2024 buy a wide margin. The capital flow trend has been steady for over ten years and the performance supports the trend. US Equity has trounced all broad International Equity and Emerging Market Equity indices in terms of performance for over ten years now.
Regime change is on the horizon. I’m regularly amused to study potential changes and if there is an attractive risk/reward investment that can be associated, all the better. Here are 12 possible regime changes on my radar:
1. Western Level to provide a group 401(k) for CATT members
2. Nevada Builders Alliance + Western Level host Builders Breakfast, MAY 21st in South Reno, NV
It’s never been cheaper or easier to offer offer a 401(k) plan for small businesses. Understand the three types of Safe Harbor plans, the costs, the matching requirements and the overwhelming benefits for owners and highly compensated employees.
Client Profile: Self-employed, custom home builder needs help with some inherited annuities. What started as a project to help an individual deal with some annuities, turned into a deep review of best practices across seven topics. In the end, there are two distinct observations:
The individual achieved a fantastic retirement setup; great cash flow and a net worth of about $7 million.
He missed some opportunities that should NOT have been overlooked given his existing advisory relationships.
Let’s dive into this profile and discover what was overlooked and what the best practices pathway looks like.
Seven small business action items for the New Year. March/April is not the time to rush important tax and financial planning.
We’re down to the last few weeks of the year and it is important to be aware of tax loss harvesting opportunities that may exist in your portfolio. In short, tax loss harvesting is a great way to reduce your realized capital gains tax exposure. For this newsletter, I am raising two issues.
1. Tax loss harvesting – it’s time to see what needs addressing (the easy part).
2. How to reallocate – what to do with the proceeds (the hard part).
I have commented more than once about the risk of duration in my remarks this year. While I don’t predict rate moves, I do look to avoid unnecessary risk…and being exposed to duration is not good right now.
Five pointers to maximize your retirement plan contributions in 2023 and a reminder of how to beat the banks.
Small Business Contractor. Tremendous revenue growth; $3m headed to $5m in 12 months. Finances in disarray – where is the money, what did you net last year?
I recently turned 50. On the evening of my birthday, my wife and two sons wished me an ‘old-man’ happy birthday as we gathered for dinner. I responded, “It’s just the first 50. I’m getting a second. I’m going to live to 100. Even if it kills me.”
My 14- and 12-year-old boys take every shot they can at their old man. The competition between us generates plenty of good humor…and today I shot back.
US Equities proved their resolve – posting impressive gains for the quarter. Inflation remains an issue, although the severity is declining. The economy still seems fine and the record rise in the Fed Funds rate from effectively 0% to 5% is starting to create some visible damage (bank failures, higher costs of debt, ongoing layoff announcements, growing concerns in real estate).
WLA’s CURRENT VIEW:
Volatility as of March 14-16, 2023 is creating profound changes in the Treasury market…5% Treasury yields were a great buy last week and remain attractive today. As rates have declined in recent days, this is not good (for future bond allocations) if bonds revert to being a low return asset class again. The Fed has created a very difficult situation (high inflation + bank stress) which makes it even more difficult to manage the direction of rates in 2023.
Similar to the macarena dance and its popular run years ago…it seems being a macro economists is going viral, too. The reason is simple - it’s all about the Federal Reserve as highlighted in my January commentary. The fever pitch attention on the Fed/Inflation/Pivot won’t be changing anytime soon…they are the DJ setting the mood on the dance floor.
US Equity Valuations:
The Buffet Indicator is a measure of stock market valuations and is an overly simplified representation to answer the age old question – are stocks over or under valued. The risk-on euphoria during 2020-21 drove this measure to highly elevated levels similar to the 1999-2000 dot com era.