End of Year Financial Tips

I guess I do not have to remind you that the end of the year is quickly approaching? Holiday lights are popping up around the neighborhood and retailers are rolling out their seasonal displays. And it is only a matter of time before your social media feeds are flooded with daily reminders as well.

With all this holiday cheer in mind, I have compiled a list of end of the year tips. Whether you’re currently working and saving for retirement, approaching retirement, or embarking on new post-retirement adventures, here are some core tax, planning, and financial housekeeping things to do.

  • Be sure you have taken your RMD for the year.  Remember, RMD stands for Required Minimum Distribution.  This starts when you hit 70 ½ and goes until you pass away (actually, it could go longer with inherited IRAs, but that is for another conversation).  RMDs are not terribly difficult to calculate if you want to do it yourself.  However, be sure to take it, otherwise the penalty is 50%!
  • If you have a CPA prepare your taxes, give them a call to make sure there are not any end-of-the-year tax moves they may recommend.
  • Empty out your Flexible Spending Account (FSA), unless your employer allows some of the unused funds to be rolled over.  Please don’t confuse this with a Health Savings Account (HSA), as the FSA is geared more toward immediate health-related expenses, and includes a use-it or lose-it feature for the calendar year.
  • Consider charitable giving. Keep track of your donations to charities in all forms—and consider strategies that may qualify you for larger tax deductions.
  • Just in case you inherited an IRA, you may have RMDs to deal with here as well.
  • If someone who was RMD eligible passed away during the year and did not take out all their RMDs, you need to complete this by paying them out to the beneficiaries.  Again, 50% penalty if not done.
  • If you haven’t maxed out your 401k/403b/457 this year and can afford to, reach out to your benefits department to see if you can contribute more the last few paychecks of the year so it is maxed out.
  • It is a good idea to check your credit report for errors at least once a year to help catch fraud or reporting mistakes
  • Speaking of maxing out retirement plans, be sure to increase your plan contribution rates for next year when the retirement plan savings rates bump up.
  • Charitable IRA Contributions also need to be made by the end of the year.  This is where you can take your RMD (up to $100,000), and direct it to a charity of your choice.  If fulfills your RMD requirement and is not taxed to you.  Just make sure it goes directly to the charity.  You do NOT want it to come to you first and then you give it to the charity.
  • Be sure to check the beneficiary information on your plans.  If you have not updated the beneficiary information recently, it is a best to ensure it is up to date.  This includes contingent beneficiaries also.
  • While you are on a roll, check your personal information on all of your statements too.  You know, like the home address, phone number and current email addresses.

Take the time to give your finances a year-end checkup. Do you want to feel in control of your money and on top of things?  Doing this before year-end allows you ample time to take the necessary steps to potentially save on 2018 taxes and set up your investments for success in 2019—without putting a damper on your holiday cheer.

There are important financial housekeeping tasks that you can tackle at any time of the year, like repricing your car insurance or checking your credit reports.  But December 31 only comes once a year, and there are many key financial deadlines to meet before then.  So, get started now, and use the year-end to make tax-smart moves that can help set you up for a prosperous new year.

End of Year Financial Tips, Rockville, Financial Advisor, Bethesda, Investment Advisor, Retirement, Gaithersburg, Retirement Advisor, Potomac, Retirement

Market Commentary – November 26, 2018

It was a turkey of a week.
The United States and China continued to spar over trade and other issues. An expert from Moody’s told Frank Tang of the South China Morning Post (SCMP) the United States-China dispute will not be easily resolved:
“Look at the speech Vice President Pence gave in Papua New Guinea at the Apec conference. He didn’t just talk about trade, but also intellectual property, the South China Sea, forced technology transfers. So there’s a whole long list of issues the U.S. administration is now raising…”

Financial Times reported the Organization for Economic Coordination and Development (OECD) anticipates global economic growth could stumble if trade tensions escalate.

SCMP reported investors are hoping for greater clarity around trade issues when President Donald Trump meets with China’s President Xi Jinping at next week’s G-20 Summit.

