Author: Kevin Garrett

Posted on

Market Outlook: 4500 or Higher? Market Commentary – July 19th, 2021

Many are convinced that a US stock market correction, or even a bear market, is inevitable.  So, when the S&P 500 was down 1.6% last Thursday, many thought it had arrived.  Then, the S&P 500 rebounded and hit a new all-time high on Friday.  Now, as I write this article the premarket numbers are down big yet again today. Tomorrow the market may rebound…

This does not mean the market always goes up.  It doesn’t mean that the government is not creating future problems.  But, I don’t try to time the market.  What I do is focus on fundamentals, like profits and interest rates.  And right now, I believe the S&P 500 is still undervalued.

Late last year, when the S&P 500 was at 3,638, I used those fundamentals to project a year-end 2021 target of 4,200, for an increase of 15.4%.  However, with profits returning toward normal even faster than I had anticipated, the S&P 500 hit 4,185 in mid-April and I upped my projection to 4,500, which would be a full-year gain of about 19%.

Now, with the S&P 500 just 3% from my target, I’m choosing to stand pat.  Why?  I do not want to leave the impression that we are traders, shifting our target over and over.  We are investors.  It’s the long-term that matters.  The US stock market has been undervalued relative to our Capitalized Profits Model since 2009.

My model takes the government’s measure of economy-wide profits from the GDP reports, discounted by the 10-year US Treasury note yield, to calculate fair value.  If we use a 10-year Treasury yield of 1.36% (Friday’s closing yield) to discount profits (from the first quarter, the most recent available), then my model suggests the S&P 500 is 45% undervalued.  And with profits likely to grow 20% or more this year, fair value will rise more as the year unfolds.

Right now, the Fed is artificially holding interest rates down across the yield curve.  So, when I calculate our estimate of fair value, I use a 2.0% 10-year yield. Using this 2.0% rate gives us a fair value of 5,240.  It would take a 10-year yield of about 2.4% for our model to show that the stock market is currently trading at fair value (with no increase in profits.)  If rates do rise, because the economy is stronger than the Fed expects, it would likely be accompanied by even faster profit growth.

I fully understand that current monetary policy is inflationary, and that past government spending, plus what some politicians are asking for right now has lifted US Federal debt above 100% of GDP.

These policies could shift economic growth, the level of interest rates, and my estimate of the fair value of stocks in the years ahead.  But for the foreseeable future, re-opening, easy money, and deficit spending are all pushing economic growth and profits up.  With the Fed holding rates down and profits booming, and with our model saying stocks are undervalued, I remain bullish.  And right now I think if our 4,500 target is wrong, it is likely too low.

Integrated Financial Group

Kevin Garrett – Integrated Financial Group

My firm specializes in working with people that experience what we call “Sudden Income.” Typically the income came from one of these events:
1) Accessing and Managing Retirement Assets
2) A Performance Contract (Typically a Sports or Entertainment Contract)
3) Divorce Settlement
4) Inheritance or Insurance Payout
5) Sale of a Business or Stock Options
6) A Personal Injury Settlement

I believe the unique nature of these events requires specialized professional experience, empathy, and communication to deal with both the financial changes and the life changes that inevitably come with them.

My clients value my ability to simplify complex strategies into actionable plans. They also appreciate that I am open, non-judging, and easy to talk to about their dreams and fears. Each client defines financial success differently and my goal is to guide them from where they are now to where they want to be. As my client’s advisor, my goal is to provide them with a lifetime income stream, improving returns, protecting their funds, and managing taxes.

Firm Specialties:

    • Retirement Planning For Business Owners & Executives
    • Woman’s Unique Financial Planning Needs
    • Professional Athletes
    • Investment/Asset Allocation Advice
    • Estate Planning
    • Risk Management
    • Strategic Planning

Kevin was listed in The Wall Street Journal as “One of the Financial Advisors In The Southeast That You Need To Know”

Kevin was listed in Forbes Magazine’s Annual Financial Edition as a Five Star Financial Advisor

Kevin has been awarded the Five Star Professional Wealth Manager in Atlanta Magazine in 2012, 2014, 2015, 2016, 2017,2018, and 2019.

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers.

KEVIN GARRETT, AWMA, CFS
Integrated Financial Group
200 Ashford Center North, Ste. 400 | Atlanta, GA 30338
Phone | 770.353.6311
Email | kgarrett@intfingroup.com
Website | kevingarrettifg.com

 

Thank you for visiting our Blog!

Jim Weber – Managing Partner,  ITB Partners

Jim Weber – Managing Partner, ITB Partners

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

 

 

 

 

 

Posted on

What Has Been Going On With Cryptocurrencies? Market Commentary – June 14th, 2021

Cryptocurrencies have been around for more than a decade but have become increasingly popular in the past few months. One factor affecting the value of cryptocurrencies is its acceptance by merchants. With more companies accepting cryptocurrencies like Bitcoin as a form of payment, digital currency becomes more mainstream and its value increases. But the future of cryptocurrency is certainly less than clear. No matter how trendy the money and technology are now, it will not succeed unless more businesses continue to accept it.

The recent price action in digital assets has caught the attention of investors and the business community alike. In response, some have hastily suggested that owning cryptocurrencies is preferable to bonds, while others have called for a greater focus on the environmental impact of mining these assets. Regardless of one’s personal view, digital assets and cryptocurrencies are currently becoming an increasingly large part of the global financial system. As such, more and more investors are asking how they should think about them as both investments and currencies.

To start, cryptocurrencies are extremely volatile. Large cryptocurrencies, for example, have seen extreme bouts of volatility over time, and in some cases have taken years to recover these losses. Furthermore, correlations between cryptocurrencies and traditional assets like stocks and bonds are incredibly unstable, making it difficult to predict whether they will “zig” or “zag” during periods of stock or bond market stress.

