Spending It All

How much can one afford to spend before they become broke and destitute? It appears our country is trying to discover this right now. Biden is unveiling another massive $2 Trillion spending bill, this time aimed at infrastructure, housing, education, and broadband spending. And this is on top of last year’s budget breaker of a year.

  • 2020 US Government Spending: $6.5 Trillion
  • 2020 US Government Federal Tax Revenue: $3.5 Trillion

We spent about twice what we made last year as a country. Spending double what you make is typically not great for a budget. And now we’re likely going to overspend again in 2021 (click below for up-to-date figures), although not for a crisis, that was last year’s $4 Trillion.

Let’s just say for the sake of argument this will be a great investment into our country’s future and pay us back well more than we’re going to spend. Who will make the payments on that extra debt? 

Biden plans to raise taxes to pay for the extra debt load. A lower than average tax rate on top earners and corporations is being used as the rationale. Here are some of the details (sorry, probably too much detail) talked about during Biden’s campaign:

  • Increase the corporate tax rate from 21% to 28% 
  • Increase taxes on those earning more than $400,000 by: 1) Reinstating the 39.6% tax bracket. 2) Phasing out the Qualified Business Income deduction 3) Imposing Social Security payroll taxes. 
  • Repeal the reduced capital gains and qualified dividends tax rate for taxpayers making over $1 million per year. Their gains would be taxed at the 39.6% tax rate (plus the 3.8% NIIT rate). 
  • Further limit itemized deductions by placing a cap on the tax benefit that can be received to 28% and reinstating the pre-TCJA overall limit on itemized deductions
  • Repeal the step-up in basis for inherited properties

Why does this matter?

Many of our clients will be unaffected by the tax increase, so most won’t have to worry about that. But all of us will own the ever-increasing level of debt that is being taken on. The debt, now at $28 Trillion and growing, is a risk to our future. We imagine much of the pain will be felt by younger generations in the years to come.

At the end of the day, the heavy spending in 2020 was likely a necessity to kickstart the economy and avoid another economic crisis. We’re hard-pressed to say the same for this infrastructure bill. We expect to see higher taxes as a trending topic in the coming years. For the clients that are affected by this, we work with accountants and attorneys to find ways to strategize and reduce the impact. 

If you have concerns, make sure to set aside time to give us a call. We’re here to do the worrying for you!

Sincerely,

Inflation Infatuation

As you’ve seen in the news, there’s now maximum effort to ramp up vaccinations. I saw it first hand this week. Not as someone getting vaccinated, but as a reservist in the Coast Guard. I just received word the Coast Guard is deploying this coming Sunday for the vaccination effort. They told me to get my affairs in order in case I’m selected. 

With the mass production of vaccines and the public and private partnership to administer them, NBC reports we could reach herd immunity as early as June now. 

When we reach herd immunity, more people will feel comfortable going out to shop and spend, and 90% of families should have some extra walking around money thanks to the latest stimulus checks.

The government has officially let it rip, according to the Economist.

For a decade after the global financial crisis of 2007-09 America’s economic policymakers were too timid. With covid-19 they are letting rip. President Joe Biden’s $1.9trn stimulus bill takes to nearly $3trn, or 14% of pre-pandemic GDP, the amount of coronavirus-related spending passed since December, and to about $6trn the total paid out since the start of the crisis.

The Economist 3/11/2021

Spending $6 Trillion to juice the economy has to get us through this thing, right? So we’re good now? Unfortunately, solving one problem often creates another.

Now there are fears the $6 Trillion in stimulus will OVERHEAT the economy and spark inflation. This is partly to blame for a quick rise in interest rates the last few weeks and why we’re seeing volatility return to stocks.

Inflation is described as too much money chasing too few goods. We’ve already witnessed this in lumber, copper, and steel, as supply is constrained because of COVID, and demand skyrockets. We’re also seeing current retail sales data that shows consumers are out there spending like crazy. 

So will this latest stimulus doom us to massive inflation? 

