Client Newsletter 3Q20
Dear Ambassador Family,
What a whirlwind 2020 turned out to be.
We just experienced a six-month sprint through a global pandemic, new laws, record-breaking unemployment, the loss of loved ones, and the disruption of everyone’s personal and professional lives. (For a quick recap of 2020, read through the box on the below.)
Six months of absolute crazy. It felt like forever. And, unfortunately, the ride is far from over.
What we predicted.
There is still much uncertainty. Back in March, we predicted:
- Coronavirus quarantines would put economic activity on hold for much of the spring, or longer.
- Low oil prices would pressure US energy producers for months to come.
- Earnings would likely decline in 2020.
- Persistently stubborn high unemployment
What have we been doing?
The Ambassador team is very grateful for your trust and partnership. We take our job extremely seriously and want to remind you of what we’ve done.
Towards the end of 2019, we took a lot of risk off the table. A lot of our clients were well-positioned going into the coronavirus recession.
In April, we started to see opportunities in the market and signs of a new economy emerging. We have designed a sleeve to fit these new trends, which has been added to most of your portfolios. This new model takes advantage of companies who are benefiting from: employees working remotely, technological and cybersecurity advances, online payments and shopping, pharmacy and biotech renewals, and vaccine development.
While this has been working for our clients, there are still a few potential risks that we’re facing going into the second half of this year.
- Resurfacing of Coronavirus
- Earnings impacted from the shutdowns
- International uncertainty (especially trades with China)
- Federal reserve stimulating the economy
- November Elections of 2020
We have been communicating often and extensively with you. I want to make sure you understand what is happening. If you have not read our previous newsletters, please take the time to do so. We have talked a lot about the uncertainty around COVID-19 and its impact on you.
Are you taking full advantage of your online portal? It’s a special tool you have access to. Some features include: If you need assistance accessing your online portal, please reach out to Debbie. This is a big one. There have been so many changes since December 2019. Many of them are still being updated and clarified with new rules and laws, often if not daily. Retirement account rules and exceptions are very complicated. With many changes, we encourage all of you to check with us before you make any decisions. I don’t want you to find yourself dealing with tax consequences. In other words, don’t do it yourself. Things are still changing, being interpreted, and worked on. We encourage you to be careful in decisions you make or have us research on your behalf to see if there is a tax-advantageous way to do it. Currently, we are neutral to slightly cautious with risk. While we are favorable on liquidity and market technicals, we are quite concerned about valuation and see risks stemming from an uneven pace of economic recovery and an adverse November election outcome. Presidential and congressional elections in November might be one of the most momentous in years. If Democrats manage a clean sweep, risk exists for slower growth and rising spending and regulation, factors that the market might not favor. Another scenario of a President and Congress split by party might add to deadlock, but perhaps a more favorable (less unfavorable?) market scenario. At this point, we think either scenario is a coin flip (50/50). Since the spring, markets have been creeping higher as the Federal Reserve has pumped liquidity to support the economy. While we are mindful of opportunities, we are also sensitive to try to mitigate the potential downside from the risks mentioned earlier. In short, we are: So much has happened since January. Even though we have communicated a lot with you in writing, we still want to hear how your situations have changed. Understanding your situations will help us serve you better. Sincerely, Petr Burunov, CFP®
Online Portal
Taxes
Investment Update
Parts of sentiment feel bubbly but are not quite at maximum euphoria. (This indicator is our least favorite, but we would be remiss not to acknowledge its potential to keep working. It is one of those things that keeps working, until it no longer does, often before a tangible turn in fundamentals or news flow.)Political risk appears skewed to the negative side.
Our strategy going forward:
President / Wealth Strategist