Personal Finances: Focusing on What You Can Control + Financial Market Update + 3.31.2020

Personal Finances: Focusing on What You Can Control + Financial Market Update + 3.31.2020

FINANCIAL MARKET UPDATE 3.31.2020

STORY OF THE WEEK

personal finances: focusing on what you can control

GUEST AUTHOR: JUSTIN VOSSEN, CFP®, NAPFA, INVESTMENT ADVISER & PRINCIPALL

Like many of us, you may feel a bit disoriented, fearful, and anxious. Not only has your life been dramatically altered in the past few weeks, but the market continues to drastically swing every day. The uncertainty of it all is perhaps the most difficult thing to comprehend. While nobody has answers, we can be sure of one thing; mankind has focused all of its resources on one problem. One can hope that with a dedicated effort, positive change is on the horizon.

The disruption to the financial markets and economy is a difficult thing to gauge. Globally, many governmental programs are focused on mitigating the damage in the near term by stimulating their economy in various ways. This stimulus will provide a lubricant for the financial system in order to continue to function as normally as it can.

There is little question that there will be a recession. We have already dipped into a bear market as fast as we have seen in history. Since 1926, the average bear market lasted 22 months, while the longest bull market lasted 9 years.  Bull markets follow bear markets, and much of the recovery typically comes in the front end of the bull market.

WEEK IN REVIEW

  • On Friday the House approved the CARES Act, which was quickly signed by the President. The rescue package is designed to provide support to the economy that has been damaged by the coronavirus fallout. The $2 trillion stimulus will be the largest in history, and roughly doubles the stimulus package used during the financial crisis. Support measures from the bill include increased unemployment benefits, direct payments of $1,200 to individuals, small business loans, and support for large corporations, hospitals, and local governments (among other items).
  • Last Thursday the weekly publication of initial jobless claims garnered significant headlines. This weekly measure represents individuals who file for unemployment benefits for the first time. The figure had been hovering around multi-decade lows just a few weeks ago, but jumped to the highest level ever. At 3.3 million, the recent reading dwarfs the peak during the financial crisis of 665,000, as well as the all-time record of 695,00 in October 1982. The spike in jobless claims is a testament to how abruptly the response to the coronavirus has slammed the breaks on economic activity.
  • Additional economic data to be published during the week may begin to reflect the impact of the coronavirus on the economy. On Wednesday we will get an update on manufacturing activity for March. On Friday we will get the Jobs report, as well as an update on services sector activity for March.

HOT READS

Markets

  • Trump Signs $2 Trillion Coronavirus Relief Bill As The US Tries to Prevent Economic Devastation (CNBC)
  • China’s Coronavirus-Battered Economy Shows Tentative Signs of Renewed Life (WSJ)
  • Larry Fink Says Economy Will Recover From Coronavirus, ‘Tremendous Opportunities’ in Markets (CNBC)

Investing

  • We Can’t Prevent Market Panics. We Can Control How We React. (Zweig)
  • A Short History of Dead Cat Bounces (AWOCS)
  • Three Reasons Its Not 1929 (The Reformed Broker)

Other

  • Even If a Restaurant Worker Coughs Or Sneezes Directly In Your Food, You Won’t Catch Coronavirus From Eating The Meal (Business Insider)
  • 15 Best Work From Home Tips During the Coronavirus Pandemic (Prevention)

ECONOMIC CALENDAR

Source: MarketWatch

MARKETS AT A GLANCE

Source: Morningstar Direct.

Source: Morningstar Direct.

Source: Treasury.gov

Source: Treasury.gov

Source: FRED Database & ICE Benchmark Administration Limited (IBA)

Source: FRED Database & ICE Benchmark Administration Limited (IBA)

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ABOUT THE AUTHOR

402.763.2967

jjenkins@lutz.us

LINKEDIN

JOSH JENKINS, CFA + SENIOR PORTFOLIO MANAGER & HEAD OF RESEARCH

Josh Jenkins is a Senior Portfolio Manager & Head of Research at Lutz Financial with over nine years of investment experience. He is responsible for assisting clients in the construction, selection, and risk assessment of their investment portfolios. In addition, Josh will provide on-going research and trade support.

