Where Trillions Dwell

Back in the 1980s, a popular Wendy’s commercial featured a soon-to-be-famous elderly lady peering at a small piece of hamburger perched on a huge bun. She then asked:

Where’s the beef?¹

 In the March 11, 1984, Democratic debate, Walter Mondale used the line as a knockout blow to fellow candidate Gary Hart.² Watch the commercial here. Watch the debate segment here.

Today we can ask a similar question:

Where’s the cheddar?

 With the huge market sell-off in March and April, we know that those who sold stashed a massive amount of cheddar or moolah. Unless they used it in the ensuing rally, it’s still there, somewhere, just sitting.

A little research reveals that a gigantic amount of bread (bigger perhaps than the bun holding the burger shamed in the Wendy’s commercial) is … to mix our metaphors … parked on the sidelines. Sitting. Waiting. Waiting for what?

On June 22, Jesse Pound wrote an article for CNBC. The article’s title pretty much summed up its contents: “There’s nearly $5 trillion parked in money markets as many investors are still afraid of stocks.”³ As pointed out by Mr. Pound, more than $4 trillion flooded into money markets as investors sold anything not nailed down. Money market assets peaked during the week of May 13, setting an all-time record of $4.672 trillion. Recent outflows, he said, still leave 90% of that amount waiting on the sidelines.⁴

Mr. Pound cites Ryan Detrick, a market strategist at LPL Financial, who noted that “after the 45% bounce, give or take, in the S&P, we haven’t seen really the big part of the retail crowd come back in. … It kind of shows again that a lot of people are really still on the sidelines.”⁵

Mr. Detrick revealed even more staggering numbers in a recent Tweet:
$15.4 trillion cash in bank accounts right now, a new record.

Recently up 15% the previous 3 months, another record.

Combined with the record of nearly $5 trillion in money markets and safe to say there’s a lot of cash on the sidelines.⁶

Another Stash of Cash

Another trillion dwells in orphaned retirement accounts. And this amount is likely to grow because of the massive loss of jobs in the recent virus crisis.

Many companies set up 401(k) plans for their employees. The employee contributes to the plan by way of paycheck deductions. In some plans, the employer contributes a certain percentage of the employee’s wages. Over time, these plans can grow significantly, the gains free from tax until the employee starts withdrawing funds upon retirement.

There’s a slight problem. As employees change jobs, they often forget about 401(k) plans with their previous employers. As reported by Mitch Tuchman in a June 2020 MarketWatch article:

Over a recent 10-year period as many as 25 million people in workplace plans changed jobs and left behind a 401(k) plan. Millions more have left behind more than one, according to a GAO study.⁷

Millions of people who lost their jobs during the pandemic will one day find new jobs, most likely with different companies. Yet their old 401(k)’s with the previous employers might just sit there, with no one paying any attention to any strategy of investment.

Mr. Tuchman offers some sound advice: roll those old 401(k) accounts into an IRA account. That way, you—or your financial advisor—can make rational decisions about staying in the market, getting out of the market, or getting back in the market when the drop appears over. Beware, Mr. Tuchman advised, and make certain you complete a true rollover:

Make sure you request a rollover, not a distribution. If you take money out of your 401(k) plan you will be liable for taxes and, possibly, penalties for early withdrawal. Once the money is transferred you can begin to choose new investments in your IRA that better fit your current age, risk tolerance and retirement goals.⁸

Fear of Fear Itself

It looks as if fear accounts for this vast amount of wealth sitting on the sidelines. If I get back in the market, I think, it’ll no doubt crash. After all, I say to myself, look at the massive unemployment around me. How can the market possibly go up, I wonder?

Millions of sidelined investors asked those questions as the stock market recovered most of its pandemic losses. Granted, more convulsions loom just over the horizon. But it makes little sense to sit there and watch potential gains pass you by.

Protecting Against Crashes: Our 1-2-3 Approach

At RFS, we protect our managed accounts against the ravishes of stock market crashes.

First, we watch your account, every minute of every day.
Second, we use technical analysis and active management to decide when to deploy your funds … and when to pull them back into cash.
Third, we use trailing stops to guard against crashes.

