Spring is here and tax season is officially behind us! Let’s dive into the second quarter of 2023.

If you recall from my January newsletter, we have been cautious and on the defense. This remains true, especially as current events unfold.

I also urged you to take on a strategy of emotional clarity. I would love to see you continue to seek out expertise and reflect on your family’s long-term needs and goals.

Investment Update

We added precious metals to your investments in the quarter. Two reasons include:

1. Increasing secular trend overseas of abandoning the dollar and trading in local currencies instead, and
2. Cyclical factor as Fed gets closer to ending the tightening cycle. Precious metals potentially offer diversification from the risk of a declining US Dollar as well as possible resurgent inflation with subdued growth or even recession (stagflation).

Special Topic Q&A: Are my Dollars Safe?

So, what is all this talk about “de-dollarization”?

The US Dollar has been (still is) the world’s leading currency that global central banks use to backstop their economies. Many central banks recognize that their citizens do not trust their own governments. Governments tend directly or indirectly to manipulate their own currencies (for instance, when they spend more money than they earn, nationalize privately owned property). Think of a currency’s value as a vote of confidence (or lack thereof).

Of the world’s major currencies (US Dollar, Euro, UK Pound, Japanese Yen), the US Dollar used to be the currency of choice. Untouched by war with a couple hundred years of legal, fiscal, and economic stability, the US Dollar was a safe haven for people abroad who did not trust their own governments.

Is this the immediate end of the US Dollar? 

The US Dollar still comprises 6 of 10 units of global central bank reserves.  However, the trend is going lower as countries begin to trade with each other in other currencies. Peter Earle at the American Institute for Economic Research cites several recent examples of such deals. China and Brazil will ditch the dollar in favor of yuan-real settlements for trade. India and Malaysia are also shedding dollars in favor of using their own currencies for trade. Talks about developing regional or even a BRICS (Brazil Russia India China South Africa) settlement currency also are developing. In the meantime, foreign central banks continue to add to their gold reserves.

Will this all happen overnight?

Possible but unlikely near-term. Keep in mind that there is (not yet) a new currency alternative that is as liquid and large as the US Dollar. It is said that the total world supply of gold would fit in 2 Olympic-sized swimming pools. None of the other major developed market currencies have enough liquidity or credibility to supplant the US Dollar. The Chinese yuan might be accepted for bilateral trade, but the reality of capital controls and lack of institutional track record impede it (for now) from being the new choice for most central banks. Perhaps a new currency backed by the BRICS might come into play, but not yet.

How might this impact my nest egg?

Regardless of the pace of this process, de-dollarization does have implications. Interest rates in the US are unlikely to decline to levels even 5 or 10 years ago. Foreign demand for US Dollars (and debt) will be less than the past. Either government spending will have to fall, taxes rise, or else interest rates would have to be high enough to attract investor interest to invest in US Treasuries. Potentially, this might also limit upside on US-based assets (stocks) and possibly make foreign-currency assets relatively more attractive to investors.

What are we doing?

We have brought in precious metals into your investments. Over time, they potentially hold value and appreciate in US Dollar terms if these trends continue. While we would not be surprised to see fits and starts (profit taking), any further progress toward debasing the US Dollar as the world’s currency might stoke further demand for alternative currencies.  Precious metals might fit that category.

What about holding physical precious metal?

Our investments focus on the liquid funds that trade daily on a financial exchange and correspond to the price of the underlying precious metal.

Some people feel comfortable holding their precious metal physically.  Collectors love historical coins and have the potential of strong price gains if they hold a rare artifact.

It also entails risks. For instance, you cannot go to most stores and transact in gold or silver. You can only go to a broker (or jewelry exchange shop) to exchange it for dollars with which you could actually transact.

You also should have physical security (safe at a minimum) to ward off potential thieves.

Transaction costs on physical metal can be very high. For instance, basic silver coins in the recent past require you pay a premium of at least 5-12% to the underlying metal in addition to the base price.

We recently heard a quote for physical gold in an IRA with a commission of 8-12% just to buy into it, then the same commission to liquidate. (Imagine what the cost might be if one ever wanted to sell out.)