Bank of America’s research investment committee says no, and brings some new data to the table. First, it cited data from the Census Bureau showing that of the households who received a $600 stimulus check in the first half of February, 73% saved or paid down debt.

Bank of America also surveyed more than 3,000 people to ask how they would spend the new stimulus check. Even in the lowest-income category, 53% say they plan to either save, pay off debts or invest.

Marketwatch 3/10/2021 article here

So for us, as investors, it appears if we do see higher inflation, it may only be temporary.

Client Portfolios

With inflation fears mostly overblown, we are ready to do some buying of stocks. Just last week the Nasdaq (mostly growth stocks) dropped over 2% in one day while the Dow (mostly value stocks) rose 1%. That hasn’t happened since the tech bubble burst in 2001. We used that opportunity to pick up a few investments in client accounts.

In the Growth Stock Portfolio, we bought Discovery Channel (ticker: DISCA) which started a new streaming service with the beloved Chip and Joanna Gaines from “Fixer Upper” and the Magnolia Network. We also bought the company DocuSign (ticker: DOCU), a company I’ve wanted to own for a while and one we use regularly for our esignature paperwork.

In our Funds Portfolio, we bought into The Motley Fool Fund (ticker: TMFC), a fund of mostly aggressive growth stocks. This will add some growth back into the portfolio after we took profits by selling most of our growth funds last year after a nice run-up.

Still waiting to hear back from the Coast Guard. If they ask me to stick people with needles I’ll be sure to warn everyone!

Thanks for reading. Please let us know if we can do anything for you.

Sincerely,

The Great Disconnect

Usually, the stock market drops following scary headlines that were meant to stress us out and keep us watching or scrolling. Our job is to try and calm everyone by remembering the stock market is a reflection of emotional individuals who, at times, stop thinking rationally and panic.

2020 was very different. It was the year of the Great Disconnect. The stock market, after an initial swoon, became quite calm and measured while the news and social media became panicked and emotional. 

How can “Wall Street” climb when the news is reporting chaos on “Main Street?”

Without attempting to draw any political or moral conclusions, here are three reasons we believe this to be the case:

  1. The outrageous actions of the few protestors and rioters in Portland and D.C., among other cities, do not represent the views of the majority of us. Most of us were betting on a peaceful transfer of power. The news had us on the edge of our seats.
  2. The daily bad news about COVID has been offset by the long-term hope of vaccines and herd immunity. The stock market discounts what’s happening today and pays closer attention to what’s likely to happen six months from now.
  3. We think the main reason is this: the pandemic resulted in rare bipartisan support for stimulus to prop up the economy. This has boosted savings in the US dramatically. Bank of America says only 28% of the latest $600 stimulus checks have been spent so far. High amounts of savings bodes well for stocks because savings typically find a way into investments of all kinds.

This is certainly not an exhaustive list, but meant to help us tone down the media drama we get bombarded with on a daily basis. 

Unraged

In this day and age of “outrage” culture, there are plenty of issues to react to. Social, political, financial… you name it. We suggest bucking the trend and vowing to be ‘unraged.‘ This would certainly benefit our country in the social and political areas, but that’s not our area of expertise. Financial advice is what we get paid to give.

In our experience, the ‘unraged’ investors have been the most successful. That’s someone who doesn’t get emotional at bad news but looks for opportunities to invest in good companies, funds, and real estate at below market value levels. It’s also helpful not to be emotional at all-time highs either. Getting too excited and putting too much hope in your account balance can either cause you to sell out completely and miss out on future gains or cause you grief when the next inevitable pullback shows up. Don’t put your hope in the stock market, find something with less volatility to hope in.

Financial planning can also help us be ‘unraged’ investors. When you’ve thought through and planned for a litany of possibilities, even death and disability, you have a better chance of staying calm and making wise decisions regardless of what the future might hold.

We can now see what the political future holds for us, at least for the next few years: a Democrat-controlled White House, House of Representatives, and a razor-thin majority in the Senate.