The climate report added a new dimension to uncertainty about economic growth last week, reported Fortune. Black Friday shoppers may have missed it, but the U.S. government released the 4th National Climate Assessment on Friday. Ed Crooks of Financial Times summarized some of the report’s economic findings:
“The largest costs of climate change for the United States this century were expected to come from lost ability to work outdoors, heat-related deaths, and flooding…If [greenhouse gas] emissions are not curbed it warns, ‘it is very likely that some physical and ecological impacts will be irreversible for thousands of years, while others will be permanent.’”

Major U.S. stocks indices finished the week lower. It was the biggest drop during Thanksgiving week since 2011, according to CNBC.com.

Americans are hard working and generous.
Take a guess: How many hours do Americans work each year relative to Europeans?

Here are a few hints provided by The Economist and Expatica:

  • The average American has 23 vacation days each year.
  • The Spanish and the Swedes average 36 vacation days each year.
  • Workers in the European Union are guaranteed at least 20 paid days of holiday each year, excluding public holidays.
  • The United States has 10 public holidays.
  • The British have 8 public holidays.
  • Germans may enjoy as many as 13 public holidays, depending on where they live.

So, how many hours do Americans work relative to our European counterparts?
In a typical year, Americans work 100 hours more than the British, 300 hours more than the French, and 400 hours more than the Germans, on average. The Economist reported:  “In 2017 the average American took 17.2 days of vacation. That was a slight rise on the 16 days recorded in 2014 but still below the 1978-2000 average of 20.3 days. Around half of all workers do not take their full allotment of days off, which averages around 23 days. In effect, many Americans spend part of the year working for nothing, donating the equivalent of $561 on average to their firms.”

That’s pretty generous.  There is a case to be built for the importance of taking more vacation time, according to the Harvard Business Review. “Statistically, taking more vacation results in greater success at work as well as lower stress and more happiness at work and home.”

Food for thought as you consider New Year’s Resolutions.

Weekly Focus – Think About It
“When you are inspired by some great purpose, some extraordinary project, all your thoughts break their bonds: your mind transcends limitations, your consciousness expands in every direction, and you find yourself in a new, great, and wonderful world. Dormant forces, faculties, and talents become alive, and you discover yourself to be a greater person by far than you ever dreamed yourself to be.”
–Patanjali, Hindu author and philosopher

Best regards,
John F. Reutemann, Jr., CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

 

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

 

* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Stock investing involves risk including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Sources:
https://www.scmp.com/news/china/article/2174648/us-china-trade-tensions-deepen-2019-hitting-chinese-economy-moodys
https://www.ft.com/content/e563446e-ed0e-11e8-89c8-d36339d835c0
https://www.scmp.com/business/china-business/article/2174695/uncertainty-over-trade-war-likely-weigh-china-growth
http://fortune.com/2018/11/24/climate-change-report-economy/
https://www.ft.com/content/216b5ed2-ef68-11e8-89c8-d36339d835c0
https://www.cnbc.com/2018/11/23/stock-markets-dow-set-for-losses-as-trading-resumes-for-half-day.html
https://www.economist.com/business/2018/11/24/americans-need-to-take-a-break
https://www.expatica.com/de/about/Public-holidays-in-Germany_105411.html
https://hbr.org/2016/07/the-data-driven-case-for-vacation
https://www.goodreads.com/author/quotes/80565.Pata_jali

What is Thanksgiving?

Thanksgiving has always been about being thankful for what you have. Even before it was set as an official holiday, it was a centuries-old tradition to have a feast celebrating a good harvest, victory in battle, or some other momentous occasion.

The custom of celebratory feasts is almost as old as civilization itself. For most of our history, we’ve depended on good harvests to get us through tough times. Winter, famine, war, upheaval – people have long worked hard to “get ahead” of the adversity life always throws our way. These days, of course, most of us don’t have to worry so much about things like starvation. Yet the idea of “Thanksgiving” is still as important as ever.

All of us still face setbacks and obstacles, adversity and hardship. Giving thanks for what we have – for whatever good fortune we’ve enjoyed this year – helps strengthen our resolve to deal with today’s challenges and tomorrow’s trials. I think that’s why Thanksgiving has evolved from being a harvest celebration to something much grander.

It’s a celebration of life.