Our stance has been to seek solutions for our clients that offer targeted exposure with the most transparency and lowest cost possible. That is why we invest the way we do.

Investment Security in Light of Recent Bank Failures

You might have questions in light of headlines about recent bank failures.  (See also the TD Ameritrade site.):

1. How are my investments protected?

Your investments are managed by AWM and are custodied at TD Ameritrade.  Your securities belong to you.  The SEC’s Customer Protection Rule prevents firms like TD Ameritrade from using your assets to finance their own proprietary business except when the client has margin agreements in place.

To be clear, your investments still can go up and down in value depending upon how they are invested.  When we talk about “protection”, this refers to what happens if a financial institution were to fail.

When it comes to cash held in your investment account, we have opted to keep that in an FDIC-insured account (FDIC insurance up to $250,000 per account per client).

2. Isn’t TD Ameritrade like any of the banks that recently failed?

No. Banks can take your deposits and invest them in loans and other securities for their own profit.  Banks fail when depositors pull all their money, but the bank does not have sufficient time to liquidate investments made beforehand.

In contrast, custody banks like TD Ameritrade are prohibited from taking your investments and investing them for their own benefit.

3. Then what is my biggest risk at TD Ameritrade? Do I have any insurance in that event?

The biggest (though unlikely) risk would be major fraud leading to bankruptcy (such as MF Global or FTX) and where client assets go missing.

Even in that extreme event, your investments would still have insurance coverage from SIPC.  You can refer to the TD Ameritrade website link above for more information.  It is noteworthy that in over 50 years of history, investors have recovered 99% of their investments in failed brokerage cases under SIPC supervision.

4. What should I do about my money in the bank?

Presuming your bank is a member of the FDIC, in the event of bank failure, you are insured up to $250,000 per depositor per insured bank, based on ownership category.

Closing Thoughts

We did see some recovery in the early part of 2023, especially compared to 2022, which was brutal to most investments. I do not believe the risk of a recession is gone and the second half of 2023 will likely be very difficult.

As we review each of our client’s portfolios, we keep in mind your individual needs and circumstances in order to help provide stability to your needs and goals.

Sincerely,

Petr Burunov, CFP®
President / Wealth Strategist

The post Client Newsletter 2Q23 appeared first on AWM.

Brief Investment Update

On the macro side, not a lot has changed from our last newsletter.  The US economy looks relatively better than the Rest of the World.  Global growth in general is tepid to challenged.

Controversy swirls over whether the US will join the rest of the world in negative economic growth soon.  Reasonable arguments could be made in either case, though current data goes against the case for recession.

Indeed, current numbers suggest weak but continued positive growth.  Consumption has been solid, and jobs growth has been positive, albeit decelerating.

Housing has resumed its growth from last year.  Housing starts hit a new cyclical peak in August.

If trends of the last 50 years were consistent with today, that might suggest recession could be at least 2 years away.  That also assumes that housing starts have already peaked for this economic cycle (which might or might not be the case).

One of the main arguments for a future US recession is vulnerability in manufacturing.  Non-residential construction has been weak.  Exports have been languid due in part to the trade war (our best guess: de-escalation but no trade deal soon) and also lack of overseas demand.

Growth in major economies such as China, Germany, Japan, India, and the UK is sluggish to negative.  Global growth is likely to weigh on profits for US companies with large overseas businesses.

On the flip side, there have been all kinds of interest rate cuts and liquidity bolstering measures overseas.  The US has gradually followed suit with 2 interest rate cuts of 25 basis points each to the Fed Funds rate.  The yield curve remains inverted.

How Might This Influence Your Investments?

Based on your objectives and risk tolerance, your investment portfolios generally retain a neutral to cautiously optimistic tilt.  We see a balance of opportunities and risks, which is reflected in diversifying the positions in your portfolio.

Certain of your investments have done very well (especially broad large domestic equity exposure and generic high-quality bonds).  Other investments have trodden water in the last 2 years, particularly active managers in small cap and long-short equity.  These active managers tend to favor diversification and investments with good fundamentals at reasonable valuations.  For the reasons cited later, active managers have not participated as much in the rally over the last couple of years.

