Westover Luncheon Series Featuring Erin Arvedlund

Westover Luncheon Series: Erin Arvedlund

Our June 2019 Westover Luncheon Series featured Erin Arvedlund, an author and former Barron’s reporter who broke the story of Bernie Madoff nearly seven years before the scandal rocked the financial world.

She shared keen insights about the case as well as what to look for when a financial offering seems “too good to be true.” Please click below to enjoy a replay of the luncheon.

New Retirement Act Passes House; Gives Rise to Important Planning Opportunity

– by Murray Sawyer, JD, President and CEO

Who says cats and mice can’t play nicely together?

On Thursday, May 23rd, the House of Representatives by near unanimity passed a significant retirement bill. The vote was 417 to 3. Its acronym is SECURE, which is short for Setting Every Community Up for Retirement Enhancement. It’s a Big Deal and augurs the biggest changes to retirement plans in a decade.

I have no doubt the cats and mice in the Senate will play nice too. In fact, I’ll go so far as to predict that this legislation will be passed as fast as a Mercedes AMG S63 on the Bonneville Salt Flats. Or as fast at Sunday’s Indy 500 winner can race around the Indianapolis Motor Speedway. In this era of Pelosi/Schumer v. Trump, both houses are desperate to have some legislative success to point the voter to, don’t you think?

Key Components of the SECURE Act

There’s a whole bunch of fluff in the Act designed to help small business employees, home care workers, long-term part-time workers, and benefit annuity-issuing insurance companies which I’ll ignore, but to cut to the chase. The three main takeaways are these:

1. The biggest takeaway is this one. The ability to provide a significant benefit to your children through a so-called “Stretch IRA” is greatly limited. Today, children-beneficiaries can take withdrawals over their lifetimes. With the passage of this legislation, if you are an adult child who inherits an IRA, you must take withdrawals over a ten-year period. (And as an incidental result, this is projected to generate $16 billion for the U.S. Treasury which it would not have otherwise enjoyed. Why am I not surprised?)

2. You may make contributions to IRAs at any age, even after you turn 70.5. The point here is that you could continue to make contributions to IRAs for your entire lifetime.

3. The RMD clock, the mandatory time when you need to start taking withdrawals from traditional IRAs, is pushed back from 70.5 years of age to 72. I never knew what the magic of 70.5 was anyway, so this is good, so long as you can afford to wait.

How the Legislation Might Affect You

The main planning point to come out of this legislation is our general recommendation that clients strongly consider the possibility of using Roth conversions with respect to existing IRAs, or parts thereof.

Remember, the window for Roth conversions at a favorable tax rate is time limited. Personal income tax rates will soon enough go back up come 2026, when the lower income tax rates and brackets of the 2017 Tax Act are scheduled to sunset. Today, a step-by-step, year-over-year conversion may make sense for you because then your children would not be limited by this 10-year rule, and also because they would enjoy their Roth IRA inheritance tax-free, with you having paid the taxes at the time(s) of conversion.

Every individual’s circumstances are different, so this recommendation will not apply to all, but please reach out to us if you would like us to discuss your particular circumstances.

And enjoy this glorious Memorial Day weekend. Ladies and gentlemen start your engines!

Keep the faith.

2019 Westover Summit: Speaker Paul Begala

9th Annual Westover Summit - Paul Begala, Murray Sawyer, Chip Sawyer, and Matt Beardwood

We are pleased to announce the successful completion of Westover’s 9th Annual April Summit featuring political pundit and former strategist, Paul Begala. Begala’s remarks, delivered to an audience of clients, media, and friends of the firm, covered many prescient topics in the current political and economic landscape.

To learn more, please see Town Square Delaware’s coverage of the event by clicking here.

As our Director of Wealth Management, Matt Beardwood, notes in the article, “Paul’s remarks were spot on. We feel that creating a forum like this for our clients not only engages and inspires them but can also challenge or provide support to their political and economic world view.“

 

 

 

Westover Capital Advisors - Fireworks

First Quarter 2019 Snapshot

– by Chip Sawyer, CFA® and Chief Investment Officer

It has been a great start to the year for both the stock and bond markets, which is a welcome change from last year when cash was the best performing asset. Most equity indices were up double digits for the first quarter, and the bond market was up over 2%.

The majority of the quarter’s gains occurred in January when the market correctly anticipated the Fed reversing their hawkish tone from late last year. In general, investors preferred the more cyclical sectors as tech, industrials, and energy were the best performing sectors while healthcare, staples, utilities, and financials were the worst performing sectors.