A Word About Trailing Stops

A trailing stop is a type of stop-loss order that combines elements of both risk management and trade management. Trailing stops are also known as profit protecting stops because they help lock in profits on trades while also capping the amount that will be lost if the trade doesn’t work out.

Here’s how it works. When the price increases, it drags the trailing stop along with it. Then when the price finally stops rising, the new stop-loss price remains at the level it was dragged to, thus automatically protecting an investor’s downside, while locking in profits as the price reaches new highs.

A trailing stop-loss is a way to automatically protect yourself from an investment’s downside while locking in the upside.

For example, you buy Company XYZ for $10. You decide that you don’t want to lose more than 5% on your investment, but you want to be able to take advantage of any price increases. You also don’t want to have to constantly monitor your trades to lock in gains.

You set a trailing stop on XYZ that orders the position to automatically sell if the price dips more than 5% below the market price.

The benefits of the trailing stops are two-fold. First, if the stock moves against you, the trailing stop will trigger when XYZ hits $9.50, protecting you from further downside.

But if the stock goes up to $20, the trigger price for the trailing stop comes up along with it. At a price of $20, the trailing stop will only trigger a sale if the stock drops below $19. This helps you lock in most of the gains from the stock’s rally.

I Don’t Have Any Positions

When talking to your friends, you might say you don’t currently have any positions in the stock market.

But you do.

Your position is cash. And it forms a part of a gigantic ocean of liquidity that will one day seek and find a home. The home it finds is most likely to be the U.S. stock market. The wise approach is to have some of your wealth in cash, some in bonds, and some in stocks. Your risk tolerance will govern the percentages for each type of investment. But you really ought to have some positions other than a 100% position in cash.

Give Us a Call‘

Call Jack at (301) 294-7500, and we can start figuring out a sensible plan designed just for you.

1 https://www.youtube.com/watch?v=VnCajZth-24.
2 https://www.youtube.com/watch?v=pjw8m7GmIa4
3 https://www.cnbc.com/2020/06/22/theres-nearly-5-trillion-parked-in-money-markets-as-many-investors-are-still-afraid-of-stocks.html 
4 https://www.cnbc.com/2020/06/22/theres-nearly-5-trillion-parked-in-money-markets-as-many-investors-are-still-afraid-of-stocks.html
5 https://www.cnbc.com/2020/06/22/theres-nearly-5-trillion-parked-in-money-markets-as-many-investors-are-still-afraid-of-stocks.html
6 https://twitter.com/RyanDetrick/status/1275122147745320961
7 Beware the vultures coming for your old 401(k) money, MarketWatch, June 17, 2020, by Mitch buchman, https://www.marketwatch.com/story/beware-the-vultures-coming-for-your-old-401-k-money-11592320876. 

In honor of Memorial Day, we’d like to tell you a story about a man named Ben Salomon.

Ben Salomon was a dentist. He went to school, got his degree, and started his own dental practice at the tender age of 23. The most trying ordeal he was ever supposed to encounter was a mouth full of cavities or a particularly tricky root canal. But when his country called, he answered – serving as the dental officer for the 105th Infantry Regiment of the U.S. Army.

The year was 1942.

Ben Salomon was a dentist, but he still had to train like a regular infantryman. He qualified as an expert with both rifle and pistol and was even declared the unit’s “best all-around soldier” by his commanding officer. Soon, he was promoted to the rank of captain. Two years later, he went into combat – specifically, to an island in the Pacific called Saipan.

Ben Salomon was a dentist. But during combat, a toothache was the furthest thing from most men’s minds. The Battle of Saipan was fierce, with the U.S. suffering over 13,000 casualties. So, with little dental work to do, Salomon volunteered to go to the front lines, to replace one of the surgeons who had been wounded.

It was July 7, two days before the battle would end. As the U.S. advanced across the island, the wounded began to pile up, and it wasn’t always possible to transport them back to the regiment’s main base. So, Salomon set up a tent barely fifty yards from the frontlines to serve as an immediate aid station. Just after dawn, approximately 4,000 Japanese soldiers launched one of the largest counterattacks of World War II. Within minutes, Salomon’s tent filled up with wounded soldiers, many of whom had to be physically carried in. Undaunted, Salomon got to work, trusting the line would hold and the enemy be repelled.

