Author: Minich MacGregor Wealth Management

Thanks For All the Little Things

Written by Minich MacGregor Wealth Management on June 18, 2021. Posted in Uncategorized.

June is the month for Father’s Day — but it’s also the month for family vacations and road trips!

Whenever we plan a vacation, we think back to all the trips we took as kids. The first things to come to mind aren’t how magnificent the Grand Canyon looked, or the awesome power of Old Faithful, or even the rides at Disney World.

Our memories are of all the little things.

Now that we’re older, we know just how many “little things” our dads did for each and every family vacation, year after year after year. First, he would save up his hard-earned money throughout the year, so we could tour a far-off national park, visit some golden beach, ride the newest mega-coaster, or learn more about our nation’s history. Then, he would obsessively plan every route we took, scrutinizing maps and atlases – this was in the days before GPS – so we would always take the shortest route, or the most scenic one. Next, he would teach us all how to pack the family car the right way, so we could fit in the most luggage.

Then the work really began.

When we were twenty minutes into our trip, and one of us called out, “Dad, I forgot my ________, he would turn around so we could retrieve it. Sometimes grudgingly, sometimes in good humor…but he would always turn.
He would stop for every bathroom break we needed to take, even if the last one was ten minutes earlier.
He would tell dad jokes and sing funny songs all throughout the drive, just to keep our spirits up.
He would drive all through the long night while the rest of us slept.
He would wake up two or three hours earlier than everyone else, all to stand alone in the line for tickets to a guided tour or popular ride.
He would teach us the names of the trees and animals we saw or point out distant wonders we would otherwise have walked right on by.
He would carry us on his shoulders when we got tired.
He would buy us that one thing in the gift shop we just had to have.
When one of us said, “Look at me, Dad!” for the umpteenth time, he would always look.
When we asked, for the millionth time, “Dad, when will we get there?” he would always answer – and then distract us with a comment like, “Hey, look at that funny cloud!”
When we asked, for the billionth time, “Dad, what kind of bird/tree/rock is that?” he would quickly look up the answer as soon as we weren’t looking.
When we would ask, for the gazillionth time, “Dad, how many stars are there in the sky?” he would answer, “A million billion gazillion.”

These are the things we remember from our family vacations. Not the grand sights or spine-tingling thrills. We remember all the little things our dads used to do to make sure each one of us had a great time.

So, as another Father’s Day approaches, and another season of family vacations begins, we want to say,

Thanks, Dad.

Thanks for all the little things.

All million billion gazillion of them.

And from everyone here at Minich MacGregor Wealth Management, we wish all fathers everywhere a

Very Happy Father’s Day!

P.S. Our favorite eye-rolling, groan-inducing joke dad used to say on road trips:

ME: “Dad, I’m hungry.”

DAD: “Hi, Hungry, I’m Dad!”

Prisoners of War

Written by Minich MacGregor Wealth Management on May 28, 2021. Posted in Featured.

Name, rank, service number, and date of birth. That was the only information Donald Cook ever told his captors. Donald Gilbert Cook. Captain, U.S. Marines. August 9, 1934. Even when he was beaten, even when he was starving, even when he was sick, it was all he’d ever say.

But for his comrades, he did so much more.

Name, rank, service number, and date of birth. That was all Lance Sijan’s torturers ever got from him. Lance Peter Sijan. Lieutenant, U.S. Air Force. April 13, 1942. Even with a fractured skull, a broken leg, a mangled hand, and extreme malnutrition, Lance Sijan would say no more.

But for his country, he showed so much more.

Lance Sijan was 25 years old when his plane exploded over North Vietnam. Although he was able to eject, the force was so violent that Sijan was knocked unconscious. When he awoke, he found himself in enemy territory without food or water. He was able to radio for help, but there were too many North Vietnamese forces in the area. Sijan refused to subject other airmen to a dangerous rescue attempt. So, he informed his superiors of his decision to crawl through the thick jungle, hoping to find a safer spot.

Weakened and dehydrated, with multiple broken bones, Sijan was only able to move by sliding along his backside. Despite this, he evaded capture for six weeks, until finally, he was spotted by the North Vietnamese on Christmas Day. But even in captivity, Sijan’s indomitable will could not be broken. He subjugated one of his guards and escaped back into the jungle, only to be recaptured several hours later.

That’s when the torture began.

Name, rank, service number, and date of birth. Already gaunt and maimed, Sijan was interrogated relentlessly. But he never relented. He never divulged any information about himself, his unit, or his mission. Nor did he ever complain to his comrades. As he began slipping in and out of consciousness, he continued to plan future escape attempts. Most important was the standard he set for the other prisoners. Never give up. Never give in. Keep resisting. Keep fighting. Keep serving.

Finally, a few weeks after being captured, Lance Sijan died from pneumonia. But his example endured on, inspiring other prisoners to persevere – and live.

Later that year, Sijan was posthumously promoted to the rank of captain. In 1976, he was awarded the Medal of Honor for his “extraordinary heroism and intrepidity above and beyond the call of duty.”¹

He was only supposed to be in Vietnam for a training mission. But maybe Donald Cook had a premonition he would be captured one day. Maybe that’s why he prepared for it long before it happened.

Cook joined the marines in 1956. A gifted linguist, Cook taught himself Vietnamese and Chinese and made a point of learning how to conduct himself if he were ever captured and interrogated. He even wrote a pamphlet based on the experiences of American POWs during the Korean War and taught resistance techniques to other marines in case they were ever imprisoned.

In 1964, Cook went to Vietnam for a 30-day assignment. But only 18 days after arriving, Cook found himself embroiled in the Battle of Binh Gia. Wounded and captured by the Viet Cong, his superiors thought he was dead and declared him killed in action.

But Cook was very much alive – and about to put his training to use.