We have yet to see a confirmation of this recession signal from the Leading Economic Indicators Index, which also does a good job of predicting recessions. Therefore, we still believe this bull market will continue.

The end of March saw the first inversion of the yield curve since 2007 when the 3-month Treasury yielded more than the 10-year Treasury for a brief five days. That has since reversed with the 10-year currently yielding about 8 basis points more than the 3-month. Historically, inversions like this have been a pretty accurate indicator signaling a recession is on the horizon.

However, in none of the previous seven inversions was the 10-year Treasury yielding less than 5% (currently, the 10-year is yielding about 2.5%). Current short-term rates of 2.5% would not have come close to inverting the curve in the past, so it may very well be “different this time.” Clearly, our 10-year Treasury would be much higher if not for the ridiculously low-interest rates seen overseas (where trillions of dollars of debt has negative yields).

We have yet to see a confirmation of this recession signal from the Leading Economic Indicators Index, which also does a good job of predicting recessions. Therefore, we still believe this bull market will continue.

If you want to know more or would like us to review your personal financial picture and offer our best advice, we encourage you to give us a call!

April 2019. Westover Capital Advisors, LLC. All rights reserved.

Gentlemen, Start Your Engines!

– by Murray Sawyer, JD, President and CEO

News happens fast now. Today’s new and timely story will soon be tomorrow’s forgotten tale. It is easy to miss things now because of how quickly stories get turned around, as our attention is diverted to the next “New, New Thing”. Daily, we are inundated with a veritable fire hydrant flow of news through social media. Every so often, we need to take the pedal off the gas, step out of our fast lane; we need to slow down just for a minute to appreciate and celebrate a notable and newsworthy accomplishment. This is one of those occasions.

Chip, Matt and I want to congratulate our close and dear friend, George Alderman. George has just been inducted into the Delaware Sports Museum and Hall of Fame for the class of 2019.

Westover Capital Congratulates George Alderman

The picture above is early-‘70s and George is celebrating another race car victory with his dear wife, Marilyn, who passed away a few years ago.

George grew up in Delaware, graduating from Newark High School. In addition to owning Alderman Automotive, George Alderman Racing and the local Datsun/Nissan dealership back in the day, his avocation, which he pursued with a true passion, was race car driving.

George spent 49 years as one the country’s top race car drivers, competing in Sportscar Club of America (SCCA) and International Motor Sports Association (IMSA) events.

He was named the Sports Car Club of America Formula 3 national champion in a Cooper-Norton in 1960 and also their national champion in a Formula Libre Cooper-Alfa in 1964. He drove a Lotus 23 to the SCCA divisional championship in 1966 and a McLaren Chevy to the Governor’s Cup in 1967 SCCA NE divisional championship. George won the IMSA Baby Grand championship in 1971 in a Datsun 510 and the 1974 BFG Radial Challenge Series championship in an AMC Gremlin. In the 1980s, he drove Datsun Z cars in the Camel GT series and had five wins and 50 top 10 finishes in 70 starts. Now that’s Tigeresque!

He competed in his final race just a mere two days shy of his 70th birthday.

Please join us as we salute George for this wonderful recognition!

Keep the faith.

April 2019. Westover Capital Advisors, LLC. All rights reserved.

Westover Capital - WealthView Financial Management Platform

Introducing Westover’s WealthView

– by Murray Sawyer, JD, President and CEO

For nearly twenty years, Westover has served the needs of our clients and their families, and for some over multiple generations. We are aware of the unique circumstances that apply to each of our clients, and are both mindful of and humbled by our role as a trusted advisor.

Whether it’s our client luncheon series we started last year or the rollout of the Westover mobile app we also initiated in 2018, we continuously challenge ourselves to provide relevant, thoughtful, and innovative enhancements to enrich and simplify our clients’ increasingly complex financial lives.

Westover Capital - WealthView Financial Management PlatformIn today’s fast-paced environment, safe access to real-time financial information is key to wealth advice and management. Intelligent use of technology continues to play an increasingly important role in this process.

To that end, we are excited to introduce WealthView, Westover’s new personal financial management platform. WealthView enables you to store, view and manage your entire financial picture in one place, whether on your PC or mobile device.

With WealthView, you can do things like aggregate all banking (checking, savings, mortgages, credit cards, etc.) and investment accounts – both those held at Westover and those held elsewhere. You can even include assets such as real estate, vacation homes, personal property, business interests, life insurance etc. WealthView will track spending, create budgets, build consolidated reports of your entire financial picture and keep track of important financial documents.