However, these laggards might be starting to show signs of life.  If they were to continue to recover, this could help meaningful portions of many portfolios.

In spite of the market’s flattish performance over the last 12 months, we have seen some significant anomalies develop.  Pockets of potentially overhyped momentum and overvaluation have emerged.  Other areas appear to have been “left for dead” by investors.

One example is “growth” vs. “value”.  Growth stocks have higher valuation measures anticipating higher future earnings growth (or even ignoring negative earnings).  Growth stocks have risen far more than value stocks with lower valuation and lower implied growth expectations.

The chart below shows performance from 2017 to 2019 of US small cap stocks by deciles of profitability and valuation.  Bars to the right indicate the most expensive stocks with the lowest levels of current profits.  Bars to the left show companies with cheaper valuations.

The chart below suggests that extremes in performance between “growth” and “value” might not persist forever.  Sharp outperformance in growth is often followed by a reversion back to historical averages.  Such trends might reward those who look for quality assets at reasonable, not just any, prices.

We will adjust your portfolios as we monitor trends in markets and the global economy.

Thank you,

Stuart P. Quint, III, CFA
Director of Investments and Compliance

The post Investment Newsletter 4Q19 appeared first on AWM.

Letter from the President: Petr Burunov, CFP®

Dear Ambassador Family,

This summer was a whirlwind.

On July 9^th, I received a heartbreaking call from my family in Sacramento. My cousin was in a fatal motorcycle accident. Passing away at the young age of 38, he left behind 2 small children and a pregnant wife.

As his family relied on my expertise to talk through his business and personal finances, it quickly became clear that most of his ideas, wishes, and plans were in his head, and not on paper. I watched his wife struggle to make sense of things. This young, vibrant family thought they had plenty of time to plan and prepare for the future, but instead found themselves in complete disarray.

While dealing with the pain of losing a loved one, the family quickly discovered that my cousin’s business didn’t have a succession plan. Many documents were missing or didn’t even exist. This hindered maximizing the business valuation and added stress to his family. Should something happen to you, would your family be able to pick up where you left off?

Life is so fragile.

This is a great reminder to all of us, that planning is a MUST. Check that your documents are in good order with clear instructions. Make sure your accounts and property are titled according to your wishes and with the most current information. If possible, help your loved ones avoid probate, a time-consuming and costly process.

You can save them so much stress and chaos.

We’re watching your money.

Throughout 2018, we started to take profits on some investments due to rising concern in going forward performance and deteriorating fundamentals of certain companies.

A number of clients called, asking us why we were selling some really good names. During those conversations, I heard a common theme that people get emotionally attached to well-known companies that pay dividends.

Nearly a year after selling some of these positions, a number of these companies are trading well below where they were last year. Others were forced to cut dividends, just to survive.

My number one goal is to watch out for you and your families.

Dividends are a nice way to get extra income, but we must consider other factors:

• Can the company maintain and/or grow its dividend?
• Is their market share vulnerable to competition?
• How does it hold up under a slowing global economy? (See the investment letter)

Year-End Planning Ideas.

Going back to my previous point, our goal is to look after our clients, especially at the end of the year. We want to make sure each client, who is over the age of 70½, satisfies their RMDs. Don’t forget to include RMD’s from all retirement accounts. It happens more often than you’d think. And please, don’t wait until the last minute.

As we talk with you and your families, we encourage our clients to stick to your budget, especially during the holidays. For those wanting to give to charities, we want to help you make sure your donations are made in a tax efficient way. We encourage you to give your time and heart to causes you passionately believe in.

When you experience a big change that could impact what we’re doing, please let us know. It’s important for us to consider your individual situations as we help you manage your family financial health.

My goal is to see your life full of purpose.

I hope you enjoy the rest of the year with your loved ones. If you have any questions, please don’t hesitate to contact us.

Sincerely,

Petr Burunov, CFP®
President / Wealth Strategist

The post Client Newsletter 4Q19 appeared first on AWM.

