GSB Wealth Management Newsletter, October 1, 2018
*See note at the end re: trade fees
With fall upon us we thought it might be educational to look at the mid term elections coming up in November as well as the gubernatorial election right here in Connecticut. No, we are not going to talk politics as we are not interested at being the poor old mole in the game whac-a-mole. However, here locally we will be making a decision as to who is going to run a state that is broken financially and may be headed for far tougher times if the can continues to be kicked down the road. So far all I have heard in the press is the usual sniping about which guy is the bigger rat and which guy is going to cut taxes more. One party wants to cut my property taxes by $700. I think I am going to throw a party. Last I looked I pay property taxes to my town and not the state so this one has me a bit vexed. On the other side the guy is going to eliminate the state income tax. I suppose we don’t need to pay the state police, teachers and firefighters anyway. If I were running for office I would articulate why the state is in financial difficulty and what steps we need to take to set us on the right track. Then again, I would have a less than 1% chance of winning as no one wants to hear the truth. It is fine to cut everyone else’s programs and benefits just don’t cut mine!
On a national level things are just as contentious and divided. The reason we bring this up is that it makes our jobs as financial advisors that much more challenging. It is hard enough to try and decipher where the economy is going, where the stock market is heading and where interest rates may end up. It is harder when we don’t know what rhetoric or hard line language is going to come out of Washington next. Again, we seek to make no judgements here. The whac-a-mole concept mentioned earlier is alive and well in the Capitol, so it seems. There appears to be little compromise, rather an attitude that you either agree with what we are doing, or you’re fired! We mention all of this because we have spoken to many of you and heard your concerns about these issues (and others), and many wonder why the stock market has done so well. The reason is that because in the stock market’s eyes, much of this doesn’t matter. The economy has a mind of its own and cycles from recession and bear market to strong growth and bull market approximately every 10 years. We are now approaching 10 years in the current growth/ bull market phase. President Obama was inaugurated January 20, 2009 – almost at the bottom of the worst U.S. recession since the great depression of the 1930’s. It wasn’t his fault and he benefited from economic growth and a great stock market for the balance of his eight- year term. President Trump was inaugurated on January 20, 2017, eight years into economic recovery and a strong stock market. Some would argue he was set to fail coming into office so far into an economic recovery. The recovery under Obama was relatively slow. No fault of his own. He inherited an economy that had been taken to its knees and like the aftermath of the great depression, growth was slow and subdued for many years after. Trump came in and cut corporate taxes which added fuel to an economic fire that was already starting to burn more brightly. Such tax cuts are likely to prolong economic recovery beyond the usual 10- year cycle. At GSB Wealth Management we still feel we are in the late innings of the current cycle and bull market that began in March of 2009. We also acknowledge that recovery may continue for some time to come. At the same time, we are starting to see excesses that typically signal that economic contraction may be waiting in the wings.
We have been asked by several clients “how often do you look at my portfolio”? The answer, literally, is “all of the time”. We own a concise list of securities in our client accounts. These securities all have “ticker” symbols that are listed on the quote machines on our desks. If you own any given stock in your portfolio, you can be assured we know where the price of the stock is at any given minute. We also conduct our own research so have a firm understanding of that stock’s fundamentals at any given time. As mentioned in earlier newsletters, GSB Wealth Management invests in the highest quality securities we can find. We firmly believe this is the best way to grow a client’s portfolio over the long run while at the same time limiting losses when the tide turns. We are always happy to hear from you should you have any questions or concerns. Until then we hope you enjoy the fall season.
Your GSB Wealth Management team
*Trade fees – Please note that if your total investment with us is under $1 million, and you are signed up for email delivery of Fidelity’s documents (trade confirms, statements, etc.), Fidelity’s trade fees are $4.95 per trade; otherwise they are $17.95 per trade if you are signed up for paper delivery. Please notify us at firstname.lastname@example.org if you would like to change your delivery option. Total investments of $1 million or more will automatically receive the $4.95 per trade regardless of delivery option.