Despite the volatility of these assets, there is tremendous potential in the underlying blockchain technology. But what exactly is blockchain? Bankrate defines blockchain as “a digital, public ledger that records online transactions.” This effectively creates a completely decentralized form of digital currency that is currently treated as “property” (like owning art, real estate, etc.) as opposed to a “security.” It should also not be considered a currency because there is no government backing it and it has been anything but stable. Currency needs to have stability behind it so consumers can determine fair prices for goods and services. The Federal Reserve is in the process of conducting additional research on the topic, and a formal paper that dives deeply into the topic is expected over the summer.

There are additional difficulties in seeing how cryptocurrencies can be treated as a unit of account, medium of exchange, or store of value, further undermining the argument that they are currencies in the traditional sense. For example, Visa processes more than 3,000 transactions per second, while the Bitcoin network processes just more than three. Taking this a step further, as the size of a block increases, transaction fees rise and processing times increase. Until this changes, the ability to widely transact using cryptocurrencies will remain limited – nobody wants to wait for a block to be mined just so they can get their morning cup of coffee.

A decision to allocate to digital assets and cryptocurrencies will depend on an investor’s risk tolerance – put differently, any investor in these assets needs to be prepared for the value to go to zero. As we noted in December, an investment in cryptocurrency might be appropriate for some, but for those who view it as a cure in a world of uncertainty and historically low-interest rates, a bit of caution may be warranted.

Integrated Financial Group

Kevin Garrett – Integrated Financial Group

My firm specializes in working with people that experience what we call “Sudden Income.” Typically the income came from one of these events:
1) Accessing and Managing Retirement Assets
2) A Performance Contract (Typically a Sports or Entertainment Contract)
3) Divorce Settlement
4) Inheritance or Insurance Payout
5) Sale of a Business or Stock Options
6) A Personal Injury Settlement

I believe the unique nature of these events requires specialized professional experience, empathy, and communication to deal with both the financial changes and the life changes that inevitably come with them.

My clients value my ability to simplify complex strategies into actionable plans. They also appreciate that I am open, non-judging, and easy to talk to about their dreams and fears. Each client defines financial success differently and my goal is to guide them from where they are now to where they want to be. As my client’s advisor, my goal is to provide them with a lifetime income stream, improving returns, protecting their funds, and managing taxes.

Firm Specialties:

    • Retirement Planning For Business Owners & Executives
    • Woman’s Unique Financial Planning Needs
    • Professional Athletes
    • Investment/Asset Allocation Advice
    • Estate Planning
    • Risk Management
    • Strategic Planning

Kevin was listed in The Wall Street Journal as “One of the Financial Advisors In The Southeast That You Need To Know”

Kevin was listed in Forbes Magazine’s Annual Financial Edition as a Five Star Financial Advisor

Kevin has been awarded the Five Star Professional Wealth Manager in Atlanta Magazine in 2012, 2014, 2015, 2016, 2017,2018, and 2019.

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers.

KEVIN GARRETT, AWMA, CFS
Integrated Financial Group
200 Ashford Center North, Ste. 400 | Atlanta, GA 30338
Phone | 770.353.6311
Email | kgarrett@intfingroup.com
Website | kevingarrettifg.com

 

Thank you for visiting our Blog!

Jim Weber – Managing Partner,  ITB Partners

Jim Weber – Managing Partner, ITB Partners

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

 

 

 

 

 

Posted on

The Return of Inflation Market Commentary – March 15th, 2021

Inflation is not dead. It is not gone. It has not been tamed. I know it seems like it, especially after the past few decades which generated in many an “inflation-complacency” that feels justified. After all, following the 2008 Financial Panic, many predicted Quantitative Easing would cause hyper-inflation.

When the Fed boosted the Monetary Base by more than $3 trillion dollars during Quantitative Easing 1, 2 & 3, and the federal budget moved to a huge deficit, gold and silver commercials proliferated. So did predictions of a collapsing dollar. But inflation never came. Since the end of the 2008-09 financial panic, the Consumer Price Index has increased by an average of just 1.7% per year, falling short of the Fed’s 2% target.

During the 2020 COVID-induced round of Fed money printing, instead of using QE to put reserves in the banking system, the Fed financed government programs to fund loans to businesses and direct payments to individuals. As a result, the money supply as measured by M2 has grown 26.3% in the past year, the fastest annual growth I can find in US history, and roughly double the pace of M2 growth the US experienced during the 1970s.

According to those who believe in Modern Monetary Theory – (which isn’t all that modern, btw), and is just vaguely a theory – the US can increase real output enough to absorb it. In other words, they say that while inflation is “too much money chasing too few goods” – they expect the output of goods to increase enough to keep inflation low.

I find this impossible to believe. In fact, I think many are living in denial. Inflation is already on the rise. In the past six months, the Consumer Price Index is up 3.6% at an annual rate and if it rises a modest 0.2% per month between January and May, it will be up 3.4% over 12 months. Part of this is because COVID shutdowns led to weak inflation in early 2020, but I expect inflation to move higher in 2021.

But, in addition to M2 growth, incomes and savings have increased, while production has not. Demand is exceeding supply. All personal income combined – wages & salaries, employee benefits, small business income, rents, interest, dividends, and transfer payments – was up 6.3% in 2020 versus 2019. Total after-tax income was up 7.2% in 2020, the most for any year since 2000.

Combined, Americans saved about $2.9 trillion in 2020, more than doubling the previous record high of $1.2 trillion in 2018. As of the third quarter of 2020, the amount Americans held in checking accounts, savings accounts, time deposits, and money market funds was up $2.8 trillion from the year prior. Add another $1.9 trillion in federal government stimulus spending (borrowing from the future, to spend today) and the US is awash in cash.

Unfortunately, in spite of a strong recovery in output, industrial production is 3.3% below pre-COVID levels, while real GDP is 2.5% below. In other words, demand is OK, it is supply that’s still hurting – a perfect recipe for inflation.

