This earnings season, corporate America will get closer to the return of earnings growth—which is likely in the first quarter of 2021. We probably will have another decline in profits for third quarter 2020, though potentially only about half as big as last quarter’s. And we will undoubtedly hear more about uncertainty—both COVID-19 and election-related. We also highlight three things investors can watch this earnings season. Moving in the Right Direction How investors evaluate this earnings season will depend on their perspectives. We are likely to get a much smaller year-over-year decline in S&P 500 Index profits in the third quarter compared to the second quarter, which is good news. Consensus is calling for a roughly 20% year-over-year decline in earnings per share (EPS) according to FactSet’s estimate, but we expect quite a bit better [FIGURE 1].       The consensus estimate for the third quarter has risen by about 4% over the past three months (best such increase in more than two years according to FactSet), a good sign that companies may be able to deliver more than the typical upside. And although fewer companies have offered guidance because of the amount of uncertainty, 67% of the guidance has been positive, significantly higher than the five-year average of 32%. Accordingly, we expect company management teams to instill confidence that the earnings rebound baked into analysts’ forecasts—or at least something close to it—may materialize. The economic growth picture in the United States is also supportive. Mostly better-than-expected economic data during the quarter is a positive indication of earnings surprises. The possibility of a more than 30% annualized spike in US gross domestic product (GDP) during the third quarter is supportive

The world’s events always affect the markets, and making smart investment choices requires you to look at what’s happening around the world. But what about during an election year? How should you invest while the country is deciding which direction to take? Regardless of which side of the political spectrum you prefer, you may want to keep the following facts in mind as you invest during an election year. 1. Stocks Trend Upward Regardless of Who’s in Office Although stock values go up and down, the stock market always has an overall upward trend, regardless of who’s in office. On average, returns from the S&P 500 are 8 to 10% per year1. To put these numbers into perspective politically, seven Republicans and seven Democrats have called the White House home since the infamous market crash of the Great Depression. In other words, the person in the Oval Office typically doesn’t affect overall stock market growth. 2. Markets Tend to Bounce Back After a Volatile Primary Season During the primary season, stock values tend to be volatile, which can be scary for investors. But you shouldn’t necessarily yield to the fear and sell. During the year after a primary season, stocks return an average of 10.1%2. Although you can never predict returns, the patterns indicate that if you stay the course during a volatile primary season, values are likely to return. 3. Investors Often Cash Out Assets During Election Years Research indicates that the amount of net assets flowing into money market accounts triples during election years. Essentially, this trend indicates that many investors get nervous, sell stocks, and put the cash into money market accounts. Staying in the markets while

If you’ve been wondering how to optimize your finances and ensure your money continues to work for you, a financial professional may be able to help. But the thought of turning over your most sensitive financial information to a near-stranger can be an intimidating one. To make this relationship work, you’ll need to place a great deal of trust in your financial professional, and it’s crucial to find the right fit. What should you know about working with a financial professional, and how can you prepare for your first meeting? What a Financial Professional Can Do For You A financial professional is essentially a personal trainer for your financial life. While you may be able to educate yourself on the financial principles you’ll need to manage your own investments, a financial professional has the knowledge and guidance to take your plan to the next level. Financial professionals use their knowledge to create personalized financial plans for their clients that touch on savings, budgeting, insurance, and tax-saving strategies. Just a few of the benefits you can realize from working with a financial professional include: Accountability and follow-through. It can be easy to talk yourself into (or out of) making certain financial moves. By partnering with a financial professional, you can help ensure that the actions you take will fit in with your overall financial plan. Ongoing tweaking and review. Circumstances can change, and your plans may change with them. A financial professional will help you reevaluate at regular intervals and make any changes that may be necessary. Most financial professionals offer a wide array of services, which means that you can use your professional for as little (or as much) as

