Client Newsletters
Dear Clients, March 2023
In light of recent events in the financial markets we wanted to share with you our view on the situation and what actions we are taking.
Silicon Valley Bank, the 14th largest bank in the United States, surprised the markets recently when it made headlines for lacking adequate liquidity. This particular bank has a customer base of startup companies and biotechnology companies, very common to have high liquidity needs to fund their growing businesses. In short, what the bank had done was invest customer deposits in long term government treasury bills. The bank could not meet the level of liquidity requested by their customers, and were forced to sell their treasury investments at a loss, due to exponentially rising interest rates, to meet their customer cash requests. General consensus is this was an irresponsible investment Silicon Valley Bank had made. The only solution was for the federal government to step in and take over the bank to protect customers. This action has led industry experts to question if other banks have made similar decisions, thus facing a similar fate. The answer at this point is it is simply too soon to know.
As we have relayed previously, the portfolios we manage have largely removed companies with high cash flow needs, while resuming a "flight to quality" tactic. We have reiterated that we are interested in investing in stable companies with strong balance sheets, and this should serve as an example of why. We knew it was only a matter of time before rising interest rates took aim at potential victims. We hope this situation is contained to a manageable few who made similar investment decisions.
Many of you have recently invested in CDs (Certificates of Deposit) with us. You may have questions about how this situation impacts you. Because DA Davidson is a brokerage firm, we have access to bank CDs all over the country and we strive to find you the best rates on the market, while ensuring your money remains safe. We do not invest your money in a CD that exceeds the FDIC insurance threshold with any one bank, thus making sure your money is federally insured. Should any bank fail, your money is backed up by the full faith and credit of the United States government.
Additionally, our firm has enacted a watch list for all banks that are currently showing a financial weakness, and they are removed from our inventory. DA Davidson remains aggressive in finding only quality banks to do business with.
Like you, we are hopeful this situation is limited in scope, and the fallout is minor. Let this serve as a reminder to all investors to consider all future scenarios before making investment decisions. Our team takes great pride in managing our clients' money with careful consideration, respect, and a well thought-out plan.
If you have questions or concerns, we ask you to give us a call. We thank you for your trust in what we do.
Sincerely,
The Riverfront Wealth Management Group
Kyle, Brett, Marissa, Jean, and Sierra
Dear clients, November 2022
We are entering the fall season during a challenging investment year, and our team has remained steadfast in our dedication to you. We have reminded you that patience is key to long-term success in the public markets, in both the up and down times. As such we have also remained patient in our Paragon portfolios, but have made a handful of changes this year as the market has dictated.
We made another change this quarter by removing a fairly aggressive growth fund and replacing with a blue-chip fund with an affinity to dividends and is overweight to financial services, industrials, and energy. We have conviction that these sectors of the economy will outperform relative to high-growth technology during this economic cycle.
A few things:
- We're seeing CD rates become more attractive for the first time in many years. If you have a savings account with too much cash, we'd be happy to get you a guaranteed return in an otherwise challenging year. Please give us a call and we'll search our broad inventory for the best rates.
- We can review your current 401K with you to ensure you're best allocated for your age, investment time horizon, and risk tolerance. Some changes may be suitable depending on your best interest, including potentially rolling over an older 401K into an IRA for the benefit of active management and a wider range of investment options. Learn more on each of your potential options here or contact my office to discuss your specific situation.
- And last but not least, the cornerstone of a sound investment portfolio is an up-to-date financial plan. If you don't have one yet, or yours needs to be updated, please call to schedule a financial planning meeting.
We hope to see you soon. But if we don't before the end of the year then please have a wonderful holiday season.
Sincerely,
The Riverfront Wealth Management Group
Kyle, Brett, Marissa, Jean, and Sierra
The Riverfront Wealth Management Group volunteering at the Veterans
Stand Down event, as part of “DA Davidson Day”, September 17, 2022.
Dear Clients, June 2022
Looking at the weather forecast it seems that sunny and warm days are here to stay for a while. But if you turn on the news for an economic forecast the headlines will most certainly read dark and stormy. We have remained steadfast in reminding investors to be patient through the economic headlines: gas prices, supply chain issues, interest rate increases, inflationary scares, and geopolitical worries. Each of these has had an impact on the market and your investment portfolio. As we continue making adjustments to portfolios we have conviction in the areas below, and are looking for a better second half to 2022 than the first half:
- Equities over fixed income
- Value stocks over growth stocks
- U.S. companies over International
- Municipal bonds over Treasuries
- Publicly traded companies over private equity
We are also favoring tax-efficient ETF's as the investment vehicle for taxable accounts (non-IRA's). We have converted many taxable accounts to a comparable ETF model which helps investors accomplish two goals: (1) harvest losses; and (2) be more tax efficient going forward. We are putting new cash investments into this ETF model so let us know if you have some savings you'd like to invest and we'll work on an investment plan.
It seems there has been a lot of “money in motion” in 2022 including sizeable tax bills, real estate buys/sells, inheritances, retirements, etc. Be sure to keep us abreast of changes so we can update your financial plan accordingly and plan for things in advance.
Last note and something to think on: if three years ago you knew the S&P 500 would go up with an average annual return of 10% would you invest? I bet you would. Because that's exactly where we stand as of this writing at the end of June. It doesn't feel like it, on both your end and ours, because of the market conditions of 2022, but perspective can be helpful.
Enjoy your summer. We're here for you if you need anything.
Sincerely,
The Riverfront Wealth Management Group
Kyle, Brett, Marissa, Jean, and Sierra
Dear Clients, May 2022
As we approach the midway point of 2022 (can you believe it?) we were hopeful this market correction would have passed. Unfortunately, the market is still grappling with many of the same issues it started the year with. The Fed will continue with its rate hikes, inflation is still far above average and the world is watching Russia and Ukraine.
We are not standing idle. Our team is taking additional measures to ensure your portfolio is best aligned with ever-changing market conditions. With the consultation of our trusted economists and money managers, we have reallocated portfolios to more stable, profitable companies. Businesses with strong balance sheets and cash on hand should be able to withstand economic headwinds and continue to grow. Believe it or not, there are publicly traded companies on the exchange who do not post a profit. These companies are typically early stage and have an excellent concept, but have a product or service that is months or years from being at a scale large enough to be profitable. There is a time and a place to invest in these types of companies. Now that interest rates are on the rise and the fight against inflation is well underway, we believe the opportunity to invest in these companies may have passed for the time being. The strong will survive.
These are understandably unsettling times, but the key here is patience. We have said all along this year is going to test investors' patience. We have your best interest at heart, and will continue to monitor the economic landscape as it evolves. Our team's foundation is based on open and honest communication, integrity, transparency and the utmost professionalism. If you have any questions or concerns, or would like to meet in person, please give us a call.
Sincerely,
The Riverfront Wealth Management Group
Advisors with DA Davidson & Co.
Kyle, Brett, Marissa, and Jean
Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy, timeliness, suitability or relevance and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. The opinions and comments expressed may not accurately reflect those of D.A. Davidson & Co., member FINRA/SIPC.