“Dull” quarter?  Not really…

Dear Ambassador Family,

We have not changed much since the last letter – 3 on a scale of 1 to 5.  The strong rally in 1q19 is flattening out as corporate fundamentals are modest but solid.  Low interest rates thus far have limited downside.

Since the last newsletter, we have moved slightly more negative on the US Dollar.  This continues a trend from last year of adding gold and emerging markets (depending upon your family’s model and risk tolerance).  Slower growth, a potential cut in interest rates, and volatility from upcoming elections next year are the main reasons.

Over the last several months, we have been reviewing client portfolios and taking down risk to specific factors (trade war, exposure to negative yield curve, most cyclical commodities).

Gold and Treasury bonds have rallied in 2q19 as investors sense a more dovish Fed.  S&P 500 is holding onto a slight gain with solid corporate fundamentals continuing to be offset with high valuations.  Small cap and international markets are slightly down for the quarter.

Do not let the lack of big price moves fool you.  Cross-currents in the global economy remain:

• The US yield curve remains inverted – though, now, Fed has tipped its hand that it might lean a little dovish (e.g. likely to cut rates now rather than raise them).
• US economic growth has been steady but unexciting. Jobs gains are positive but well off the peaks.  Inflation is subdued.
• International growth continues to be weak in general.
• The US and China are now unlikely to come to a trade deal in the near term. Markets have been surprisingly resilient.
• Geopolitical tensions with Iran might be rearing their ugly head (though that has not boosted oil much)
• Markets have generally yawned about European elections (more populists in power, but not enough to get excited) and risk of a disorderly Brexit.
• It is early, but US presidential elections in 2020 might add some market volatility.

We continue to be hopeful for gradual gains.  Yet, we are also mindful that risks at current high valuations remain.

Please let us know of any questions.

Sincerely,

Stuart P. Quint, CFA

Managing Director / Investments and Compliance

The post Investment Newsletter 3Q19 appeared first on AWM.

Getting Ready for the Summer

Letter from the President: Petr Burunov, Financial Planner

Dear Ambassador Family,

This summer, I hope you are able to enjoy the sunshine and outdoors with your loved ones.

I’d like to share some exciting things to come in the months ahead and review this last quarter.

Coming Attraction 1: Short and Insightful Videos 

As you have probably seen in recent emails, we have started to post videos on various topics to our website. Over the last several months, a number of our clients lost spouses or parents. I thought it would be appropriate to share how having a plan can greatly relieve stress during such a difficult time. Other video topics include:

1. The effects of owning too much real estate
2. Americans dealing with bankruptcy in retirement
3. Why many business owners struggle after retiring
4. Dealing with the loss of a loved one

If you haven’t watched these already, I strongly encourage you to do so.

Coming Attraction 2: Preparing You for a Prosperous Lifestyle in Retirement (It’s Not Just about Money)

We are excited to share materials centered around lifestyle before and during retirement.  Retirement can either be a time of great success or utter boredom.  (Success is more than just  money!)

We will share stories of people like you who are thriving, and more importantly, what they are doing to be successful.  You’ll see content like:

• Helpful ways to mentally prepare for retirement
• Productive things to do in retirement vs. things that might not be as helpful
• How you can live a meaningful life in retirement

Observations from Tax Season 2019

This past tax season was the first time our clients really noticed the effects of the new tax law.  Most people were surprised and/or confused to see the impact the new laws had on their returns (both good and bad).  Some wage earners had lower tax withholdings, others saw decent tax rebates, and some ended up paying more in taxes because of fewer deduction options.

We are working proactively to stay on top of the new changes and understand their implications so we can help you maximize your planning strategies.

Continuing Education

The changes in the tax codes were significant and numerous enough that we decided it was important to spend time learning how these changes affect personal, business, estate, and retirement planning going forward.

Our team attended two educational conferences this year that focused on growing our knowledge in tax changes and technology.

