Financial Model Blog

Attack on Freedom & More

Attack on Freedom & More

Near-Term response may be just the beginning


Just a couple days ago the Russian armed forces moved in and attacked numerous targets throughout Ukraine and Putin made a vow to make massive changes to their government. Change that could go as far as replacing it all together. We have been keeping our ears to the ground for the past several months and sharing our opinions via our blogs and Podcasts so the actual event itself although unpleasant, is not as shocking to the markets, our clients and followers. Believe it or not the past couple of days have ended on a high note despite what you may think when the announcement of a major conflict fills the media. The market and the public have been well informed of the looming turmoil and the animosity leading up to these events. It would seem after two trading sessions from the initial attack, that the market is beginning to shrug off some of the building volatility as the build up to the event itself has caused quite a bit of challenges in the market.


Something to remember about how the stock market tends to react to geopolitical shocks. On average the drawdown is about 5% and the rebound itself is a short couple of months. Is this considered an "average" shock, or is this more? Could this be considered a much larger conflict which leads to a deeper and longer lasting impact? We feel that although possible, it won't come to this. That does not mean that we think market volatility is over and losses will be kept to a minimum moving forward. The tweaks we've made over the past 4 months have positioned portfolios to improve given the current landscape, but containment will be important if we want to avoid a long-lasting shakeup to broader markets. The stats below can give us a glimpse of what happened in other times of major events. Although every event is very different and we don't know how the Ukraine invasion might develop, it does give some perspective and hope that things can recover if contained.



The areas of the market where we continue to see risk is the high multiple, high price to earnings type of stocks. Those can include companies that have strong potential to become some of the largest companies with disruptive technologies. The problem continues to be rising rates and inflation and that means those earnings down the road are worth less today than they were a year ago. Sectors that fall into this category are expensive technology, biotech, and large, small and mid-cap growth. We have mentioned this time and time again on the Podcast as well as Blog posts over the past several months. These are areas of the market we feel are out of favor for the time being and will have their time to shine again, but for the near-term we have been trimming, reducing or eliminating exposure to these areas. That's not to say there aren't exceptions to the rule, but broad exposure to these has proven to be a bad place to hang out. The chart below gives some examples of ETF's that represent our rationale and reasoning to reduce positions. Performance is a year to date snapshot of how things have played out.



Market opportunities will present themselves throughout the year and we lean towards more of an active than passive management style. We continue to be focused on more of the longer term performance of portfolios and year end returns versus the weekly or monthly. Areas of the market where we have seen and continue to see promise is in financials, commodities, value, industrials, real-estate and energy. Equities that live in those spaces include banks, insurance companies, staples, precious metals, and other lower multiple stocks that have been left for dead in the past decade. Boring? Yes, but sometimes boring is okay if it's making money in a challenging environment which is attacking broad markets and portfolios around the world.


With growing panic, apprehension and fear, does that mean we're headed for a bear market? We don't believe so and we look to the VIX index to get a better understanding of how volatility plays out in comparison to returns. The VIX or Volatility Index basically measures the amount and extent of pricing fluctuation on the stock market. The higher the VIX levels, the more rapid and violent prices change. Typically when levels are extremely high, it means stocks lose value in the short term. There are some recent levels in change of the VIX that suggest the market will shift before year end. Time will tell and the market impact remains to be seen. If the Ukrainian invasion grows to last longer and become more involved with other countries; our outlook could change quite rapidly. For the time being we remain positive on the outlook of the markets over an extended time frame and believe the best place to be is stocks as a way to hedge against rising costs and inflation.


And that's only the beginning...Reach out and schedule a consultation to discuss your situation. We'll walk you through your options and help you make the right choice for your goals. Click below to take a listen to the latest PennyWise Financial Podcast and hear more commentary on Ukraine, Tax items you need to know and much more.







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Car Insurance Day

Get help or do it alone

Pay me now or pay me later


These days just about anything can be done online. Ordering products can be done with a few clicks and it's delivered to your doorstep in a couple of days and sometimes even a couple of hours. Seems easy enough for most purchases, but sometimes the ease and comfort comes at a cost. I can't tell you how many times we've ordered things on Amazon, Ebay or another shopping site, only to find it at our local BJ's or Home Depot a few days later and much cheaper. It was super easier to search for the product we were looking for, pay and have it sent. Nowadays no one wants to leave the house, head to the store, hunt for their item and I can't blame them. A lot of times you can get decent prices and sometimes even cheaper than the item in the store. There's no rhyme or reason to the way things are priced. We've learn to accept that sometimes things are cheaper and sometimes they're more.


So how do people shop for things that are less tangible; like insurance.? There are all types of insurance coverage from healthcare to home owners. Those get a little trickier to price and compare. For starters, any insurance program is going to have a number of caveat's that needs an attorney review to decipher and truly understand. When shopping online, you're at the mercy of doing your own research and hoping things work they way you've come to understand them.



