Trusted insights from our thought leaders

MARKET UPDATE | THIRD QUARTER 2020

The upcoming election has led to more questions about the impact of Presidents on the markets. Based on history, there does not seem to be an ironclad answer, though expected tax policies do provide guidance for planning purposes. The COVID-19 pandemic continues, and while there have been encouraging developments in treatments, caution seems prudent as there seems to be an uptick in cases in Europe, according to the European Center for Disease Prevention and Control. Despite the backdrop, global market returns have been solid as economies continue to recover, and governmental policies remain supportive of growth. No matter the outcome of elections or other world events, The Mather Group is here with our consistent systems and approach to help you achieve your long-term goals for you and your family.

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Trending Topics

5 Things to Know About Your Medicare Benefits

With the open enrollment period for Medicare just around the corner, now is the time to start thinking about strategies that will enable you to maximize your Medicare benefits. With this in mind, here are five things you should know about Medicare:

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5 Reasons to File Your Taxes Early

The Internal Revenue Service started accepting tax returns for 2018 on Monday, January 28 – which means Tax Season has officially begun! Review the top 5 reasons you should consider filling early this year.  VIEW

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Know The 1099 Reporting Rules

1099-MISC reporting rules can be confusing. Learn the filing requirements, exceptions, as well as some quick tips to make filing easier.  VIEW

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MARKET UPDATE | THIRD QUARTER 2020

The upcoming election has led to more questions about the impact of Presidents on the markets. Based on history, there does not seem to be an ironclad answer, though expected tax policies do provide guidance for planning purposes. The COVID-19 pandemic continues, and while there have been encouraging developments in treatments, caution seems prudent as there seems to be an uptick in cases in Europe, according to the European Center for Disease Prevention and Control. Despite the backdrop, global market returns have been solid as economies continue to recover, and governmental policies remain supportive of growth. No matter the outcome of elections or other world events, The Mather Group is here with our consistent systems and approach to help you achieve your long-term goals for you and your family.

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MARKETS ARE NOT A PERPETUAL MOTION MACHINE: A PERSPECTIVE

Despite a blistering upward trend in the  S P 5001 since its March 23rd bottom (up 60.0%), the market demonstrated a disappointing reversal on September 3rd, falling 3.5%. However, if an investor deconstructs recent market performance, then it becomes clear that the market is not really the monolithic entity which pundits report upon daily, if not hourly. More specifically, the S P 500 is constructed of 11 sectors, and the relative performance of each sector shows a wide disparity in their 2020 returns. As shown in the graphic below, just 3 sectors, i.e. Communications Services, Consumer Discretionary and Information Technology, have driven the bulk of recent market returns. Yes, despite the hoarding of paper products, the Consumer Staples sector has had a relatively mild level of performance. And, despite the complexity of the pandemic, the Healthcare sector has only slightly exceeded 5% in its year-to-date return. This is a summary of the attached article (link), and full details and disclosures are included within.

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MARKET UPDATE | SECOND QUARTER 2020

Markets experienced a historic recovery during the second quarter, with U.S. stocks posting their best quarterly results in two decades according to the Wall Street Journal.1 While the economic climate continues to improve from first quarter lows, further recovery is likely contingent upon our ability to contain COVID-19. Faced with the current public health crisis, the Fed stated it will likely keep rates at zero for the foreseeable future.  During the recent period of market volatility, many active managers failed to generate alpha and underperformed passive index strategies, potentially due in part to poor market timing. We believe both recent and long-term results reinforce The Mather Group’s long-held belief that index-based investing best serves the needs of our client families, especially in times of increased uncertainty.

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MARKET TIMING: WHAT RECENT AND HISTORIC MARKET RETURNS HAVE REVEALED

An apt description of markets in 2020 may have been written by Charles Dickens 161 years ago, “It was the best of times, it was the worst of times...” After achieving record highs for the Dow, S P 500 and NASDAQ indices February 12th, the markets began their unprecedented descent February 20th, resulting in a 37% fall in just 28 trading days. One result was that individual investors—some unsure but many in panic—withdrew $62 billion from equity mutual funds during that short period, and then an additional $71 billion during the following two months. So, a total of $133 billion was thought by these investors to be shielded from further market losses. But, was a shift to cash rewarded by following this market timing strategy? Unfortunately, for many of these investors, the answer is a resounding “No”. If an investor were out of the market, i.e. in cash, for only 5 of the best trading days in 2020, then the investor would have suffered a 30% portfolio loss compared to another investor who remained fully invested throughout 2020. This is a summary of the attached article (link), and full details and disclosures are included within.