That was when he saw his first Japanese soldier.

Ben Salomon was a dentist. But when he saw the foe attacking the wounded men lying outside his tent, he remembered his training. He grabbed a gun, fired, and returned to his work. But then, two more enemy soldiers entered the tent. Salomon dealt with these, too – only for another four to emerge from beneath the tent walls. Shouting for help, Salomon rushed them head on. He defeated three on his own; one of his wounded comrades stopped the fourth.

But the front lines were punctured, and the bleeding couldn’t be stopped. The enemy was overrunning the foxholes, and the aid station was doomed. Realizing what was about to happen, Salomon ordered the wounded men to retreat, supporting and carrying each other as necessary. In the meantime, Salomon said, he would hold the enemy off.

The wounded soldiers staggered out the rear of the tent. Ben Salomon left by the front.

When they found his body two days later, Salomon was alone, clutching a machine gun. The bodies of ninety-eight enemy soldiers were in front of him. He had seventy-six bullet wounds and dozens of bayonet wounds, many of them suffered while he was still alive. While he was still fighting.

Ben Salomon was a dentist. He was also a warrior, a patriot, and a hero.

***

Fifty-nine years later, Ben Salomon was posthumously awarded the Medal of Honor. This often happens with those who have died in battle. Their names are preserved in records, but entire generations can pass before history gives them their due.

Despite receiving the Medal of Honor, and despite the incredible heroism he displayed, few people have heard of Ben Salomon before. That’s not a surprise. After all, over one million men and women have died serving our country. They were all heroes, yet most can’t be found in history books, documentaries, or even Wikipedia articles. In a sense, Ben Salomon is fortunate. The Medal of Honor is given to those who have “distinguished themselves by acts of valor.” But surely there are tens of thousands of people who never received such a medal even after their death – because their own acts of valor are lost to time.

We think this is one of the reasons we observe Memorial Day every year. Whenever we visit a cemetery, whenever we flip through a photo album or scrap book, whenever we comb through the stories of our friends, family members, and ancestors who made the ultimate sacrifice, we commemorate the Ben Salomons of the world. They weren’t superheroes like you see in movies, with magical powers or unworldly strength. They were teachers and taxi drivers, farmers and factory workers, students and scientists. They were dentists. Every Memorial Day, we ensure their memories, their deeds, and their sacrifices are never forgotten, and thus never in vain. We award them our own personal medals of honor – for deeds that mean so much to the world, and everything to us.

That’s why we observe Memorial Day. To ensure that, while people die, valor lives on forever.

On behalf of everyone at Research Financial Strategies, we wish you a safe and peaceful Memorial Day.

First, I want to thank everyone for all the calls and emails. We are all doing great, and I hope all of you are safe and healthy. At the same time, I am humbled and embarrassed, for 99% of my industry now floats in a sea of red ink. But we are having our best year ever, THANKS to YOU!!! Holy Cow, who else can say that?  In the last 60 days we have brought in over $30 million of new Assets Under Management, all from referrals. Thank YOU, AGAIN!!!

Now for the details:  Here’s the latest on our moves and strategy. Since the virus erupted and started to do major damage to the markets, we used 3x leveraged ETFs both to profit from declines (SPXS) and from advances (SPXL). According to our best indicators, we have emerged from the “crisis mode,” which required us to be fast and furious with purchasing SPXS (to play a market decline) and SPXL (to play a market advance). These ETFs enabled us to make split-second moves.

Now we are back to what we call “best relative strength” sector and subsector investment selections. Sometime today the following trades will show in your account: we replaced SPXL with five, 18%, selections (the 18% allocation is relative to a 100% growth model, so you will have to adjust accordingly): VGT, XLG, XLY, XBI, IJK.  Additional details are provided below. Our goal is to avoid the really sick parts of the economy/stock market that may never return to January, 2020 levels, or, in the best case, in 3 to 5 years: autos, airlines, auto rentals, aerospace manufacturing, hotels, cruise lines, retail, restaurants, theme parks, etc. These are now the most suffering parts of our economy: most will never come back.

