Letter to Wiser Clients March 18, 2020

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This week has been one of those weeks where you just want out of the stock market. You are tired of seeing your balance decline. There are a million reasons to keep holding on or investing more, but you don’t remember them exactly. Stay the course. Every dollar into the market buys more shares, every dollar not sold is a dollar that is still generating interest, dividends and will rebound in value. Liquidating could be the end of your future financial security.

For our retirees taking regular withdrawals from your accounts, remember that we keep two years of cash in reserve for market environments just like we are experiencing now. When you receive your monthly disbursement, we are not liquidating anything to cover this withdrawal.

Financial markets are clearly reflecting our current environment of business closures and the recommendation to stay home. Vanguard economists posted today that the US could see a mild recession because of current events, however they currently believe that it will be a short one with a strong rebound based on pent-up demand by year end.

The markets could continue downward and will certainly be volatile until we flatten the number of coronavirus cases and better understand the global economic stimulus plans. As more individuals are tested, more cases will appear. When the number flattens out, hospitals return to more normal operations and businesses reopen, stocks will begin to climb.

Our plan is to look for opportunities to sell funds that we would have sold in the past, but chose not to due to capital gains. These funds will be sold and the proceeds will be moved to the like fund that we would rather hold moving forward. A tax deduction can be created in this transaction. We are looking for the best opportunity to sell bonds at higher prices and buy stocks at lower prices. This will help accelerate the portfolios recovery once we return to normal valuations.

Posted by Casey T Smith

March 18, 2020

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