All this money printing threatens to eventually create a sugar high in equities. We aren’t there yet, but markets are floating on a sea of new money. Inflation hedges (real estate, commodities, materials companies) will do well. Traditional fixed income (long-term bonds) is at risk. The return of inflation is a very real threat to the long-term health of the US economy, and something you will hear me talking about more in the months ahead..

Integrated Financial Group

Kevin Garrett – Integrated Financial Group

My firm specializes in working with people that experience what we call “Sudden Income.” Typically the income came from one of these events:
1) Accessing and Managing Retirement Assets
2) A Performance Contract (Typically a Sports or Entertainment Contract)
3) Divorce Settlement
4) Inheritance or Insurance Payout
5) Sale of a Business or Stock Options
6) A Personal Injury Settlement

I believe the unique nature of these events requires specialized professional experience, empathy, and communication to deal with both the financial changes and the life changes that inevitably come with them.

My clients value my ability to simplify complex strategies into an actionable plan. They also appreciate that I am open, non-judging, and easy to talk to about their dreams and fears. Each client defines financial success differently and my goal is to guide them from where they are now to where they want to be. As my client’s advisor, my goal is to provide them with a lifetime income stream, improving returns, protecting their funds, and managing taxes.

Firm Specialties:

    • Retirement Planning For Business Owners & Executives
    • Woman’s Unique Financial Planning Needs
    • Professional Athletes
    • Investment/Asset Allocation Advice
    • Estate Planning
    • Risk Management
    • Strategic Planning

Kevin was listed in The Wall Street Journal as “One of the Financial Advisors In The Southeast That You Need To Know”

Kevin was listed in Forbes Magazine’s Annual Financial Edition as a Five Star Financial Advisor

Kevin has been awarded the Five Star Professional Wealth Manager in Atlanta Magazine in 2012, 2014, 2015, 2016, 2017,2018, and 2019.

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers.

KEVIN GARRETT, AWMA, CFS
Integrated Financial Group
200 Ashford Center North, Ste. 400 | Atlanta, GA 30338
Phone | 770.353.6311
Email | kgarrett@intfingroup.com
Website | kevingarrettifg.com

 

Posted on

Key Items I’m Watching This Year Market Commentary – January 17, 2021

Now that we are a few weeks into the new year, I wanted to look forward a bit and briefly discuss some of the things I’m questioning and watching this year. I like to go through this process each year to force a review of my thinking and the strategies that come from those thoughts that I pass along to you.

Will stock concentration continue?
Five stocks represent a quarter of the S&P 500, which is the largest weighting for five stocks since the early 1970s. It’s hard seeing this continue, but it’s harder to come up with a reason why it won’t.

Will value come back?
Over the last 5 years, the Russell 1000 Value Index has grown by 9% a year. Not bad, except when you compare it to its growth counterpart, which has grown at 21% a year. Maybe we should be talking less about value being dead and more about growth being impossible to keep up with.

One of the reasons for the discrepancy in returns has to do with the difference in sector weights. Value has 29% fewer technology stocks and 26% more financials, industrials, and energy. The spread between value and growth on fundamental factors is as wide as it has been since 1999, and on some metrics, it’s even wider. But is it different this time? You cannot rule it out.

Will the stocks that benefited the most from Covid continue to outperform?
The world looks different today than it did a year ago. People are working from home, and they are wearing masks in the street. Some parts of our lives and some parts of the economy are changed forever. The question is, has the market already discounted all the change and then some?

Zoom, Peloton, Docusign, Teladoc, Shopify, and Wayfair gained an additional $300 billion in market cap this year. For comparison, that’s twice as much as the combined value of Delta, Las Vegas Sands, Marriott, Royal Caribbean, and Simon Property.

Again, the Covid beneficiaries added twice as much in market cap this year as the combined value of the badly hurt names by the virus. Did the market get this right? Does the gap narrow this year, or does it continue to widen?

Irrational Behavior
Investors went a little crazy this year. And I don’t mean in the way that Zoom gained $100 billion in market cap. That might be justified. But what investors did after Apple and Tesla announced that they were splitting their stocks was absolutely insane.

Apple announced a stock split on July 30th. On July 31st, the stock gained 10.5%. That was its second-best performing day of the last decade. $172 billion in additional market cap was added one day because investors were getting four shares for every 1 they had previously, with the price of their shares getting cut by 75%. In theory, this shouldn’t impact the value of a company. In reality, it really it did!

Will investors continue to ignore things like common sense? Investor behavior is impossible to predict, but I’m really looking forward to seeing whether or not 2021 is a continuation of what feels like irrational behavior because often such behavior ends badly.

Where does the Dollar Go? 
Maybe all that money printing is finally catching up with us. For the first time in a long time, the mighty dollar is starting to show signs of weakness. This has implications for the global economy and implications for U.S. investors.

A weaker dollar is good for gold and good for non-hedged foreign stocks. Gold quietly made an all-time high earlier in the year, and international stocks are showing signs of life, after doing a whole lot of nothing over the last decade.
International developed stocks (EFA), think Japan, United Kingdom, have only outperformed U.S. stocks once in the last 8 years. This is another one of those things that shouldn’t continue forever, but it’s hard to make the case why it wouldn’t.

Will we see more institutional adoption of Bitcoin/Cryptocurrencies?
Speaking of dollars, it has been a wild year for Bitcoin. Until recently, Grayscale’s Bitcoin was the only way for U.S. investors to access bitcoin in a listed fund. But recently, competition is showing up, providing investors more options.

Until now, Bitcoin/cryptocurrencies have been mostly a fringe asset and has not had a place in the portfolio of 99% of investors. What happens if institutional investors start to get involved?

Will the yield curve continue to steepen?
The yield curve, historically one of the most predictive economic indicators, went negative in 2019. That got a ton of attention at the time. Once again, it preceded a recession, albeit one that had nothing to do with the underlying economy. Be that as it may, right now it is at a 3-year high and I see few people talking about it.

A steeper yield curve, again, in theory, is good for economic growth and rising inflation expectations. With the Fed committed to keeping short-term rates low for the next few years, this may continue to widen, and maybe longer-term bonds start to outpace inflation.