Speculation has been increasing that the November election results may be delayed or disputed, or both.  A contested election might affect financial markets in several ways. Also, the news that President Donald Trump has tested positive for COVID-19 may potentially impact markets as well. Note on President Trump’s COVID-19 Diagnosis While this Weekly Market Commentary was in production, we learned that President Trump and First Lady Melania Trump had tested positive for COVID-19. First and foremost, we wish the president and first lady a swift and full recovery. Obviously the news adds a layer of uncertainty to an already contentious election cycle. The immediate market response has been relatively mild so far. US stocks were lower at open the morning of October 2, but some assets that are perceived to be more resilient in the face of a risk-off environment, such as Treasuries, gold, and the Japanese yen, have shown no real sign of added strength early on. The news adds to the election uncertainty, however. Trump will be unable to campaign in person during the quarantine period that he observes—and maybe longer if he exhibits more serious symptoms—which possibly could hurt his reelection chances. On the other hand, the United Kingdom’s Prime Minister Boris Johnson saw his approval rating rise while he was fighting the infection. From a market perspective, we think it’s better not to speculate on the election impact of the diagnosis. We do know two things: 1) The response to COVID-19 is very different from case to case, which means only time will tell how the virus may affect the president, and 2) the president and first lady will be monitored closely and will have access to some

As technology continues to evolve, so too have the skills of cyber-criminals, who have honed their abilities to break through firewalls, stealing valuable personal data and funds. What steps might you consider to help secure your valuable personal and financial data when banking online? Consider the following tips as important baseline checks. Connect with caution. Be careful how and where you use any online banking system. Never connect to the Internet through an unsecured public wireless network. Never access your account from a link. Links are easy to tamper with, especially if they are embedded in an email, text message, or online article. Always go directly to the home page of the financial institution first, and navigate from there. If possible, try to use the same computer each time you make an online transaction, and be sure to log off when you are done. Protect your passwords. Choose and use your passwords carefully. Create “c0mplic@T3d” passwords. Use at least eight characters and include a liberal mix of uppercase and lowercase letters, numbers, and special symbols. Avoid using the same password for multiple accounts — doing so leaves you more vulnerable. Never use personally identifying information, such as the last four digits of your Social Security number or a family member’s name, in a password or username. That could easily be the first thing a hacker tries. Be sure to change your passwords regularly (at least three times a year) and avoid reusing the same password and username on different websites. Never share passwords, personal identification numbers (PINs), or other account-related information in response to an unsolicited request. If you did not initiate the communication, you should not provide any information.

When it comes to retirement planning, much ado is made of how much to save. But often, the real difference lies in shrewd distribution planning. By withdrawing funds from certain account types in a certain order, you might significantly reduce your taxes and lower your annual withdrawal rate. What should you consider now when planning your retirement distributions? Assigning Your Money to “Buckets” Many investors who are getting closer to retirement may worry about the impact of a sudden stock market drop. But while it’s important to protect some funds from major market moves once you’ve left the workforce, remember that your retirement funds will need to sustain you for several decades or longer. By allocating your assets to different risk “buckets,” you can maintain future growth while helping make sure you have enough funds on hand to cover short-term expenses. For example, your short-term savings may be entirely in cash or money market funds that have no risk of loss, while your more aggressive long-term bucket may be invested 100 percent in stocks. The right asset allocation for you will depend on your account balances, your retirement budget, your retirement wishes, and even your projected lifespan. Creating Guaranteed Income The key to a sustainable retirement involves providing yourself with flexibility. If you retire with one or more sources of guaranteed income, like a pension or Social Security, you can use this income to cover your everyday expenses while reserving your lump-sum retirement funds for larger expenses. Having a guaranteed source of income to cover expenses can prevent you from having to cash out funds in a down market. This flexibility can help you preserve your nest egg for the

Whether you dream of a travel-filled retirement or would prefer to relax and enjoy spending more time at home, you’re probably wondering what you can do to make your golden years as stress-free as possible. For many who have spent the last several decades in wealth-accumulation mode, withdrawing savings can trigger anxieties about the future. Some of the choices you make during the earliest years of retirement can significantly reduce—or accelerate—the speed with which you spend down your retirement savings. Moving to a State with No (or Low) Income Taxes As of 2020, seven states do not levy an individual income tax—Texas, Florida, Nevada, Alaska, Washington State, Wyoming, and South Dakota.1 Retiring in one of these states can save you up to 13 percent on each 401(k) or IRA withdrawal you make. There are certainly trade-offs to this approach, as low-income-tax states tend to have higher property taxes or fewer public services than high-tax areas; however, for those looking to preserve their nest egg, it’s worth looking into. In some cases, it can make sense to plan a move to a no-tax state shortly before you begin taking required minimum distributions (RMDs), as these RMDs will then be subject only to federal income taxes. And even if you’d prefer not to uproot your life to live in a new state year-round, you may want to investigate your options to see how many nights a year you’d need to spend in a no-tax state to claim residency. Deciding When to Take Social Security Benefits Another important factor in preserving your retirement savings involves when to take Social Security benefits. The earlier you claim, the less you’ll receive per month; waiting until age 70 to claim can mean maximizing your benefits.

