Best 50 Days for the S&P 500 Index, Ever - Jentner Wealth Management
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
SUMMER 2020
THE
Wealth Management Strategies from Jentner Wealth Management
Best 50 Days for the
S&P 500 Index, Ever
No one can reliably predict the market.
Just look at the market over the last three months.
On March 23, 2020, the S&P 500 look through many sorts of
hit a year-to-date low as the world tumultuous events and have done so
faced new fears from COVID-19 for decades,” according to Nicholas
and unemployment numbers were Colas, co-founder of DataTrek
approaching those of the Great Research. Average investors, looking
Depression. Then, on May 25, the at current events and news, sell
death of George Floyd in Minneapolis when they should be buying. If you
INSIDE THIS ISSUE during an arrest led to national
protests. Despite these events, in the
wait until “things improve” to start,
it’s often too late. Timing the market
trading days from March 23 to June can be hazardous to your long-term
3, the S&P had its best 50-day rally in investment success.
Best 50 Days for the history, up 37.7%.
S&P 500 Index, Ever . . 1 Ignore the media-induced panic and
How can this happen? According to stay committed to your investment
Bloomberg, “The stock market is plan and Investment Policy
President’s Word . . . . . . 2 primarily focused on a single thing, Statement. Use risk-appropriate
Robo-Advisor or Personal which is the restart of U.S. and global diversified portfolios and rebalance
Advisor? economic activities.” During these to take advantage of market drops.
50 days, states started to gradually Understand that successful investors
reopen, with improving economic look at much longer time horizons,
The Balance of Risk and activity. Investors are becoming often 10 years or more. To paraphrase
Return . . . . . . . . . . . . . . . . . 3 more optimistic as the number of Abraham Lincoln regarding these
coronavirus cases are decreasing and present times, “This too shall pass.” It
second-wave predictions appear less appears equity markets are agreeing.
Finding Professionals severe because of precautions and
potential new treatments and vaccines.
the Super-Rich Way . . . 3
It’s important to note that markets
and world events are not always
Our Commitment to connected. “History shows markets
What Matters . . . . . . . . . 4
The Jentner Report is published periodically by Jentner Wealth Management.
3677 Embassy Parkway, Akron, Ohio 44333 | 330-668-1000 | 1-866-JENTNER
THE
SUMMER 2020
THE PRESIDENT’S WORD
Robo-Advisor or Personal Advisor?
Robo-advisor is a term used for automated their investments on a regular basis. Also,
investment services, including investment investors with simple asset allocations and
management using software and computer strategies may not need ongoing rebalancing
algorithms. Some financial advisors even or guidance from an advisor.
lease robo-advisor platforms and combine
them with advisory services. Disadvantages
Robo-advisors offer less flexibility in
Advances in technology have helped robo-
investment options. While some robo-
advisors become more popular, mostly
advisors have customer service agents at
because of their low cost. But they do not
a call center or financial advisors available
provide investors interaction with a human Bruce Jentner, CFP®, Chairman
to call, many cannot make investment
financial advisor who knows them and
recommendations or change assets in
who can make specific recommendations We start our advisory process by getting to
portfolios that are adjusted through
appropriate for their current and future know you, your goals, and your risk tolerance.
algorithms.
needs. Then we develop a customized plan and tailor
Lack of personal human interaction is the it over time as your needs change. We work
Here are some of the pros and cons with investors with relatively complicated
greatest disadvantage of robo-advisors
to using robo-advisors to manage your personal and business issues and provide
for many investors. Global market and
investments. advice based on our years of experience
investment information is available in real
time 24 hours per day. But information working with others with similar issues.