And What About SPACs?
What Is a Special Purpose Acquisition Company (SPAC)? It is a company with no commercial operations that are formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company.

Also known as “blank check companies,” SPACs have been around for decades. In recent years, they’ve become more popular, attracting big-name underwriters and investors and raising a record amount of IPO money in 2019. In 2020 SPACs raised $64 billion. And they’re just getting started.

According to Goldman Sachs, $61 billion in SPAC IPO proceeds are currently searching for acquisition targets. I cannot wait to see this. There are going to be some spectacularly bad deals come through.

It’s always hard to see things changing. And then along comes a year like 2020. Nobody had any of this on their list at the end of 2019. 2021 is sure to deliver some surprises, and unlike the last dreadful year, hopefully, those surprises will be for the better.

Content in this material is for general information only and 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. The economic forecasts set forth in this material may not develop as predicted and no strategy assures success or protects against loss. Investing involves risk including loss of principal.

 

Integrated Financial Group

Kevin Garrett – Integrated Financial Group

My firm specializes in working with people that experience what we call “Sudden Income.” Typically the income came from one of these events:

1) Accessing and Managing Retirement Assets

2) A Performance Contract (Typically a Sports or Entertainment Contract)

3) Divorce Settlement

4) Inheritance or Insurance Payout

5) Sale of a Business or Stock Options

6) A Personal Injury Settlement

I believe the unique nature of these events requires specialized professional experience, empathy, and communication to deal with both the financial changes and the life changes that inevitably come with them.

My clients value my ability to simplify complex strategies into an actionable plan. They also appreciate that I am open, non-judging, and easy to talk to about their dreams and fears. Each client defines financial success differently and my goal is to guide them from where they are now to where they want to be. As my client’s advisor, my goal is to provide them with a lifetime income stream, improving returns, protecting their funds, and managing taxes.

Firm Specialties:

    • Retirement Planning For Business Owners & Executives
    • Woman’s Unique Financial Planning Needs
    • Professional Athletes
    • Investment/Asset Allocation Advice
    • Estate Planning
    • Risk Management
    • Strategic Planning

Kevin was listed in The Wall Street Journal as “One of the Financial Advisors In The Southeast That You Need To Know”

Kevin was listed in Forbes Magazine’s Annual Financial Edition as a Five Star Financial Advisor

Kevin has been awarded the Five Star Professional Wealth Manager in Atlanta Magazine in 2012, 2014, 2015, 2016, 2017,2018, and 2019.

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers.

KEVIN GARRETT, AWMA, CFS

Integrated Financial Group

200 Ashford Center North, Ste. 400 | Atlanta, GA 30338

Phone | 770.353.6311

Email | kgarrett@intfingroup.com

Website | kevingarrettifg.com

 

Posted on

6 Months From The Low – Market Commentary – 9/25/20

On March 23, 2020, the S&P 500 Index closed down 2.9% for the day, bringing its total loss from its all-time high to 33.9%. The index was in the midst of its fastest bear market ever. A day earlier, New York Governor Andrew Cuomo had ordered the statewide closure of all non-essential businesses in an effort to slow the spread of the COVID-19 virus, following California’s example and kickstarting a wave of similar lockdowns across states that would ultimately bring the unemployment rate to more than 14%. Although nobody knew it at the time, that day marked the low for the closely watched stock market barometer, and it began a V-shaped recovery. The S&P 500 eclipsed its previous high by mid-August and rose 60% from the March 23 bottom through its most recent high point on September 2.

Having a large allocation to technology and growth companies whose businesses have been more insulated from the negative impacts of the virus certainly has helped the S&P 500, however, all 11 sectors have gained at least 30% from the low. In addition, the Russell 2000 Index, which measures the performance of small-cap companies in the United States, was among the worst-hit during the February-March bear market, but it has actually outperformed the S&P 500 since the market bottom.

History tells us that the gains may not necessarily be over either. While the S&P 500 has already made new all-time highs this month, other key indexes remain well below all-time highs, potentially leaving plenty of room for upside if the economy continues to recover.

Perhaps most importantly, I do not view the recent pullback in stock prices as investors reassessing the durability of the recovery. Since September 2, credit spreads have remained contained, Treasury yields have held steady, and more economically sensitive areas of the market such as industrials, financials, and even real estate have outperformed large-cap growth and the information technology sector. This is the exact opposite of what we saw in February and March. Back in early April when we were just starting to rebound, I told you that based on some reasonable assumptions that I could see the market rebounding to around 3150. While we have seen a significant market decline in September, I am raising my year-end fair value target for the S&P 500 to 3,350-3,400, implying a little upside still to come through the remainder of 2020.

Integrated Financial Group

Kevin Garrett – Integrated Financial Group

My firm specializes in working with people that experience what we call “Sudden Income.” Typically the income came from one of these events:

1) Accessing and Managing Retirement Assets

2) A Performance Contract (Typically a Sports or Entertainment Contract)

3) Divorce Settlement

4) Inheritance or Insurance Payout

5) Sale of a Business or Stock Options

6) A Personal Injury Settlement

I believe the unique nature of these events requires specialized professional experience, empathy, and communication to deal with both the financial changes and the life changes that inevitably come with them.

My clients value my ability to simplify complex strategies into an actionable plan. They also appreciate that I am open, non-judging, and easy to talk to about their dreams and fears. Each client defines financial success differently and my goal is to guide them from where they are now to where they want to be. As my client’s advisor, my goal is to provide them with a lifetime income stream, improving returns, protecting their funds, and managing taxes.

Firm Specialties:

    • Retirement Planning For Business Owners & Executives
    • Woman’s Unique Financial Planning Needs
    • Professional Athletes
    • Investment/Asset Allocation Advice
    • Estate Planning
    • Risk Management
    • Strategic Planning

Kevin was listed in The Wall Street Journal as “One of the Financial Advisors In The Southeast That You Need To Know”

Kevin was listed in Forbes Magazine’s Annual Financial Edition as a Five Star Financial Advisor

Kevin has been awarded the Five Star Professional Wealth Manager in Atlanta Magazine in 2012, 2014, 2015, 2016, 2017,2018, and 2019.