AREAS OF FOCUS
  • Asset Allocation & Portfolio Management
  • Investment & Market Research
  • Trading
AFFILIATIONS AND CREDENTIALS
  • Chartered Financial Analyst (CFA)
  • Chartered Financial Analyst Institute, Member
  • Chartered Financial Analyst Society of Nebraska, Member
EDUCATIONAL BACKGROUND
  • BSBA, University of Nebraska, Lincoln, NE

P: 402.827.2300 | F: 402.827.2319 | E: contact@lutzfinancial.com | 13616 California Street | Suite 200 | Omaha, NE 68154

All content © 2017 Lutz Financial  | Important Disclosure Information |  Privacy Policy

Personal Finances: Focusing on What You Can Control

Personal Finances: Focusing on What You Can Control

 

LUTZ BUSINESS INSIGHTS

 

personal finances: focusing on what you can control

justin vossen, cfp®, napfa, investment adviser & principal

 

Like many of us, you may feel a bit disoriented, fearful, and anxious. Not only has your life been dramatically altered in the past few weeks, but the market continues to drastically swing every day. The uncertainty of it all is perhaps the most difficult thing to comprehend. While nobody has answers, we can be sure of one thing; mankind has focused all of its resources on one problem. One can hope that with a dedicated effort, positive change is on the horizon.

The disruption to the financial markets and economy is a difficult thing to gauge. Globally, many governmental programs are focused on mitigating the damage in the near term by stimulating their economy in various ways. This stimulus will provide a lubricant for the financial system in order to continue to function as normally as it can.

There is little question that there will be a recession. We have already dipped into a bear market as fast as we have seen in history. Since 1926, the average bear market lasted 22 months, while the longest bull market lasted 9 years.  Bull markets follow bear markets, and much of the recovery typically comes in the front end of the bull market.

One could argue that the markets are like a rubber band, the further you pull it back the quicker and harder it snaps back. As a result, in this particular environment, we recommend that we hold steady and make sure we have enough cash to get us through the coming quarters. That way we can effectively tune out the noise, focus on long-term goals, and let the benefits of diversification play out.

To conclude, if the best advice we can provide is to hold steady and ride through these coming weeks/months, what can we be doing proactively to help our mental and financial state?

We will be contacting Lutz Financial clients to discuss a variety of the following topics:

  • Gather tax filing items. This will help provide some level of certainty on payments/estimates and wrap up last year. In addition, it will allow you to plan for this coming year, as well to get closure.
  • Review your home budget. Are there things you don’t need immediately? Do you have unnecessary subscriptions or payments that don’t need to be made?
  • Look at tax-loss harvesting and asset location. Are there any tax plays now when the market has pulled back that you couldn’t do when greater gains were built-in?
  • Should you consider a Roth IRA conversion?
  • Should you reconsider you required minimum distributions for this year?
  • Revisit healthcare proxies, living wills and other advanced directives.
  • Make 2020 Roth/IRA contributions.

If you have immediate questions or concerns, please contact Lutz Financial today at 402.827.2300.

ABOUT THE AUTHOR

402.827.2300

jvossen@lutzfinancial.com

LINKEDIN

JUSTIN VOSSEN, CFP®, NAPFA + INVESTMENT ADVISER, PRINCIPAL

 Justin Vossen is an Investment Adviser and Principal at Lutz Financial. With 21+ years of relevant experience, he specializes in providing wealth management and financial planning services for high net-worth families, business owners in transition, endowments and foundations. He lives in Omaha, NE, with his wife Nicole, and children Max and Kate.

AREAS OF FOCUS
  • Investment Advisory Services
  • Comprehensive Financial Planning
  • Business Owner Planning & Succession
  • High Net Worth Families
AFFILIATIONS AND CREDENTIALS
  • CERTIFIED FINANCIAL PLANNER™
  • National Association of Personal Financial Advisors, Member
  • Financial Planning Association, Member
EDUCATIONAL BACKGROUND
  • BSBA in Economics and Finance, Creighton University, Omaha, NE
COMMUNITY SERVICE
  • St. Augustine Indian Mission, Board Member
  • Nebraska Elementary and Secondary School Finance Authority, Board Member
  • St. Patrick's Church, Trustee
  • Mount Michael Booster Club Board
  • Lutz Gives Back, Committee Chair
  • March of Dimes Nebraska, Past Board Member

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OMAHA

13616 California Street, Suite 300

Omaha, NE 68154

P: 402.496.8800

HASTINGS

747 N Burlington Avenue, Suite 401

Hastings, NE 68901

P: 402.462.4154

LINCOLN 

115 Canopy Street, Suite 200

Lincoln, NE 68508

P: 531.500.2000

GRAND ISLAND

3320 James Road, Suite 100

Grand Island, NE 68803

P: 308.382.7850

Updates to July 15 Tax Filing Deadline

Updates to July 15 Tax Filing Deadline

 

LUTZ BUSINESS INSIGHTS

 

updates to july 15 tax filing deadline

Governor Ricketts has followed the lead of the IRS and extended the Nebraska income tax filing and payment deadline to July 15, 2020. The Nebraska extension, like the federal extension, will be automatic and no special forms will be required. In addition, any first quarter federal and Nebraska estimated tax payments will also be delayed until July 15. However, the IRS has said that second quarter estimate payments will still be due by June 15. Likewise, the payroll tax deadline is unaffected. 