We have therefore had to surgically separate the stock market by purchasing sector and subsector winners and thus avoiding the losers. This approach is not 100% accurate: for example XLY is a top “RS”, relative strength,  performer, but it has DISNEY in it. That’s where it belongs, and we can’t do anything about it. The mouse is struggling at best, on life support for at least another 18 months.

That’s all for now.  As always, feel free to call me. We are here for you!!!

Jack  Reutemann
240 401 2355

Only read this if you like to understand the details or are a stock market nerd like me!

VGT, Analyst Report

VGT tracks a broad index of companies in the information technology sector which the company considers to be the following three areas; software, consulting, and hardware. As a result, this fund tracks some of the most crucial companies in the technology sector across a wide range of market cap levels. The fund focuses entirely on U.S. stocks, and is relatively top heavy; three securities make up 25% of the fund 54% of assets go to the top ten even though the fund holds over 425 securities in total. Investors should also note that this fund dedicates the majority of its assets to giant and large cap funds, meaning that it will be less volatile than some of the other products in the space that focus on relatively unproven companies and technologies. As a result, this fund will be more of a value play than one that presents strong growth opportunities. So while this is a decent fund for those looking to achieve broad exposure to the tech sector without the influence of semiconductors, most investors should look to broader fund which take into account all sectors of the technology industry instead for their portfolios.

XLG, Analyst Report

This ETF tracks the 50 largest securities, by market capitalization, in the Russell 3000 universe of U.S.-based equities. As a result, investors should think of this as a concentrated play on mega cap stocks in the American market. These securities are usually known as ‘Blue Chips’ and are some of the most famous and profitable companies in the country, including well known names such as ExxonMobil, Apple, IBM, and GE. The fund is probably one of the safest in the equity world as the companies on this list are very unlikely to go under unless there is an apocalyptic event in the economy. However, these securities are unlikely to grow very much either as they are already pretty large and have probably seen their quickest growing days in years past, but most do pay out solid dividends which should help to ease the pain of this realization. Overall, XLG is a decent choice for investors seeking broad mega cap exposure but most investors would probably be better served by investing in a broader fund that is a little more diversified.

XLY, Analyst Report

The ETF offers exposure to the consumer discretionary sector, making it an appealing option for investors looking to implement a sector rotation strategy or tilt exposure towards corners of the U.S. market that may perform well during a recovery. XLY offers impressive liquidity, cost efficiency, and depth of exposure, making it one of the best ETF options for playing the consumer discretionary sector.

XBI, Analyst Report

XBI is one of a handful of biotech ETFs available, offering exposure to a corner of the market that can perform well during periods of consolidation and is capable of big jumps in the event of major drug approvals. XBI focuses on a narrow sector of the health care sector, and as such is probably too precise for most investors seeking to construct a long-term portfolio. However, this ETF can be useful for those seeking to fine tune exposure or for those bullish on the sector over the long run. XBI focuses exclusively on American stocks, and primarily consists of mid cap and small cap securities. XBI’s portfolio is somewhat limited, though the equal-weighted methodology of the underlying index ensures that assets are balanced across all components. That feature can be particularly important in the biotech space, where specific companies are capable of turning in big gains over short periods of time.

IJK, Analyst Report

This ETF offers exposure to mid cap stocks that exhibit growth characteristics, making IJK a potentially useful tool for investors looking to fine tune their domestic equity exposure or implement a tilt towards a specific investment style.

TQQQ, we continue to hold this position, as it is a very efficient way to own 3X the QQQ: 
Analyst Report

This ETF offers exposure to one of the world’s most widely-followed equity benchmarks, the NASDAQ, and has become one of the most popular exchange-traded products. The significant average daily trading volumes reflect that QQQ is widely used as a trading vehicle, and less as a components of a balanced long-term strategy. Of course, this fund can certainly be useful as part of a buy-and-hold approach for investors looking to maintain a tilt towards the potentially volatile tech sector.

Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
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Investment advice offered through Research Financial Strategies, a registered investment advisor.

