Broker Check

2020 - 1st Quarter


JAN’S QUARTERLY LETTER – First Quarter 2020


The Stats…

2019 ended with all indices on a positive note—28.9% for the S&P 500, 22.3% for the DJIA, and 34.8% for the Nasdaq.  The iShares Barclay Aggregate Bond Index was up 5.77% for the period.

With the advent of the COVID 19 virus, stock markets worldwide have tumbled into bear market territory.  A bear market is defined as a 20% or greater drop in stock prices from peak to trough. I fully expect the volatility to continue at least until we see a slowdown in the rate of new infections.

In contrast to stocks, iShares Barclay Aggregate Bond Index is down slightly less than 2% YTD.


COVID 19...

On December 31, 2019, China announced a rash of pneumonia cases of unknown cause.  It’s mid-March and what we now know as COVID 19 has spread to countries around the globe.  Governments, scientists, epidemiologists and the medical community are all working nonstop to contain the spread of the virus and determine how and where to treat persons who will need hospitalization.  Uncertainty and fear abound.

The life-threatening nature of the virus is, by far, the most tragic component of the situation.  Yet still, the economic impact of COVID 19 has been sudden and stunning.  

What To Do...

I strongly recommend that you keep a long-term perspective and do not sell your stock investments in this downturn.  Although it’s difficult, please remain patient.  Under normal conditions, I would host an impromptu client meeting to discuss the situation, but that can’t happen this time.   Please feel free to call me and we’ll discuss, one on one, your questions and concerns. 

Fortunately, in January, we rebalanced all retirement accounts and raised the cash necessary to pay out planned cash distributions (including RMDs) through 2021.  That means we won’t need to sell any of the stock or bond investments in your IRA portfolio for almost two years.  I hope you find some comfort in knowing we did that.

If you find you have an extraordinary expense you did not anticipate and need cash, you have a significant percentage of your portfolio in bonds and income-oriented investments.  This portion of your portfolio has not declined in pace with stocks.  If you need cash, I suggest you sell a portion of your income-oriented investments now - I refer to this as my “Plan B”.  If you’ve been my client for a while you might recall me talking about my “Plan B” before.

Home mortgage rates have fallen to less than 3.5%.  This may be an opportune time to refinance.  And, if you or your grown children have been waiting to buy an affordable home, the lower mortgage payment available may make it affordable now.

If you’ve been wanting to get into the stock market, or add to your portfolio, but have been hesitant because stock prices were too high – this might be a good time to invest. I suggest dollar cost averaging into stock investments right now versus jumping in all at once.  In other words, gradually add to your investment portfolio monthly or quarterly over the next six or twelve months.  Another approach would be to gradually add to your investments on days when the market dips.  


Other News...

There are a few other items I want to share with you in this letter.

The Secure Act

The SECURE Act (Setting Every Community Up for Retirement Enhancement Act) was signed into law on December 20, 2019.  Key provisions of the law include:

  • Workers age 70 ½ and older may now make deductible contributions to their IRAs.
  • Effective January 1, 2020, the initial age for Required Minimum Distributions (RMDs) increased to 72.
  • As of January 1, 2020, non-spouse beneficiaries of IRAs will no longer be allowed to stretch their RMDs over their lifetimes but will be required to distribute the entire plan within ten years. Non-spouse Beneficiary IRAs established before January 1, 2020 are grandfathered in and beneficiaries may continue to stretch their distributions over their lifetimes. 
  • The SECURE Act makes it easier and less expensive for small employers to establish 401K plans for themselves and their employees.
  • The SECURE Act also made two changes in the 529 Plan rules. Families can now use up to $10,000 in plan funds to pay down student loans.  The Act also expands the use of 529 plan funds to cover costs associated with registered apprenticeships, which typically combine on-the-job training with classroom instruction.  Note, some states have not opted to honor past changes in 529 plan rules, be sure to check before implementing the new provisions.

I’m pleased to introduce you to a new member of our team, Andrew Rappolt!  And, Nancy Bockelman is full-time again!...

I’m excited to introduce our newest employee, Andrew Rappolt.  Andrew comes to us well-qualified for the job.  He has a B.S. in Economics and a Master’s Degree in Security Analysis and Portfolio Management, as well as more than 15 years’ experience.  He’s a pleasure to work with too!   

Nancy Bockelman is back full-time. She’s working remotely from her home in Florida.  We’re so happy to have her back on the team - all the time!

Alan Dorin and his family will be relocating to Oregon soon.  We will miss him and wish him well.

Upcoming client appointments and client meetings….

In compliance with the need for social distancing we will temporarily be conducting meetings by telephone and remotely online.  We have the systems and software in place to share the screen and your information online.

Our April 9, 2020 client meeting is canceled.  We will continue to monitor the situation and hope to host our remaining 2020 client meetings providing it’s safe to do so.

Lastly, we are prepared to work remotely from home if necessary.  It’s fortunate that Nancy is already working remotely from Florida.  Many of you have commented that you’re surprised to find out that

Nancy is calling from Florida.  She can call you using our phone number and make copies using our copier in Santa Rosa from her office in Florida.  Technology is amazing, isn’t it?

In Closing...

Thanks to Angela, Nancy, Andrew and Tom for the amazing job they do supporting our clients and keeping things moving and organized here in the office.  I’m lucky to work with such a great team!

Now more than ever, I want to wish you and yours’ well.  Please keep in touch; if you need anything from us or have questions please call.  We’re in this thing together.

Thank you so much for your continuing confidence and business.  We are so fortunate to have such wonderful clients!

Warmest wishes,


Sources: Wall Street; New York Times; The Economist; LPL Financial Research. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. There is no assurance that the strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.