The IRS has also announced that the cap on the amount of tax payments that can be deferred no longer applies. Previously, the IRS announced that any amount in excess of $1 million for individuals or trusts ($10 million for C-Corporations) would still be due by April 15. This is no longer the case. As it stands today, there is no federal cap on the income tax payments that can be deferred until July 15.  Interest and penalties on delayed payments will only start to accrue on July 16. 

Not all states mirror the federal extension. For example, Iowa has extended its payment and filing deadline to July 31, but the estimated payment deadlines are currently unchanged. Consider reaching out if you are filing in a state other than Nebraska. 

As we navigate the challenges ahead, please know that we will always keep you informed as quickly as possible. In the meantime, please see the below links for further details:

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We tap into the vast knowledge and experience within our organization to provide you with monthly content on topics and ideas that drive and challenge your company every day.

Toll-Free: 866.577.0780  |  Privacy Policy

All content © Lutz & Company, PC

OMAHA

13616 California Street, Suite 300

Omaha, NE 68154

P: 402.496.8800

HASTINGS

747 N Burlington Avenue, Suite 401

Hastings, NE 68901

P: 402.462.4154

LINCOLN 

115 Canopy Street, Suite 200

Lincoln, NE 68508

P: 531.500.2000

GRAND ISLAND

3320 James Road, Suite 100

Grand Island, NE 68803

P: 308.382.7850

Personal Finances: Focusing on What You Can Control + Financial Market Update + 3.31.2020

Controlling What You Can + Financial Market Update + 3.24.2020

FINANCIAL MARKET UPDATE 3.24.2020

STORY OF THE WEEK

CONTROLLING WHAT YOU CAN

A critical concept investors must understand is that markets are forward looking. This means prices reflect the aggregate of all future expectations. As a result, stock prices will often decline (rise) ahead of bad (good) data. With the S&P 500 down over 33% from its mid-February peak, the market is definitely expecting some bad news. We are now on the precipice of those expectations becoming reality. As coronavirus testing ramps up, the number of confirmed cases will likely jump. At the same time, economic data (which is backwards looking) is going to start reflecting the impact of the virus on business and consumer activity. The news flow has been scary, but it will probably get worse before it gets better.

The real question relates to how expectations will compare to reality. The market has already priced in a great deal of the bad news that we are about to get. Has it fallen too much? Or not enough? It is impossible to know in advance, and it is out of our control. Instead of dwelling on this, investors are better served by focusing on what they CAN control.

Recent volatility has presented a variety of opportunities for investors. For those that are not in or near retirement, the selloff provides a BIG opportunity to invest at a steep discount. Many investors could also benefit from “rebalancing” their portfolio. Balanced portfolios made up of both stocks and bonds have likely seen their allocation to stocks fall relative to their bonds. The act of rebalancing moves the portfolio back to its target by selling what has done relatively well (bonds), and buying what has done relatively poor (stocks). Effectively buy low/sell high. Finally, tax loss harvesting can be beneficial for any taxable investor. Tax loss harvesting involves realizing losses on certain positions, and investing the proceeds into a similar (but not substantially identical) investment. The losses generated can be used to offset other realized gains and a certain amount of ordinary income in the current tax year, while unused losses can be carried into futures years. Each of these items are within an investor’s control, and offer a way to take advantage of an otherwise scary and tumultuous event.

Remember this important concept: markets are forward looking. Stock prices fell in advance of the bad news arriving. Like all of the past challenges our nation has faced, we will overcome this threat. Expect prices to rise ahead of the good news.

WEEK IN REVIEW

  • On Monday the Federal Reserve dramatically increased the level of support it is providing to the markets. Headlining the new support measures is a new program called the Secondary Market Corporate Credit Facility. Under the program the Fed will begin purchasing corporate debt (in addition to the previously announced agency mortgages and Treasury bonds). This includes individual investment grade bonds, and ETFs that are comprised of investment grade bonds. The corporate bond market has been under pressure amid the coronavirus fears, and the Fed’s purchases is designed to provide some stability.
  • Congress continues to work on a large stimulus bill aimed at mitigating damage to the economy caused by the coronavirus. The amount of stimulus being discussed would be very large, even compared to what was rolled out during the financial crisis.
  • Last Thursday the market got a small taste of the bad economic data to come. The number of new individuals filing unemployment increased by roughly a third, and the number is expected to increase even more dramatically this Thursday. Today we will get an early look at activity in the services and manufacturing sector when HIS Markit publishes its flash (early estimate) PMI data. This survey based data is expected to reflect a sharp drop in sentiment and activity during the month of March.