The recent correction in the S&P 500 Index’s technology sector presents a unique challenge to markets following a historic stretch of outperformance as technology’s share of the market has ballooned in size. Despite September weakness in this sector that has dragged the broader market lower, we expect technology leadership to continue given supportive underlying fundamental and technical conditions. A September to Forget During the COVID-19 pandemic, technology has played a curious role in mitigating downside during bouts of volatility, while also posting considerable outperformance when markets rebounded, as many viewed the sector as relatively well insulated from the economic effects of the virus. After a “melt-up” environment for tech during the month of August, the sector so far has corrected more than 12% from its prior high in September, a historically weak month for the S&P 500. Investors are asking if the weakness will continue. Fundamentals are Supportive The question of whether technology’s strong performance since March has put it in bubble territory has received a lot of attention in the financial media as well as with investors. Although we acknowledge that some of the better-performing technology and technology-related stocks have been on an upward trajectory similar to that of the late 1990s until the recent sell-off, we don’t believe technology is in a bubble. We would first point out how strong fundamentals are right now. Earnings estimates for the sector have already moved above their pre-pandemic highs. While there is risk that these expectations may not be achieved, the gap between technology sector earnings and earnings from the entire S&P 500—which includes technology—is impressive [Figure 1]. During the second quarter of 2020, technology was one of only three sectors to

As the end of the year approaches, it’s time to consider strategies that could help you reduce your tax bill. But most tax tips, suggestions, and strategies are of little practical help without a good understanding of your current tax situation. This is particularly true for year-end planning. You can’t know where to go next if you don’t know where you are now. So take a break from the usual fall chores and pull out last year’s tax return, along with your current pay stubs and account statements. Doing a few quick projections will help you estimate your present tax situation and identify any glaring issues you’ll need to address while there’s still time. When it comes to withholding, don’t shortchange yourself If you project that you’ll owe a substantial amount when you file this year’s income tax return, ask your employer to increase your federal income tax withholding amounts. If you have both wage and consulting income and are making estimated tax payments, there’s an added benefit to doing this: Even though the additional withholding may need to come from your last few paychecks, it’s generally treated as having been withheld evenly throughout the year. This may help you avoid paying an estimated tax penalty due to underwithholding. Of course, if you’ve significantly overpaid your taxes and estimate you’ll be receiving a large refund, you can reduce your withholding accordingly, putting money back in your pocket this year instead of waiting for your refund check to come next year. Will you suffer the alternative? Originally intended to prevent the very rich from using “loopholes” to avoid paying taxes, the alternative minimum tax (AMT) now reaches further into the ranks

Many self-improvement goals focus on stability and personal growth — and financial goals are often no different. From buying your first home to saving for retirement, planning your finances can also help you work toward your personal goals. Learn more about why self-improvement is so important and how good financial planning will complement the goals you’ve set. Why Self-Improvement? Self-improvement is never one-size-fits-all. This means that no matter how happy you are with your current life, there can always be room for improvement. And by making small, incremental changes, over time, you can shift your lifestyle and your state of mind. Self-improvement can take many different forms. For some, it may mean replacing bad habits with better ones. For others, it can involve striving toward a tangible goal, like learning a second language or hiking the Appalachian Trail. By having something to consistently work towards, you’ll be focused on solutions, not mired in the problems of the past. How Financial Planning Can Help Self-improvement goals tend to focus on personal or vocational habits, from waking up earlier to joining a trade association and attending networking events. But some goals—like buying a home, finding your dream job, or paying for that vacation you’ve always wanted to take—can also implicate financial planning principles. By tracking your money more carefully and prioritizing your goals, you’ll be well-equipped to tackle whatever life can throw at you. Set up a spending plan. For many, “budget” implies the same restrictive connotations as “diet.” But in reality, a budget is no more than a spending plan, helping you decide how much money to set aside toward certain expenses and savings goals. List your priorities. If you’re eager