Advantages is not the same as personal investment
We sometimes refer younger people with recommendations. Think about websites This holistic approach gives our clients
less money and relatively simple financial like WebMD, which provide useful medical the benefits of lower-cost investment
situations to robo-advisors. These platforms information. However, few people would management along with the advantages of
are a good way for investors to get started substitute a website for a personal physician personal relationships and trusted advice.
accessing the markets because there are who knows them and can make specific That’s the difference a financial advisor makes.
generally low minimum account balance recommendations. Even if robo-advisors
requirements, fees are lower, and they are permit you to input and edit your goals in The Vanguard Group, a leader in low-cost
easy to use. their software, you will likely benefit more index funds with a robo-advisor platform
from talking with an advisor about your and a strategic partner of Jentner Wealth
Robo-advisors typically apply optimized issues and concerns. Management, conducted research that found
indexed strategies and target allocations comprehensive wealth managers can, on
that are appropriate for many investors. Our Solution average, add 3% annual return over the long
They use algorithms to automate term. Quoting directly from the Vanguard
The internet has moved us beyond
investment strategies based on risk research, “This return is not added over a
the information age. We now live in
preferences. In general, the algorithms rely specific time frame but varies each year and
the recommendation age. Investment
on evidence-based models and recognized according to client circumstances. It can be
management and financial planning are both
investment theory and research. Using added quickly and dramatically, especially
important and are not the same thing.
algorithms to make investment decisions during periods of market decline or euphoria.
is designed to take emotions out of the It may be provided slowly. It will not appear
Robo-advisors and financial advisors do not
process as markets rise and fall. Also, the on a client’s quarterly statement, but is real
need to be mutually exclusive. As fiduciary
software automatically monitors and nonetheless. Remember, providing services
advisors, we use robo-like technology on
rebalances multiple portfolios in real time as such as estate and succession planning, or
efficient, low-cost custodial platforms to
markets move. offering advice on long-term care insurance
manage investments. We use technology to
and charitable giving, have value as well, even if
reduce expenses in our client portfolios.
The advantages of robo-advisors can be they are not quantifiable.”
We also spend the time to understand each
attractive to some. For those who do not
client’s needs and circumstances in order to
want to think about their investments or
provide meaningful fiduciary advice that is
talk to financial advisors, letting algorithms
right for them.
do the work enables them not to monitor
THE
SUMMER 2020
The Balance of Risk and Finding Professionals the
Super-Rich Way
Return The super-rich, those with a net worth
of $500 million or more, seek the very
Investment uncertainty is normal, so finding your personal comfort level best professionals to help them achieve
between risk and expected return is an essential element to a successful their many and often-complex goals. The
investment experience. super-rich want to work with the best
of the best, and they take smart steps
Uncertainty is an inherent and ev- to invest. Only with the benefit of hind- to identify those professionals.You can
take a page from their playbook to locate
er-present part of investing. Any in- sight do we feel as if we know whether professionals who are the best fit for you
vestment that has an expected return any time period was a good one to be based on your goals, needs, and level of
above the prevailing “risk-free rate” invested. Unfortunately, while the past complexity.
(think T-Bills for U.S investors) involves may provide insights, the future will
trading off certainty for a potentially forever remain uncertain. Some people with truly serious wealth
turn to family offices, which are entities
increased return. For example, stocks designed to address the financial and per-
have higher expected returns than Part of being able to stay unemotional sonal needs of extremely affluent families.
bonds largely because there is more during periods when it feels like uncer- They may provide in-house expertise
uncertainty about the future for equity tainty has increased is having an ap- and work with outside professionals too.
investors than bond investors. Bonds, propriate asset allocation that is in line Even if you don’t have the level of wealth
needed to utilize a family office, you can
for the most part, have fixed coupon with an investor’s willingness and ability still benefit by adopting an approach to
payments and a maturity date at which to bear risk. It also helps to remember sourcing professionals that is similar to
principal is expected to be repaid. that, during what feels like good times what the super-rich take.
Stocks have neither. Bonds also sit and bad, one wouldn’t expect to earn a
higher in a company’s capital structure. higher return without taking on some Perhaps the biggest takeaway is that you
might seek a referral from professionals
In the event a firm goes bust, bondhold- form of risk. While a decline in markets you’re currently working with when you
ers get paid before stockholders. So, do may not feel good, having a portfolio need help from additional experts. This
investors avoid stocks in favor of bonds you are comfortable with, understand- approach tends to be effective in helping
as a result of this increased uncertain- ing that uncertainty is part of investing, people find top-quality professionals and
ty? Quite the contrary, many investors and sticking to a plan that is agreed ensuring that those professionals give
them the expertise, time, and energy they
end up allocating capital to stocks due upon in advance and reviewed on a reg- need to accomplish their goals.
to their higher expected return. In the ular basis can help keep investors from
end, many investors are willing to make reacting emotionally. This may ultimately Of course, you can also do your own
the tradeoff of bearing some increased lead to a better investment experience. research. That said, those efforts are likely
uncertainty for potentially higher re- to be most effective if you are connect-
ed in some way to the people you need,
turns. through mastermind groups or the like.
