I know the shut-down is being relaxed across the country, but most of us are still spending a lot of time at home. Before you fill up your calendar, I have something to add to your quarantine to-do list; the Get-Your-Stuff-Together Notebook. 

Creating a notebook can be a tedious process, which is why it rarely gets done. Who has the time to weed through all their papers, compile a list of all your important financial details, then put them together in a somewhat organized fashion? Well, thanks to a global pandemic and a stay-at-home order, you do.

If you’ve ever had to search for documents after a loved-one passed, then you know the importance of having financial information organized and available. You can help alleviate family members’ unneeded stress at this difficult and challenging time.

If you’re interested in taking this on, below are 8 sections you’ll want to include. If you’d rather pick up a book that’s ready to fill in, contact us at (503)387-3222 or and we’ll put our Allevi-8 Book aside for you. We have 25 available to give out.

1. Financial Plan

This is a good spot to put your overall financial plan for the future. What are you contributing to retirement accounts? How much are they likely to grow? Any annuities? What about investment property? Inheritances, pensions, social security…. We can help you put one of these together if you’d like.

2. Contacts

Some of the most helpful information a beneficiary/executor could have is to know the professionals you were working with. Contact information for the financial advisor, estate attorney, accountant, and insurance agent, are a few that should be listed.

3. Accounts

This is an important section for obvious reasons. Where are the assets that you’ve accumulated? Not just personal bank and investment accounts, but think about accounts as well that may be more difficult to access. You may want to include the company, account #, type of account, and approximate value. This should be updated at least annually.

4. Insurance

There’s over $1 Billion in life insurance that beneficiaries don’t collect every year because they didn’t know a policy existed. Don’t let this happen to you. Make a list of all the insurance policies (life, disability, long-term care…) you have and include: company, policy, type of policy, and the benefit coverages.

5. Estate Plan

Updating your will or trust is vital to making sure you leave a legacy and not a logjam. Include your will, trust, or leave a note of where to find those documents. This could also be a good spot for a letter with additional instructions for heirs. I wrote a note to my wife, “Uh oh, this isn’t good. If you’re reading this either I’m gone or you’re wishing I was!”

6. Taxes

After someone is gone, there’s a final tax return that needs to be prepared for their estate. Having past tax returns can be helpful for an accountant to complete this. Consider keeping a copy of your last few years of returns in this section.

7. Real Estate

Real estate is often the largest asset for an individual or family. This is a great spot for the deed/title, mortgage statements, and leases for an investment property.

8. Other

This is like the junk drawer for all the random stuff you didn’t put in earlier sections. Here are some ideas to include: passwords, car titles, business information, pet information, spare keys… The list goes on…

Once you’ve completed this, duplicate it electronically and store it in the cloud. Information in these cloud folders can be shared with anyone you desire.

Now, get organized, create a plan, alleviate your loved-ones-stress, and get-your-stuff-together.

Stock Portfolio Changes

We’ve made a few changes in our Stock Portfolio in the last few weeks. We received great news from quarterly earnings reports from the South-American Amazon, Mercadolibre MELI, and cybersecurity firm Fortinet FTNT last week. Both were up greater than 20% in one day! 

To celebrate the good performance, we sold some other stocks we bought during the downturn to raise cash; Target TGT and Home Depot HD got the boot out of the portfolio after approximately a 15% gain each. We also sold payment processor Square SQ after a puzzling 10% gain in one day after showing a terrible loss in the first quarter.

After making the sales, we bought a small position in the video call company Zoom Video Communications, Inc. ZM, anticipating a better than expected earnings report in June. The stock is up 18% since we bought it just two weeks ago.

It’s extremely challenging to outperform the stock market, but that’s what we’ve been trying to do in this portfolio. The stock market is now down approximately -8.5% for the year but the Stock Portfolio is positive by several percent (depending on the particular portfolio) over the same time period. 

We’re so thankful to the advice of the people we follow at Morningstar, Motley Fool, Jim Cramer, and Barron’s for helping us achieve this! We’ll hope it continues!

 Fund Portfolio Changes

We’re still holding a big position in a technology fund, First Trust Internet Fund FDN, in the Fund Portfolio we bought during the downturn. It has a 15% gain so far and we will likely sell at some point in the near future if the stock market continues to go higher.

If we see a “second wave” of the virus, the stock market will pull back and we will use some of the 15% cash we have to buy yet again.