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers.

KEVIN GARRETT, AWMA, CFS

Integrated Financial Group

200 Ashford Center North, Ste. 400 | Atlanta, GA 30338

Phone | 770.353.6311

Email | kgarrett@intfingroup.com

Website | kevingarrettifg.com

 

Posted on

Economic Update and an Important Message to Parents Market Commentary – August 18, 2020

Late last week the government reported that the U.S. economy created 1.763 million new jobs last month. The expectations had been for 1.48 million. It’s good to see the numbers going in the right direction.

These are huge gains in employment, but it comes after even larger losses. To be sure, the economy is a long way from where it was just six months ago. The unemployment rate is down to 10.2%. We’ve had recessions that peaked with lower unemployment rates. The number of unemployed people dropped by 1.4 million to 16.3 million. The labor-force participation rate is 61.4%, which isn’t as bad as I had expected.

Let’s look at leisure and hospitality, which is a crucial sector for the economy. Leisure and hospitality added 592,000 jobs in July. In May and June, the sector added 3.4 million jobs. That sounds impressive, but leisure and hospitality lost over 8.3 million jobs in March and April.

We had more good news for the jobs market on Thursday, when the jobless-claims report finally fell below one million. The number of folks filing for jobless benefits fell to 963,000. That’s the first time in 20 weeks it came in under one million. Economists had been expecting 1.1 million.

While the jobs market is better, there’s still a long, long way to go. We also saw strong CPI numbers, which surprised me a bit as the increases were the largest in years. Something to continue to watch.

We’re also seeing another move towards cyclical stocks. By this, I mean stocks whose fortunes are closely tied to the broader economy. When cyclicals do well, that’s often though, not always an early sign of an improving economy. Perhaps Wall Street is sensing that the economy will reopen sooner than expected.

An Important Message For Parents Of College-Aged Kids

For those of you like me who are sending their children back to college, there is an important step to take now more than ever as we live through this health crisis and want to protect our kids as much as possible even as they are moving away to a college campus.

For my readers in Georgia, the law states that a person who is 18-years or older is considered an adult. At this point, parents cannot legally access their medical or financial matters. To help make sure that parents can continue protecting their children while they’re away at college, it is a good idea to create two essential estate planning documents: a financial power of attorney and an advance directive for health care. For my readers in other states and other countries, it would be wise to check your state’s laws.

Financial Power of Attorney

A financial power of attorney is someone who is legally authorized to act on another person’s behalf. A financial power of attorney can help with money, real estate, or legal matters. If the student gets sick or becomes incapacitated, the parent with the financial power of attorney can make sure that any bills are paid, and any legal issues are handled appropriately.

If a student becomes incapacitated and they have not named a financial power of attorney, the court will likely appoint a guardian or a conservator to help with any financial or legal issues. That court-appointed individual may not necessarily be the student’s parent.

Advance Directive for Health Care

An advance directive for health care is a legal document in which a person lists their health care and treatment preferences. It puts their doctors on notice about medical decisions if they are otherwise able to communicate those wishes due to an injury or illness. Within the advance directive, a person can designate their medical power of attorney. If a college student designates their mother or father as their medical power of attorney, that parent can speak to their child’s doctor, look at any health care records, and make decisions about their child’s medical treatment.

If a student gets hurt or seriously ill without having an advance directive in place, there could be delays in making urgent health care decisions. If the parent is not named the medical power of attorney, he or she might have to petition the court in order to act on their child’s behalf.

While I don’t practice law, I have a great group of legal experts in my network to help answer your questions. If you want to discuss this further, feel free to contact me and I will do my best to help!

 

Kevin Garrett – Integrated Financial Group

My firm specializes in working with people that experience what we call “Sudden Income.” Typically the income came from one of these events:

1) Accessing and Managing Retirement Assets

2) A Performance Contract (Typically a Sports or Entertainment Contract)

3) Divorce Settlement

4) Inheritance or Insurance Payout

5) Sale of a Business or Stock Options

6) A Personal Injury Settlement

I believe the unique nature of these events requires specialized professional experience, empathy, and communication to deal with both the financial changes and the life changes that inevitably come with them.

My clients value my ability to simplify complex strategies into an actionable plan. They also appreciate that I am open, non-judging and easy to talk to about their dreams and fears. Each client defines financial success differently and my goal is to guide them from where they are now to where they want to be. As my client’s advisor, my goal is to provide them with a lifetime income stream, improving returns, protecting their funds and managing taxes.

Firm Specialties:

  • Retirement Planning For Business Owners & Executives
  • Woman’s Unique Financial Planning Needs
  • Professional Athletes
  • Investment/Asset Allocation Advice
  • Estate Planning
  • Risk Management
  • Strategic Planning

Kevin was listed in The Wall Street Journal as “One of the Financial Advisors In The Southeast That You Need To Know”

Kevin was listed in Forbes Magazine’s Annual Financial Edition as a Five Star Financial Advisor

Kevin has been awarded the FIVE Star Professional Wealth Manager in in Atlanta Magazine in 2012, 2014, 2015, 2016, 2017,2018 and 2019.

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers.

KEVIN GARRETT, AWMA, CFS

Integrated Financial Group

200 Ashford Center North, Ste. 400 | Atlanta, GA 30338

Phone | 770.353.6311

Email | kgarrett@intfingroup.com

Website | kevingarrettifg.com

 

Posted on

How The Stock Market Can Predict Elections – Market Commentary – July 13

Kevin Garrett – Integrated Financial Group

2020 is an election year, and as we get closer to November, I expect this to replace COVID-19 and the recession at the top of investors’ minds. The makeup of Congress may influence stock market performance, and how stocks and the economy perform prior to the election may forecast who will win.

