Our Writings

December 2020

Monthly Market Recap

from Clint Edgington, CFA

In a year that the markets were driven by Covid, November may be remembered as a turning point.  Three different vaccines for Covid were announced effective.  Fears of a contested election further dividing our political environment diminished, and a Biden victory ushers in a return to a more conventional Presidency with a split Congress being likely.

Monday, November 9th had Pfizer announcing the efficacy of its vaccine being over 90%, above expectations.  Since that point, a reversal in the market has taken place.  The growth stocks that were buoyed by economy wide shutdown (i.e. anything you can do at your computer: Amazon, Facebook, Zoom, etc.) showed growth that was muted by Value companies (i.e. energy, materials, etc.).  Smaller cap companies, less able to invest in the cap-ex required to compete in a suddenly online world, outperformed.  November, in summary, marked a wide divergence from the rest of the year when it came to the markets.  Small caps, value, and foreign stocks all turned to outperform for the year.  The U.S. markets, an outperformer for the year, yielded to foreign stocks that had a torrid month. 

Yet while an end to the Covid crisis appears to be in sight, case counts in the U.S. continued to rise entering the winter season when the virus may be more difficult to subdue.  Add the logistical challenges of the vaccine to our view, and the exact endpoint gets hazy. Europe is coming off shutdowns and have seen a drop in case counts and hospitalizations that the U.S. hopes to follow.

A Biden administration likely ushers in a period of normalizing relations with foreign partners, including reuniting with global peers to combat climate change.  Biden ran on raising taxes to reduce deficit spending, a (likely) divided congress will likely subdue that and the size of a potentially upcoming fresh stimulus package.

Expenses Paid with PPP Loan Proceeds Not Deductible

By Anne Zavaglia, CFP® 

Small businesses that received a Paycheck Protection Program (PPP) Loan are able to have their loan forgiven if the loan proceeds were used for certain qualifying expenses during the covered period. The CARES Act specified that the forgiven loan amount would not be considered taxable income to the business; however, the IRS issued guidance this past spring stating there would be no tax deduction allowed for expenses paid with proceeds from a loan that is forgiven. The IRS has released a revenue ruling confirming such along with a revenue procedure that provides a safe harbor for taxpayers.

Four Steps to Rebuilding Your Business

Few business owners have escaped the financial effects of stay-at-home orders, new safety protocols, and consumer fears related to the pandemic. Even if you took advantage of temporary federal, state, or local relief funds to help you stay afloat during the worst months, you could be expecting significantly lower sales and profits for 2020 overall.

The short- and mid-term outlook for small businesses is still uncertain and varies by region and industry. In fact, challenging economic conditions could persist locally and/or nationally for a while. As the situation changes, you may need to think on your feet and approach some aspects of your operation in new ways.

How to Help Maintain a High Credit Score

During the holiday shopping season, your credit score is probably the last thing on your mind. But as you start your seasonal spending, remember to use credit wisely so you can start the new year with a healthy credit score. The following tips can help you maintain or potentially improve your credit score throughout the holidays and beyond.

LTC Insurance vs. Hybrid Life Insurance: Comparison

An important part of any retirement strategy involves factoring in the potential expenses associated with long-term care. For many years, people have purchased long-term care insurance to help cover some of those costs.

However, over the past decade, other insurance products have become available that combine life insurance with some type of accelerated and/or extended benefits provision for long-term care. A comparison of the general frameworks of each type of insurance could help you decide which option may be better for you.

Sharing Your Money Values Can Be Part of Your Legacy

When it’s time to prepare the next generation for a financial legacy, you might want to bring your family members together to talk about money. But sitting down together isn’t easy, because money is a complicated and emotionally charged topic. Rather than risk conflict, your family may prefer to avoid talking about it altogether.

If your family isn’t quite ready to have a formal conversation, you can still lay the groundwork for the future by identifying and sharing your money values — the principles that guide your financial decisions.

Five Tips to Regain Your Retirement Savings Focus in 2021

In early 2020, 61% of U.S. workers surveyed said that retirement planning makes them feel stressed.1 Investor confidence was continually tested as the year wore on, and it’s likely that this percentage rose — perhaps even substantially. If you find yourself among those feeling stressed heading into the new year, these tips may help you focus and enhance your retirement savings strategy in 2021.

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