This is how Wealth Advisor described the Democratic Senate majority: 

The positive outline here is simple — a slim Democratic majority is enough of an advantage to pass additional fiscal support but not large enough to pass more ambitious legislation like raising taxes or a Green New Deal. Some investors on Wednesday called this a “fiscal goldilocks” scenario.

Long-term, the market will look past COVID-related disruptions as long as Congress continues to send checks to Main Street. When these dry up, and the economy has to stand on its own two feet again, we may have another opportunity to practice being ‘unraged’ investors.

Portfolio Specifics

We are thrilled with last year’s performance. The Growth Stock Portfolio handily beat the stock market in part because it WASN’T invested in much oil, travel, or banking related companies. Some of the high performers were Zoom, Mercadolibre, Nvidia, and Target. We’re currently sending out Reports of Performance to existing clients so everyone can see their specific return.

The more modestly aggressive Fund Portfolios were also positive but only saw single-digit returns because of the more conservative nature and more broadly diversified approach. We made some changes in this portfolio at the end of 2020 by selling some of the underperforming funds. We are moving a portion of that portfolio to see better growth going forward. The Motley Fool Company, a company providing investment research, has a few funds that were adding to the portfolio. 

We know moods will change and the market will go down again someday. Just in the last few days we’re seeing some cracks in this unstoppable market. 

Fortunately, client accounts are more conservative than they usually are as we wait to see things play out. As you might expect, the resolution to COVID is first on our list to watch, but there are other anomalies we’re seeing in retail investing, specifically the trading of Gamestop GME, that we’re following as well. We plan to invest some of the extra money sitting on the sidelines when we see the next financial surprise hit the news and push the stock market down.

Please let us know if there’s anything we can do for you!

Sincerely,

Bruce & Tim Porter

Waiting Game

Seems like we’re doing a lot of waiting right now: Waiting for a vaccine to be distributed, waiting for a new administration, waiting for small businesses to be able to reopen, waiting for people to go back to work, and the economy to continue to recover. While we wait, Congress is trying to pass another stimulus bill, which we believe is helping keep the stock market close to all-time highs.

Don’t hold your breath though, Congress has gone back-and-forth for months on approving a $908 billion bill to help bolster the economy as shutdowns continue. A large portion of the funding is expected to help fund states and their programs. Without funding, people are wary of a potential “double-dip” recession. 

You may be interested in a second wave of $1,200 stimulus checks. Although this would be a pleasant gift to start the year, Congress has provided mixed reviews as to whether or not it will happen.

Here are some of the details of the stimulus:

  • An increase in federal unemployment checks by $300/week.
  • A reopening of the Paycheck Protection Program (PPP) to allow for more businesses to apply for support.
  • Eviction freezes would continue and be extended for some period of time.
  • Prolong state funding to essential services, such as food banks.

While we wait for the conclusion of the vaccine distribution, the election, and the economy, we’re making changes to clients’ portfolios.

Growth Stock Portfolio

We recently took advantage of buying Salesforce CRM for the Growth Portfolio. Salesforce specializes in providing software for businesses to help with day-to-day operations. Recent news about them acquiring another company (Slack Technologies ticker: WORK) led to a drop in share price – a great opportunity to buy. We have other stocks and funds on our radar for future buys. With continued uncertainty surrounding COVID, we’ve kept cash aside in case we get another chance to buy.

End of Year Rebalancing

The wild ride of 2020 has provided a variety of opportunities in the stock market. As the year wraps up, we’ll be performing our End-of-Year Rebalancing to make sure accounts are allocated properly. We’ll be able to use this as a time to offset potential tax burdens in the coming year, as well as lock in gains and position for the future. You’ll likely see notifications of this from TD Ameritrade.

Finally, we want to say thank you to everyone that’s trusted us with their important financial decisions this year. From our families to yours, we wish everyone a Merry Christmas this year!

Please let us know if there’s anything we can do for you!

Sincerely,

Moving On

We’re all familiar with how long of a year it’s been, so we’ll spare you from having to rehash the drama. Instead, let’s look forward now that the election is behind us (mostly). Let’s move past 2020.