We hope everyone is safe and sound and we look forward to talking soon. Until then, please let us know if we can do anything for you.

– Bruce Porter & Tim Porter, CFP®

No Tanks

What do you say if someone offers you a barrel of oil? No Tanks! I can almost hear you all groaning.

Life feels a little better today than a month ago. Not because it is better, but because we seem to have passed peak fear and are now letting just a little optimism seep into our outlooks. While the stock markets have stabilized – although still down from the beginning of the year – the low price of oil has been a continued concern.

The world’s crude oil is almost “homeless”…storage facilities in U.S. major crude-oil trading hub, Cushing, Oklahoma, are expected to fill up to capacity in the coming weeks.

“At least 18 Saudi-hired supertankers…due to arrive next month in the US…are ripe to be rerouted and will likely park as floating storage until a buyer emerges.”  Wall Street Journal 4/21/2020

About 80 supertankers out of 750 worldwide are now used to store oil rather than transport it, according to Saudi officials. Very Large Crude Carriers (VLCCs) rates were $27k/day four weeks ago. Today, they are getting  $300k/day because there’s no place to put the oil they are carrying. See image that links to the Seatrade Maritime News article.

Markets have reacted with negative prices to this worldwide glut of oil.  In effect, oil producers are saying, “We will pay you to take this oil off our hands because we have no place to store it.”

Why does the historic negative oil price have such a profound effect on stock prices?  Some reasons: 

  1. Banks – that have loans to oil-related companies, will be weakened as these loans are subject to default as the oil producers suffer with below profit level prices.  
  2. Jobs – there are many oil-related jobs that will be eliminated…adding to the largest (and quickest) U.S. unemployment stats since the Great Depression due to COVID-19.
  3. Sentiment – as if the Virus Crisis wasn’t enough, this oil price drop has added to the impression that the “sky is falling” and some investors sell out to avoid risk.

Our take on this oil glut is that when the government-mandated business and personal shutdown is concluded, life will begin a “new normal.”  At some point oil use will gradually rise along with travel, eating out, theater attendance, and retail shopping…all with a new emphasis on personal hygiene and social distancing.

Many expect pent-up demand to buoy markets once the Virus Crisis has subsided.  Buying patterns may be different…perhaps more online purchases than in brick and mortar stores.

In all this, we have found some positions in our accounts that have actually gained, and in some cases, we’ve taken profits.

Portfolio Changes

In our portfolio of funds, we bought SPDR Technology Fund XLK and sold it three weeks later for an 11% gain. We expect to buy that again if/when the market drops again. In other cases, we’ve sold to eliminate liabilities in our portfolio such as Emerging Markets positions. We now have an average of 15% in cash in this portfolio to deploy at the next pullback.

In our portfolio of stocks, we bought Microsoft MSFT, Home Depot HD, and Target TGT during the pullback. All are at gains today helping the return of this portfolio beat the stock market return by several % year-to-date. We also trimmed some winners: cybersecurity firm Fortinet FTNT and video game maker Activision ATVI, and sold some losers: online travel company Booking BKNG and the Chinese Google, Baidu BIDU. We now have approximately 15% cash in this portfolio to take advantage of the next leg down.

We hope everyone is safe and sound and we look forward to the day when we can have in-person meetings once again. Until then, please let us know if we can do anything for you.

– Bruce Porter & Tim Porter, CFP®

Details of Stimulus

As we see it there are three areas our clients should know about the $2 Trillion stimulus bill signed yesterday: Checks, Retirement Account Changes, and Small Business Relief. Below we’ve tried to list the details and point to some of the best resources we’ve found that could be helpful to our clients.


    How much will I receive?

  • Individuals who made less than $75k/yr will receive $1,200
  • Married couples who made less than $150k/yr will receive $2,400
  • Checks will be reduced by $5 for every $100 earned above those limits.
  • A credit of $500 will be added for each child under the age of 16
  • It appears people with taxable income less than $2,500/yr will not be eligible for the check.

    When will I receive my check?

  • The timeframe for delivery isn’t clear, possibly mid-April at the soonest.
  • If you elect to receive tax refunds via Direct Deposit, you will likely receive it sooner than mailed versions.

    What year is my income based on?

  • Income is based on 2019’s tax return.
  • If you have not filed 2019, it will be based on 2018’s tax return.


Below is a good concise set of bullets from giving a summary of changes to retirement accounts this year. The image links to the article.