We Stay Up at Night So You Don’t Have to

As we are reviewing your account(s) and plan(s), we are vigilant for things that might affect you. Lately, we’ve been monitoring:

• Impact of tariffs on trade with China (and elsewhere)
• New changes in tax laws (federal/state/local)
• Mitigating investment exposure to economic or regulatory risks
• Proactively contacting clients who are being impacted, and educating them on what options are available and how to benefit from them

If you have questions, please don’t hesitate to contact us.

Sincerely,

Petr Burunov
President/Financial Planner

The post Client Newsletter 3Q19 appeared first on AWM.

After one of the worst quarters in a couple of years, risk assets recovered strongly in 1q19.  Stocks, commodities, and bonds, for the most part, posted positive gains.  Possible reasons include:

• Continued strong corporate profits especially in the US
• Economic growth in US still positive though weaker (less so internationally)
• Declining bond yields
• Stabilization in oil prices owing to OPEC agreement to cut oil production
• Hope for China growth to turn around, including a potential truce in the trade war

So, are the good times back for good?  We think a healthy dose of skepticism might still be appropriate.

We have previously commented on the slope of the yield curve as an indicator of economic health.  When the line is moving up, historically that has often signaled economic expansion.  When the line moves down, one needs to be more cautious.  “But when the yield curve turns negative, all bets are off.”

Today, the difference between long term bond yields (10-year US Treasury) and short-term interest rates (3 Month T-Bills) is a -0.05%.  That might augur a cautious outlook for the economy and risk assets.

One potential mitigating factor is that comparable international bond yields are even lower.  For example, current 10-year yields in the US of 2.6% exceed yields of 0-1% in Japan, UK, and Germany for similar bonds.  Apparently, global bond managers might be to blame rather than a necessary weakening in US economic fundamentals.  Perhaps US bonds might be priced higher (and the slope more positive) were it not for low international bond yields?

Our read is somewhere in the middle between bull and bear.  While jobs and consumption continue to grow (mainly in the US, to a lesser degree in emerging markets), other areas of the global economy are stalling or even declining.  Corporate earnings growth is clearly decelerating.

When you factor in that markets now are also back toward the higher end of history (off both recent troughs and bubble peaks), we have a neutral tilt toward risk in portfolios.

How Are Your Portfolios Being Positioned?

Your portfolios are constructed based on 3 buckets.  Depending on your specific financial situation, you might have a greater weighting in a bucket versus the others.   Included are some brief updates:

• Income – goal is to clip coupons with low to moderate variation in price

Update: we added an active total return manager with expertise in consumer and muni bonds.  This might enhance yield with a modest increase in credit risk.

• Growth – goal is strong capital appreciation with high potential price variation

Update: we added exposure to an emerging market consumer goods ETF that might benefit from growth in the middle class in emerging markets.  We also took profits on US small cap, REIT’s, and Japan.

• Diversification – goal is moderate capital appreciation with moderate variation in price; some elements reflect hedging against macro events

Update: we added 2 new strategies to your portfolio: merger arbitrage and equity long/short.  Both strategies potentially offer positive returns with moderate exposure to traditional equity and fixed income risk.  The manager of the strategy had run another larger successful fund at another firm. 

Please let us know of any questions.  You can also find a lot of information on a variety of investment topics on our website.

Sincerely,

Stuart P. Quint, CFA
Managing Director, Investments and Compliance

The post Investment Newsletter 2Q19 appeared first on AWM.

We had started 2018 being cautiously optimistic on prospects for asset returns in 2018.  We did not expect to see returns repeat as strongly for 2018 as in 2017.  Yet, we had a moderately positive bias due to:

1. Corporate profits remaining healthy
2. Accommodating, but tighter, monetary policy
3. Overseas economies continuing to recover

However, chinks in the armor sprung up in the summer.  Economic activity overseas was turning downward in Europe, China, and other emerging markets.  Coupled with hotter valuations in US markets, we chose to pull back on aggressive exposure.  However, we did not turn completely bearish as corporate profits remained strong.