All,

We are still on a “technical buy” – meaning we are staying in the markets.  Please view the chart below.  Green is good, red is bad, and we have a 45 degree trend line in play.  Notice that today we have recovered the 50 day moving average, this is a good sign as it indicates a positive movement in the market. The farthest, right hand side green bar, crossing thru the thick Fuchsia line. Even though CV19 is still a major problem, and unemployment claims have gone up again this morning, many believe the worst may be behind us.  Everyone has an opinion.  Either way, the market is liking the prospects for a recovery, and partial state-by-state openings.  Also, unless the deal falls apart at the last minute, another $425 billion small business stimulus package should pass the House today, having already passed the Senate. 

I’m trying to not overload you with info, but just hit the high points.

As before, call me if you have any investment questions!!! ​

Jack 
240 401 2355

Breaking down the CARES Act
As you know, the coronavirus pandemic has created both a health crisis and an economic crisis.  As of this writing, there are over 160,000 known cases.¹ By the time you read this, there will certainly be more – and that number does not reflect those who have been infected but not tested.  The economic cost, meanwhile, has resulted in millions of Americans losing their jobs.  Some economists at the Federal Reserve estimate the unemployment rate could rise as high as 32%!² To help address both crises, Congress recently passed the Coronavirus Aid,

Relief, and Economic Security (CARES) Act.  It’s a massive, $2 trillion stimulus package designed to help everything from hospitals, to individuals, to businesses large and small.  Time will tell if it will be enough to blunt the impact of this pandemic, but the fact Congress was able to pass something so significant, so quickly, is a rare feat worth celebrating. Charles Darwin once said, “It is the long history of humankind that those who learned to collaborate and improvise most effectively have prevailed.”  For many years now, that is not a quote you could usually apply to the United States Congress.  Political partisanship has meant that gridlock usually prevails over collaboration. 

Thankfully, both sides of the aisle recently proved the institution still works when people put aside their differences and work together for the common good. This is major legislation, with benefits for almost every American.  Some of the bill’s provisions are especially important for retirees.  So, to help you understand what the CARES Act does, and how it will impact you, we have prepared a special breakdown.  As we are sending this to all our clients, some information may apply to you, and some may not.  Please read it carefully, and then let us know if you have any questions. As always, we hope you and your family are staying healthy and safe.  Please let us know if there is anything we can do for you! Sincerely, Jack Jack Reutemann, Jr Research Financial Strategies      

Important Provisions of the CARES Act
The CARES Act is designed “to provide emergency assistance and health care response for individuals, families, and businesses affected by the 2020 coronavirus pandemic.”³  Think of it as a kind of massive care package.  Just as an actual care package is meant to get somebody through a tough time, that’s what the CARES Act is designed to do.  Because so many people have either lost their job, seen their hours cut back, or experienced drastic changes to their daily lives, many Americans must now contend with potential cashflow problems.  The CARES Act contains a number of provisions to help individuals and businesses handle those problems, at least for the short-term. What follows is a brief overview of the provisions that could affect you and your finances. 

Let’s start with:

DIRECT PAYMENTS⁴
What’s the quickest way to ensure people get the money they need?  Pay them directly.  Perhaps the most newsworthy aspect of this bill is that many taxpayers will receive a one-time direct payment to help them cover expenses. Here’s a breakdown of how it will work. Individuals who made up to $75,000 in 2019 will receive $1,200.
Heads of Household (single parents, for example) who made up to $112,500 in 2019 will receive $1,200.
Married couples filing a joint tax return who made up to $150,000 in 2019 will receive $2,400.
On top of this, each taxpayer will receive up to $500 for each child they have under the age of 17.  So, for example, a married couple with two children would receive $3,400. Note that payments decrease for individuals and married couples with income above their respective thresholds.  Specifically, payments shrink by $5 for every $100 earned above the $75,000/$150,000 limits.  The payments disappear entirely for individuals who made $99,000 or more, and for married couples who made $198,000 or more.

So, when will this money actually arrive?  It’s unclear.  The IRS could start issuing payments sometime in April or May, but an official schedule has not been released.  (The CARES Act itself only mandates that payments be made “as rapidly as possible.”⁴)  It’s likely that those who filed their 2019 tax returns with direct-deposit information will receive payments first. If you haven’t filed your tax return for 2019 yet, please let us know.  We would be happy to work with your tax preparer to expedite the process.