First Trust is a fund company we’ve utilized in choosing investments. They have some great funds and provide insightful economic commentary to us. Below we’ve paraphrased a recent First Trust publication and listed eleven things we’ve learned since the election. All eleven will have implications for 2021 and beyond.

What we’ve learned since the election:

1. The pollsters were horribly wrong again. They had four years to fix the problem and now there will be even less confidence in polls going forward.

2. The close election shows American voters do not want a radical shift in economic policy.

3.  President Trump is pushing back against election results with court cases, and recounts will be automatic in some states because of the closeness of the results…and odds favor a Joe Biden Presidency for the next four years.

4.  It appears that Republicans will have at least 50 seats in the US Senate. The outcome of two runoff elections in Georgia, taking place in early January, will determine the final Senate make-up and it appears Republicans will win at least one of those. Because Dems will not have control of the US Senate, we will have a divided government, which is typically good for the stock market.

5.  Democrats lost perhaps 10 seats in the House of Representatives, but still retain a majority. This result is causing the moderate wing of the Democrat party to push back against their more progressive members.

6.  This means that a major tax hike, the Green New Deal, Medicare for All, and Supreme Court “packing” are probably off the table. A Biden Administration will generate more rules and regulations, but federal courts and the 200+ Trump judge appointees during the past four years are likely to make sure agencies and departments stick to their legal mandates as passed by Congress

7.  Expect Congress to pass a stimulus bill in the lame duck session, but it will not be the $3 trillion that Speaker Pelosi and the Democrats were pursuing before the election.

8.  Expect some sort of infrastructure spending package, passing with bipartisan support. Because President Biden will need to get some sort of tax victory, look for an increase in the itemized deduction for state and local taxes.

9.  Trade wars are off the table, however, it will be hard for a new White House to justify going soft on China or for reversing progress made toward peace in the Middle East.

10. The economy continues to grow with productivity up 4.1% from a year ago.  About 90% of S&P 500 companies report revenues are better than expected, and costs have been cut as they have adapted to challenging times. 

11.  Although layoffs remain high, a record-breaking 12 million jobs have been added in the past six months and the unemployment rate fell to 6.9% as of 11/6.

Positive Conclusion 

With the good news of Pfizer’s 90% effective Covid vaccine yesterday the stocks that have struggled have surged ahead, continued low-interest rates will enable companies to expand, governmental fiscal policies are not likely to change in any major way, the likelihood of more stimulus, and with the entrepreneurial power of the U.S economy the stock market may continue to make new highs.

We remain mostly invested in client accounts with cash ready to take advantage of any overly emotional swings in the stock market.

Client Agreement

On another note, we’ve made some changes to our Client Agreement and wanted to send out an updated copy so our current clients can review it. Please click here to review.

Please let us know if there’s anything we can do for you!

Sincerely,

Ad Newseam

Similar to “Ad nauseam,” the Latin term for an argument or discussion that has continued to the point of nausea, but applied to news media.

We’ve heard and talked so much about COVID-19 and the election this year, we’re taking this month off from those topics. We’ll pick it back up Nov 3rd.

Instead, let’s discuss something we CAN control. Not financial planning, that’s boring and overused. We want to discuss crafting VISION for your financial life. Vision is much more interesting. Vision is what entrepreneurs and leaders use to change the world. Vision is what you need to remodel a formerly beautiful 1994 home that could now be on the show “Hoarders” (Tim and his wife Holly’s next project). Vision is what we need to help us make good financial decisions.  

As we’ve had financial planning conversations the last 15 years, we’ve noticed there can be a tendency to dive deep into the infinite details of the financial world. Don’t do this. There’s a time for details, but usually, it’s not helpful. Like landing a plane, we need to keep our heads up and be looking down the runway at where we want to end up. 

To avoid getting bogged down in the details, use the acronym RETIRED to focus on the major points that need to be considered when crafting vision for you or your family’s financial future. Click the image to see the pdf.