We’ve been working with our banker to figure out the details of what’s available for small business (eligibility, amounts, etc.), and he just sent a pdf from the US Chamber of Commerce that explains them well. If you’re a small business owner, sole proprietor, or self-employed you’ll want to give this a read. It’s the most helpful piece I’ve seen yet. The entire document is below.

Hope some of these details are helpful. Contact us if we can answer any questions.

Stay healthy,

– Bruce Porter & Tim Porter, CFP®

End of the Beginning

It feels as if we haven’t had a single bit of good news since the start of this crisis. That’s not true of course. A few countries have had some success, but the negative news has significantly overwhelmed it. 

Higher and higher infection numbers, devastating deaths, dire economic projections, pictures of empty shelves, shuttered businesses and “stay home” orders have dominated.

The result has been stocks, bonds, gold, and oil have all gone down. Almost everything is lower this month except for guarantees and cash as we search for good news.

BUT TODAY, we have a glimmer of hope. A tiny ray of sunshine is emerging as Italy’s infections grew by the slowest amount, approximately 8% since the beginning of the crisis and Germany appears to be having success flattening the curve as well. See images from Johns Hopkins data.

Johns Hopkins
Johns Hopkins
Johns Hopkins

This is great news for the country of Italy, and those of us looking to estimate what the scenario could look like here in the US. It took Italy 32 days from the first 100 community spread infections to flatten the curve. It took Germany 24. If we’re on the same time-frame as Italy, we should see our curve flatten by April 4th. We’ll hope before.

Add that ray of hope to a $1 to $2 Trillion stimulus bill that “should” pass today, and we have the makings of some actual good news. Yes, honest-to-God good news! This will help our loved ones, our economy, suffering industries, the stock market, and our investment accounts.

Lest we get too optimistic though, let me quote Churchill after their first victory against the Germans in Egypt during WWII:

“We are not at the end, or the beginning of the end, but perhaps, the end of the beginning.”

We also are not at the end of our war against the virus. The stock market takes time to work through events such as these and typically goes through multiple stages. See chart of 2008-9.

1) An initial panic selloff, which stems from all bad news, max uncertainty, and no clear solution. 

The month of March has clearly been the first stage.

2) A short-term relief rally following good news after investors realize it’s not as bad as feared.

Starting today brought by peaking numbers across the globe, the expectation of the passing of the stimulus bill, and good news (hopefully) on the COVID-19 treatments from Gilead, Regeneron and/or other drugs.

3) A second and final drop when the terrible economic data – high unemployment, slower GDP, falling earnings – accompanies the fear. 

These numbers will start to come in as early as Thursday with HUGE unemployment numbers being reported, but most figures will be coming in April and May.

4) The stock market bottoms when the end of the crisis is in sight. Followed by hope for the future and a permanent move higher.

This will take new infections leveling off, shelter-in-place orders removed, people back in restaurants, planes and hotels. Then, it needs to be confirmed by companies reporting profits again.

Realistically, we don’t know how severe this downturn will be or how quickly the country can get back to work. The only thing we do know is there is a global effort to defeat this virus and with time it will be defeated. 

More Buys

To take advantage of some of this initial panic shock, we bought a little more yesterday. In the Growth Stock portfolio, we bought my wife’s favorite store Target TGT. Costco and Walmart have gotten most of the press lately for long lines and empty shelves, but Target will also benefit from Christmas-like sales in Spring. We like the company and love the stock at these lower levels.

Client Calls

We’re in the process of calling all our clients to talk through their current situation. We’re about half the way through the list and will be finishing those before month-end. One thing we want to stress is that each client needs to have enough cash for their distributions for the rest of the year. That way we won’t have to sell any stocks at depressed levels to fund distributions.

We’re looking forward to chatting with you if we haven’t already. Feel free to reach out to us if you need anything. We’ll either be in the office or taking calls from home.

Stay healthy,

– Bruce Porter & Tim Porter, CFP®

Time to Buy

Today the market dropped to a level that’s pricing in a recession later in the year. Recessions last on average 11 months and have an average pullback in the stock market of 30%. While there’s plenty of drama today about how to slow the spread of COVID-19, we believe the bad news is mostly priced in now and took advantage of the opportunity to buy some American stocks today. 

We bought Home Depot HD for the Growth Stock Portfolio and the SPDR Technology Fund XLK, which includes companies like Microsoft and Apple, in our Funds Portfolio.