Speaking of tax filing…
NEW TAX DEADLINES 
This isn’t technically part of the CARES Act, but I’m going to cover it anyway because it’s important.  Due to the pandemic, IRS has extended this year’s tax-filing and payment deadlines.  Now, taxpayers have until July 15 – up from the standard April 15 – to file their 2019 tax returns.  The deadline to make IRA and Roth IRA contributions is now July 15 as well. Note that this new deadline applies to everyone, not just those who are sick, under quarantine, or materially affected by the coronavirus in some way.  And if you’ve already filed your return, you should still receive your refund around the same time you would during a typical tax season.

UNEMPLOYMENT⁴
Let’s get back to the CARES Act. It was said a moment ago that direct payments were the most newsworthy aspect of the bill.  But for the overall economy, the bill’s unemployment provisions are probably the most important.  Unemployment claims rose by 3.28 million between March 15-21.  That’s the highest weekly surge in history.  The previous record?  695,000.⁶ To help combat this, the CARES Act provides approximately $260 billion in unemployment assistance for those who lose their jobs.  This includes freelancers, independent contractors, and other self-employed workers.  That’s a major change, because under normal circumstances, they can’t apply for unemployment benefits.

Generally, workers who lose their jobs will receive $600 per week for four months, in addition to what their state unemployment program pays.  The CARES Act also adds an additional thirteen months of federal unemployment insurance on top of a person’s state benefits. If any family members lose their job, please let us know.  We would be happy to answer their questions or provide any assistance we can.

BUSINESS SUPPORT⁴
Even those who don’t lose their jobs will still want to keep a close eye on our nation’s unemployment rate.  More people out of work means less people spending money on the economy – which can have a profound influence on the markets.  That’s why one of the most critical things the government can do right now is help businesses avoid laying people off. Roughly $350 billion of the legislation’s price tag is geared towards just that.  Companies with up to 500 employees can receive loans of up to $10 million.  Any portion of the loan used to maintain payroll or retain workers – at least through the end of June – will be forgiven. 

In addition, businesses can apply for grants of up to $10,000 to cover their operating costs. For larger businesses, the CARES Act sets aside around $500 billion in loans and grants, especially for hard-hit industries like airlines.  And for companies that are forced to close or furlough workers, the legislation “covers to 50% of payroll on the first $10,000 of compensation, including health benefits, for each employee.”⁷ These are all necessary steps to keep our economy going.  Will they be enough?  That’s an open question.  The answer largely depends on how long the pandemic lasts – and how well Americans commit to social distancing to stop the virus’ spread.  Watch this space.

RETIREMENT FUNDS⁴
We said at the beginning of this message that some of the CARES Act’s provisions are especially important for retirees.  Let’s cover those now.   First up, Required Minimum Distributions, or RMDs.  In a normal year, anyone 72 years or older would need to withdraw a minimum amount from their IRA or 401(k).  Not this year. Under the CARES Act, all RMDs are suspended in 2020.  That means you can leave that money in your retirement account for the year if you don’t need it now.  Note that this applies both to retirement account owners and beneficiaries.

People who have already taken their distribution for 2020 can potentially return the money to their account if they want.  This could be a slightly complicated process, so we won’t cover it here.  However, if you want further information about it, let us know. The CARES Act also waives the 10% early withdrawal penalty for retirement accounts.  Withdrawals will still be taxed, but spread over a three-year period.  Under most circumstances, our advice is to leave your retirement savings where they are, but it’s nice to know that early withdrawals are an option if you need them. Finally, the CARES Act increases the 401(k) loan-limit from $50,000 to $100,000.  

If you have questions about any of these provisions, or how they apply to you, let’s chat!

COMBATTING THE CORONAVIRUS⁴
Finally, it should come as a great comfort to know that the brave doctors, nurses, and scientists on the front lines are getting assistance, too.  Specifically, the CARES Act provides $100 billion for hospitals, $1.32 billion for community health centers, $11 billion for coronavirus treatments and vaccines, $16 billion for additional medical supplies, like ventilators and masks, and $20 billion for veterans’ health care. 