By putting yourself in the line of exper-
The statement, “The market hates tise, you may boost your chances of iden-
uncertainty,” attempts to personify tifying professionals who are right for you.
the market by ascribing the very real
Finally, be cautious about getting referrals
nervousness and fear felt by some from peers, just as the executives at fam-
investors when volatility increases. ily offices are.Your peers may understand
When markets go up and down, many your situation only in the big-picture
investors struggle to separate their sense and may make broad recommenda-
emotions from their investments. For tions that may not be a great fit. Depend-
ing on the complexity of your needs, you
many investors, regardless of wheth- might be better off using a professional
er markets are reaching new highs or you already trust to look for additional
declining, changes in market prices can professionals. Talk to your financial, legal,
be a source of anxiety. During these and accounting professionals to discuss
periods, it may not feel like a good time your needs and if they can connect you
with a high-quality professional to address
Daniel J. Bloom, CFP®, your needs.
Vice President and Chief Administrative Officer
Jentner Wealth Management
3677 Embassy Parkway, Akron, Ohio 44333
330-668-1000 1-866-JENTNER
ADDRESS SERVICE REQUESTED
SUMMER 2020
THE
Wealth Management Strategies from Jentner Wealth Management
Our Commitment to
What Matters
Jentner Wealth Management oper- prices—frees us to spend time
ates with a clear mission: We are where we believe we have an
dedicated to advancing our clients’ advantage: how we design and
values, goals, and dreams by pro- manage client investment portfolios
tecting and enhancing their resourc- and how we serve our clients with
es. That means providing a success- comprehensive financial planning. THE JENTNER REPORT
ful investment experience for each Employing an evidence-based ap-
client. That means more than just proach to planning and investing, an The Jentner Report is published quarterly by
returns. It means offering peace of approach we systematically imple- Jentner Wealth Management, 3677 Embassy
mind and confidence by protecting ment, enables clients to understand Parkway, Akron, Ohio 44333, 330-668-1000.
and growing portfolios throughout and stick with their financial and © 2020 Jentner Wealth Management. All rights
the daily fluctuations of the world investment plans even in challenging reserved. Information has been obtained from
sources believed to be reliable, but its accuracy
investment markets. market environments. and completeness and the opinions based there-
on are not guaranteed, and no responsibility is
The global stock and bond markets We focus on developing financial assumed for errors and omissions. Nothing in
have rewarded long-term investors. plans that address the opportuni- this publication should be deemed as individual
Unfortunately, the track record of ties and risks of life. We structure investment advice. Call Jentner Wealth Manage-
ment for consultation before making an invest-
professional investment managers risk-appropriate, broadly diversified ment decision. Any performance data published
who attempt to predict the best portfolios that address the tradeoffs herein are not predictive of future performance.
investments is poor. Recognizing that arise when making financial de- Investors should always be aware that past
this, more than 20 years ago, Jentner cisions. Jentner’s clients know that performance has not been shown to predict
Wealth Management began using a transparent planning approach the future. Jentner Wealth Management is not a
certified public accounting, tax, or legal firm. We
a factor-based approach built on backed by decades of investment do not engage in the preparation of tax returns
historical evidence. Rather than research is powering our decisions. or provide legal advice. If in doubt about the tax
attempting to predict the future, we Here at Jentner Wealth Manage- or legal consequences of an investment decision,
draw information about expected ment, we strive to help people it is best to consult a qualified expert.
long-term returns from the market understand their choices and be
The Jentner Report is printed for our clients
itself. prepared so they can stick with and select investors. If you have received this by
their plan and achieve their goals mistake, please contact us to have your name
Trusting markets to do what they and dreams. removed from our mailing.
do best—drive information intoYou can also read