We’re implementing Warren Buffet’s simple rule – be fearful when others are greedy and greedy when others are fearful – he wrote about in a letter from Oct, 2008. I recommend you give it a read as we work this through this difficult situation.

– Bruce Porter & Tim Porter, CFP®

Buy American, I am – Warren Buffet Oct 16, 2008

The financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So… I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.


A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month or a year from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

How low can stocks go?

That was the ominous query topping The Wall Street Journal’s “Money and Investing” section on March 9, 2009. Exactly 11 years ago today. I was sitting in our office with Bruce and we and our clients had just endured a 56% drop in the stock market over the previous 18 months. There was very little good news that day and we were all bracing for lower stock values.

That day marked the bottom of the stock market and was the beginning of the longest bull market (up market) in history.

Unfortunately, the title works for today too, as stocks fell again… Now down to a level from back in June of last year (see chart). 

Today’s news is that Russia and Saudi Arabia are engaged in an oil price battle, which dropped the price of oil 25% to $31/barrel. This is rattling a stock market already sick with COVID-19.

When markets go down like they have the last few weeks, and in 2008-9, investors tend to stay in the weeds and focus exclusively on short-term negative news to the detriment of anything long-term and/or positive. This is not helpful, but it is normal. Today let’s poke our heads up out of the weeds and take a look around.

COVID-19 will slow economic growth. 

True. Social distancing, event cancelations, and calls for quarantines will limit how much money consumers and businesses will spend. The falling price of oil today is reflecting this. In regards to large and small businesses, we are already getting reports that revenues are down, with the exception of Costco and a few others. Less revenues mean less profits, so stocks are falling. BUT there are a few silver linings:

  • Lower oil prices mean more money in our pockets
  • Lower interest rates to pay on our mortgages and for businesses to borrow and invest
  • Housing is still strong
  • Starting from a strong economy and low unemployment
  • The administration is proposing a stimulus package tomorrow to help

COVID-19 will push us into recession.

Maybe. A technical recession is two straight quarters of no economic growth for the country. This may happen, but it will depend on how long the COVID-19 keeps some of us from going out and spending money. The sooner it’s contained the sooner we can get back to normal and get back to growing the economy again.

It’s taken the Chinese two months to gain control of the outbreak, but it’s unclear how long it will take the US. See the chart below – website here – to see new cases of the virus in mainland China leveling off.

Biotech firm Gilead could have the key to a quicker recovery. They developed a drug for the Ebola epidemic called Remdesivir that is being touted by the World Health Organization as a treatment (not to be confused with a vaccine) to shorten the duration and reduce the severity of the virus. It’s undergoing trials currently and we should have more information this month. This will be a gamechanger if it proves effective. We’re watching this closely. 

This recession will be like 2008.

Unlikely. The recession we remember best is the one we went through last. The last recession was in 2008-9 and, this is important, the Great Recession of 2008-9 was a systemic problem with the foundation of our economy – the banking system. The banks were on the brink of collapse and the recovery took years. The issue we’re dealing with today is VERY different. Here are some key differences:

  • Not financial, but biological/humanitarian – We have the best biotechnology firms in the world working together for a treatment and a vaccine. Just the news of an effective drug should give all of us confidence and result in a nice bump in stocks.
  • Not long-term, but short-term – It took 4 years for stocks to recover from the Great Recession low of March 9, 2009 (Happy Anniversary!). There is no evidence to suggest it will take us that long to recover now. Our base case is a recovery in less than a year.
  • Not foundational, but it will affect the economy – A slowing of the economy is not all that unusual. Recessions happen quite often – 11 times since 1947 lasting an average of 11 months. Banks are on a much better footing now and will weather the storm much better this time around.

The bottom line is we are disappointed the stock market is down, as always. However, we are looking forward to the day when we can invest more at lower prices and watch those investments trend higher as COVID-19 is conquered. 

– Bruce Porter & Tim Porter, CFP®

Economics of Epidemics

I mentioned it in last month’s letter, but fear of the spread of Coronavirus is now gripping investors. As of today, the stock market has dropped 10% in one week as companies, economists, and individuals try to quantify what the economic impact of the virus may be around the world. So far this is a pretty standard pullback but we want to give some perspective in case it continues.

I don’t want to minimize the human tragedy of this event and certainly don’t take human suffering lightly. This is a biological and human tragedy first and an economic issue second. With that said I’d like to focus on the data of past epidemics to give us an idea of how this might affect our investments going forward.