But what about all those who have no good fortune to celebrate?
One of the best things about Thanksgiving – both now and in the past – is that it’s also been a time for ensuring those less fortunate than us have something to celebrate as well. Even in medieval times, thanksgiving feasts gave much needed respite for beggars, debtors, widows, orphans, and all those who could not provide for themselves.

In the modern age, record numbers of people volunteer food and time to ensure others can eat. Even the President of the United States will traditionally serve a thanksgiving meal to those who can’t enjoy a feast with their families, like the members of our armed forces.

So, this Thanksgiving, please join with me in looking back on our good fortune, not just this year, but in all the years stretching back to the beginning of history. Join me in giving thanks that we have each other to build a world that makes almost every year better than the one before.

On behalf of all us of here at Research Financial Strategies, I wish you a Happy Thanksgiving!

Market Commentary – November 19, 2018

Keep your eyes on the horizon.
Motion sickness happens when your body receives conflicting signals from your eyes, ears, and other body parts. One way to manage the anxiety and queasiness that accompany the condition is by keeping your eyes on the horizon.

The motion of the stock markets has been causing some investors to experience similar symptoms. Surprisingly, the remedy is the same: Keep your eyes on the horizon – your financial planning horizon.

A planning horizon is the length of time over which an investor would like to achieve his or her financial goals. For instance, perhaps you want to pay off student loans by age 30, fund a child’s college tuition when they reach age 18, or retire at age 60.

When stock markets are volatile, an investor may receive conflicting signals from various sources, which may induce anxiety and queasiness. When you start to worry about the effects of market volatility on your portfolio, remember stock markets have trended higher, historically, even after significant downturns.

For instance, in 2008, during the financial crisis, the Dow Jones Industrial Average lost about 33 percent. It finished the year at 8,776. The drop sparked tremendous anxiety among investors who wondered whether their portfolios would ever recover.

Last week, the Dow closed at 25,413.

While stock markets have trended higher historically, there is no guarantee they always will. That’s why asset allocation and diversification are so important. A carefully selected mix of assets and investments can reduce the impact of any single asset class or investment on a portfolio’s performance. Keep in mind, of course, past performance is no guarantee of future results.

Last week, stock markets finished lower. MarketWatch reported U.S. stocks moved higher on Friday after President Trump indicated he might not pursue tariffs against China.

What is an apology worth?
John List, an economist at the University of Chicago and Chief Economist for a ride-sharing app, needed to go from his house to the hotel where he was a keynote speaker. So, of course, he called his ride-sharing company. The experience was less than stellar, as he explained to Steven Dubner of Freakonomics Radio:  “So I get in the back of the car and it says I’m going to be there in 27 minutes. So I go into my own land of working on my slides, because of course I’m doing things at the last minute. I lose track of time. I look back up about 25 minutes later, and I’m back in front of my house…And I said, ‘Oh my god, what happened?’ The driver said, ‘I got really confused, and the GPS switched, and we turned around and I thought that you changed the destination, so I went back.’ So I told her immediately, ‘Turn around, go back.’ I missed part of my panel.”

List also missed an apology, which neither the driver nor the company offered.  He decided to investigate how much mistakes, like the one he experienced, cost the company and whether an apology would reduce the cost. As it turned out, the cost of 5 percent of trips that resulted in customers being 10 or 15 minutes late was 5 to 10 percent in lost revenue.

List enlisted the help of researchers Benjamin Ho of Vassar College, Basil Halperin of Massachusetts Institute of Technology, and Ian Muir of the ride-sharing company, and conducted a field experiment on clients of the ride-sharing company. They discovered apologies are not universally successful at reducing the costs associated with a bad experience. The most successful apologies had a monetary value. In their case, a $5 coupon produced a 2 percent increase in net spending.

The team discovered another important fact. Apologies lose value and can inflict reputational damage when a company has to apologize multiple times.  No surprise there.