First, Cook established himself as the senior officer among nine other POWs, even though he technically wasn’t, knowing this would cause him to be singled out by his captors for especially brutal attention. As the senior officer, he had the authority to demand better food, medicine, and care, which he did so constantly. Often, this only resulted in harsher treatment for himself, but sometimes, his efforts paid off.

Next, Cook began giving away his food and water rations, not to mention what little medicine he had, to prisoners in worse condition. As the prisoners were forcibly marched from one camp to another, Cook personally carried his comrades’ belongings if they were too weak to do so themselves, knowing those same belongings were often what kept the men alive.

As the senior officer, Cook was always first to be interrogated – and first to be punished whenever his fellow POWs resisted. But, drawing on his years of training, Cook never relented. Name, rank, service number, and date of birth. Even when offered the chance to negotiate his own freedom, Cook refused. He would not abandon his post, his duty, his men, or his country.

At one point, his interrogator pushed a pistol against his forehead and threatened to fire. It was probably the only time Cook indulged his captors with a different answer.

“You can’t kill me,” he said. “Only God can decide when I die.”²

His words were prophetic. After over three years in captivity, Cook finally passed away. Not from torture, or starvation, or a Viet Cong bullet, but from malaria. His fellow prisoners, the same men he had inspired, protected, and saved, buried him in the jungle themselves.

Donald Cook was posthumously promoted to colonel and awarded the Medal of Honor “for conspicuous gallantry and intrepidity at the risk of his life above and beyond the call of duty…and for personal valor and an exceptional spirit of loyalty in the face of certain death.”³ Fifteen years later, his daughters found a box containing letters he had written to them before leaving for Vietnam.

“Do what is right and just,” he had written, “no matter what the personal cost.”²

Every Memorial Day, we honor those who died defending our country. Usually, we imagine their valor and sacrifice taking place on the front lines, in the heat of battle, and it often did. Defending a hill, liberating a town, mounting a last, desperate charge – these are feats movies are made of.

But when you walk past the white marble headstones of Arlington National Cemetery, when you read their stories, you learn that sacrifice comes in many forms…and the greatest valor often happened where there was no one to see. Some of the finest heroes our country has ever known were nowhere near the front lines when they died. They were in enemy territory. They were shackled and starving. Sometimes, it would be years before their country would know what happened to them. Sometimes, their bodies never even made it home.

They were prisoners of war. They were heroes.

This Memorial Day, let’s remember them. Let’s honor them.

On behalf of everyone at Minich MacGregor Wealth Management, we wish you a safe and peaceful Memorial Day.

¹ “Lance Sijan”, Wikipedia, accessed May 3, 2021. https://en.wikipedia.org/wiki/Lance_Sijan

² Donald L. Mathis, “Colonel Donald G. Cook, USMC: Faith Without Fear,” American Intelligence Journal, Vol. 35, No. 1, pp.23-28. 2018.

³ “Donald Cook (Medal of Honor)”, Wikipedia, accessed May 4, 2021. https://en.wikipedia.org/wiki/Donald_Cook_(Medal_of_Honor)

2021 Areas of Uncertainty -> Volatility

Written by Minich MacGregor Wealth Management on May 24, 2021. Posted in Minich MacGregor Missive, News.

Everyone knows that April showers bring May flowers. But this year, the saying could be, April tranquility brings May volatility.

Okay, maybe that saying won’t catch on. But still: Up one day, down the next, flat overall — this has been the state of the markets for the last few weeks. The fancy word for this is consolidation. The markets have been on a tear this past year, and now investors are consolidating their gains, waiting to see what happens next. Think of it as a plane in a holding pattern, circling the runway while it waits for a good time to land.

Why this new volatility in the markets? That’s the question many clients have been asking us. Well, volatility is always a product of uncertainty, and there are several areas of uncertainty that investors are dealing with right now. We’ll address a few…

The first area is inflation.

On Wednesday, May 12, most Americans probably woke up and read the news that Ellen DeGeneres was canceling her show. Or maybe they checked the latest sports scores. We enjoy reading this stuff as much as the next person, but, as financial advisors, our morning was spent reading something else: a news release from the Bureau of Labor Statistics revealing the Consumer Price Index for the month of April.

Here’s how it starts:

“The Consumer Price Index for All Urban Consumers increased 0.8% in April on a seasonally adjusted basis after rising 0.6% in March, the US Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 4.2% for seasonal adjustment. This is the largest 12-month increase…since September 2008.”¹

Riveting stuff? Maybe not – but there’s some important information to be found in that paragraph. Here’s what it says in plain English: Inflation is on the rise.

The fact inflation is rising is not a surprise, nor is the reason for it hard to understand. With the worst of the pandemic seemingly behind us, the economy is opening up in a big way. More and more people are going out to eat, visiting theme parks, traveling on airplanes, buying cars, improving their homes, etc. In other words, people are demanding more goods and services.

As we know from the Law of Supply and Demand, when the demand for things outpaces supply, prices go up. With more people are vaccinated, and the CDC recently loosening their mask recommendations, demand has risen sharply over the past few months.

Now, these conditions are all good for economic growth. But for the stock market, there are two issues. The first issue is that this economic growth was largely priced into the markets months ago. Remember, stock market prices reflect what investors anticipate will happen tomorrow more than what’s happening today. Investors expected the economy to grow, so they plowed more money into stocks. Now, the growth is happening, but it’s simply confirmation of what people already expected.

To show you what we mean, here’s a graph of the S&P 500 over the last twelve months.²

So, what’s the next good thing investors can expect? Unknown. That’s the next area of uncertainty. Previously, even when the pandemic was at its worst, investors had a lot to look forward to. A vaccine. Falling case numbers. More government stimulus. But now vaccines are here, case numbers have been falling for months, and there are no more stimulus checks in the offing. It’s like returning from a trip to Disneyland. The kids are exhausted. The parents must return to work. And everyone’s wondering when the next vacation will be.

