Client Newsletter 3Q23
Dear Ambassador Family,
I hope you are enjoying a wonderful summer! Let me update you on a few important topics.
Why You Want to Keep Your Financial Plan Up to Date
Only 2 years ago in 2021, we had a fantastic year in the markets. Sometimes, strong markets spur complacency. We made an effort to steer our clients away from it.
We encouraged our clients to be proactive while markets were on our side. We advised you to develop a financial plan and be ready for a downturn, should it come. We also urged you to challenge yourselves with probing questions, such as:
- Where are you now?
- Where do you want to be?
- What is your timeline?
- How much volatility can you afford?
- Have you had major changes in your life?
At the beginning of last year, we spoke again and cautioned that 2022 might not be as good of a year for your investments. Concerns about rising interest rates and their impact on asset bubbles in real estate and other areas suggested caution about the kinds of investments you chose to make. 2023 has started out better, but we still have concerns as to how sustainable the rally might be.
It is easy to get caught up in your emotions when it comes to money. Some people are prone to falling in love with certain investments. Many of you are close to retirement and worry about your financial situation once your paychecks stop coming in. Others, who are already in retirement, might find it quite difficult to suffer a reduction in investment income.
Those that planned ahead experienced solid returns and were in a better position to sustain their lifestyles in spite of the market volatility since 2022.
However, those who lacked a strategic financial plan faced greater risk, and are more inclined to make ill-informed choices based on emotions and not rational, strategic planning. Even with only moderate losses and a pickup in market volatility, they were more vulnerable to panic by obsession with the ups and downs of news produced by media outlets.
Having a well-thought-out strategic plan can significantly increase your likelihood for success. When we understand how much time you have, how comfortable you are with taking risks, and how quickly you need access to your money, we can create strategies that are better at helping you. It’s like having a bigger toolbox to find the best solutions for you.
Investment Update: When the Crowd Zigs, Zag
Recently, when I turned on the business news, many of the guests interviewed were waxing poetic about the attractions of the market and the end-of-recession prospects for 2023. It left me scratching my head.
Barely 1 in 20 names of the S&P 500 are actually up in 2023 (after a correction of most stocks in 2022). The rally has focused mostly on names perceived to benefit from Artificial Intelligence (AI). Valuations appear high relative to history, yet earnings for most of the market are not rising and falling in many cases.
Banks and many stocks geared toward economic growth are down. Only 3 months ago, several banks had failed because of large, sudden deposit outflows. Now we are seeing default rates on commercial property loans pick up.
Interest rates remain high and are not falling. Stocks celebrated the Fed not raising rates in June, but Canada, UK, and Australia DID after taking similar pauses. While headline inflation appears to be slowing, core inflation is resilient.
While we took up risk slightly in the first part of June for more aggressive accounts, at current levels, we are skeptical. Yields on cash above 5% appear compelling relative to most other assets. It is possible that the bubble mindset has returned to parts of the market, but without confirming fundamentals, it risks bursting. The global economy shows pockets of weakness.
Call us from Missouri (“Show me”), but we remain defensive in the near term and would not be surprised to see volatility return, perhaps as soon as this summer.
Mark Your Calendar for Labor Day Weekend!
Back in 2019, Charles Schwab acquired TD Ameritrade. Your account(s) will be transitioning to the Schwab Alliance platform over Labor Day weekend. This transition is on track to take place by Tuesday, September 5, 2023.
In preparation for this transition, you will be receiving communication from TD Ameritrade and Charles Schwab. I will highlight a few things you need to be aware of.
- Your TD Ameritrade accounts will automatically transition to Schwab Alliance on (or around) Tuesday, September 5, 2023.
- After 9/5/2023, Charles Schwab will serve as your new custodian.
- AWM will have all the same authorizations for trading, fee deduction and payment, and money movements.
|August 25, 2023||Last day to request an incoming account transfer|
|September 1-5, 2023||Account information will be unavailable (8:30 p.m. ET on 9/1/2023 to 5:00 a.m. ET on 9/5/2023).|
|September 5, 2023||Account information will be available again at 5:00 a.m. ET.|
Accessing Your Schwab Alliance Account
Starting Tuesday, September 5, you will access your account(s) through Schwab Alliance (schwaballiance.com).
- If you have a Schwab Login ID and password, there is nothing you need to do. You can log in with these credentials.
- Need to set up your Schwab Login ID and password? Go to schwaballiance.com and select New Schwab User, then follow the prompts.
AWM Client Portal
Once the TD/Schwab merger is complete, it may take a few extra days for your Schwab accounts to appear in your client portal. We thank you for your patience during this merger.
If you have any questions or concerns, please reach out to us. We will do our best to answer your questions and help however we can.
Petr Burunov, CFP®
President / Wealth Strategist