Auto insurance is one of those things that were traditionally bought and sold with a local agent who reviews your needs, affordability and delivers a proposal. That's the old school way of going about it, but this younger generation and even the tech savvy pre-retirees are doing some homework and shopping online. Many have hesitation about doing that and I would agree that a bit of caution is necessary. Comparing price as your only way to determine which coverage is the "best" option, could cost you; a lot! While things are working as planned and no claims are needed, things are great. You're putting some cash in your back pocket and saving for other things. What happens when you do have an incident - does your policy actually cover that event and what is their claims process like? That can be a very big deal and I've had my fair share of dealings with insurance companies for clients, family and for myself and I can tell you it makes the world of difference when you're going through a tough time.


What other options are available for the consumer to get help when shopping for home, auto or any other insurance? Working with a captive agent is one way to go about it. That means working with a licensed agent who is bound by the product set available by their company. It's not always going to be the best coverage or the cheapest, but they bank on the overall client experience as a value add. There's nothing like getting help with a quit phone call or even dropping by a local office to someone face to face. Just think about anytime you've had an issue with Spectrum, Time Warner or any other big outfit that could care less about wait times or actually helping their customers with a problem. It can be brutal.


There's another option that many may not have considered in the past; an insurance broker. How is that any different than an agent? They're not confined to a singular product set or insurer. Some companies provide better coverage, special riders or more competitive rates depending on a persons specific situation. Everyone's needs and wants are different. Things like credit score and other risk factors play a role in the products available as well as the premium they're going to pay.


In my experience the best option is working with a broker you can trust. Not any old broker who's claim to fame is that they're not captive. That only means they have access to a variety of products, but it doesn't necessarily mean you'll get the best response or best policy available. People are motivated by money and they have the ability to steer or direct you to coverage as they deem fit. You hope they are seeing the bigger picture by keeping you as a loyal client who's going to share your experience with friends and family. The longer you remain a client, the more money they make.



How often should you shop for coverage? Typically every two to three years is a good amount of time to go shopping again. That could be a simple call to your broker to make sure you have a competitive premium and the best policies based on your current needs. It's an ongoing process that needs to be reevaluated every so often because you could find gaps in coverage or life changes that need to be addressed. At the end of the day, weighing your options and comfort level will play a role in how and where you shop for coverage. We're all required to carry auto insurance and it's viewed as a necessary evil. The truth is, if you have a major accident, you'll be thanking your lucky stars you have the right coverage and the right team handling your claim. Saving a couple hundred bucks on a bare bones policy you found online might come back to bite you badly when it costs you thousands or more.


And that's only the beginning...Reach out and schedule a consultation to discuss your situation. We'll walk you through your options and help you make the right choice for your goals.

Want to learn more? Follow our latest market commentary, firm updates, or anything financial via our blog or Podcast.





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Know who holds the crown - Mobile App or Website

Know who takes the crown - the app or website

A battle to the finish



We all carry a smart phone by now - or at least most of us. There are a growing number of retired clients of ours who are new to the smart phone space. For years they fought it and went with a pre-paid, but now they're indulging in the luxuries of having access to a multitude of things at their fingertips.


So, what's the big difference between a website or a fancy new app? They typically offer the same stuff and it can be hard to see the advantages on the surface. Many times the mobile apps don't actually give you as much access or range of functionality. At first, the app sounds like a clunky, water downed version of a fully immersive website with all the bells and whistles you'd expect from that fancy Cadillac. There's more to the debate than meets the eye and those of us who have embraced apps as a way to stay connected and efficient, understand their purpose.


For starters, mobile apps offer much better personalization. This can be done based on interests, location, behavior and even more. The apps allow users to establish preferences when you set things up. A website is static and NOT typically customized for each individual client or consumer.


Then there's notifications and how they're being sent to its users. In the past email was a great way to communicate with users of a site, but some have overused or abused it and its lost some of its effectiveness. Notifications from a mobile app can be tweaked by users to allow for push, in-app or even emails. This gives the user control over how and what they want to get notices for.


Using a mobile web browsers to access a companies website can be a bit challenging even with the largest smart phones. It's a funny thing how trends change over time. In the past phones were on mission to build the smallest phones that could easily fit inside a pocket or jacket. They folded in half, were mainly used for calls then graduated to texting and web browsing. The apps of today provide its users one main thing - access with convenience.



Why blog about an app versus a website and who cares? Although most of our younger clientele have downloaded our app and use it often; many don't even know one exists. It's a fast and easy way to access your accounts with various ways to securely log into your account. Additional features are being added all the time, but the app exists today. We have it available and ready for download now!


Remote deposit, statements, tax forms, biometric log in, performance, announcements and letters are on their way. If you want to know more about our app and begin using it - reach out to your Monarch advisor or schedule a meeting with me to become a new client and explore all the benefits we have to offer.


In terms of a champ - it's not a winner take all but more of a preference. Each has its place in keeping tabs on your investments, performance, statements, communication or anything else financial. More robust options exist on a website, but you always have your phone on you with the ability to quickly take a look at things on the fly. We think both are essential to maintain efficiency and remain active in pursuing your financial goals.

Want to learn more? Follow our latest market commentary, firm updates, or anything financial via our blog or Podcast.