An interesting item to note is the radical change in markets since September 20, the peak of the S&P 500 Index.  Although US markets were up double-digits for the year, international markets and fixed income were already down and lagged significantly.  Some questions we received included, “Why do I own anything apart from the S&P 500?” and “Why do I own fixed income at all?”

These trends changed abruptly from September to December.

Fixed income rallied and finished flat for the year as fears of recession spread overseas and even to the US.  Although it was in the red for much of the year, fixed income returns differed from what was occurring in most equity markets in the winter. We made another defensive adjustment in October.  The Fed appeared more aggressive on tightening interest rates than we and many observers had believed earlier in the year.  Additionally, credit spreads began to weaken.

Equity markets led by US markets declined (though the US still finished ahead of global markets for the year).  Particularly in the US, high-flying stocks that had led the market’s previous rise were among its worst performers.

How Are Your Portfolios Being Positioned?

Entering 2019, we view the world this way:

1. Corporate profits are slowing (maybe declining), though still strong, BUT
2. Monetary policy is tight (with some chance of pausing), and
3. Overseas economies are weak – the US remains relatively stronger but is diminishing, too.

Your portfolios are constructed based on 3 buckets.  Depending on your specific financial situation, you might have a greater weighting in a bucket versus the others.

1. Income – goal is to clip coupons with low to moderate variation in price
2. Growth – goal is strong capital appreciation with high potential price variation
3. Diversification – goal is moderate capital appreciation with moderate variation in price; some elements reflect hedging against macro events

1. Income – Playing More Defense

We chose in December to reduce or eliminate exposure to corporate credit, particularly high yield bonds, in your portfolios.  Given the risk of a slowing economy along with higher risk-free interest rates, we are concerned about potential rising corporate bond downgrades and defaults.

Consequently, we have added even more to US Treasury positions, using a mix of short and intermediate duration positions.  For the first time in over a decade, short-term Treasury rates of 2.5% exceed core inflation and provide meaningful, albeit not dramatic, return with limited downside.  Longer duration positions might benefit from appreciation if macro volatility were to persist.

2. Growth – Mainly Staying Home, but Selectively Looking at International

We remain focused mainly on the US and Japan while acknowledging that select emerging markets might also be attractive given price declines and changes in the inflation outlook due to lower commodity prices and a potentially weaker Dollar.  For now, we retain positions mostly in large US stocks, small cap, and REITs with a focus on the domestic economy.  Stay tuned for potential future changes.

3. Diversification – Refilling the Bucket

For conservative to moderate portfolios, we have initiated a position in gold.  The US Dollar has enjoyed a strong run in 2018 due to a more hawkish Fed and stronger economic growth relative to the rest of the world.  While both directionally might remain in 2019, we believe the gap will decline for one or both factors.  Gold might have the potential to rise, particularly if investors continue to worry about macro risk impacting economic growth.  Additionally, given that many major currencies outside of the US Dollar have their own issues (even lower interest rates, political tension within Europe), gold possibly might come into favor after many years of being moribund.

Please let us know of any questions.  You can also find a lot of information on a variety of investment topics on our website.

Sincerely,

Stuart P. Quint, CFA
Managing Director, Investments and Compliance

The post Investment Newsletter 1Q19 appeared first on AWM.

Dear Ambassador Family,

Summer is over and our head is in the game!

1. Website:

   We sent you an email in the middle of August announcing the official launch of our new website and resource center. As you know, we were able to go live over a month early from what we previously told you.

   This project had been our top priority all year. You and our professional colleagues expressed a desire for content and resources that are directly related to the situations our clients and their clients are dealing with every day. We heard this request and delivered.

   Our resource center is full of blogs and white papers that we wrote based on our conversations with you. Here are four white papers you can quickly access from our website’s home page:

   • 3 Ways Reaching for Income Can Make You Broke
   • 2018-9 Tax Guide: Don’t Get Trumped By The Tax Reform
   • Investment Dashboard 2018 (Part 1: Stocks vs. Bonds)
   • Investment Dashboard 2018 (Part 2: Economies: US and International)

   We are continuing to produce content that will be a valuable resource for you and your loved ones to live your lives with purpose. Please share these articles with anyone who might find this information to be helpful.

