This Cranky Market

Hello from Sycamore,

As I type this the market is down about 25% from its recent high and down about 9% today. The recent decline and wide daily fluctuations combined with the current media frenzy can make us all uneasy as investors. We wanted to review some points about your account(s) and let you know what we are thinking.

First, at the core of our stock selection process is the business of the corporation and its ability to consistently grow earnings. We work hard to try to reduce risk by not paying too much for those earnings. Companies or industries that we feel are not consistent profit generators or are in a business that we feel may have a limited future are not in your portfolio. For instance, we do not own any airline stocks and about two years ago we sold out of oil and gas securities as well as oilfield service companies.  We also broadly diversify to try and limit the exposure to any single industry or company. Currently, we believe that the fundamental health of the companies in your portfolio(s) is good.

We do not do any market timing. While we are no happier with the current decline than anyone else, we will not be making any adjustments in your portfolio based on that decline.

Second, this market decline has been quick and volatile, but it doesn’t seem too bad when we compare it to other declines. Stock market declines are fairly common though certainly not much fun. The link below will take you to a communication we sent to our clients in 2010.   While this information is a bit dated…it represents the big picture and we believe is pertinent today.

https://sycamoreweb.com/volatility-since-1900s/

We cannot see into the future so we are not certain of the best path to take but history has taught us many times that share prices will follow corporate profitability over the long run. That is how we select investment holdings for you and why we continue to advise holding those investments over long periods.

One final thought. This may be a good time to put any idle cash to work. We’re finding several bargains.

Thanks for your business and trust!
Sycamore Financial Group

*Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Investment return and principal value of an investment will fluctuate. Investor value, when sold may be worth more or less than their original cost.

By |2022-07-21T12:29:03-04:00March 12th, 2020|2020 Newsletters|0 Comments

Could the Saver’s Credit Help You Save More?

Hello from Sycamore,

The ‘Saver’s Credit’ may make it possible for you to receive a tax credit on your eligible contributions to your IRA or employer-sponsored retirement plan. Depending on your adjusted gross income, you may be eligible to receive a tax credit of up to 50% on the first $2,000 of contributions you make to a qualified retirement plan or IRA. These savings are in addition to any tax deferral that may be available on the contribution.

Limitations do apply – you must be 18 or older, cannot be a full-time student and may not be claimed as a dependent on anyone’s tax returns. The table below  help you understand if you might qualify.

What does this really mean?

If you are married filing jointly and your adjusted gross income is $50,000 you could receive up to 10% tax credit on the first $2,000 you contribute to your retirement accounts. $2,000 x 10% = $200 tax credit.

If you are single with an adjusted gross income of $20,000 you could receive up to 20% back on the first $2,000 you contribute. $2000 x 20% = $400 tax credit.

If you fall into one of these categories, what should you do?

  1. Maximize your contributions to your IRA or retirement plans.
  2. Increase your contribution to maximize your credit.
  3. Bring this piece of paper to your tax preparer.
  4. Call Sycamore for more information or with questions.

Thanks for your business and trust!
Sycamore Financial Group

*Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Investment return and principal value of an investment will fluctuate. Investor value, when sold may be worth more or less than their original cost.

By |2022-07-21T12:20:42-04:00March 3rd, 2020|2020 Newsletters|0 Comments

The Market is Volatile – Is this Normal?

Hello from Sycamore,

If you have been watching the news lately, you have likely seen that the markets have been volatile. What should you do you ask? We believe it is best to stay the course. These recent, large single day declines may seem a bit spooky, but when we look at the big picture, these are to be expected with an index that has increased in value over time. The Dow Jones Industrial Average (DJIA) has been around for over 122 years and in January 1975 the DJIA was valued a little over 600 points, now fast forward to 2018 we have seen the DJIA climb to well over 26,000 points.

If we learned one thing from some of our most volatile times: the great depression of 1929, black Monday 1987, Friday the 13th, 1989, the dot com crash of 2000, September 11, 2001, or the recession of 2008 – it is that markets are resilient. Historically September proves to be the worst performing month of the year and then October follows it and proves to be the most volatile month in the market. For these reasons we aren’t surprised by the volatility we are currently seeing. Looking back on the market we have also noticed you can’t avoid volatility, but you can persist through it.

We do however, understand seeing large single day declines may feel alarming, but if we look at the 10 largest single day point declines vs the 10 largest single day percentage declines it can point out that although the single day numbers are larger, the percentage declines are smaller. We may not like seeing the large point declines, but even a decline of over 1000 points is under a 5% change, making this much lower than the drops we have seen during even the most recent recession (2008).

Largest Single Day Point DeclinesLargest Single Day Declines by %
RankDateCloseNet Change% ChangeRankDateCloseNet Change%Change
12/5/1824,345.75-1,175.21-4.6110/19/19871738.74-508-22.61
22/8/201823,860.46-1,032.89-4.15210/28/1929260.64-38.33-12.82
310/10/201825,598.74-831.83-3.15310/29/1929230.07-30.57-11.73
49/29/200810,365.45-777.68-6.98411/6/1929232.13-25.55-9.92
510/15/20088,577.91-733.08-7.87512/18/189958.27-5.57-8.72
63/22/201823,957.89-724.42-2.9368/12/193263.11-5.79-8.4
79/17/20018,920.70-684.81-7.1373/14/190776.23-6.89-8.29
812/1/20088,149.09-679.95-7.7810/26/19871793.93-156.83-8.04
910/9/20088,579.19-678.92-7.33910/15/20088577.91-733.08-7.87
102/2/201825,520.96-665.75-2.54107/21/193388.71-7.55-7.84

Source Wikipedia

So back to the original question – is this normal? We feel it is.

Thanks for your business and trust!

Allison Rumschik
Sycamore Financial Group

*Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Investment return and principal value of an investment will fluctuate. Investor value, when sold may be worth more or less than their original cost.

By |2022-07-21T12:28:24-04:00November 13th, 2018|2018 Newsletters|0 Comments
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