HOT READS

Markets

  • Fed Surprises Market With Program to Support Corporate Bonds Amid Coronavirus Pandemic (CNBC)
  • Congress is Getting Closer to a Deal on the Massive Coronavirus Stimulus Bill (CNBC)

Investing

  • What if You Buy Stocks Too Early During a Market Crash (AWOCS)
  • The Panic of 2020? Oh, I made a Ton of Money – and So Did You (Zweig)
  • Bird in the Hand (TheBelleCurve)

Other

  • This is your Brain on a Crashing Stock Market (Zweig)
  • Coronavirus ‘Infodemic,’ Here’s How to Avoid Bad Information (WSJ)
  • Blood Donations Needed During Coronavirus Pandemic (CNBC)

ECONOMIC CALENDAR

Source: MarketWatch

MARKETS AT A GLANCE

Source: Morningstar Direct.

Source: Morningstar Direct.

Source: Treasury.gov

Source: Treasury.gov

Source: FRED Database & ICE Benchmark Administration Limited (IBA)

Source: FRED Database & ICE Benchmark Administration Limited (IBA)

Do you want to receive financial market updates in your inbox? Sign up here! 

ABOUT THE AUTHOR

402.763.2967

jjenkins@lutz.us

LINKEDIN

JOSH JENKINS, CFA + SENIOR PORTFOLIO MANAGER & HEAD OF RESEARCH

Josh Jenkins is a Senior Portfolio Manager & Head of Research at Lutz Financial with over nine years of investment experience. He is responsible for assisting clients in the construction, selection, and risk assessment of their investment portfolios. In addition, Josh will provide on-going research and trade support.

AREAS OF FOCUS
  • Asset Allocation & Portfolio Management
  • Investment & Market Research
  • Trading
AFFILIATIONS AND CREDENTIALS
  • Chartered Financial Analyst (CFA)
  • Chartered Financial Analyst Institute, Member
  • Chartered Financial Analyst Society of Nebraska, Member
EDUCATIONAL BACKGROUND
  • BSBA, University of Nebraska, Lincoln, NE

P: 402.827.2300 | F: 402.827.2319 | E: contact@lutzfinancial.com | 13616 California Street | Suite 200 | Omaha, NE 68154

All content © 2017 Lutz Financial  | Important Disclosure Information |  Privacy Policy

U.S. Tax Filing Deadline Extended to July 15th

U.S. Tax Filing Deadline Extended to July 15th

 

LUTZ BUSINESS INSIGHTS

 

u.s. tax filing deadline extended to july 15th

Acting on President Donald Trump’s direction, Secretary Steven Mnuchin announced that the April 15th tax filing deadline will be extended to July 15th. This gives all taxpayers and businesses three extra months to file and make payments without interest or penalties.

This extension applies to federal income tax only. It is up to each state to declare their individual state income tax deadlines.

  • Nebraska has extended both filing and payment deadlines to July 15th but has stated that there is no extension on 2020 estimated payments.
  • Iowa has extended both filing and payment deadlines to July 31st but has stated that there is no extension on 2020 estimated payments.

The tax payment extension applies to federal tax due with 2019 tax returns, plus 2020 first-quarter tax payments for an aggregate amount due of up to $1 million for individuals and trusts ($10 million for C corporations).  Any tax due in excess of these aggregate amounts is due on the normal due date and is not extended.

We are monitoring the situation closely and will send communication as updates arise. Please note, we are recommending you file by April 15th if you are able and/or expecting a refund.  If you opt to defer your tax payments until July 15th, we still recommend you file before April 15th, and pay the tax by July 15th.

Please see the below links to the IRS website with more detailed guidance:

 

RECENT POSTS

SIGN UP FOR OUR NEWSLETTERS!

We tap into the vast knowledge and experience within our organization to provide you with monthly content on topics and ideas that drive and challenge your company every day.

Toll-Free: 866.577.0780  |  Privacy Policy

All content © Lutz & Company, PC

OMAHA

13616 California Street, Suite 300

Omaha, NE 68154

P: 402.496.8800

HASTINGS

747 N Burlington Avenue, Suite 401

Hastings, NE 68901

P: 402.462.4154

LINCOLN 

115 Canopy Street, Suite 200

Lincoln, NE 68508

P: 531.500.2000

GRAND ISLAND

3320 James Road, Suite 100

Grand Island, NE 68803

P: 308.382.7850