2. Tour:

   We would also like to give a formal tour of our new website through a series of emails. I want to make sure you fully understand this resource outlet and know where to access any information you may need.

   I encourage you to read these emails and familiarize yourself with our website. This is where we have our menu of services, our process, along with information to help you understand what it really means to work with a Fiduciary Advisor.

3. Our Trademark:

   In my last couple of letters, I have been introducing the concept of the Family Barometer number. Our team is working on producing a white paper that explains what this number is and how you can maximize your financial planning services here at AWM. It helps our team here at Ambassador and you to understand the complexities surrounding your financial situation.  This also helps us to strategically advise you as we work together to reach your goals.

4. Technology Advancements:

   Technology is constantly changing, and we are keeping up. We have had to manually fill out every single form in order to gather the proper information we need from you. This process not only increases the number of times we transfer information, it also highly increases the chances of copying the information incorrectly.

   In order to protect your information and security, we are taking every measure we can to ensure we confidentially handle all of your private and personal information.

   Later this quarter, we will begin to make things easier for you. We are transitioning to a new, secure, electronic system and away from paper. This new system ultimately will allow us to give you timely, pertinent advice based on the current information you submit. This will allow you to verify, change, or add information seamlessly and correctly. The less mistakes made, the better our service can be for you.

5. Approaching the New Year:

   On December 22, 2017, the most sweeping tax legislation since the Tax Reform Act of 1986 was signed into law. The Tax Cuts and Jobs Act (TCJA) implemented some positive and negative changes. To better understand some of these changes, I encourage you to read our tax guide, which can be downloaded from our resource center.

   If you have any questions or concerns about the implications of this new tax code, please don’t hesitate to reach out to us. You could retain us to do planning work to make sure you take full advantage of the new tax laws and prevent paying more than you need to.

2018 has been full of changes in the tax code, market, fiduciary landscape, the Ambassador firm, and much more. Our goal is to empower you to make better financial decisions as we approach 2019 whether you are focusing on tax, estate, or retirement strategies. In order to do that, we want to be proactive in learning about you and the changes in your life. Starting this quarter, we will ask you to review all your information we have, make any necessary changes, and prioritize your goals. By gathering information before our in-person meetings, our time together will be more productive and centered around what’s most important: helping you navigate your life with purpose.

Sincerely,

Petr Burunov

President / Financial Planner

Schedule appointment

The post Client Newsletter 4Q18 appeared first on AWM.

October 3, 2018

Dear Ambassador Family:

In August, we made some tweaks to many of your portfolios.  The net result is that they have become a little more defensively relative to the start of this year.  Here are three major themes:

1. More Cautious on Global Growth

   We have drastically reduced positions related to global growth (commodities, emerging markets) and reduced Japan in portfolios.  We have grown more cautious on global growth in recent months.  Economic data from Europe and China has peaked.  Emerging market currency volatility is reemerging.  Lower global growth also puts commodity demand growth at risk.

   While the fundamentals of many Japanese companies still remain attractive, the fact is that China is Japan’s number one export destination.  Japan will not escape international volatility, though it can outperform it.  As an offset, the Japanese Yen often strengthens in times of global volatility as a safe haven, given that Japan is still a net lender to the rest of the world.  Our active manager invests in companies more geared toward domestic economic activity as well.  We keep the active manager, but reduce exposure to reflect a deteriorating situation overall for international markets.

2. Play More Defense by Raising US Exposure

   We have reinvested into low beta areas of the US such as US REITs and fixed income. REITs consist of commercial property mainly in the US.  Rises in construction (material and labor) costs could restrict further supply growth.  Continued growth in US jobs helps demand for real estate.  Yields around 3% with moderate growth are reasonably attractive.

   While we are still cautious on much of traditional fixed income, we have narrowed our underweight position as a form of insurance against macroeconomic risk.  Macroeconomic risk potentially could arise from an upset either in Europe (weak growth, rising populism), China (weakening economic growth, fallout from US tariffs), or other emerging markets.