Until there’s something new to feel excited about, many investors worry there’s a ceiling on how much higher stocks can rise.

Before we go on, let’s return to inflation for a moment. We mentioned there were two issues with economic growth. The second issue is fear. Specifically, fear that the economy will grow too much, too fast.

If the economy grows too quickly, prices will rise across the board and the value of our currency would drop. This, essentially, is inflation: When the general price level rises, a dollar simply pays for less than it used to. That makes it much harder for people to buy the goods and services they need. Or to pay off their debts. It makes it harder for businesses to hire new workers or pay the workers they already have. The upshot? When inflation gets too high, consumer spending plummets, unemployment jumps, and economic booms turn into economic busts.

For investors, the question isn’t about whether inflation will go up. It already is. The question is, will this inflation be temporary, or long-term? The answer will determine how big of a deal it really is.

There’s certainly a good argument that it’s temporary. That’s how the Federal Reserve currently sees it (more on them in just a minute). The thinking is that this inflationary spike is driven by temporary problems related to reopening the economy. As soon as society settles down and regains equilibrium, prices will settle down, too. But we don’t know for sure. It’s not hard to imagine a future where, by the end of the year, the world is still wrestling with the implications of the pandemic. Supply could still be struggling to keep pace with demand. Prices could keep rising. We’re still a long way away from that. But if that is what the future holds, the Federal Reserve would need to do something about it.

And that’s the other area of uncertainty.

You see, the Federal Reserve has what they call a “Dual Mandate”. To put it simply, their mission is to “foster economic conditions that achieve both stable prices [manageable inflation] and maximum sustainable employment.”³

The problem is, it’s not always possible to focus on both goals at once. The Fed must prioritize, and right now, employment is a far higher priority. For the last year, the Fed has helped prop up the economy by buying billions in bonds to keep interest rates low. (Lower interest rates make borrowing less costly, which means businesses and individuals can borrow and spend more, thereby pumping more money into the economy.) But that can’t go on indefinitely. At some point, the Fed must raise rates, especially if inflation keeps rising.

For months, the media has been asking the Fed when they expect to raise rates. For months, the Fed’s answer has been some variation on, “Not until the economy is ready.” Currently, the Fed simply doesn’t see rising inflation as an issue. At least, not compared to the task of getting the economy back to full employment. But for investors who’ve become hooked on the drug of low interest rates, these assurances do little to calm their fears. Why? Well, low interest rates mean that many types of investments, most notably bonds, simply don’t provide the same return on investment as they would in a high-interest rate environment. That drives more and more investors into the stock market to get the returns they need. But what happens when interest rates go up? Consumers and businesses could cut back on spending, which in turn could cause earnings to fall and stock prices to drop.

Rumors persist that the Fed will begin “tapering” their bond-buying sooner rather than later. (This means the Fed will gradually buy less and less in bonds, resulting in a gradual increase in interest rates.) Whenever the headlines even hint at this, the markets tend to spasm. This is the cause behind many of the price swings we’ve seen in recent weeks.

So, that’s the story behind the recent volatility. The question is, what do we do about it?

The first thing we need to do is accept that these areas of uncertainty are likely to persist for some time. In other words, we need to be mentally prepared for a sustained period of consolidation/volatility. If the reverse happens and the markets resume their upward climb? Fantastic! But if not, at least we’ll be prepared.

The second thing to do is remember that we are prepared – for short-term volatility and long-term inflation. If interest rate fears worsen and volatility goes up, we are ready to play defense and move to cash. If there’s a general rise in prices and inflation skyrockets above what the Fed can handle, we don’t have to ride out another market crash like so many investors do. As always, we’ll obey the rules of our strategy and do what the trend dictates. If our technical signals indicate major volatility on the horizon, we’ll act accordingly.

The final thing you can do is let us know if you have any questions or concerns. We’d be happy to speak with you! But in the meantime, keep in mind that while April showers bring May flowers, June sun brings fun! Summer is just around the corner, so go enjoy it. Our team will continue to man the fort around here. If there’s ever any action we need to take, or development you need to know, we will contact you immediately. As always, let us know if there is ever anything we can do for you!

₁ “Consumer Price Index – April 2021,” Bureau of Labor Statistics, May 12, 2021. https://www.bls.gov/news.release/pdf/cpi.pdf

₂ “S&P 500”, Google.com, accessed May 19, 2021.

₃ “The Federal Reserve’s Dual Mandate,” Federal Reserve Bank of Chicago, October 20, 2020. https://www.chicagofed.org/research/dual-mandate/dual-mandate

Inflation – Is the Economy Overheated?

Written by Minich MacGregor Wealth Management on May 20, 2021. Posted in Uncategorized.

How much inflation can the country afford before we’re in trouble?

Let’s discuss.

First, let’s get on the same page about some basics.

If you’ve noticed the price of a thing increasing over time (say, your favorite candy bar or the cost of college tuition), that’s inflation in action.

Economists use the broad increase (or decrease) in prices of goods and services across the country as a measure of economic health.

When inflation is stable and predictable, it’s a sign of a basically healthy, growing economy.

But, high inflation can quickly eat away at the purchasing power of your dollars, indicating that the economy might be overheated.

Deflation, or a decline in prices, can be a warning sign of a shrinking economy.

Recent data highlighted a surprise spike in inflation, indicating that prices increased faster than economists expected last month.¹

Could this be a worrisome sign that the economy is overheated? Could $50 burgers be in our future?

Maybe.

On the other hand, could it be a temporary blip caused by the economy emerging from the pandemic-driven slowdown, complicated by supply chain issues?

Very possible.

Are the headlines catastrophizing?

They usually are.

Let’s look at the data.

