Fresno Financial Advisor: February 2021 Highlights

Fresno Financial Advisor: February 2021 Highlights

Fresno Financial Advisor News: The Shape of Economic Recovery

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Overview

Following the longest recorded economic expansion in history, the U.S. hit its peak in monthly economic activity in February 2020. And yet, this was quickly followed by two consecutive quarters of economic decline — thanks to the coronavirus invasion on U.S. shores. In fact, the second quarter of 2020 suffered the steepest quarterly drop on record (9.1%), having never experienced a drop greater than 3%.1

The fallout was immediate and severe. In April 2020, more than 20 million jobs were lost, wiping out gains achieved over nine straight years of job growth. Job losses were particularly egregious among lower-wage, lower-educated workers, as well as for women — largely due to layoffs in the leisure and hospitality industry.

By June, the National Bureau of Economic Research (NBER) officially declared a recession, widely heralded as the worst since the Great Depression. However, quick moves by the Federal Reserve, a stimulus package passed by Congress and a concerted push by the Trump Administration to reopen the economy during the summer facilitated a remarkable turnaround. In the third quarter, the U.S. economy expanded by an annualized 33.1% — its biggest expansion ever.2

The rebound was not without drawbacks. Gross domestic product (GDP) was still 3.5% below pre-pandemic level, and reopening the economy proved to be devastating in terms of human life.3 Whereas it previously had been prevalent mainly in large metropolitan areas and “hot spots” around the country, the coronavirus spread uncontrolled to virtually every state, city and town in the U.S.

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Fresno Retirement Consultant News: Investment Scams on the Rise

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Overview

In 2020, the U.S. Securities and Exchange Commission (SEC) issued an alert regarding a significant increase in investment scams. The sudden rise was attributed to the outbreak of the virus and subsequent market and economic declines. According to analysis of consumer complaint data by the Federal Trade Commission (FTC), there was a 70% upsurge in income scams during the second quarter of 2020 compared to the same period in 2019.1

The FTC reports that Americans lose more money on investment scams than any other type of income fraud. While the median loss is just above $16,000, people in their 50s and 60s — the age when many are motivated to make up for lost ground with retirement savings — lose an average of $24,000.2

Cyber Fraud

According to the Association of Certified Fraud Examiners, cyber fraud appears to be the fastest-growing concern. Law enforcement, corporations and individuals are reporting substantially more attempts at ransomware attacks and/or business compromise schemes.3

Another form of cyber fraud is “social engineering,” in which scammers use human interaction to trick people into eschewing standard security protocols for a friend. For example, a grifter may pretend to be a friend or colleague and encourage someone to open an email attachment that is infected with malware or to divulge confidential information. The scammer may use scare tactics to warn an individual that his computer is vulnerable to cyber attacks, urging him to install and run the malware they provide.

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Fresno Financial Consultant News: Is the Economy Slowly, Silently Sliding?

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Prospects for stock market growth have remained resiliently and optimistically cheerful this year, despite the nine-month-long pandemic. Unfortunately, the time may be at hand for a stock market price correction that better reflects the state of the global economy.

The lack of ongoing fiscal stimulus which, even if passed, may not feasibly be able to distribute funds before the election or even before the end of the year, may have a greater effect on the economy than just individual households. Federal Reserve officials continue to call for more government stimulus, warning that the economy remains in a “deep hole.” However, this close to the highly anticipated and contentious election, government efforts are more focused on politics and judicial branch activities than the economy. As a result, some market analysts are questioning whether their initial year-end projections are overpriced based on an expected rebound that may not materialize.1

As we approach year end, you should schedule a time with your financial advisor to review your investment portfolio. While we do not typically recommend dramatic changes based on the current state of the economy, the stock market or even the outcome of a presidential election, we do encourage our clients to regularly evaluate their portfolio to ensure it is aligned to their goals and risk tolerance. Now more than ever, we believe it’s important to have an asset allocation strategy designed to weather volatile times.

There is a group of people who may be able to anticipate market trends even more quickly than Wall Street analysts — the corporate executives and officers of S&P 500 companies with firsthand knowledge of their businesses. If actions speak louder than words, prospects look pessimistic. Throughout September, these executives began selling personal shares of their own company stock at a rate not seen since 2012.2

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Fresno Retirement Advisor News: Fixed Income vs. Stock Portfolio

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Early this year, many stopped spending and began saving money. This wasn’t difficult as many areas of the economy were — and possibly still are — shut down. For some, vacation plans were canceled, and the normal level of entertainment activities and dining out have been curbed. If you’ve remained employed, chances are good you’ve been able to step up your level of savings this year. However, with current interest rates, it can feel like savings accounts are stagnating. Should you take the risk of investing for higher returns amid today’s continuing market uncertainty?1

It’s worth noting that by mid-August, the S&P 500 had fully recovered from the 34% pandemic-induced plunge that occurred between February and March earlier this year.2 Of course, this is great news for equity investors who stayed in the market, but stock portfolios continue to be worrisome. You may wonder if financial rewards are truly commensurate given the level of anxiety associated with market declines, but there are ways to help reduce your risks and still have the opportunity for growth. If you’d like to discuss various options, please feel free to contact us.

Traditionally, stocks have yielded higher long-term gains than bond portfolios, but the tradeoff is more volatility. A recent analysis by a Wharton professor shows that historical dynamic has shifted somewhat throughout the past five decades. In fact, fixed-income portfolios have performed as well, if not better, than the U.S. stock market during this time frame. Perhaps even more surprising, fixed income has exhibited similar or more volatility than comparably performing stock portfolios.3

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Fresno Financial Advisor News: The Millennial Economy

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The millennial generation hasn’t had it so great. A recent economic analysis reports that since entering the workforce five to 20 years ago, the average millennial has experienced slower economic advancement than any other generation in U.S. history.1 It’s not just a matter of long periods of high unemployment. It’s also because getting that first “real” job during a recession often means a lower entry-level salary that can affect their lifelong earning potential.

Not only that, but millennials can’t seem to catch a prolonged break. They’ve experienced the impacts of 9/11, the Great Recession and now the COVID-19 pandemic — all within the past 20 years.

These setbacks matter to all generations because millennials represent the future of the U.S. economy. As of July 2019, millennials surpassed baby boomers as the nation’s largest living adult generation.2 It’s important that this demographic make inroads in entrepreneurial or job creation endeavors while continuing to advance industries, both old and new. Growth in these areas increase GDP and wealth prospects for the entire nation.

And yet, in contrast to the historical trend of each generation boasting progress faster than the prior generation, this has not necessarily been the case among millennials. On one hand, as of 2018, 40% owned their own homes and 40% of millennial women had children. However, their numbers pale compared to Generation X, among which 45% owned their homes and 53% of women had children at the same age as today’s millennials.3

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Other Fresno Financial Advisor Articles

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Our firm is not affiliated with the U.S. government or any governmental agency.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc are not affiliated companies. California Insurance License # OK48173

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. Investing involves risk, including possible loss of principal. Insurance product guarantees are backed by the financial strength and claims-paying ability of the issuing company. Diversification cannot ensure a profit or guarantee against losses in a declining market. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 722736 – 9/20