Q4 2019 Newsletter

I hope you’re back in the swing of things and out of that post-summer blues.  There are a few things I would like to address in this newsletter as we gear up toward the end of the year.


By now, most of you have been able to view your accounts online. I have heard great feedback regarding the new views and technology versus LPL.  All the mechanics seem to be up and running, and we are just working on client contributions and catching up with the in-between work.

Black Diamond has been working well, which is the reporting software behind your quarterly reporting.  You will all receive a login to Black Diamond once we have rolled out the client user side and worked out the kinks.  It is a very easy dashboard that will act as a scorecard for your investments.

Kim and Ginger were rock stars getting everything in order to make this move possible and add the Fidelity resources to the firm.  I want to make personally acknowledge the integral roles they played through this entire transition. Kim has done a stellar job for the firm on behalf of the clients.  In collaboration with the partners at Gladstone, I’ve been able to offer Kim a full-time position, which will be a great opportunity for her and her family.  While I will miss working with Kim full time, she still is a resource for us when we need her.

I have heard that the paperwork form LPL is still coming in truckloads, but that will stop shortly.

Your money and the news:

There are some questions that have come up over the past quarter that I thought made sense to address in this newsletter.

First, I would like to start off by saying that the sizzle is what sells in the world of network news.  Try to tune out or take a break from the noise.  With talk of inverted yield curves, recession, impeachment, trade wars, etc., it’s important to remember—good investment philosophy needs to drive decision making

Interest Rates – The Fed has now lowered interest rates twice.  There is talk of rates dropping to 0%. What does this mean?

The Federal Reserve controls the monetary policy – the flow of money into the economy.  Reducing the rates are a way to encourage banks to loan more.  We live in a low interest rate world, including negative rates abroad.  With an aging economic cycle, central banks seem to intensify an effort to reduce interest rates to fight off slowdowns in the economy.  This is not new, and while the news in the moment may seem completely different, it really is just a continuation of policy we have seen since the financial crisis.  We are monitoring the changes and watching as things develop, but until we see a major shock in the system, we are staying the course.

What is our take on the market?

It’s been an interesting year in the markets thus far.  If we look from September 2019 to Sept 2019, the S&P 500 is basically flat.  Most of the gains we saw in the beginning of the year were from the rebound off the cliff the market jumped off of Q4 last year.

So, what is going on?  The big question for the past 2 years is:  Are we in the late cycle of the economic cycle and how close are we to a recession?  What is in store for the rest of the year?

We have seen some talk about markets rising relating to an acronym that has been tossed around, TINA (There Is No Alternative).  The average P/E ratio of the market at about 18-19 (P/E = price/earnings per share– a metric the street uses to determine historical and forward valuations).  We, and a lot of our analysts and economists, don’t feel the market is overvalued to the point where a major pull-back in equities is needed.  We have been treading with caution over the past year and some of the short-term investment prospects we consider need constant observation.  You will see in your portfolios we have taken a few positions in late cycle investments around consumer staples, energy & utilities.   We are constantly monitoring market conditions so that we remain good stewards of your money.   Although there may be volatility in the short term, we need to continue to keep our eye on the future.  Timing the market is an impossible task. The best of the best have failed.  There are two things we can do to take advantage of changing markets:

1.) Monthly contributions

2.) The “time” component of our investment philosophy.

Contributions on a monthly basis allow us to deploy cash to buy in down markets.  Having your Short, mid and long-term allocations set up will give you the comfort of knowing that the capitol you may need in the short term will be minimally affected in the case of a downturn.

What is our exposure given the Impeachment proceedings?

Politics aside, there are several concerns that could arise as a result of this happening or not.  For now, I would advise as to not be as concerned about things we cannot forecast.  We are aware of the political environment and how it can change, and when there is something, we feel we should advise to make changes to, we will do so.  For now, the tea leaves have us staying the course.

Gearing up for the Last Quarter:

Refinance - Interest rates are low and that has been reflected in the mortgage rates.  I have seen a lot of refinances being done sub 4%.  This isn’t a good idea for everyone, but it is a good idea to have a discussion with me about it.  What to take into consideration:

  • Closing costs
  • Where you are in your loan repayment?
  • Do you need cash out?
  • How long are you planning on staying in that property?

Let’s move on this discussion ASAP, as rates have a tendency to change.  I do not handle mortgages, but I can help you make an informed decision that can add to additional cash flow.

Estate Planning – The end of the year is a good time for us to review your estate planning to make sure you have everything in order.  If you have a Will and all the accompanying documents, then we typically will review them every 3-5 years, unless something major occurs, such as a new child, divorce, marriage, inheritance, new business, etc.

A typical estate plan consists of a Will, Power of Attorney, Living Will/Healthcare Proxy and HIPAA authorization. The Will is key in spelling out where your assets will go and in what proportions and WHO will care for your children. A Power of Attorney and Living Will/Healthcare Proxy are important documents to allow another person to assist you in the event of an emergency.  If you do not have one or all of these documents, or you have questions about whether something is right for you, then let’s address that by year’s end, check it off as a 2019 win.

Additionally, if you have aging parents with health concerns or family members with special needs, we should have a conversation to help you identify how best to help and protect your loved ones, including planning for long-term care needs and asset preservation.  I have an attorney in-house, Constantina “Deana” Koulosousas who will review everything with you and have a conversation about your options.  This is part of the benefit you have by being a member of the firm, so take advantage of it.

Tax Loss Harvesting – If you have brokerage accounts with me, outside of retirement accounts, then we will be looking to take advantage of tax benefits that will come from selling out of gains and losses.  This helps to minimize your overall tax burden within your portfolio over the long haul.  As we prepare for our Q4 review, please keep statements for all accounts you may have that we do not manage here at the firm.  This way we can coordinate between the accounts to help maximize the benefit.

Taxes – We have also added in-house tax services with Robert Greulich, CPA as our specialist.  If you would like to review these services, please call the office or reach out to me directly.

Happy Halloween and I look forward to meeting with you before Thanksgiving!!

Robert J Mascia, CFBS


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