THE MAKEUP OF CONGRESS IS VERY IMPORTANT

Although all election years feel different, 2020 no doubt may be one of the most unique election years ever. We have a pandemic, a deep recession, extremely heightened partisanship, a mail-in ballot controversy, an unpredictable president, and the oldest presidential candidate ever.

Amazingly, 1940 was the last time the S&P 500 Index was lower during an election year with an incumbent in the White House. Historically, when a president has been up for reelection, it has tended to boost stocks.

Stocks were down big in 2008-but President George W. Bush had finished his two terms. It isn’t about Republican or Democrat-it’s about incumbents trying to boost the economy and stock prices by the time voters go to the polls.

I’m often asked if stocks perform better under a Republican or Democratic president. I take a different view and point out that stocks have tended to do their best when we have a split Congress. Markets tend to like checks and balances to make sure one party doesn’t have too much sway.

When Republicans have controlled both chambers in Washington, DC, on average the S&P 500 has gained13.4% per year and gross domestic product (GDP) has grown 3%. When Democrats have controlled both the House of Representatives and the Senate, the economy did a little better, with GDP growth of 3.3%, while the S&P 500 was up 10.7% on average. Some of the best stock gains in recent memory took place under a split Congress. Stocks gained close to 30% in 1985, 2013, and 2019, all under a split Congress. The average S&P 500 gain with a divided Congress was 17.2% while GDP growth averaged 2.8%, again suggesting markets may prefer split power come November.

WATCH THE ECONOMY

History shows that the US economy has had major bearings on the presidential election outcomes. If there has been a recession during the year or two before the election, the incumbent president has tended to lose. If there were no recession during that time, the incumbent tended to win. Incredibly, the economy has predicted the winning president every year going back to President Calvin Coolidge, when he won despite a recession within two years of the election. But Coolidge inherited a recession when President Warren G. Harding passed away, and by the time people voted in November 1924, the Roaring ’20s had started to take hold, and the economy was strong again.

My analysis suggests the 2020 presidential race is still up in the air. If the economy continues to open up, a vaccine is on the way, and the massive stimulus continues to drive asset prices higher, President Trump’s chances may improve. A weak economy struggling to come out of recession and weaker markets would likely favor challenger former Vice President Joe Biden.

AND WATCH THE STOCK MARKET

Since 1928, the stock market has accurately predicted the winner of the presidential election 87% of the time, including every single election since 1984. It’s quite simple. When the S&P 500 has been higher the three months before the election, the incumbent party usually has won; when stocks were lower, the incumbent party usually has lost.

Think back to 2016, when virtually no one expected Hillary Clinton to lose-except for the stock market. Stocks were quite weak leading up to the election, with the Dow Jones Industrial Average down nine days in a row. Copper (a President Trump play on infrastructure) was in the green a record 14 consecutive days.

POTENTIAL POLICY CHANGES

Markets tend to be volatile ahead of elections because of the uncertainty around possible policy changes. In this election, the stakes are particularly high for corporate America because a takeover of the Senate by Democrats and a possible Biden victory reportedly may lead to an increase in the corporate tax rate from 21% to 28% and unwind the corporate earnings boost the 2017 Tax Cut and Jobs Act delivered.

Other areas to watch that could impact markets:

* Tighter financial regulation could have some market impact.
* Healthcare should perform well regardless of the election outcome with “Medicare for All” off the table.
* Energy could be hurt by a potential blue wave, but prices may get support from lower production and higher production costs.

So in summary, as we get closer to the November election, how stocks and the economy are doing could be a big signal for who will win the election and be in office in January.

KEVIN GARRETT, AWMA, CFS
Integrated Financial Group
200 Ashford Center North, Ste. 400 | Atlanta, GA 30338
Phone | 770.353.6311
Email | kgarrett@intfingroup.com

Website | kevingarrettifg.com

Thank you for visiting our blog.

Jim Weber – Managing Partner, ITB Partners

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

Jim Weber – Managing Partner,  ITB Partners

Posted on

Investor Behavior And The Future Impact On The Market – Market Commentary – June 22, 2020

Kevin Garrett – Integrated Financial Group

Stocks shook off the 5.9% S&P 500 Index drop a week ago Thursday by gaining three days in a row before fading a bit at week’s end. While researching and reading this week, two charts stood out to me that tell us quite a lot about how investors have reacted during this volatile market and what could be next.

Incredibly, nearly a third of all investors over 65 years old sold their full equity holdings. With stocks now back near highs, this is yet another reason to have a plan in place before trouble comes, as making decisions when under duress can lead to the exact wrong decision.

As shown in the above chart, according to data from Fidelity Investments, nearly 18% of all investors sold their full equity holdings between February and May, while a much higher percentage that was closer to retirement (or in retirement) sold. Some might have bought back in, but odds are that many are feeling quite upset with the record bounce back in stocks here.

Along these same lines, investors have recently moved to cash at a record pace. In fact, there is now nearly $5 trillion in money market funds, almost twice the levels we saw this time only five years ago. Also, the past three months saw the largest three-month change ever, as investors ran to the safety of cash. If you were looking for a reason stocks could continue to go higher over the longer term, there really is a lot of cash on the sidelines right now.

 

Stocks are Overbought

Last, I noted a few weeks ago that the extreme overbought nature of stocks here is actually consistent with the start of a new bull run, not a bear market bounce, or the end of a bull market. Adding to this, the spread between the number of stocks above their 50-day moving average and 200-day moving average was near the highest level ever.

Looking at other times that had wide spreads, they took place near the start of major bull markets. Near-term the potential is there for a well-deserved pullback, but going out 6 to 12 months, stocks have consistently outperformed historically.

About Integrated Financial Group

My firm specializes in working with people that experience what we call “Sudden Income.” Typically the income came from one of these events:

1) Accessing and Managing Retirement Assets
2) A Performance Contract (Typically a Sports or Entertainment Contract)
3) Divorce Settlement
4) An inheritance or Insurance Payout
5) Sale of a Business or Stock Options
6) A Personal Injury Settlement

I believe the unique nature of these events requires specialized professional experience, empathy, and communication to deal with both the financial changes and the life changes that inevitably come with them.