These are topics everyone needs to address, but they are most important to the younger generation. Please forward this to anyone you know that could use a head start in crafting vision for their financial future.

The Button

There’s a “Power Off” button on your electronics that will save you stress and potentially high blood-pressure on November 3rd and the days that follow. We suggest you consider using “The Button” if the on-air conflict-of-opinions conversation gets to be too much for your peace of mind.

Our clients have hired us to worry for them…we’re planning on protecting assets in their accounts while looking for bargains these chaotic times may present. 

Put your feet up and enjoy the show next month!

We got this,

From the Ash Heap

Today the half-million Oregon individuals who evacuated their homes, the thousands whose homes, farms, or businesses are in ashes, and the unbearable story of the Tofte family and the others who lost their lives are quite literally in our prayers. 

He raises the poor from the dust and the needy from the ash heap… Psalm 113

Typically we try to provide hopeful, helpful commentary when the financial markets are in ashes, but even after the pullback suffered last week, the smoke is gone and the skies are blue for stocks since the COVID lows of late March.

Although we feel the stock market got ahead of itself on the rebound, it appears to be correcting what’s being called the “raging mania” and we think volatility will settle down after the election. Yes, even if there’s a blue wave. 

In an article Forbes wrote yesterday, they rank the following scenarios for the stock market after the election:

1. Biden wins, Republicans hold the Senate – This means gridlock and nothing gets done, markets love this.

2. Status Quo – Initial jump, Trump continues striving for lower taxes and deregulation but stuck with an unpredictable negotiating style.

3. Blue wave – Initial drop, recovery in December, and the following year as history has shown.

4. Disputed Election – Uncertainty upon uncertainty is bad for markets.

A Barron’s article had these insights:

  • RealClear Politics average of opinion polls shows Biden’s lead narrowing to 7.5% now. Although we’re all a little skeptical of polls after the last election.
  • The 10 close elections in the post-World War II era have seen selloffs in the six to seven weeks before the election as uncertainty grows.
  • No clear winner may emerge on the night of Nov. 3 or even early the next morning, given the extra time to count and the potential for debated results of the mail-in ballots.
  • A contested election would likely send stocks lower. The hanging chads on Florida ballots in 2000, which ultimately had to be decided by the Supreme Court in Bush v. Gore December 12th, 2000, trimmed 7% from the S&P 500 index.
  • Maybe a more dramatic response if an uncertain election outcome sparks civil unrest. Extreme polarization and high unemployment is increasing tensions.
  • The Deutsche Bank strategists find close elections have been followed by strong rallies averaging 5%, regardless of which party wins, as hedges against political risk are closed out.

So what should we make of this? Great question. Guessing the direction of the stock market over the next 2 months, or 2 years, is not our game. We instead like to take a more measured approach. This means small changes to portfolios based on time horizon, risk tolerance, and of course, the levels of the stock market.

For our client accounts, we’re finished locking in gains and are now looking to reinvest those gains should we get opportunities. The pullback has pushed the S&P 500 down approximately 7% from the high it reached early this month.

If the drop continues, we’ll be looking to invest again for everyone with the hope that the passing of the election, progress on COVID-19, and the end to this tumultuous year will settle things down. 

Thank you for reading, 

– Bruce Porter & Tim Porter, CFP®

PS – We wanted to make sure to say thank you to all who participated in, or who gave their lives nineteen years ago today to save those in the 9/11 attacks!

GROSS Domestic Product

Our government has been working to avoid an outright depression with a $3+ Trillion stimulus plan, and another $1 to $3 Trillion being debated in DC.  But the downside will be very obvious on Thursday when the projected GROSS Domestic Product for the Second Quarter comes out, and it will be GROSS!  It will be the worst since the Great Depression we’re told.

USA Today article had this to say: 

1) The…report [is] projected to show a record -35% annualized drop in gross domestic product…gross domestic product, or GDP, represents all goods and services produced in the country…”. 