3. Conclusion: A Little More Caution, But Not Bearish

   Let us be clear that we do not foresee a major bear market around the corner.  Rather, we are acknowledging that the bull market is “long in the tooth”.  Risks have risen, particularly overseas.  (Let us also not forget US mid-term Congressional elections, which might provide some future noise with a change in control of at least one house of Congress.)  On the other hand, the US economy shows no signs of weakening, and corporate profits continue to impress in aggregate.  Hence, we stick with a cautiously optimistic bent, albeit a little more cautious compared to the start of the year.

Please let us know of any questions.  You can also find a lot of information on a variety of investment topics on our website.  Learn our thoughts on various types of investments as well as psychology (a major factor for building and maintaining successful financial health).  You can also find past investment newsletters in the Investment Management folder of our Resource page.

Sincerely,

Stuart P. Quint, CFA

Managing Director, Investments and Compliance

Schedule appointment

The post Investment Newsletter 4Q18 appeared first on AWM.

Dear Ambassador Family,

We keep adding new ways to serve you.

Stuart just celebrated his first year with us.  We brought him in to upgrade the management and trading of your investments.  His mandate is to manage your money not just to seek return, but also to defend against higher market volatility which we anticipate going forward.

Please read the Investment Letter.  It describes enhancements for you from the investment side.  For instance, did you know we just saved many of you half a percent every year from now on?

In my April newsletter, I introduced the concept of a Family Barometer number. I want to explain more about this concept.

1. What is it: A Family Barometer acts the same as a weather barometer. A weather barometer is an instrument that measures the changes in our atmosphere. We base much of our lives around this tool because of the information it gives us. In a similar way, your “Family Barometer” gauges your family’s overall financial health.
2. How it works: Because this tool paints a picture of your entire financial situation, it helps us to understand where you are, where you want to be, and how to get there. By understanding as much as we can about you and your goals, we then can help you design the number you will need to improve your financial state. We want you to maintain or improve your lifestyle in retirement.
3. Why use it: Much like receiving and implementing a treatment plan from your doctor, using your Family Barometer will drastically increase your odds for success. With an accurate diagnosis and the appropriate change in direction (or behavior), we can help you navigate to success, independence and fulfilling your dreams.

As most of you have probably heard and seen by now, we are steadily working on our new website to make it as user-friendly and informative as possible.

With the feedback I have heard from certain clients and professionals, I understand the need for more education and resources.

Our goal is to launch our content library for you to use and answer any questions you might have about our industry.   Our team has been steadily working on developing content and designing the platform.  We expect to launch it formally on October 1, 2018.

Once this platform goes live, we will notify you of new articles. We seek to have an interactive relationship with you through this resource center. I encourage each of you to read our articles and forward them on to your friends and family.  Let us know of additional topics you want us to address.

The last update I want to mention is technology.

Our office has contacted most of you, asking you to sign up for our client portal and begin filling it out. This is one of our financial planning tools to enhance our strategic advice. By compiling all of your assets and financial accounts onto one platform, we can visually see how to help you achieve your goals. It is important for us to see the whole picture when discussing your financial plans and situations.

This portal serves two main functions:

1. We can communicate seamlessly with you. You receive a variety of reports and newsletters, which you might find useful for your other professionals who assist you with tax planning.  You can also share information with us in an environment more convenient and secure than Email or snail mail.
2. We can strategically build comprehensive plans for your household’s finances. For those clients who want to maximize and utilize these planning services, we encourage you to link all assets and accounts to the portal. When you have questions and come in for a meeting, we can analyze tax strategies, estate planning strategies and charitable giving strategies, to name a few.

To see the full value of this resource, I want to point back to the Family Barometer. Once we are able to see your entire financial picture, we will be able to properly diagnose your situation and offer you proactive recommendations.  Think of me as your financial doctor.  On the other hand, if you were to keep vital information from me, I would never be able to set you up for the most successful outcomes.

Thank you for being a member of the Ambassador Family.  We look forward to getting to know you better and help you live life with purpose.

Sincerely,
Petr Burunov
President / Financial Planner
 

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