You should know, too, that the Act includes a telehealth program so that if you can’t leave home, you can still have a virtual appointment with your doctor. Our hearts goes out to all those giving their time, talents – and sometimes, lives – to keep the rest of us safe.  They are true heroes, and we are so grateful for them.

Let’s all do our part to make their jobs just a little easier by maintaining our distance, keeping clean, and staying home as much as possible.

CONCLUSION
As you can see, the CARES Act is a loaded piece of legislation.  Time will tell whether more measures are needed, but this is definitely a good start. Of course, our team will continue poring over these changes. 

If there is anything else we feel you need to know, we’ll reach out to you. 

In the meantime, if you have any questions about:
• Getting a direct payment
• Filing your taxes
• Protecting your paycheck and/or income
• Your retirement accounts

Please don’t hesitate to let us know.  Whether we’re in the office or working from our own homes, our team is always here for you.

Stay healthy, and stay safe!  

Sources

¹ “Cases in U.S.”, Centers for Disease Control and Prevention, March 31, 2020.  https://www.cdc.gov/coronavirus/2019ncov/cases-updates/cases-in-us.html
² “Coronavirus job losses could total 47 million, unemployment rate may hit 32%, Fed estimates,” CNBC, March 30, 2020.  https://www.cnbc.com/2020/03/30/coronavirus-job-losses-could-total-47-million-unemployment-rate-of-32percent-fed-says.html
³ “Text of S. 3548,” United States Senate, https://www.congress.gov/bill/116th-congress/senate-bill/3548/text
⁴ “Text of the Coronavirus Aid, Relief, and Economic Security Act,” United States Congress.  https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf
⁵ “New Details From the IRS on July 15 Tax Deadline, Audit Relief,” The Wall Street Journal, March 30, 2020.  https://www.wsj.com/articles/new-details-from-the-irs-on-july-15-tax-deadline-11585087948
⁶ “Unemployment claims soared to 3.3 million last week, most in history,” CNN Business, March 26, 2020.  https://www.cnn.com/2020/03/26/economy/unemployment-benefits-coronavirus/index.html
⁷ “What’s Inside the Senate’s $2 Trillion Coronavirus Aid Package,” NPR, March 26, 2020.  https://www.npr.org/2020/03/26/821457551/whats-inside-the-senate-s-2-trillion-coronavirus-aid-package    

Dear clients, family and friends,

As a follow-up to last Monday’s email, I want to thank the dozens of people who wrote back with praise and thanks. Last week saw a 15% drop in the S&P 500. Meanwhile, our SPXS position shot up almost 45% for the week. The position currently enjoys a profit of 63% in just 17 days. 

 Also, as I write this, it appears that the Administration and Congress will reach a trillion-dollar stimulus package before the end of the day. We have certainly been tricked and disappointed in the past, but this time let’s hope they have put politics aside and do the right thing for our country. 

I have made the difficult but prudent decision to exit our SPXS position and protect our epic profit of 63%. Remember the old saying, “Pigs get fat, hogs get slaughtered.’’ It’s in play right here, right now.

Tomorrow brings us another day, and our process will allow us to make the right decision. This may be just a few days of hiatus of green over red, and then back to more sell off.

Right now we need to be praying for the millions of Americans in the travel, hotel, restaurant, retail, manufacturing, and service sectors who have lost their jobs—many may be permanent. Most of them were living “paycheck to paycheck” before the Coronavirus reared its ugly head. Now I shudder to imagine the hardships they face.

All of my comments from last Monday remain in play. Federal money will help dislocated employees and small businesses in the short term. But the damage to GDP and consumer confidence will require months to repair. You know anybody looking to buy a restaurant or a hotel? I don’t think so.

Pray for our great country. Worst case scenario is this is a replay of the 1918/1919 Spanish flu. 

Please write back or call me to talk. I am sequestered at home as is most of our staff. I have nothing to do but send emails and speak with all of you!  

Seriously, don’t hesitate to call me. I am here for YOU.​

Jack  240 401 2355 

Jack Reutemann, Jr

Research Financial Strategies​