First Trust, which is one of the fund companies we use to invest in, put out an informative piece earlier this week to show how epidemics of the past 40 years have affected the stock market. 

You can review below, but here are the main takeaways:

  •  Out of the 12 epidemics since 1980, 6 months after the epidemics the stock market was negative only once.
  • After 12 months, the stock market was negative in 2 of the cases. 
  • The average return of all epidemics in the stock market was 8.8% after 6 months and 13.6% after 12 months.

What does this tell us about Coronavirus? Every situation is different and I don’t want to read into this too much, but I think it’s safe to say this too shall pass. Will it last 6 or 12 months? I’m not sure. The bad news is still continuing as the spread is being followed around the world and possibly in our country. The stock market will likely react negatively until all the bad news is out. 

Changes to Portfolios

To be prepared for an event like this we’ve had approximately 15% cash/money market waiting to invest in most accounts. Typically we’d be ready to pull the trigger and be buying on a day like today, but we’d like to wait until more information is available before we do that. In the coming weeks, we’ll be looking to buy investments below their fair value as the emotion of fear overtakes facts and fundamentals. 

Because we never know when the market will stop going down, we typically invest at a few different times. For example, in the 2018 downturn, we invested when the S&P 500 pulled back 10% from the top and then at a 15% pullback. Those investments turned out to be great decisions. 

Below are the investments we’re interested in owning at lower prices:

Growth Stock Portfolio

  • Microsoft MSFT
  • Lowes LOW
  • Visa V
  • Adding to Boeing BA

Funds Portfolio

  • S&P 500 Index SPTM
  • Dividend Growth Fund DGRO
  • Pimco Dynamic Income Fund PDI
  • First Trust Internet Fund FDN

It’s hard to say how long it will take for these investments to be positive. Sometimes we get lucky and buy at the absolute bottom and they’re profitable quickly, but more than likely it will take some time to see the gains materialize. 

Warren Buffet was just quoted this week as saying he’s never seen a dip in the market that an investor shouldn’t have bought. We think that’s good advice and will follow it once again.

Please contact us if you have any questions or concerns! 

– Bruce Porter & Tim Porter, CFP®

China Goes Viral

The Coronavirus daily updates are on every news outlet I have. The unfortunate numbers are stacking up and the stock market is beginning to notice. Last week the year-to-date gains were erased as new cases appeared in our country. This week stocks are headed back up from a somewhat sketchy press release showing treatments for the virus “might” be helpful.

I keep being asked, “Why would the US stock market go down in response to this virus?” Here are the reasons:

  1. China sequestered 50 million in or near Wuhan. That area is now a ghost town, which means the economic impact in that area will be drastically lower. This is a huge negative for the economy of China, potentially lowering their GDP (annual growth rate) from 6% down to 4%.
  2. Now think of all the products the Chinese are not importing and buying from US companies during this time. Then think of the US multinational companies doing business in China like Starbucks, Target, Disney, Taco Bell, United Airlines, etc. These businesses are closed and will be taking losses for the time being.
  3. Finally, think about the slowdown in the global economy this will cause. Even though the US and global economies are growing, the pace of growth of 2.1% in the U.S. last quarter is modest and we can’t afford to slow down before we’ll be tipped into recession.
  4. You can start to see how if the Chinese economy sneezes – figuratively and literally – the US stock market could catch a cold, or maybe a virus is a better metaphor.

Let’s keep a level head though, we’ve seen this type of thing before. The SARS pandemic, another coronavirus from 2003, gives us some idea of what could happen. 8000 people were infected and 800 died from that virus. The stock market went down 10% in response, but in mid-March had bottomed and stocks rebounded up 26% for the year.

This virus is spreading faster with 28,000 infected today but, thankfully, has only one-fifth of the mortality rate at 563. The latest projection is for the virus to peak in April and subside from there. This means we’ll continue to hear about the tragic sicknesses and deaths, but it won’t last forever.

TD Ameritrade Conference

That brings me to the TD Ameritrade national conference Bruce and I attended in Orlando, FL last week. The conference was a treasure trove of best practices from some of the best and brightest advisors across the country. I came home with a long list of ideas to improve our portfolio, planning, advice, cybersecurity, and other aspects of our business

The other reason we attended the conference was to hear about the Charles Schwab TD Ameritrade buyout. It’s now official that Schwab will be acquiring TD Ameritrade and the deal, which will make one mammoth investment company managing over $5 Trillion in assets, should close the second half of 2020. There will be no changes until then, but after midyear, we’ll know more about what kind of changes will take place like name, website, etc.