Weekly Focus – Think About It
“When dealing with people, remember you are not dealing with creatures of logic, but creatures of emotion.”
–Dale Carnegie, American writer and lecturer

Best regards,
John F. Reutemann, Jr., CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

 

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

 

* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Stock investing involves risk including loss of principal.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Sources:
https://www.sharp.com/health-news/does-looking-at-the-horizon-prevent-car-sickness.cfm
http://afcpe.org/assets/pdf/volume_25_2/09013_pg174-196.pdf
https://finance.zacks.com/longterm-stock-market-trends-6294.html
https://clicktime.cloud.postoffice.net/clicktime.php?U=https%3A%2F%2Ffinance.yahoo.com%2Fquote%2F&E=jim.streight%40rfsadvisors.com&X=XID420wkTXFf6103Xd1&T=RFAD&HV=U,E,X,T&H=c07add89594b427a7910f483583c7695db1d1aae^DJI/history?period1=1167631200&period2=1230789600&interval=1d&filter=history&frequency=1d
https://clicktime.cloud.postoffice.net/clicktime.php?U=https%3A%2F%2Ffinance.yahoo.com%2Fquote%2F&E=jim.streight%40rfsadvisors.com&X=XID420wkTXFf6103Xd1&T=RFAD&HV=U,E,X,T&H=c07add89594b427a7910f483583c7695db1d1aae^DJI?p=^DJI
https://www.investopedia.com/terms/s/systematicrisk.asp
https://www.marketwatch.com/story/nasdaq-poised-to-fall-1-at-the-open-as-nvidia-weighs-on-stock-market-chip-makers-2018-11-16
https://www.reuters.com/article/us-usa-trade-china/trump-says-u-s-may-not-impose-more-tariffs-on-china-idUSKCN1NL28Q
http://freakonomics.com/podcast/apologies/
http://s3.amazonaws.com/fieldexperiments-papers2/papers/00644.pdf
https://www.brainyquote.com/quotes/dale_carnegie_130727

 

Breaking down what could affect the markets in the months ahead

“A player surprised is a player half-beaten.” – Chess Proverb
The World Chess Championship is currently being played in London, and for the first time in decades, an American could be crowned as champion.
But this letter isn’t really about chess. It’s actually about the markets.

You see, there are some interesting similarities between the markets and one of the oldest games in the world. Here’s what I mean. In this modern age, the best chess players rely on supercomputers, teams of analysts, and endless hours of preparation to get ahead. Thanks to technology, players can calculate more possibilities and outcomes than ever before. Despite all that, chess games can unfold in thousands of ways – and a player can go from winning to losing in the space of a single move.

If you think about it, the markets function this way, too. Banks, hedge funds, and investment firms all rely on supercomputers, data, and teams of analysts to forecast which way the markets will go. But despite this, the markets often move in ways that defy even the smartest of analysts or most sophisticated of machines. In some cases, one piece of new information can cause the markets to rise or fall.

Thanks to computers, we can track who’s winning a chess game in real time. White may make a certain move, and the computer thinks they have a decided advantage. Black responds and either equalizes or makes their position worse. Something similar happens to the markets. A large corporation reports higher than expected earnings, and the markets go up. Then, the government reports that job growth is lower than expected, and the markets fall. You get the idea.

When a lot of these swings happen over a period of time, we call it market volatility.
So, why am I saying all this? Because we are in a period of market volatility right now. With the midterm elections over, there are many possible moves our economy could make that might swing the markets one way or another.

In chess, one of the worst things that can happen to a player is being caught by surprise. That’s when they’re most likely to commit a major mistake, or blunder. The same is true in investing. We expect the markets to rise and fall. It’s when an investor is caught unawares that it truly hurts.

Just as no player can control exactly how a game of chess will go, you and I can’t control which way the markets will go. But we can take steps to ensure we don’t get surprised. So, let’s quickly cover some of the major moves we could see over the next few months, and how they could impact the markets.

White opens by playing “post-midterm history and congressional gridlock”.
The S&P 500 usually climbs an average of 31% in the year after a midterm.1 That’s because, after an election, uncertainty fades as we gain a better idea of who’s in power and what their agenda will be.
In this case, Democrats took control of the House, while Republicans retained the Senate. When this happens, we usually see something called congressional gridlock. When two parties that are diametrically opposed to each other share power, they rarely agree on much, so not much changes. This type of gridlock can be frustrating, but the markets often prefer it.
With this move, we may well see the markets go up.