2) This is expected to be the shortest and steepest recession any time in recent history.  

3) Resurgent Coronavirus cases across much of the southern and western states have paused or rolled back plans to reopen many businesses and the expected recovery in the second half of the year.

As usual, we have cash set aside in client accounts for a buying opportunity if it comes.  

The Pandemic affects not only the markets but also our personal plans.  One of our friends remarked yesterday, that usually, they are traveling now…out-of-state or out-of-the-country.  Like many, they’re not excited about being locked into in a high-flying, long, narrow metal tube for several hours while re-breathing air with their seat-mates.  This year, their travel has been to the Oregon Coast.  Not a bad alternative.

Last weekend our family loved the water-sports on Devils Lake in a relative’s boat—we’re hoping these photos of Tim’s kids and a cousin will help you think cool thoughts during this hot weather.

Form CRS

In June of this year, the SEC (Securities and Exchange Commission) placed a new requirement on Investment Advisory firms.  We are now required to provide all new and current clients a CRS (Client Relationship Summary) document (download pdf here).  This document addresses relationship factors that should be considered when working with an advisory firm.  I would hope that none of the content will be a surprise to you, but it is always good to review the important concepts related to fiduciary duty, potential conflicts of interest, and how advisors get paid.

Please do let us know if any of the conversation starter questions included in the document spark an interest in a follow-up discussion on one of these topics.

– Bruce Porter & Tim Porter, CFP®

It’s all fun and gains until…

It’s all fun and gains for a handful of stocks this year, but for the rest, it’s been tough. If you’re not a “FAANG” company (Facebook, Amazon, Apple, Netflix, or Google), or a company that’s blazing a path in the new COVID world, like Zoom or Docusign, the stock market has not been kind. The average stock is down approximately -10% since January 1.

This morning I saw the top five stocks in the S&P 500 – FAAMG (remove Netflix and add Microsoft) – now represent 25% of the S&P 500. This is the highest since 1965, during the era of General Motors, Exxon , Ford, General Electric and Mobil. 

Goldman Sachs saw this happening at the end of April (article here) when the top five represented 20%. They had these takeaways:

  • The stock market has been propped up by a handful of mega-cap companies leading into the coronavirus pandemic.
  • The five largest stocks now account for 20% (now 25%) of the S&P 500 market cap, exceeding the 18% concentration level reached during the dot-com bubble.
  • Historically, such narrow breadth is a poor signal for future market returns, Goldman Sachs said.

Two things are likely to happen from here: either the poor performing stocks will catch upto the high fliers, or the high fliers will catch down to the poor performers. In similar situations in the past, like 1965 or 1999, it’s been the latter.

Portfolios

In our portfolios we’ve been trimming these high growth positions as they go up, thinking they will come down at some point in the future. Unfortunately, after every sale, they climb to new highs and we feel foolish for selling but happy we booked some profits.

For the time being, we’ll maintain our more conservative positioning as we wait for the next shoe to drop. Here are a few items that could determine the future direction of all of our accounts:

  • COVID-19 daily death rates jump up, OR death rates stay low
  • Effective vaccine distribution in the next year, OR vaccine takes longer/no vaccine
  • Democratic sweep in November, OR Republicans hold on
  • Surprising recovery in corporate earnings, OR surprising deterioration in earnings

Fund Portfolio

Last month we sold First Trust Internet Fund FDN for a nice double-digit gain that we bought in the heat of the crisis in March. We moved that cash to a short-term bond fund to wait for another opportunity to invest in it again.

Growth Stock Portfolio

In the last few months, we’ve made a few changes to this portfolio. We trimmed high flier Mercadolibre (MELI) to lock in gains and trimmed the underperforming Grand Canyon Education (LOPE) to generate cash to buy Target (TGT), again. We owned TGT for five weeks in the spring for a quick gain. Finally today, we’re pairing back our position in Zoom (ZM), that we bought May 1 for almost half its current price.

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®

Get-Your-Stuff-Together

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 jf@smb.financial 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®