The Consumer Price Index (CPI), one of the major indexes economists use to track inflation, showed a surprising spike in April, igniting fears of runaway inflation.

Core CPI (which excludes the highly volatile categories of energy and food) showed a 0.9% increase in April month-over-month and 3.0% year-over-year. That’s much higher than the expected 0.3% and 2.3%, respectively.¹

However, digging a bit deeper, we see that just two categories of goods (used cars and transportation services) accounted for the vast majority of the surge.²

That suggests things like flights and train travel suddenly became more expensive after a year of rock-bottom prices.

Is that runaway inflation or the normalization of prices as the world reopens?

We can’t tell from a single data point, but it’s not unusual to see prices increase in sectors that experienced a severe slowdown last year.

And the jump in used car prices? Well, many folks are turning to the second-hand market right now, in part because new cars are caught up in global supply chain bottlenecks for things like semiconductors and raw materials.³

Inflation is something to keep an eye on, especially in a year when so many of the usual variables have been thrown into flux. An ongoing surge in prices could hurt our wallets as our dollars buy less over time.

However, a single monthly spike following a very weird period for the economy is not cause for alarm yet; we should prepare ourselves for more odd numbers coming out of different parts of the economy in the weeks and months to come.

Shortages of everything from ketchup to gasoline could lead to price increases and fluctuations as supply chains attempt to disentangle from pandemic disruptions.⁴

Should we expect markets to react to inflation (and other) headlines?

A negative market reaction is not surprising after weeks of strong performance. We should expect volatility ahead as we (and the economy) adjust to a post-pandemic world.

Bottom line: Expect the unexpected in 2021.

88% There?

Written by Minich MacGregor Wealth Management on May 10, 2021. Posted in Uncategorized.

Two things to discuss today: the economy (getting better) and taxes (going up?).

Let’s dive in.

The light at the end of the tunnel is getting closer and brighter.

The economy is booming and we’re getting much closer to pre-pandemic levels of economic growth.¹
COVID-19 cases are declining, as the math starts to work for us (instead of against us as it did at the beginning of the pandemic).² As more folks gain immunity, there are fewer ways for the virus to spread.
All U.S. adults are now eligible for a vaccine.³
Restrictions are easing and areas are opening up for travel, meaning we can start planning those missed vacations and seeing loved ones again.

After over a year of uncertainty and dread, the future is looking up.

How are you feeling?

Do you share our optimism?

Things aren’t completely rosy, of course.

Major COVID-19 surges in India and Brazil mean millions are still suffering.⁴

Viral variants mean the pandemic may not be “over” for a long time and we still need to be careful not to undo all our gains.

Many folks are not experiencing the economic recovery and may need years to recover what they have lost.

However, let’s not let the work ahead take away from the progress we’ve made.

Let’s take a deep breath and appreciate how far we’ve come since March 2020.

… Deep Breath …

Now, let’s talk about taxes.

President Biden just unveiled a plan to increase taxes on high earners to pay for economic reforms as part of the American Families Plan.⁵

What’s on the table is likely to change as political wrangling continues, but here are a few things we’ve got to consider so far:

A higher top income tax rate of 39.6% (though it’s not clear yet who falls into that top tax bracket).

Raising the top tax rate on long-term capital gains to 39.6%. With the 3.8% Medicare surtax, that means the highest earners could pay a 43.4% rate on gains.

The elimination of the step-up basis for estates, meaning heirs could get stuck paying taxes on capital gains over $1 million (even if nothing has been sold) when they inherit.

This change could impact folks who, for example, inherit family homes that have appreciated in value. They might want to keep the home, but may not be able to afford the tax bill.

So, should I be worried?

Alert and informed, definitely. Anxious and worried, no.

Here’s why:

This is a proposal. It’s got a long way to go before becoming law and the details may change.

It’s still unclear how much impact these proposed changes will actually have. There are many advanced strategies that can help mitigate the impact of higher taxes. That’s why tax and estate strategies matter so much.

A study done by Wharton Business School suggests that tax mitigation strategies could help avoid 90% of the proposed tax increases on capital gains.⁶

Bottom line, the proposed changes are concerning, especially with so many details left to be determined, but it’s not time to panic.

We’re paying close attention to the process and will be in touch if we feel changes to your strategies are needed.

Have questions? We’re always here. Just email us at yourteam@mmwealth.com or call us at (518) 499-4565.

¹https://www.bbc.com/news/business-56932023

²https://www.cnbc.com/2021/05/02/covid-gottlieb-says-cases-will-decline-vaccinations-monumental-achievement.html

³https://www.nytimes.com/interactive/2021/us/covid-19-vaccine-eligibility.html

⁴https://www.cnn.com/world/live-news/coronavirus-pandemic-vaccine-updates-05-03-21/h_a0cbff31cf1168c6b850625a05a195b7

⁵https://www.cnbc.com/2021/04/29/how-biden-tax-plan-would-hit-the-wealthy.html

⁶https://www.cbsnews.com/news/biden-capital-gains-tax-wealthy/

Chart source: https://www.cnn.com/business/us-economic-recovery-coronavirus (As of April 30, 2021)

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

The White Carnation

Written by Minich MacGregor Wealth Management on May 8, 2021. Posted in Uncategorized.

As you know, Mother’s Day is observed on the second Sunday in May in the U.S. as a day to honor mothers for their contributions to family and society. That includes grandmothers, great-grandmothers, and also women who serve in the role of mothers.

Have you ever wondered how Mother’s Day evolved? The idea originated from mainly two women, Julia Ward Howe and Anna Jarvis.

