Financial Advisor News

Piedmont, CA

Financial Advisor News

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Piedmont, CA

by: ALISON VAN DYKE

FIRST AND MAIN FINANCIAL

(510) 601-1935

Oakland, CA | East Bay; Navigating Stock Markets During Covid-19

Q1 2020 Market Summary:

Markets have been moving fast over the past weeks.

We’ve had many clients reach out to us over the last month and we are here at our desks to talk, or Zoom, if you like. We’re here evaluating the situation, and your accounts, every day. We haven’t proactively reached out to too many folks because many or our clients view their investments as long-term. They assume account values are currently compressed and will eventually recover.

Our retired clients have layers of safer assets built into their portfolios so we can continue to distribute cash to them without having to sell the more volatile assets while values are compressed.

The stock market is nothing more than a reflection of economic progress. In times of uncertainty a debate rages about recovery times and prospects for the future. How long it will take to recover from this challenging time remains to be seen.

We’ve lived through many market corrections in the last couple of decades, the worst of which were the .com bubble burst in the early ‘00’s and the financial crisis of ’08 and ’09. This market drop was the fastest on record but it didn’t go as deep as 08-09. Markets may go lower but we have experienced some level of stabilization over the last days with volatility receding and clear signs of underlying demand for stocks (i.e. future economic progress).

Currently, thoughts are chaotic and emotions are running high. We’ve worked very hard to connect ourselves to the available data (and guidance from our nation’s lead scientists) and to distance ourselves from the commentary (and headlines) on how bad this might get, or on how our lives may change.

The pattern of spread of Covid-19, and its health impacts, has been very stable. In some places the spread has been broader with neutralization harder to attain. Some places have done quite well to limit the spread and “flatten the curve.” The real numbers, while significant, are proving to be quite small compared to the “do nothing” predictions that initially flew about causing many people’s minds to go into a state of overload.

The U.S. economy came into this pandemic in one of its strongest states ever. Millions of jobs are being lost and our government has responded with massive aid, and stimulus, while our Federal Reserve bank has created enormous amounts of liquidity to keep the system moving. We’ve had some clients view this as an opportunity to put more money to work for the long- term thus likely improving their future circumstances.

We recently combed through taxable portfolios harvesting tax losses and adding a bit more balance in equity (stock) exposures.

  • –  Domestic small value stocks dropped 39.24% (worst performing asset)
  • –  Short government bonds gained 0.43% (best performing asset)
  • –  U.S. momentum stocks dropped 15.48% (our best performing basket of stocks)

We also recently added more equity balance to retirement portfolios and will be doing more rebalancing especially in our most diversified portfolios with respect to stocks vs. bonds. While these past weeks have seemed much longer, the stay-at-home has in-fact only been a few weeks and will be lifted in some number of more weeks. More people may start to wear masks when they go out and people and businesses will adjust until we have a vaccine and more people have been tested and are known to be immune.

We don’t know and can’t predict how much economic progress has been lost, but stock markets are the most efficient expectations voting machine ever created and at the moment markets are saying there’s a good argument to be hopeful.

This likely is a good time to keep pushing money into markets through retirement accounts for the long-term, or even switching to a more volatile asset allocation with retirement assets (or college savings) that won’t be used for many years, depending on one’s circumstances.

We’re happy to review your circumstances with you. We hope you and yours are well.

As always, we truly appreciate the confidence you’ve placed in us and are happy to talk if even only just to connect on a human level for a few minutes.

Sincerely,

Erik S. Wolfers, MBA, CFP®

 

Oakland, CA | East Bay; Real Estate Investing and Tax Planning with Delaware Sta…

What is a Delaware Statutory Trust—DST?

Hi I’m Erik Wolfers. I’m the managing member of First & Main Financial. We’re in Oakland in Piedmont California. Today I’m going to talk about Delaware Statutory Trusts, or DSTs.

DSTs are an improved vehicle for doing a 1031 exchange. If you have a highly appreciated piece of property, you can sell it and take the proceeds and roll it into a Delaware Statutory Trust.

DSTs generally contain more real estate; real estate that’s already working, already producing income—properties that are already sometimes fully occupied if it’s a multi-family property, or sometimes a retirement home is another kind of property that Delaware Statutory Trusts might hold.

You take the proceeds from the sale of your property and roll them into a Delaware Statutory Trust and then you get passive income. There’s no longer involvement on your part.

It is real estate, so things can happen to the real estate. But there is a long track record of these kinds of vehicles that can be reviewed. The income generally is in the 5% to almost 7% range.

We are a fee only financial advisor, so instead of taking a commission, the commission that would go to a broker of a Delaware Statutory Trust stays in the deal for the client so they get a bump in their equity, 6% more or 7% more ownership in the Delaware Statutory Trust, and the yield also goes up for their investment.

These generally last 6 years or 7 years is the target, and then can be rolled into another Delaware Statutory Trust, or proceeds can be reclaimed and taxes paid at that time. Or some people have the idea of rolling over into new trusts until their heirs can inherit the property or the ownership in the Delaware Statutory Trust and then the taxes never get paid.

If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.

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BIO: At First & Main Financial, Alison Van Dyke helps clients with their financial lives. She has worked in Corporate Finance for Bank of America and Chase Manhattan Bank. Alison is pursuing the CFP® certification; she received her MBA at Georgetown and her B.A. in Political Science from UCLA.

235 Wildwood Avenue,
Piedmont, CA 94610, USA

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BIO: At First & Main Financial, Alison Van Dyke helps clients with their financial lives. She has worked in Corporate Finance for Bank of America and Chase Manhattan Bank. Alison is pursuing the CFP® certification; she received her MBA at Georgetown and her B.A. in Political Science from UCLA.