Many clients have been asking us why the stock market has recovered so strongly when the news concerning the economy and Covid-19 is taking a turn for the worse. We know the economy has been temporarily crippled, the unemployment rate has skyrocketed and there is civil unrest in many major cities. The stark truth is that this information is well known in the markets and has already been factored into today’s prices. What is propping everything up is the fact that the government has printed trillions of dollars and some of this money is leaking into the stock market. Can anyone remember a time when the government literally printed checks and handed them out to people as if it were Halloween? Unprecedented.
Recent stock market action reminds me of a period in the 1970’s when the economy and country were also in unrest and there existed a group of stocks called the “nifty fifty”. The nifty fifty were considered “safe” investments that couldn’t lose much value and should never be sold, only purchased. Money flowed into this group of stocks in a torrent and drove up the price and valuation of these companies to unprecedented levels. The same thing happened in the late 1990’s when the internet stocks were on fire and investors wanted in just because they were going up. Never mind the company fundamentals and whether they even had a sustainable business plan. Two of the popular stocks in the “nifty fifty” were Polaroid and Xerox, technology leaders of that era. Both company’s stocks were bid up to unsustainably high levels and when the bubble eventually broke a tremendous amount of value was permanently lost. In fact, Polaroid eventually filed for bankruptcy many years later and Xerox never reclaimed the glory of the nifty fifty era.
Today’s stock market activity is looking somewhat similar to the nifty fifty era of the 1970’s but would need to be redefined to the nifty five or nifty ten. Current top technology and E-commerce stocks have garnered quite a bit of attention and money has been pouring into these names causing many to double in price in just the last few months. The prevailing wisdom is that these stocks are “safe” at any price and will continue to dominate their respective industries for years to come. This may or may not be the case, but it may be prudent to reduce exposure to some of these names and book profits while we have them in hand.
GSB Wealth Management Welcomes New Colleagues
We’ve been growing! Since our last communication we’ve added resources so that we can serve our clients better. When next we meet, don’t be surprised if there are new faces around the table, or on the video call. Our newest colleagues are:
Anthony Morgillo, CFP, Vice President
Anthony joined us in June and is a Wealth Management Adviser. He has over twenty years of investment experience having most recently been a Financial Solutions Adviser with Merrill Bank of America. Anthony is based in Guilford Savings Bank’s Branford office. He is an experienced financial planner and is prepared to advise our clients on their most complex investing, financial planning, and cash flow needs. He is a member of the firm’s Investment Committee.
Mackenzie joined us in April after graduating Magna Cum Laude from the University of New Haven with a B.S. degree in Finance. She is a Wealth Management Analyst and assists the wealth advisers with portfolio analysis, compliance, and client related projects.
Jennie joined us in May and is a Wealth Management Analyst. She has a B.A. from Boston College where she majored in Russian and International Studies. She is currently remotely pursuing her Master’s degree in Finance at Georgetown University. She has also completed the Chartered Financial Analyst (CFA) program. In her role with GSB Wealth Management she assists the portfolio team with analysis, investment research, and client related projects.
You can see an Adviser in select Guilford Savings Bank Branches
In order to be closer to our clients and the community, GSB Wealth Management advisers are now located in Guilford Savings Bank’s Main Office and Branford locations.
Ted Reagle, Vice President Anthony Morgillo, CFP®, Vice President
Wealth Management Adviser Wealth Management Adviser
One Park Street 61 North Main Street
Guilford, CT 06437 Branford, CT 06405
Direct Phone: 203.458.5414. Direct Phone: 203.204.6630
Introducing GUIL – Our New Robo Advisor Offering
GUIL stands for GUided Investment Launchpad and is an on-line, automated investment platform for investors that may not have the portfolio size or investment complexity that requires a full service GSB Wealth Management relationship. There is no account minimum and you can establish an account in minutes. We invite you to visit www.myguil.com to learn more. Tell your family and friends!
Reminder: IRA Distributions NOT Required in 2020
Even if you are over age 72, you are not required to take a required minimum distribution (RMD) from your IRA account in 2020. With the passage of the CARES Act in March, providing Americans financial support due to COVID-19, RMDs were made optional this year. The suspension of the RMDs for 2020 also applies to Inherited IRA accounts. Please give us a call if you have questions.
Leaving Assets to Heirs
Your estate is a legacy. Here is a checklist to help you make the planning process efficient and effective.
- Check provisions for your spouse, your dependents, and your financial obligations. Although requirements may vary from state to state, you may have more flexibility for some allocation decisions than for others.
- Consider the ages of your intended beneficiaries. Minors and disabled heirs may require special guardianship or trust arrangements.
- Provide for contingencies in case circumstances change. For example, if a primary heir is unwilling or unable to receive the bequest, you could define how that person’s share is to be distributed.
- Estimate your potential estate, gift or inheritance tax liabilities. The federal estate tax applies to only the largest estates. For an individual, $11.4 million is excluded from tax consideration in 2019, and a surviving spouse may benefit from the couple’s combined exclusion value. But state laws vary widely and, in some cases, can apply to a much wider range of inheritance scenarios. In many states (and for the federal tax), any liability is assessed on the estate itself. But in some states, taxes may be collected directly from the heirs.
- Address your philanthropic goals. You may be able to use specialized trusts to gain tax advantages while also providing for heirs and for favored charities. For example, you can investigate whether charitable lead trusts or charitable remainder trusts could meet multiple goals for you.
Special Considerations for Different Assets
Shares of a business you own
- Determine who among your heirs might be most willing and able to take responsibility for the business
- Consider a system that gives passive shareholders a stake in any potential business profits without actively participating in the business
- Provide for key employees as well as family members
- Discuss succession issues with partners or co-owners
An investment portfolio in a taxable account
- Determine whether the intended heirs could manage their portfolios effectively without professional advice
- Consider delegating portfolio control to a person or institution able to assume fiduciary responsibilities
Assets in a retirement account
- Review the beneficiary designations of your retirement accounts to be sure that they are consistent with your intentions. Keep in mind that account beneficiary designations will override any provisions of your will.
- Consider rolling over employer-sponsored plan assets into one or more IRAs for beneficiaries
- Weigh the potential benefits of converting a traditional account to a Roth account
- Assess the tax implications of each potential distribution scenario
Real estate (primary residence and vacation property)
- Decide whether you want your heirs to share use of the property or just receive the cash equivalent of the property’s estate value
- Consider how heirs sharing a property can collectively manage the costs of ownership and maintenance
- Consider how a partner in any joint ownership you set up could leave the partnership in the future
- Consider alternative provisions for heirs who might have no interest in actively using the property
Personal property with significant financial worth or sentimental value
- Obtain realistic assessments of current worth for art, antiques or jewelry
- Determine whether any heir might have significant sentimental interest in any item and provide for those special interests
- Talk with heirs about ways to apportion unique items
- Ensure that your executor can locate and gain access to estate documents stored in safes, vaults and safe-deposit boxes
Just a reminder to always be aware of any suspicious emails you may receive, as today’s hackers are more sophisticated and posing as though they are from a legitimate email address. Never click on a link within an email that you are suspicious of, and always give us a call if you have any questions or concerns regarding an email from us. Please notify us immediately if your computer system has been compromised. We also recommend that you use unique passwords for each website.