Julia Ward Howe was a preacher, a reformer, a writer, and a poet in Boston. From around 1870 to 1880 when Julia sponsored a Mother’s Day, she envisioned it as a day of solemn council. Her idea was that women all over the world would meet to discuss the ways to achieve world peace. She wanted them to meet as mothers keeping in mind the main duty of protecting their children.¹

Ann Jarvis, the mother of Anna Jarvis, cared for the wounded on both sides of the conflict during the Civil War. She desired to orchestrate peace between the Union and Confederate mothers by forming a Mother’s Friendship Day.

Anna Jarvis was just 12 in May of 1876 as she listened to her mother’s plea during a Sunday School lesson she was teaching about notable mothers—that someone would one day be the founder of “a memorial mother’s day commemorating motherhood for the matchless service they render to humanity in every field of life.” When Ann passed away in 1905, her daughter was devastated and decided to memorialize her mother by working towards this dream her mother had.

Anna’s campaign began in earnest during 1907 and continued over the next few years writing thousands of letters to prominent figures such as President Teddy Roosevelt, 1908 presidential hopeful William Jennings Bryan, Mark Twain, and former Postmaster General John Wanamaker, about proclaiming an official Mother’s Day.

The very first Mother’s Day Anna organized was at St. Andrew’s Methodist Church in West Virginia in 1908 where her mother had taught Sunday School. She urged sons and daughters to visit their mothers, or at least write a letter home for Mother’s Day. She further gave the counsel, “Live this day as your mother would have you live it.” Her diligence finally paid off, because Anna became the official founder of Mother’s Day in 1948.²

Anna’s vision for Mother’s Day was mostly domestic and sentimental with the mother’s role within the home as the center. Anna declared the official flower of Mother’s Day to be the white carnation because it was her mother’s favorite flower. The carnations were to be worn by sons and daughters to honor their own mothers and to represent the purity of a mother’s love. But she noticed around 4 years after that first Mother’s Day that florists were raising the prices of carnations for Mother’s Day. As white carnations were selling out, florists began promoting the idea to wear red and bright colored flowers in honor of living mothers, and white flowers for deceased moms. Besides that, all kinds of other businesses were using the holiday for financial gain.^{2, 3}

Anna wanted to protect the purity of Mother’s Day to be a national holiday to honor overworked and under-appreciated mothers. She eventually rescinded the carnation as the official emblem in protest. Because she never tried to profit financially from the holiday she founded, she became devoted for 40 years to fight the commercialism that she felt had changed the day. She wanted Mother’s Day “to be a day of sentiment, not profit.” She felt that commercialism was destroying Mother’s Day.³

However, the much-loved tradition of giving Mother’s Day gifts, cards, and flowers did not go away and in fact has grown in popularity through the years. No matter how you plan on celebrating Mother’s Day this year, remember that your expression of love to the mothers in your life, especially your own Mother, is the most important thing you can do of all.

Happy Mother’s Day!

Upcoming Distribution Strategies Webinar

Written by Minich MacGregor Wealth Management on April 13, 2021. Posted in Uncategorized.

Please join us for our Distribution Strategies Webinar:

Strategies to Help Improve Your Chances of a Successful Retirement

Learn the answers to your questions:

I’m retiring – which accounts should I use to supplement my income?
What are some ways to be more tax efficient in retirement?
Should I make all of my accounts more conservative as I get closer to retirement?

At this webinar you will learn:

Distribution strategies to be more tax efficient
The ins and outs of the Bucket Strategy
Ways to improve your retirement success

Monday, April 26th at 5:00 PM (Register Here)
Wednesday, April 28th at 12:00 PM (Register Here)

Webinar presented by Cory Laird CERTIFIED FINANCIAL PLANNER™

Register with Zoom Webinar by clicking the links above
Zoom Webinar, Registration is Required for Cyber-Security
After registering, you will receive a confirmation email containing information about joining the webinar.

If you have any questions, please email Cory Laird at Cory@mmwealth.com.

Minich MacGregor Wealth Management
(518) 499-4565

Trending Now: Interest Rates & Inflation

Written by Minich MacGregor Wealth Management on April 5, 2021. Posted in Minich MacGregor Missive, News.

One year. It seems incredible, but it’s been one year since COVID-19 struck our shores. One year since the World Health Organization declared a pandemic. One year since the markets crashed and the schools closed and we realized just how much we take toilet paper for granted.

Since then, the markets have recovered and risen to new heights. The economy, meanwhile, has recovered more slowly. Now, a quarter of the way through 2021, we have a new president, several new vaccines, and a completely different world than the one we knew before all this started. We’ve also seen some renewed volatility in recent weeks. This has many of our clients asking, “Where are the markets going next? What should we expect for the rest of 2021?”

We’ll address those questions in this email.

As you know, there are two types of long-term market situations: Bull markets and bear markets. But the whole “bull vs bear” concept can also be used to describe two types of investor sentiment. Bulls are investors who have a positive, or “bullish”, view of where the markets are headed. Bears, meanwhile, generally have negative, or “bearish” expectations. So, we’re going to let both animals debate each other, each presenting their case for why the markets will have a positive year or a negative one. We’ll start with the Bull, move onto the Bear, and then give the Bull a chance for a short rebuttal. Finally, as financial advisors, we’ll give you our view.

The Bullish View

Last year’s market crash was sudden, swift, and deep. But in the grand scheme of things, it didn’t last very long. In fact, it took only six months for the markets to recover. (By contrast, it took the markets almost six years to recover after the Great Recession.) Since then, the markets have risen to new highs.

Three things propelled the markets to this remarkable turnaround: Low interest rates, federal stimulus, and the expectation of a major economic recovery. Let’s start with the first one. To help juice up the economy, the Federal Reserve lowered interest rates to a historic degree. Low interest rates promote more borrowing and spending, two pillars our economy is based on. They also help people buy homes and encourage businesses to invest more in themselves. (Including hiring more workers.)