One concern we had is that TD clients would have to create new Schwab accounts which would have created a lot of irritating paperwork for everyone. Thankfully, TD said this will not be the case and we’re glad to not have that looming.

As always, please let us know if there’s anything we can help you with. 

Thanks for reading,

– Bruce Porter & Tim Porter, CFP®

Safety Third

What should we make of a stock market at all-time highs and priced for perfection? After a nice run in 2019, it appears many investors are taking the Safety Third approach. This investment approach replaces the mantra of “safety first” with “risk and return first”, and asks, “What could possibly go wrong?”

Like my son Henry trying to impress his sisters by climbing to the top of this palm tree on our vacation to Kauai over the New Year. Safety was not his top priority, getting to the top was. Safety was definitely third. When he got a little higher he asks, “Dad, now catch me.” To which I replied the classic dad line, “you got yourself up there, you can get yourself down.” A few scrapes later he was down.

Now that we’re this high in the stock market – DOW hit 29,000 this week – let’s talk about how we’ll get down.

To be clear I’m not predicting a selloff, there are many good things happening in the economy right now – low employment, a Federal Reserve sitting out this year, no recession warnings from companies, and a trade war that’s on pause. It would be foolish not to consider that the party will end at some point. There will be some news that will at least temporarily push the market down.

When the news is ugly and the market is down, we try to keep our fearful emotions in check by not selling at the bottom. Instead we try and buy because things are never as bad as the news portrays.

When times are good and market is up, like it was this last year, we try to keep our greedy emotions in check by not buying at the top. Instead we sell because things are not usually as good as the stock market is trying to tell us. Greenspan called this phenomenon “Irrational Exuberance” in 1996. Right now, the stock market is telling us there’s no bad news in sight. We’re a little skeptical of that.

On that same trip to Kauai with my family, I was slightly concerned the Christmas gift Kim Jong Un, the North Korean leader, promised to send our country was going to be missiles to Hawaii. Thankfully, that didn’t materialize. Instead, we started trading missiles with Iran. The stock market shook those headlines off pretty quickly but it just goes to show I cannot predict the bad news, only that it’s coming.

To keep greed in check and anticipate the bad news that will eventually shake up investors, retirees, and those soon to be, should prioritize safety by getting a little more defensive mentally and financially:

1.  Lower Expectations – Returns have been good the last year and decade, but are not likely to be as good in the next. Starting at a significant low point in the stock market as we did one year ago and in 2010, it’s easier to have good returns. Starting this decade at all-time highs, it will be harder to notch such good returns. Throw in high debts, high deficits, and aging demographics and we have an uphill battle.

2.  Investment Accounts – Prioritize safety again in investments by taking gains and moving some stocks into cash and short-term bonds. This will help cushion the next fall in your accounts and provide extra ammunition to invest in stocks at emotionally low prices in the future. We’ve already been doing this in our client accounts.

3.  Guaranteed Income – Make sure that you have guaranteed income (pension income, social security, or annuity) to cover basic necessities like housing, food, transportation and utilities in retirement. This will help put your mind at ease that a down market won’t wreck your retirement.

SMB Financial News

This year we’ve been loving our new office in Tigard, where we’ve been for two years now. We especially enjoy rolling the Traeger grill out of our garage door and grilling salmon and tri-tip for client lunches. We did this probably 30 times last year. If you haven’t had the chance to come in for lunch, please ask! We love to do it.

Jeremiah and his family (From left: Ember, Elias, Alicia, Willow)

Jeremiah Forrister, has been with us two and a half years now and is doing a fantastic job! I’m not sure how we functioned without him. He’s in charge of operations in the office and he’s also a licensed advisor looking to grow his own book of clients.

Text Box: Jeremiah and his family 
(From left to right: Ember, Elias, Alicia, Willow)
Bruce and his four sons (From left: Matt, Dave, Brad, Tim)

Bruce and wife Maiza, have enjoyed traveling this year and are looking forward to more travels throughout 2020. Bruce also wanted to mention we had a fantastic time at my house for Christmas where all four of his sons got a chance to be loud and obnoxious together once again.