My clients value my ability to simplify complex strategies into an actionable plan. They also appreciate that I am open, non-judging, and easy to talk to about their dreams and fears. Each client defines financial success differently and my goal is to guide them from where they are now to where they want to be. As my client’s advisor, my goal is to provide them with a lifetime income stream, improving returns, protecting their funds, and managing taxes.

 

Firm Specialties:

  • Retirement Planning For Business Owners & Executives
  • Woman’s Unique Financial Planning Needs
  • Professional Athletes
  • Investment/Asset Allocation Advice
  • Estate Planning
  • Risk Management
  • Strategic Planning

Kevin was listed in 

The Wall Street Journal as “One of the Financial Advisors In The Southeast That You Need To Know” 

 

Kevin was listed in Forbes Magazine’s Annual Financial Edition as a Five Star Financial Advisor  

 

Kevin has been awarded the FIVE Star Professional Wealth Manager in Atlanta Magazine in 2012, 2014, 2015, 2016, 2017, 2018, and 2019.

 

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers.

 

KEVIN GARRETT, AWMA, CFS
Integrated Financial Group
200 Ashford Center North, Ste. 400 | Atlanta, GA 30338
Phone | 770.353.6311
Email | kgarrett@intfingroup.com

Website | kevingarrettifg.com

Thank you for visiting our blog.

Jim Weber – Managing Partner, ITB Partners

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

Jim Weber – Managing Partner, ITB Partners

 

Posted on

Seeing Positive Signs In Economic Wreckage

Market Commentary – May 5, 2020

When the employment report for April is released this Friday, the economic damage from the deepest of the Coronavirus shutdowns will become clear.I am estimating that nonfarm payrolls will be down roughly 22 million versus March, and the unemployment rate will skyrocket to around 17.0%, the highest reading since at least 1948.

To put that in perspective, during the subprime-mortgage panic of 2008, payrolls declined 8.7 million over a 25-month period. Now, it looks like we lost almost three times as many jobs in just one month. The highest unemployment rate since the wind-down from World War II was 10.8% at the end of the 1981-82 recession. The jobless rate peaked at 10.0% after the Great Recession.

Unfortunately, I expect the unemployment rate to be even higher in May, and it is very difficult to believe that $2.5 trillion in government spending offset more than 50% of the damage. I hope I am wrong about that, but promising money to companies for payroll expenditures – but only having them able to open at 25% to 40% capacity – will not save many restaurants or bars.

While the economic damage is horrific, there are some positive signs. While 30 million workers filed for unemployment benefits in the past six weeks, those currently receiving benefits (what are called “continuing claims”) are up a smaller 16 million in the first five weeks of that period and will be up around 20 million for the full six-week period. Yes, that’s still awful, but it tells us that the Payroll Protection Plan and areas of actual job creation, such as online retailing and delivery services, are offsetting some of the damage.

This kind of job destruction will be accompanied by a very large decline in GDP. We’re estimating a contraction at a 30% annual rate in the second quarter. But everyone already knows that.

We won’t get that data until late July, and by then I expect the economy to be expanding, albeit from a low base. In fact, I’m already seeing some light at the end of the tunnel. During the week ending Saturday, May 2, 939,790 passengers went through TSA checkpoints at airports. That’s up 26% from the prior week and up 40% from two weeks ago. The amount of motor gasoline supplied has grown three weeks in a row, and is up a total of 16%. Hotel occupancy and railcar traffic are both up from a month ago. This high-frequency data will give a clearer read on the pulse of the economy as we gradually reopen, and is something I review weekly.

Anyone who ventures outside will notice more cars on the road and more activity, including in businesses that are still required to be closed to the public but are preparing for clearance to re-open. Many researchers are using cell-phone location data to track the movement of people. For example, Apple looks at “routing requests” on map applications. In mid-April, both walking and driving requests were down roughly 60% from January 13th. As of Saturday, walking and driving requests were only down 29% and 16%, respectively.

This recession will be brutal, the worst of our lifetimes. But it is not a normal recession, and it will also be short. Investors should keep in mind that, although the weeks ahead will be tough, there are better days beyond them.

 

Kevin Garrett – Integrated Financial Group

My firm specializes in working with people that experience what we call “Sudden Income.” Typically the income came from one of these events:

1) Accessing and Managing Retirement Assets
2) A Performance Contract (Typically a Sports or Entertainment Contract)
3) Divorce Settlement
4) Inheritance or Insurance Payout
5) Sale of a Business or Stock Options
6) A Personal Injury Settlement

I believe the unique nature of these events requires specialized professional experience, empathy, and communication to deal with both the financial changes and the life changes that inevitably come with them.

My clients value my ability to simplify complex strategies into an actionable plan. They also appreciate that I am open, non-judging, and easy to talk to about their dreams and fears. Each client defines financial success differently and my goal is to guide them from where they are now to where they want to be. As my client’s advisor, my goal is to provide them with a lifetime income stream, improving returns, protecting their funds, and managing taxes.

Firm Specialties:

  • Retirement Planning For Business Owners & Executives
  • Woman’s Unique Financial Planning Needs
  • Professional Athletes
  • Investment/Asset Allocation Advice
  • Estate Planning
  • Risk Management
  • Strategic Planning

Kevin was listed in 

The Wall Street Journal as “One of the Financial Advisors In The Southeast That You Need To Know” 

 Forbes Magazine’s Annual Financial Edition as a Five Star Financial Advisor  

Kevin has been awarded the FIVE Star Professional Wealth Manager in Atlanta Magazine in 2012, 2014, 2015, 2016, 2017,2018, and 2019.

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers.