Congress, meanwhile, has passed three major stimulus packages in the last year. The most recent bill was signed by President Biden on March 11. The America Rescue Plan Act of 2021, as it’s called, provides $1.9 trillion in aid for both businesses and consumers.¹ Among other things, the Act extends COVID unemployment benefits through Labor Day, provides $1,400 direct payments to individuals, expands certain tax credits, and grants billions to small businesses to help meet payroll and retain workers.¹ The first two stimulus packages had a positive impact on things like retail sales and consumer spending, and it’s widely expected that this one will, too.

This combination of low interest rates and government stimulus have helped the economy tread water while we deal with the virus. But much of the market’s rise is due to something else: Expectation. Specifically, expectation that the pandemic will end, and the economy will hit the accelerator. As more people are vaccinated and case numbers fall, the thinking goes, more and more of society will re-open, releasing a flood of pent-up demand. Demand to travel, to eat out, to catch a movie in theaters, you name it. Add the latest round of stimulus to the mix, and suddenly Americans have both extra money in their pocket and the means to spend it. In other words, all the ingredients are there for a major economic comeback, the likes of which we haven’t seen in decades.

Now, we seem closer than ever to that expectation becoming reality. As of this writing, there are three approved vaccines in the U.S., with more than 115 million doses administered.² (40 million people are currently considered fully vaccinated, approximately 12.3% of the total population.²) Currently, our nation is averaging over 2 million shots each day.² It’s no surprise, then, that cases in the U.S. have been falling for weeks. In fact, as of March 19, cases are down over 14% over the last two weeks.³

We’re not out of the woods yet, not by a long shot. Masks and social distancing will continue to be a part of our lives for some time yet, and of course there are relatively new variants of the coronavirus to deal with. But if we can maintain this trajectory, increasing the number of people vaccinated and reducing the number of people sick, that could do wonders for our economy. It could lead to more of society re-opening, leading in turn to more jobs, more consumer spending, and greater company earnings. Greater earnings, of course, usually lead to higher stock prices.

The Bearish View

So, in light of all this, how can anyone have a negative view of where the markets are headed? It all comes down to a single word: Inflation.

Inflation. It’s a scary-sounding word that conjures up images of German children stacking useless money in the 1920s, or gas rationing in the 1970s. For decades, economists have monitored it relentlessly. The Federal Reserve considers managing inflation to be a core aspect of its mission. That’s partly why our nation’s inflation rate has been relatively stable over the last twenty years.

But recently, some analysts and investors have begun stressing over inflation again. They don’t deny that the economy is poised to grow. They just worry that it will grow too much, too fast. There’s a word for this, too. Economists call it overheating.

When an economy overheats, it essentially no longer has the capacity to meet all the demand it faces from consumers. Some producers will simply not be able to supply all the goods their customers want. Other producers, to keep up with that demand, will be forced to raise prices. It’s a classic example of the Law of Supply and Demand. (When the demand for something outpaces its supply, the price goes up.) For example, if everyone suddenly decides to fly to that vacation spot they’ve been putting off for a year, the cost of air travel would skyrocket.

If the economy were to grow too quickly, prices would rise across the board – and the value of our currency would drop. This, essentially, is inflation: When the general price level rises, a dollar simply pays for less than it used to. That makes it much harder for people to buy the goods and services they need. Or to pay off their debts. It makes it harder for businesses to hire new workers or pay the workers they already have. The upshot? When inflation gets too high, consumer spending plummets, unemployment jumps, and economic booms turn into economic busts.

Some experts worry this is what’s in store in 2021. They see the economy as a garden hose that’s been tied up into a knot. Untie the knot – or re-open the economy too quickly – and the water will burst out with sudden, savage force.

So, here’s what this has to do with the stock market. Normally, the Federal Reserve combats inflation by raising interest rates. Higher interest rates tend to cool off the economy, because they prompt people to save their money instead of spending or borrowing it. A cooler economy decreases inflation, and gradually things go back to normal. The problem is the stock market has become accustomed to the Fed’s low interest, “easy money” policies. Low interest rates mean that many types of investments, most notably bonds, simply don’t provide the same return on investment as they would in a high-interest rate environment. That drives more and more investors into the stock market to get the returns they need. But what happens when interest rates go up? Consumers and businesses could cut back on spending, which in turn could cause earnings to fall and stock prices to drop.

Fear of inflation, and fear of higher interest rates. That’s the bearish view in a nutshell.

Rebuttal

We promised the Bull would have the opportunity for a short rebuttal, so here it is. There are two main reasons for thinking this fear of high interest rates are overblown. The first is that, even if inflation does go up – which it likely will – we have a lot of room to work with before it becomes a problem. In 2020, the inflation rate was only 1.2%.⁴ That’s well below the 2% mark the Fed generally aims for, and nowhere close to the mind-boggling numbers we saw in the late 70s and early 80s. (In 1979, for example, the inflation rate was 13.3%.⁴)

The other reason is that there’s no reason to assume the Federal Reserve will automatically raise interest rates just because inflation goes up. Why? Because the Fed itself has said that it won’t!⁵ Currently, the Fed sees stimulating the economy and boosting employment to be far bigger priorities than tamping down on inflation, and recently, the Fed Chairman suggested interest rates would remain low at least until 2022.

Our View

We’ve told you what the Bulls and Bears think. So, here’s what we think.

Here at Minich MacGregor Wealth Management, we don’t focus on guessing what the Fed will do, or anyone else. We don’t have a crystal ball. No one does! That is why we base our strategy on both technical and fundamental analysis. We analyze – and take advantage – of market trends, relying on the Law of Supply and Demand rather than fighting it.