Black responds with “uncertainty about congressional investigations and a little gridlock of their own.”
I mentioned that the markets usually go up after a midterm as uncertainty fades. That may not be the case this time around. That’s because there’s a lot of uncertainty still surrounding Washington. The House of Representatives is where much of Congress’ investigative power rests, and you can bet that Democrats will continue – and perhaps widen – ongoing investigations into President Trump’s campaign and other alleged scandals. The resulting uncertainty could prey on many investors’ minds.

Then, too, despite the perception that gridlock is good for the markets, historical data doesn’t always bear that out. In fact, “in the five previous congressional sessions since 1901 in which Republicans controlled the White House and the Senate while Democrats controlled the House, the annualized return [for the Dow Jones Industrial Average] has been a loss of 1.69%.”2
As you know, past performance is no guarantee of future results. But it does suggest that we probably shouldn’t get too excited about gridlock.

White counters with the holiday season and, yes, more history.
As I said above, uncertainty about congressional investigations could hamper the markets – in theory. But that may not necessarily be true. Remember Bill Clinton’s impeachment back in the 1990s? There was a lot of uncertainty then – but the markets performed just fine anyway.
The markets may also benefit from the holiday season. Black Friday, Cyber Monday, and all the shopping days that come after transform this time of year into a winter wonderland for retailers. To put it simply, more sales means more profits. More profits mean happier investors.

Of course, this all depends upon people actually buying things this holiday season. While corporate profits often go up before Christmas, people are sometimes stingier with their wallets than expected.

Black plays interest rates, doubts about corporate earnings, and the trade war.
Ouch! Black’s move is potentially a deadly one, laced with many possible implications. Upon seeing the move, the spectators lean forward. Eyebrows are raised. Breaths are held. A hush falls over the audience. The computer analyzing the game whirs. This may be the pivotal moment.

Okay, it’s not really that dramatic. But many analysts and pundits are, in fact, waiting with bated breath to see how all these factors play out.
Let’s start with interest rates. As the economy has improved, the Federal Reserve has slowly raised rates to protect against inflation. Another rate hike is expected before the end of the year. But rising interest rates tend to spook investors. That’s because higher rates make borrowing more expensive for businesses, prompting them to cut back on spending. Less spending for businesses means less investment, less expansion – and less growth. And when investors think a company isn’t growing, they tend not to invest in that company. For this reason, interest rates will be a major story moving forward.

Many investors are also concerned about corporate earnings. Earnings have largely been strong in 2018, but that just means the bar is higher in 2019. If corporations struggle to reach or exceed that bar, that creates a narrative that they’re struggling. And if there’s one thing we know to be true, it’s that the markets are heavily affected by narratives.

And finally, there’s the trade war. To date, the U.S. has imposed tariffs on over 10,000 Chinese products. China, of course, has retaliated with tariffs of their own.

To date, this trade war hasn’t been a catastrophe for the markets. But again, uncertainty is the real factor here. If both countries continue to tax each other’s products, that could cause some very real pain for both economies. It’s a kind of “Sword of Damocles” hanging over the stock market’s head – and it probably won’t go away anytime soon.

Exhausted, both White and Black finally agree to a draw.
A lot of investors don’t realize this, but market volatility is not the same thing as a bear market. It simply means a wide variety of trading prices over a period of time. As you can see, there are a lot of moves that can – and probably will – affect the markets in 2019. Some are positive, some aren’t. Put them all together, and the most likely outcome may not be a rising market or a falling market – only a volatile market. (Just like in chess, where most top-level games end in draws.)

In chess, players strive most to avoid being taken by surprise. That’s what we’re trying to do here. Now you know the potential moves that can be played, so whatever happens, you won’t be caught unawares.
The World Chess Championship is not a single game, but a series of games played over an entire month. It’s a marathon, not a sprint. And despite momentum shifting back and forth, the contestants are trained to stick to their long-term strategy. As 2018 winds down, and a new year approaches, that’s what we’ll do, too. We’ll continue making long-term decisions based on your goals and your risk tolerance rather than overreacting to short-term moves. After all, as the chess Grandmaster Savielly Tartakower once said:
“To avoid losing a piece, many a player has lost the game.”

As always, please contact me if you have any questions or concerns. In the meantime, I’ll keep analyzing the best moves we can play while you enjoy your holiday season. I hope it’s a great one!

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