Nauset Wealth Managment

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Nauset Insights

Coronavirus – Market Impact

After mostly ignoring the potential impact of the coronavirus that originated in China, US markets have suffered a sharp sell-off, as the S&P 500 Index is currently about -8% off its recent all-time high. The fear is the virus may spread more broadly than originally predicted and negatively affect economic activity around the globe.  

This COVID-19 viral outbreak is a very real headwind to economic growth in China, globally, and the US. The extent of the eventual damage is difficult to predict, but it will temporarily lower GDP growth across the globe. The good news for the US is that, while there will be some impact due to disrupted supply chains and reduced exports, the US economy has a solid foundation of low unemployment, improving wage growth and is much less dependent on the rest of the world than most countries.

How bad will the impact be? How much further will the markets decline? Both answers are unknowable at this point. However, we can say the following – until the global outbreak is successfully contained, markets will trade on fear and hope, not on fundamentals of growth and profit. And that will lead to continued volatility.

Nauset’s portfolio strategy has prepared us for this type of volatility with an allocation to securities that provide market buffers. Additionally, our long-term financial planning focus takes into account and anticipates market declines. As long-term investors, we don’t want to make the mistake of trying to call a short-term market bottom or time the market. 

If you’d like to read more about the coronavirus impact, the Independent Market Observer’s article, How Should Investors React to the Coronavirus?, is an excellent piece. 

Planning for Assisted Living: The Promise, The Truth

Over the past several years my wife has managed her elderly parents’ care in an assisted living facility. Sadly, Geeta Anand’s New York Times article, How Not to Grow Old in America, is an accurate reflection of our experience of the care promised versus the care delivered, especially in the memory care unit. Paying for a full-time outside aide was the only way her folks got the help they needed. The take-aways from this article and our experience are:

  1. Do your research before the need arrives. The cost of assisted living can be more (maybe substantially more) than expected.

  2. Consider a wide range of options including moving to a different area, but still close to family. Assisted and retirement living facility costs vary widely around the country.

  3. Involve adult children if possible. This can be challenging but, in our experience, it can be critical for ensuring parents receive the care they need. Calling isn’t enough. They need to visit and have an open line of communication.

How Not to Grow Old in America

Nauset Market View – Quick Bites

Here are the topline market views from our recent quarterly Investment Committee meeting:

  • Volatility in financial markets will continue
  • The US-China trade war will be resolved eventually
  • Recession in the next 12 months is unlikely (unless the trade war is not resolved)
  • Interest rates will remain low, even if they rise a bit, and the Fed is likely to stay on hold for the near term
  • Overall US growth is resilient, though slowing
  • Corporate earnings are unlikely to collapse but, will continue to moderate
  • China matters in and of itself, not just in relationship to the US

Two isn’t better than one, it’s critical.

As wealth advisors, when we work with couples it is a lot easier to have one point person on money issues. However, the other partner, no matter their age, needs to participate in discussions and decision-making. If they don’t, then two unfortunate consequences can occur:

  1. Couples that need to make changes to put them on a good financial path struggle to do so and watch their goals slip away;
     
  2. If the point partner dies, the surviving partner is left to learn and execute an estate and financial plan under duress and, once they understand it, they don’t like it.

Couples often think that the person who is most financially literate should manage their money — yet research shows why, especially as partners age, that’s a problem.

Read more about it in this New York Times article:

You’re the ‘Money Person’ in Your Relationship? That’s Problematic