Historically, an improving economy leads to a stronger stock market. If that happens in 2021, wonderful! But if interest rate fears worsen and volatility goes up, we are ready to play defense and move to cash. Remember, we don’t need to “buy and hold” even when there’s a Bear roaring in our face. If there’s a general rise in prices and inflation skyrockets above what the Fed can handle, we don’t have to ride out another market crash like so many investors do. We’ll obey the rules of our strategy and do what the trend dictates. If our technical signals indicate major volatility on the horizon, we’ll be prepared.

It’s been a year since the pandemic began. A year since some of the worst market turmoil in a long time. We got through that by being flexible, disciplined, and diligent, and we’ve been rewarded. So, that’s what we’ll continue to do.

If you have any questions or concerns about the market, please feel free to contact us. In the meantime, enjoy the upcoming spring season!

_SOURCES:

_{1 “The American Rescue Plan Act Greatly Expands Benefits through the Tax Code in 2021,” Tax Foundation, March 12, 2021. https://taxfoundation.org/american-rescue-plan-covid-relief/}

_{2 “How is the COVID-19 Vaccination Campaign Going In Your State?” NPR, March 19, 2021. https://www.npr.org/sections/health-shots/2021/01/28/960901166/how-is-the-covid-19-vaccination-campaign-going-in-your-state}

American Rescue Plan Act of 2021

Written by Minich MacGregor Wealth Management on March 30, 2021. Posted in Minich MacGregor Missive, News.

Roughly one year ago, Congress passed the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act. It was a massive, $2 trillion stimulus package designed to help boost the economy as it shuddered from the impact of COVID-19. The bill was generally considered a success – but on its own, it wasn’t enough to keep the economy from falling ill.

The great tragedy of this pandemic, of course, is that over 500,000 people have lost their lives.¹ But it’s not the only one. Due to COVID, over 22 million jobs were lost.² Millions more saw their hours or paychecks decrease.

Fortunately, the CARES Act, and a second round of stimulus passed in December, helped blunt some of this pain. For example, the December stimulus is credited with helping retail sales jump 5.3% in January, which was five times higher than expected.³ But there is still a long way to go. As of early March, there are still nearly 10 million people out of a job, with 4.1 million of those considered “long-term unemployed”.² That means they’ve been jobless for 27 weeks or more. Millions more still find it immensely difficult to make rent, pay off debts, or even buy groceries. As Jerome Powell, the chairman of the Federal Reserve recently said, “While the economic fallout has been real and widespread, the worst was avoided by swift and vigorous action. [But] the recovery is far from complete.”⁴

In short, our economy has been off life support for quite a while – but it is still a long way from healthy. With that in mind, Congress recently passed a third round of stimulus worth almost as much as the original CARES Act. It’s called the American Rescue Plan Act of 2021.

This is major legislation, with benefits for many Americans. So, to help you understand what the Act does, and how it will impact you, we have prepared a special breakdown. As we are sending this to all of our clients, some information may apply to you, and some may not. Please read it carefully, and then let us know if you have any questions.

As always, we hope you and your family are staying healthy and safe. Please let us know if there is anything we can do for you!

Important Provisions of the American Rescue Plan Act of 2021

ARPA, as we will refer to it from this point forward, is meant to “change the course of the pandemic and deliver immediate relief to American workers.”⁵ Like the previous coronavirus aid packages, ARPA is designed to stimulate the economy by reducing unemployment and ensuring consumers have the money they need to cover expenses and purchase goods and services.

What follows is an overview of the provisions that could affect the finances of either yourself or your loved ones. Let’s start with:

Direct Payments⁶

What’s the quickest way to ensure people get the money they need? Pay them directly. Perhaps the most newsworthy aspect of this bill is that many taxpayers will receive another direct payment to help them cover expenses.

Here’s a breakdown of how it will work. Note that the IRS will base these amounts on the information found in your 2020 tax return, or your 2019 tax return if you haven’t filed your 2020 return yet.

Individuals who make up to $75,000 will receive $1,400.

Heads of Household (single parents, for example) who make up to $112,500 will receive $1,400.

Married couples filing a joint tax return who made up to $150,000 will each receive $1,400, for a total of $2,800.

On top of this, each taxpayer will receive an additional check for $1,400 for each dependent they have, including adult dependents. This is great news to parents – especially parents of college students! (The previous two stimulus payments were limited to dependent children under the age of 17.) So, for example, a married couple with two children could receive up to $5,600. Note, however, that payments decrease for individuals and married couples with income above their respective thresholds. And the payments disappear entirely for individuals who made more than $80,000, single parents earning more than $120,000, and married couples earning more than $160,000.

The upshot is that Americans who qualify to receive stimulus checks could receive significantly more than they did in the first two rounds – but slightly fewer Americans will receive them overall. This was the result of intense negotiating in Congress, with several key members from both parties refusing to support the bill unless it came with stricter eligibility limits.

By the way, if you haven’t filed your tax return for 2020 yet, please let us know. The IRS recently extended the filing deadline to May 17, 2021.⁷We would be happy to work with your tax preparer to expedite the process!

Speaking of taxes…

Tax Credits⁸

In many ways, ARPA is really a tax bill – because many of the ways it helps stimulate the economy are due to changes to the tax code. Even the direct stimulus payments are technically tax credit. In this case, ARPA expands several tax credits. Perhaps the most important is the child tax credit, which has been expanded for the 2021 tax year.

Under ARPA, households with children can claim a tax credit of $3,600 per child under the age of six, and $3,000 per child between ages six through seventeen. (Previously, the credit was worth up to $2,000 per child.) These amounts are reduced for individuals earning more than $75,000 per year, or married couples making more than $150,000 per year. For these people, the expanded tax credit – meaning the extra amount above the original $2,000 credit – will be reduced by $50 for every $1,000 earned above those income levels.

In addition, the child tax credit is now fully refundable. That means “you can receive money from it as a tax refund even if your tax bill is reduced to zero.”⁸ Eligible households can receive half of this benefit in 2021. The plan is for payments to be made monthly beginning in July.