KEVIN GARRETT, AWMA, CFS
Integrated Financial Group
200 Ashford Center North, Ste. 400 | Atlanta, GA 30338
Phone | 770.353.6311
Email | kgarrett@intfingroup.com
Website | kevingarrettifg.com

Posted on

The Economy, Inflation, and Interest Rates Market Commentary – April 23, 2020

 

With each passing week, the economic damage wrought by the Coronavirus and the resulting shutdowns grows larger. It’s not just businesses, both small to large, feeling the pain. Educational institutions, hospitals, churches, not-for-profits, and state and local governments are all finding it hard to remain financially viable.

The US has essentially turned off broad swaths of the private sector – the ultimate and only source of income and wealth creation. Without the private sector, there is no money to pay for government, schools, healthcare, or charitable organizations. To make up for it, the US has resorted to an open-ended expansion of the Federal Reserve’s balance sheet (and expanded their power) and huge increases in government borrowing and spending, the likes of which the US has never seen outside of wartime.

As in 2008, many are worried that huge increases in Quantitative Easing and money growth, along with the purchasing of debt directly from the market, will lead to much higher inflation. However, at least for now, that doesn’t appear to be a problem. The consumer price index (CPI) fell 0.4% in March and is up only 1.5% from a year ago. This week, West Texas Intermediate (WTI) oil was trading at record low levels. This suggests another negative number for the CPI in April.

But the drop in measured consumer prices in March was not just driven by lower energy prices. Other factors included lower prices for hotels, airline fares, and clothing. What do all these categories have in common? A massive drop in customers due to the shutdown.

Sure, hotels are cheap today, but almost no one is using them; hotel occupancy rates are down about 70% from a year ago. Yes, anyone who flies can get cheap seats, but the number of people going through TSA checkpoints is down 96% from a year ago. Clothing prices fell 2% in March as sales at clothing & accessory stores fell 50%. Who had time to buy clothes when you had to stock up on groceries and toilet paper?!?

In other words, prices for the actual items people bought in March probably did not fall as much as the CPI report suggested, and the same argument will probably apply to April, as well. Bottom line: in the near term, while it may look like deflation, that’s not true for the average consumer.

As I look further out, official measures of prices will eventually turn back up. I see multiple broad forces at work on consumer price inflation, which should prevent us from lurching into either ultra-high inflation or Great-Depression-style persistent deflation.

Obviously the Fed’s actions will boost various measures of the money supply. And the unusually generous unemployment benefits for many workers who have recently lost their jobs means those businesses that are trying to ramp up production will have to offer higher wages than usual to attract workers, which could feed through to higher end-prices.

However, in spite of these reasons to fear higher inflation, there is one big reason to avoid fearing hyperinflation: the demand for holding money balances, by both individuals and companies, is going sky high. The precedent of shutting down the economy will make cash King. That’s the only way to survive. So, yes, the money supply will be much higher, but velocity will be much lower; people will hold cash dear.

While I think inflation measures will head towards 3.0% in 2021, higher than it was immediately prior to the Coronavirus, hyperinflation is unlikely.

Interest rates will go up eventually, too, but don’t expect a sharp rebound. After the Great Recession, the Fed didn’t raise short-term rates again until late 2015, when the unemployment rate hit 5.0%. After the expected spike in joblessness in the next couple of months, it’ll be a long time before we get back to 5.0% unemployment. Meanwhile, having witnessed two massive recessions in a row, investors will place an even larger premium on safety and risk-aversion than they have for the past decade, which will hold the 10-year yield down relative to the economic fundamentals we’ll see in the eventual recovery.

We’ve never seen an economic shutdown like this before. The ability of people and the government to panic like this changes nearly every economic calculation. For inflation, there are forces going both ways. Only time will ultimately tell.
Kevin Garrett – Integrated Financial Group
About Kevin

Kevin was listed in 

The Wall Street Journal as “One of the Financial Advisors In The Southeast That You Need To Know” 

Kevin was listed in Forbes Magazine’s Annual Financial Edition as a Five Star Financial Advisor  

 

My firm specializes in working with people that experience what we call “Sudden Income.” Typically the income came from one of these events:

1) Accessing and Managing Retirement Assets
2) A Performance Contract (Typically a Sports or Entertainment Contract)
3) Divorce Settlement
4) Inheritance or Insurance Payout
5) Sale of a Business or Stock Options
6) A Personal Injury Settlement

I believe the unique nature of these events requires specialized professional experience, empathy, and communication to deal with both the financial changes and the life changes that inevitably come with them.

My clients value my ability to simplify complex strategies into an actionable plan. They also appreciate that I am open, non-judging, and easy to talk to about their dreams and fears. Each client defines financial success differently and my goal is to guide them from where they are now to where they want to be. As my client’s advisor, my goal is to provide them with a lifetime income stream, improving returns, protecting their funds, and managing taxes.

 

Firm Specialties:

  • Retirement Planning For Business Owners & Executives
  • Woman’s Unique Financial Planning Needs
  • Professional Athletes
  • Investment/Asset Allocation Advice
  • Estate Planning
  • Risk Management
  • Strategic Planning

Kevin has been awarded the FIVE Star Professional Wealth Manager in Atlanta Magazine in 2012, 2014, 2015, 2016, 2017, 2018, and 2019.

 

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers.
KEVIN GARRETT, AWMA, CFS

Integrated Financial Group

200 Ashford Center North, Ste. 400 | Atlanta, GA 30338

Phone | 770.353.6311

Email | kgarrett@intfingroup.com

Website | kevingarrettifg.com

 

 

 

 

Share the Wealth of Knowledge!

 

Please share this market update with family, friends, or colleagues. If you would like us to add them to our list, simply click on the “Forward email” link below. We love being introduced!

 

 

 

 

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure the performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.  It is an unmanaged index and cannot be invested into directly.  Past performance is no guarantee of future results.

 

The opinions voiced in this material are for general information only and are not intended to provide specific investment advice or recommendations for any individual.  If you do not want to receive further editions of this weekly newsletter please reply and ask to be removed.

 

LPL Tracking #