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Danger Ahead

Photo by Ashim D’Silva on Unsplash

Danger ahead or does the party continue?  Despite political unrest, chaos in the streets, high unemployment, looming inflation, and concerns about a return to normalcy, the market has been kind to us.  That does assume that we have been invested the entire time and not made a knee-jerk reaction to the unprecedented events that unraveled in the past year.  Does that mean that all of us have done just that? No - of course not!  Recently, we have been meeting with potential clients who have allowed their nerves to get the better of them.  After losing around 30% in March/April, they sold investments and remained anxiously waiting in a cash position.  Looking back now does nothing good for those in the camp that the sky was falling.  With that said, how does that create a learning narrative and impact decisions moving forward?  A logical question you may be thinking about even if you were invested the entire time. 

Danger ahead?  Well, maybe - but what does that actually mean, and how does it impact your overall investment philosophy?  The reality is, nobody truly knows when the market will "correct" or go into bear market territory.  We are NOT "Perma-Bulls" by any means, but that doesn't mean that we would ever recommend going 100% to cash.  In our 25+ years of combined experience, we have yet to see that strategy pan out.  The market is fickle.  It has no feelings, doesn't know how to tell time, and doesn't care about year-to-date performance.  It can be your best friend and your worst enemy; many times over a short period of time.  At some point valuations will matter.  That's right, earnings, cash flow, balance sheet, and future sales potential will come into focus.  

Photo by Esteban Lopez on Unsplash

Attempts to be a hero and avoid market crashes can be a costly novice mistake.  Possibly the worst investment at this current point in time is cash.  So, does this mean that you should do nothing, remain invested the entire time, and become an innocent bystander as your account gets slaughtered?  In short, no!  Not at all.  Keep in mind the stock market has two ends of any trade.  There is always someone making money whether the market is going up or down.  Finding areas of the market that appear to be undervalued or provide potential upside is our job.  It's literally what we are paid to do each and every day.  

Is there anything you can do to protect your income or principal?  Of course, there is, but that comes with a number of follow-up questions and trade-offs with respect to capping your overall return or tying up your capital for a given period of time.  We have ways to hedge against loss, speculate in certain sectors, or even provide defined downside protection.  Yes, it's true - there are things you can do to help protect against loss.  That in itself is a lengthy discussion and can be done in many ways that are specific to each individual.  The point is that you can and should be taking action if it's imperative to meet your needs, goals, and comfort.  In many cases, active management and diversification will tackle those challenges and mitigate your willingness to make a foolish decision.   

Berkshire Hathaway Chairman and CEO Warren Buffett  GETTY IMAGES

What are the "experts" saying about the market right now?  We cannot ignore the insights from the Oracle of Omaha, Warren Buffet, and his often candid commentary on the market.  In the latest article citing Mr. Buffet, (FOUND HERE) his market indicator reveals that prices are expensive and a correction may be around the corner.  Like most of us, logic, rationality, and common sense don't always line up with market returns.  The market knows no time.  As the Oracle has mentioned in other articles, "...They are dancing in a room in which the clocks have no hands" (FOUND HERE).  

The quote is from 2000 and has relevance over 21 years later.  The question shouldn't be "if" the market is going to crash, but "when"?  It will happen and you will see your account value drop.  Market cycles are a natural thing that reigns in pricing that has run up a little too far ahead of itself.  If you've been investing in the past two decades you would have experienced full market cycles that bring down account values and create opportunities.  Stocks become a moving target that requires discipline, strategy, and nerves of steel.  We watch the markets tick by tick, hour by hour and it's something we don't recommend for the average investor.  The number of emotions that can run through your head during the course of a day can be astounding.  

Photo by Heidi Fin on Unsplash

Investing is a journey.  This is NOT a sprint and shouldn't be treated as such.  It's something we hope to be a part of and provide you guidance, knowledge, support, and disciplined strategies as we navigate through inefficiencies of the market.  We remain diligent and active in our approach to money management and believe this will aid you in the pursuit of your goals.  Although we are not market timers, don't employ leverage, or take on high-risk "bets", we do what we can to protect on the downside and seize opportunities when they present themselves.  If you are new to our firm or investing, the one thing we can guarantee is that the market will go up and down.  It's not a one-way street and that has to be embraced.  Long-time clients of ours know and understand this.  We communicate our strategies and rationale in the most difficult of times; the times when most money managers do not want to meet or discuss things.  

If you have money to put to work, a looming market correction should not impair your goals.  It might mean the type of investments selected are different when things of yesteryear are no longer relevant and change is around the corner.  We have a number of headwinds that will work to combat market appreciation and there will always be hints of a catalyst to move the market higher.  Remain focused on your goals and we will help work towards achieving those outcomes. Consider our firm as a true partner in your overall journey we call life. 


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Want to learn more? Follow our latest market commentary, firm updates, or anything financial via our blog or Podcast.




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Disclaimer: The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by Basch Solutions to provide information on a topic that may be of interest. Basch Solutions is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Securities offered through LPL Financial, Member FINRA & SIPC. Investment advice offered through Private Advisor Group, a Registered Investment Advisor.

Private Advisor Group and Monarch Wealth Management are separate entities from LPL Financial. Access to BrokerCheck. The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: NY, FL, OH, TX, NC, SC, IL, AZ.