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All Stock Market Rallies Are Not Created Equal: This Week’s Market Volatility

All Stock Market Rallies Are Not Created Equal: This Week’s Market Volatility   On February 19th, 2020, the S P 500 reached a historic high of 3,386. Only 33 days later (just 23 market trading days) on March 23rd, 2020, the S P 500 Index1 had fallen 33.9% to a level of 2,237. The primary sources of this significant decline were threefold: the growing dimension of the COVID-19 pandemic; resultant concerns about its potential economic and financial fallout; and a somewhat tepid initial response to the pandemic by institutions such as the Fed, the U.S. Treasury and various levels of government.

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MARKET UPDATE | FIRST QUARTER 2020

During the first quarter of 2020, equity and fixed income markets experienced extreme bouts of volatility due to the coronavirus pandemic. In response, the Fed rapidly unleashed unprecedented levels of stimulus while simultaneously injecting much needed liquidity into the financial system.

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RESTORING AMERICA’S ECONOMIC & FINANCIAL MOMENTUM: AN UPDATE

RESTORING AMERICA’S ECONOMIC & FINANCIAL MOMENTUM: AN UPDATE   Responding quickly to the accelerating stress resulting from the Covid pandemic, Congress and the Fed have each undertaken a series of initiatives to restore America’s economic and financial momentum. More specifically, Congress has focused on assuring solvency for households, corporations and other vital organizations. In turn, the Fed has acted to maintain sufficient liquidity throughout the financial system. In this note, The Mather Group would like to provide a quick summary of several key elements of these initiatives.

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Bear markets and their historic financial and economic recoveries

Bear Markets and their historic financial and economic recoveries   The market selloff on March 16th has resulted in a 29.5% fall from the market peak reached February 19th, using the S P 500 as the benchmark. Declines which exceed 20% are often deemed “bear markets,” and raise investor concerns with respect to the magnitude and timing of their potential recovery. In this note, The Mather Group would like to share some historic data which illustrates the financial and economic recoveries from both prior bear markets and pandemics.

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Important Questions and Answers About Recent Market Volatility

IMPORTANT QUESTIONS AND ANSWERS ABOUT RECENT MARKET VOLATILITY The Mather Group continues to monitor the interplay between market volatility and the spread of the COVID-19 virus. Thus, we would like to share with you our current outlook, framed within the context of six primary questions discussed recently by members of our Investment Committee. If our outlook changes, we will share further updates with you, of course. 

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A Look Back - And Forward - At This Week's Market Volatility

A LOOK BACK - AND FORWARD - AT THIS WEEK'S MARKET VOLATILITY   This has been an information-intensive week displaying the continued health of the US economy. February saw the creation of 273,000 new jobs, while the 3.5% unemployment rate remained at a 50-year low. Wages continued to grow at a 2.9% annual rate, while inflation stayed subdued at 2.5%. Workforce participation rates continued at their high levels, or 72% for males and 59% for females.

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The Market Volatility Conundrum

THE MARKET VOLATILITY CONUNDRUM   With the significant uptick in worldwide Covid-19 cases, there has been a parallel increase in equity market volatility. US equity markets, as measured by the S P 500, have now experienced a “correction”, or a drop of 10%. In this note, The Mather Group would like to share its perspectives on some of the factors driving this volatility, identify our risk management tools in use to limit portfolio erosion and demonstrate that markets have responded quickly—and often quite positively—to past corrections and pandemics.

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Mortgage Rates Drop Near All Time Lows - Time to Refinance?

  Yields on US Treasuries fell again Thursday with continued fears over the spread of the coronavirus pushing interest rates down even further days after the Federal Reserve’s emergency 50 basis point interest rate cut.  The 10-year US Treasury Note dropped to an all-time low of 0.914% in intraday trading on Wednesday with the 30-year US Treasury bond yield touching 1.55%.  While the uncertainty in equity and fixed income markets surrounding the coronavirus remains, this continued drop in interest rates has brought mortgage rates down to historic lows, with the average 30-year fixed mortgage rate dropping to 3.29%, as seen in the graphic below. 

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MARKET UPDATE | FOURTH QUARTER 2019

Low rates continue to be a boon for both equity and fixed income markets.  The Fed lowered rates for the 3rd time in 2019 and adopted a more accommodative monetary policy than previously held.  Going forward, the Fed is signaling a wait-and-see approach to additional rate changes, leading many to believe that rates will remain unchanged throughout 2020.   In addition to low rates, the easing of hostilities in the US/China trade war also helped to bolster investor confidence and rally the markets. With the phase one trade deal expected to be signed in Q1 2020, investors remain optimistic that continued progress will help drive positive market performance. International equities have continued to underperform relative to their US counterparts. However, when looking at valuation metrics, international equities are looking increasingly attractive to investors.