WealthView is a user-friendly, intuitive platform that compliments your existing Westover portal – bringing more data into view which allows us to bring more meaningful and specific advice to you. Those with whom we’ve met and introduced to WealthView have all been surprised and pleased with its intuitiveness and comprehensive aggregation capabilities.

If you’d like a tour of WealthView or want to learn more about your comprehensive financial picture, give us a call!

Keep the faith.

February 2019. Westover Capital Advisors, LLC. All rights reserved.

Westover Capital 2019 Tax and Wealth Planning Guide

2019 Tax and Wealth Planning Guide

Westover Capital 2019 Tax and Wealth Planning Guide

The Tax Cuts and Jobs Act (TCJA) introduced significant changes to many areas of the U.S. tax system with adjustments scheduled to occur annually between now and 2025. To help make sense of the complex array of tax laws, Westover has researched and distilled these changes and is pleased to share our 2019 Tax and Wealth Planning Guide.

Please click here to download it.

For clients, we’ve uploaded the Guide to your Westover portal vault and we look forward to reviewing relevant areas of the guide with each of you at our next meeting.

We hope this will help those of you who are unsure about how evolving tax laws will affect your financial life.

Westover Capital Promotes Use of Social Media

Westover Capital Promotes Use of Social Media

In 1999, we founded Westover Capital as an independent financial advisory firm to build relationships, implement sound investment strategies, and become trusted partners for our clients. At that time, roughly 4% of the world’s population had access to the internet, and the idea of social media as we know it today was a distant but burgeoning possibility.

The Rise of Internet Access and Social Media

The early 2000s saw exponential growth in internet access and, along with it, brand new ways to leverage global technology. Companies like LinkedIn (2002), Facebook (2004), and Twitter (2006) began to define how we interact with one another on a daily basis and are as ubiquitous in our culture as the internet itself.

Early users of these platforms included individuals who wanted to stay in touch, celebrities who wanted to stay in the public eye, and cutting-edge retailers looking to promote their brands. Eventually, social media entered the mainstream, with everyone from Fortune 500 companies to the President of the United States staking out space in a sea of hashtags and status updates.

Social Media and the Financial Industry

Conservative by nature, the financial industry was slower than most to adopt social media as a way to communicate with clients, prospective clients, and the public in general. The biggest driver for this was compliance. The Securities and Exchange Commission (SEC) has very specific rules about the way financial advisors can share information and promote their services, and there can be very steep penalties when the rules are not followed. These regulations continue to evolve as the SEC and other agencies struggle to keep up with the blistering pace of change afforded by new technologies.

At Westover, we recognize that our diverse audience wishes to receive and digest information in different ways, whether it be by email, a phone call, a blog article, or a face-to-face meeting. We are excited to announce that we are embracing social media as a way to responsibly communicate our best thinking on issues of the day and interact on a regular basis with our clients. During volatile markets and heavy news cycles, we will be able to share our thoughts and opinions on the drivers of events that affect the economy and our lives.

While social media will never replace direct communication and the foundation of trust we’ve built individually with each of our clients, this initiative allows us to reach clients and colleagues through multiple channels in the ways they prefer. Be sure to follow us on Twitter and LinkedIn!

Westover Capital Advisors - Mele Kalikimaka

Mele Kalikimaka

– by Chip Sawyer, CFA and Chief Investment Officer

A Westover client recently sent us some market commentary from a well-respected asset management firm. We love reading views on the market, so these emails are always appreciated.

We agree with much of what this firm presented in their newsletter. We agree that value stocks might finally start to perform better than growth stocks and that a recession in the US is not on the near-term horizon – GDP should come in above 2% next year. We are staunch believers in diversification which is why you’ll always see both domestic and international stocks, both large and small caps, and both value and growth stocks. We also know that market timing is rarely a good idea, which is why our tactical allocation decisions involve marginal moves in the portfolio rather than dramatic all-in or all-out decisions.

The Long-Term Investor

This last point is especially important for the long-term investor. When markets are going up, it’s easy to claim to be a long-term investor. The real test for the long-term investor comes when markets are going down. Unlike in 2017, the stock market does not go up every month, or every quarter, or even every year. But if you want to grow your assets at a pace that is greater than inflation, an investor must take on some equity risk. The level of that risk will be different for every investor – we each have our own tolerance for risk. But a portfolio dominated by cash and bonds, while insulated from dramatic drawdowns, is not a solution for an investor looking to maintain their purchasing power. For the long-term investor, quarters like this one present an opportunity to buy stocks at a much more reasonable valuation than three months ago.