Here’s an example of how this would work. Imagine a married couple, Jack and Jill, who earn less than $150,000. They have two children, ages 10 and 12. Each is eligible for a $3,000 credit ($6,000 overall). If the payments are made monthly, Jack and Jill would receive $500 per month starting in July and going through the rest of the year. That would be half of the total $6,000 credit. Jack and Jill could then claim the other $3,000 next year on their 2021 tax return.

We just threw a lot of numbers at you, didn’t we? So, if you have any questions about this, please don’t hesitate to ask!

Unemployment⁹

ARPA also extends COVID-related unemployment benefits. Specifically, unemployed workers will continue to receive weekly $300 benefits through September 6 of this year. Also, the first $10,200 of unemployment benefits received in 2020 will not be taxable for workers in households earning less than $150,000.

If any of your family members lost their job, please feel free to reach out. We would be happy to answer their questions or provide any assistance we can.

Business Support¹⁰

In order to stimulate the economy, you must stimulate businesses – especially small businesses. To that end, ARPA provides:

$7 billion for the Paycheck Protection Program, which helps small businesses retain their employees. Loans received through this program may be forgiven in whole if certain conditions are met.
$28.6 billion in grants for restaurants and bars, which have been hit especially hard by the pandemic.
$15 billion for Emergency Injury Disaster Loans, especially for businesses with fewer than ten employees.

ARPA also extends tax breaks to businesses that voluntarily provide paid sick and family leave to workers affected by the virus.

Conclusion

As you can see, the American Rescue Plan Act of 2021 is a massive bill. In fact, this message only scratched the surface! Time will tell whether even more stimulus is needed this year, but for the time being, this should go a long way to propping up the economy.

Of course, our team will continue poring over these changes. If there is anything else we feel you need to know, we’ll reach out to you. In the meantime, if you have any questions about:

Getting a direct payment
Filing your taxes
Protecting your paycheck and/or income
Or anything else related to your finances

Please don’t hesitate to let us know. Our team is always here for you.

¹ “Tracking the Coronavirus,” NPR, March 23, 2021.  https://www.npr.org/sections/health-shots/2020/09/01/816707182/map-tracking-the-spread-of-the-coronavirus-in-the-u-s
² “The Unemployment Situation,” U.S. Department of Labor, February 2021.  https://www.bls.gov/news.release/pdf/empsit.pdf
³ Aimee Picchi, “Third stimulus check: Will you get a stimulus check – and how much?” CBS News, March 5, 2021.  https://www.cbsnews.com/news/third-stimulus-check-income-2021-03-04/
⁴ Paul R. LaMonica, “Yellen and Powell praise stimulus but warn that more needs to be done,” CNN Business, March 23, 2021.  https://www.cnn.com/2021/03/23/economy/janet-yellen-jerome-powell-economy-recovery/index.html
⁵ Joseph Biden, “American Rescue Plan Fact Sheet,” Wikisource, March 2021.  https://en.wikisource.org/wiki/American_Rescue_Plan_Fact_Sheet
⁶“What’s Inside? Breaking Down the American Rescue Plan Act of 2021,” Rea & Associates, March 12, 2021.  https://www.reacpa.com/insight/whats-inside-breaking-down-the-american-rescue-plan-act-of-2021/
⁷ “Tax Day for individuals extended to May 17,” Internal Revenue Service, March 17, 2021.  https://www.irs.gov/newsroom/tax-day-for-individuals-extended-to-may-17-treasury-irs-extend-filing-and-payment-deadline
⁸ Ron Lieber & Tara Siegel Bernard, “What Is in the Stimulus Bill: $1,400 Checks, Expanded Unemployment and Tax Rebates,” The New York Times, March 23, 2021.  https://www.nytimes.com/live/2021/stimulus-check-plan-details#how-does-this-change-the-child-tax-credit
⁹ Garrett Watson & Erica York, “The American Rescue Plan Act Greatly Expands Benefits through the Tax Code in 2021,” The Tax Foundation, March 12, 2021.  https://taxfoundation.org/american-rescue-plan-covid-relief/
¹⁰ “American Rescue Plan Act of 2021,” Wikipedia, https://en.wikipedia.org/wiki/American_Rescue_Plan_Act_of_2021

How to Be a Smarter Investor in Uncertain Times

Written by Minich MacGregor Wealth Management on March 29, 2021. Posted in Uncategorized.

In a perfect world, logic would always guide our financial decisions. Emotions wouldn’t come into play.

But we don’t live in a perfect world. Far from it.

That means our emotions impact our financial choices more than we realize.¹

Shockingly as much as 95% of our purchase choices are made subconsciously, driven by our emotions—as little as 5% are based in logic (and that’s when we’re in a good headspace and feeling comfortable and secure).²

When we’re faced with uncertainty, fear and instinct can take over and push logic right out of the window.³

Your brain will make you want to react quickly to protect yourself and avoid the pain you anticipate from potential losses.⁴

Ironically, these instincts often make things worse. Emotional reactions can lead to poor choices and the losses you were trying to avoid in the first place.⁵

The best way to avoid letting your hardwired biases take over? Use these strategies. They can help you fare better in any crisis. They may even make you a savvier investor.

¹ https://scholar.harvard.edu/files/jenniferlerner/files/annual_review_manuscript_june_16_final.final_.pdf
² https://hbswk.hbs.edu/item/the-subconscious-mind-of-the-consumer-and-how-to-reach-it
³ https://www.psychologytoday.com/us/blog/the-divided-mind/201207/logic-and-emotion
⁴ https://www.psychologytoday.com/us/blog/science-choice/201803/what-is-loss-aversion
⁵ https://www.cmu.edu/dietrich/sds/docs/loewenstein/RoleEmotionEconBehav.pdf