Text Box: Bruce and his four sons 
(From left to right: Matt, Dave, Brad, Tim)
Tim and his family visiting Hawaii (From left: Lucy, Henry, Holly, Penny)

Finally, Holly and I haven’t had any major life changes this year, but the family is still growing like a weed. Henry is in second grade now and just started basketball. Lucy started Kindergarten this year and just performed in the Nutcracker ballet. Penny is now three and a half and is the mascot of our family, being crazy and having fun at all times.

The business has been growing as well. We now have seven advisors at the firm and are managing $117 Million in assets. Because we’re now over $100 Million, we had to move our registration from the state of Oregon to the Securities and Exchange Commission (SEC) this year.

Our partnership with KaiPerm Credit Union has blessed us with the opportunity to do 40 presentations so far at Kaiser Permanente facilities around Portland, Salem and Vancouver. We expect those to continue and be a big part of our growth for the future.

An opportunity I’m still working on is with the Coast Guard. As a reservist with the CG, I see the desperate need that all the young guys and gals have for good financial advice. I’ve made some inroads with some folks at the top but still haven’t found the right fit for me or my firm to provide that advice…yet. I’m hoping to make some headway in this area in 2020.

Needless to say, this has been a busy year and we are very excited for the future of our firm. Thank you for being with us and helping make it special. We enjoy the great relationships we get to have with each one of you.

As always, please let us know if there’s anything we can help you with.

Thanks for reading,

Text Box: Tim and his family visiting Hawaii
(From left to right: Lucy, Henry, Holly, Penny)

Bruce Porter & Tim Porter, CFP®

A Tale of Two Christmas’

What a difference a year makes! Typically I (Tim) try to write one blog a month. This is usually enough to keep you updated about the stock market and important financial matters. Last December the news and markets were so negative, I felt like I needed to write three!

1. I told everyone the downturn we were in was Not That Interesting,

2. Pointed to a JP Morgan prediction of a significant rebound (that turned out to be accurate) in Looking for Good News, and

3. Then called it a Crisis Without a Crisis and detailed the buys we made during the pullback anticipating a rebound.

To be perfectly honest, it’s no fun watching accounts pull back like they did last year. During our Christmas Eve family get together, it was real work to put a smile on. When I try to reassure everyone with those letters, believe me, I’m writing as much to myself as I am to you.

But as you’ve seen on your statements, it paid to not panic, to take the long-term view, and to even have the guts to buy when everyone else is selling. So congratulations for a great year of investing! Let’s enjoy this nice run, but also remember, with a new year will come new challenges.

Looking ahead to 2020, we want to hear from the stock market optimists (the Bulls) and the pessimists (the Bears).

Bull Case

JP Morgan, the same strategists who called the runup this year is back at it. They see stocks 8% higher this time next year and the S&P ending 2020 at 3,400. They cite low inflation and continued low interest rates as the reason, even with uncertainty surrounding the trade war. They point out the large gains this year (about 25% year-to-date) despite the trade headline dominating the headlines.

Here’s an interesting stat: 6 times since 1990, the year following a 20% gain in stocks, the market has responded with an 18% gain on average. Will it happen a seventh time or will it be different this time?

Bear Case

Not so fast, says Ben Levisohn at Recession is around the corner and no one should get too comfortable. While the economy is growing, it’s not growing enough to weather a financial shock to the economy. 

He states, “Even many bulls would agree that an unexpected event that would simply ding an economy growing at 3% to 4% could force one growing at 1% to 2% into recession” – think a deepening trade war or a 2020 election result that disappoints the stock market.

Our Portfolios

To prepare for either case, we’ve gotten a little more conservative in all our accounts. In the Growth Stock portfolio, we’ve taken some gains by selling a few stocks and invested those proceeds in the more stable First Trust Short Maturity FTSM which yields 2.4%/yr. This will help cushion the next pullback and give us some ammunition to buy during the next surprise headline.

We’re also more conservative in our Moderate Low-Cost Funds portfolio by having only 60% or less in stocks right now, while we wait for a pullback in the stock market to buy the Vanguard Global Wellington Fund VGWAX.

We hope everyone has an incredible holiday!  In between festivities, myself and the team will be in the office reaching out to clients and wrapping up year-end details like Required Minimum Distributions. Please get ahold of us if we can do anything for you.

Merry Christmas and Happy New Year!

– Bruce Porter & Tim Porter, CFP®