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Coronavirus Sparks Market Selloff - The Benefits of Staying Invested

Markets sold off today as the number of new coronavirus cases spiked outside of China, with the disease spreading to over 28 countries. It’s still too early to know how severe the impact will be to global supply chains and the economy, however, it’s moments like these that define an investor and their long-term outcome. Many will try to time the market in an attempt to avoid losses, however, history has repeatedly shown us it’s best to remain invested. It’s not easy being an investor, and today is a great example of that.  This article explains why we fundamentally believe clients are better off staying invested and outlines the pitfalls of trying to “time the market.”

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MARKET UPDATE | THIRD QUARTER 2019

The U.S. continues to outperform global markets as Europe and China increasingly show signs of weakness. U.S. equity markets were choppy during the 3rd quarter but ended in positive territory, unlike global equities, which ended slightly down. Falling yields continue to fuel the U.S. bond rally. As market participants anticipated, the Fed cut rates twice and signaled a willingness for more accommodative monetary policy in an effort to support the economic expansion. For the first time, passive U.S. equity funds surpassed active fund strategies, solidifying a paradigm shift towards passive indexing and away from active management. Globally, the same headwinds to market stability linger: the U.S. and China trade impasse, Brexit deal uncertainty, and escalating tensions with Iran.

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MARKET UPDATE | SECOND QUARTER 2019

US Stocks and bonds continued their rally in the 2nd quarter, with stocks posting their strongest first half returns since the dot-com boom. Both markets arereacting strongly to the same event – increasing likelihood of at least one fed rate cut in 2019. Though this market expansion is now a bit long in the tooth (atjust over 10 years), the return of easy money policies could extend the party.Globally, the same threats to market stability still linger. Brexit has been delayed, the US and China are at an impasse in trade deal negotiations and tensionswith Iran have worsened. International markets have trailed the US slightly through the first half of the year as their economies navigate these issues.

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MARKET UPDATE | FIRST QUARTER 2019

While 2018 ended with US and international equities selling off in the fourth quarter, 2019 has begun with equities bouncing back and fixed income posting its strongest quarterly return in three years. Despite the geopolitical uncertainties of “Brexit” and US-China trade relations, the US economy continues to demonstrate strength, evidenced by solid wage growth and low unemployment below 4%. Additionally, the Fed has helped calm markets by taking on a more dovish tone regarding rate hikes, due in part to subdued inflation.

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CONGRESS PASSES THE SECURE ACT

Congress recently passed an appropriations bill that is expected to be signed by the President.  Attached to the spending bill is The Setting Every Community Up for Retirement Enhancement (SECURE) Act that was previously passed by the House and stalled in the Senate.  The SECURE ACT is being sold as a way to help our country’s retirement savings crisis by enhancing access to retirement plans and increasing the flexibility of those plans.  Although the plan will allow more people to access and contribute to retirement plans, other parts of the Act appear to be designed to increase revenue for the Federal government and financial services companies that sell products.

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REGULATION BEST INTEREST: IS THIS THE BEST THE SEC CAN DO?

Earlier this month, the Securities and Exchange Committee (SEC) adopted Regulation Best Interest, a ruling that will increase the standards of broker-dealers. The proposed solution is set to go into effect in June 2020. Our founding partner, Stewart Mather, shares his thoughts on the ruling.

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Roth 401(k) vs Roth IRA- Which is the Better Retirement Plan for You?

The good news for Americans who want to save more money for retirement is that there is a wide range of tax-advantaged retirement savings plans to choose from. Two of the most popular are Individual Retirement Accounts (IRAs) and 401(k) plans.

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Five Ways to a Fail-Safe Retirement

Watch for these things today so you'll stay on track for tomorrow. 

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Demystifying Medicare

Learn the tips and tools you need to manage health care costs in retirement.

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SUPER BOWL LIII: 7 FUN FINANCE FACTS

The Super Bowl is one of the biggest single-day sporting events in the world, making it big business. From advertising costs to ticket prices, the championship game impacts wallets in all sorts of ways. Before the coin toss in Atlanta, check out these seven financial facts about the big game.    VIEW

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IRA Comparison - Roth IRA vs. Traditional IRA

Use this comparison chart to help you determine which kind of IRA may be right for you. View

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How Much is My Social Security Estimate?

Estimate your retirement benefits here. View

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