Happy winter!  No snow in sight and hovering around 50 degrees in January isn’t a bad thing, if only the sun could make an appearance more than once a week.

We have talked in past newsletters about low visibility trying to navigate through the current political and economic environment.  Just to prove everybody wrong, U.S. stock markets had one of their best years in recent memory.   Here is an old axiom that goes like this – “bull markets like to climb a wall of worry”.  I suppose there is enough to worry about to propel the stock market to levels not one market prognosticator saw coming on January 1, 2019.  We enter 2020 with a ton of market momentum behind us and economic fundamentals that appear to be the best in over a decade.  We still sense a good deal of pessimism among individual investors, which may allow the market to move higher in 2020 despite the U.S. taking down the highest Iranian military official, just announced on the news this morning.  Our country’s sabre rattling around the world, whether justified or not, is concerning given many of these countries have nuclear capabilities of some degree.

There are still plenty of risks and worries that could derail markets as we progress through 2020.  One difference from a year ago is that stocks are far higher than they were in January 2019 and are more expensive based on expected earnings.  One year ago we were coming off a bruising market drop in December that shaved 20% off of stock prices.  Market participants were frightened and pessimistic and that may be why stocks performed so well last year – no one thought they would.  Today, our sense is that clients and investors are still somewhat nervous, but stocks are trading off a much higher level.  Translated, there is more downside at these levels if something goes wrong.  An interesting side note is that the largest domestic maker of cell phones dropped 35% in value in the fall of 2018 when the broad market dropped 20%.  Fast forward to today and this huge company has doubled in value from January 2019.  People seem to be blindly piling in because the stock is going up.  If it dropped 35% barely over a year ago it could do so again, or worse.  Our strategy here has always been to build the house (portfolios) correctly the first time, hence the house needs less ongoing maintenance.  You may have noticed over the years that there is not a tremendous amount of activity and trading in GSB Wealth portfolios.  We buy what we feel are high quality assets and tend not to sell unless there is a reason to do so.  Generally, a sale would happen for one of two reasons.  Reason one would be that a stock has appreciated far more than we expected at purchase and for the sake of risk control, we decide to take some of the chips off the table.  Reason two would be that the security isn’t performing as expected so we swap it out for something we feel has more potential.  Rest assured that we are watching developments very closely as we enter 2020.

In December Congress passed and the President signed into law the SECURE Act, the most significant legislation affecting retirement savings plans in the past 13 years.  Several important elements of the new laws are worth reviewing:

  • The age at which IRA owners must begin taking required minimum distributions (RMDs) is increased to 72 from 70 ½ for individuals who attain age 70 ½ in 2020 or later, providing an additional 18-month window for IRA accounts to grow tax-deferred. Individuals who turned 70 ½ in 2019 are required to take RMDs in 2020, however. This change reflects the demographic trend that many people are retiring later in life and living longer.


  • Provided you are working and earning income, an individual may contribute to an IRA (currently capped at $7,000 per year) after the age of 70 ½. Previously, there was no provision to make an IRA contribution beyond this age, even if you were still working.


  • Funds in 529 savings plans may now be used to repay up to $10,000 in student loan debt accounts.


  • Starting in 2020, newly established inherited IRA accounts may need to be withdrawn and taxes paid over the following ten years. Spouses, and beneficiaries that are no more than 10 years younger than the deceased owner, may continue to stretch the distributions over their lifetimes.

It is projected that the SECURE Act will result in 700,000 more American workers saving for retirement.  Small business owners can more easily and less expensively offer retirement plans for workers by banding together in a single 401(k) plan, called Multiple Employer Plans (MEPs).  In addition, the legislation enables more part-time workers to participate in employer retirement plans.

Ted Reagle joined GSB Wealth Management in November as a Wealth Management Advisor.  He brings extensive financial planning experience to the team and looks forward to introducing himself to our clients as opportunities present themselves in the upcoming weeks.

As always, we encourage you to contact us should you have questions or concerns.  We hope you enjoy the balance of the winter.

Sincerely, your GSB Wealth Team