For the long-term investor, quarters like this one present an opportunity to buy stocks at a much more reasonable valuation than three months ago.

However, we do have some short-term concerns, namely trade conflicts and rising rates. We’re also listening to economically sensitive, multinational companies that are describing a global economy that is very different than what we’re seeing in the U.S. Unfortunately, it appears that this weak global picture is not convincing the Federal Reserve to modify their plan to finally get the U.S. back to a “normal” interest rate environment. This may, in fact, be the right kind of medicine, but it’s going to lead to market volatility.

How Will Companies Fare in a Higher Interest Rate Environment?

A decade of low interest rates has encouraged companies to issue massive amounts of debt, and we have yet to see how these newly leveraged companies will fare when an economic downturn eventually comes in a higher interest rate environment. Combine this interest rate issue with a deteriorating global trade outlook, a weakening global economy, and a new Congress eager to rein in the President, and we think it prudent to hold a little more cash and little less in equities right now. All our client portfolios are underweight equities and overweight cash. We’ll maintain this positioning until we think it prudent to change.

All that being said, let’s not forget that the U.S. economy is relatively insulated from global weakness because we aren’t as export-driven as many economies. We do not currently see signs of a U.S. recession on the horizon, and stocks have gotten significantly cheaper this year thanks to double-digit earnings growth and the market decline.

The yield curve, while flattening, has yet to invert and the index of leading economic indicators has yet to go negative. So, while we think it best to be a little conservative, we don’t think we’re on the verge of a meltdown like we saw in 2008 or the early 2000s. Rather the market needs to digest a new interest rate environment, and the President needs to act like he wants to be re-elected and find a trade solution. Global weakness should give the Fed cover to pause their rate hike schedule and possibly allow the U.S. economy to extend the recovery into a second decade. We hope to ride out the current squall with a little more cash and hope that all signs soon point to calmer seas in the not too distant future.

This is such a great time of year to appreciate the best part of life—enjoying the company of friends and family. From the Westover family to yours, we wish you the happiest of holiday seasons and a prosperous New Year.

Mele Kalikimaka!

© Westover Capital Advisors, LLC. All rights reserved.

Westover Capital Advisors - Rainbows and Unicorns

Rainbows and Unicorns

 – by Murray Sawyer, JD, President and CEO

As I write, CNBC is streaming this news note: “Amazon on pace for worst quarter since 2008.” That’s not Al’s Sporting Goods CNBC is talking about. No, no they highlighted a company that’s the very heart and soul of our retail economy.

It’s not just Amazon either. December’s S&P Index is on pace to have as historically poor a performance as any seen over the last eighty years, save of those in the Depression-30’s, or the two most recent crises involving the tech meltdown and financial-housing market bubble bursts. 2018 will come in with the worst equity performance since 2008 and it will almost certainly be negative. Can’t be rainbows and unicorns forever.

Our job is to preserve capital in down markets and help our clients enjoy the fruits of appreciation in up markets. Next year, we see more clouds than sun on the horizon.

That said, the economy is purring. GDP will grow at 3.25% for 2018, a full fifty percent higher than its growth average for the eight years following the 2008 recession. Unemployment is at record lows. Our job market today has been called the “best job market in a generation” by recruiting site, Glassdoor. The Index of Leading Economic Indicators has more green than red lights.

So what’s an investor to do? Which door should we choose? Our job is to preserve capital in down markets and help our clients enjoy the fruits of appreciation in up markets. Next year, we see more clouds than sun on the horizon. With apologies to Billy Joel, we believe “There’s a storm front coming. White water running and the pressure is low.” 

We do not think this is a good time to be buyers, contrary to our usual counterintuitive investment approach. Why? Because the market is acting out, not following its traditional norms. The yield curve is not clearly inverted and the economy is certainly not sending recessionary signals, still the market has been falling, and for most of the S&P 500 companies into correction territory (negative 10%+) or worse. We don’t think this is the bottom either.

What’s happening is kind of like this: You’re walking in the California sunshine of Santa Monica Boulevard on your way Urth Caffe, the place Randy and I think is the best coffee shop in the world when you’re hit by an unexpected squall. We don’t know how long it will last, but we’re providing an umbrella for the journey until you can plop down in your chair and enjoy that Spanish latte.

Keep the Faith!

© Westover Capital Advisors, LLC. All rights reserved.