Refinancing Your Mortgage: Pros & Cons

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Refinancing Your Mortgage: Pros & Cons

The goal of refinancing a home loan is to obtain a lower interest rate. A lower interest rate means a lower mortgage payment, allowing you to save on interest paid over the life of the loan.

It all sounds great, right? Well, don’t jump the gun. There are both benefits and drawbacks behind refinancing. With help from our friends at North Pacific Mortgage in Bothell, WA here is a list of pros and cons to consider before refinancing:

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Is Merger Mania Upon Us?

/ Percension Wealth Advisors, LLC/

Hi everyone,

Here is the rundown of this week’s blog…

  • Seattle-based Tableau bought by another software giant for $16 billion (0:10)

  • What does the Tableau sale mean for the broader market? (2:00)

  • Stocks rise on the week, though mixed results at the sector level (2:55)

  • S&P 500 struggles to eclipse the 2,900 level (4:07)

  • Importance of the 200-day moving average and what it is telling us (5:14)

  • Portfolio activity (8:05)

Last, but not least… HAPPY (belated) FATHER’S DAY!

Have a great week!

Brian E Betz, CFP®
Principal

Digging Into A Very Muddy Bond Market

/ Percension Wealth Advisors, LLC/

Hi everyone,

Here is the rundown of this week’s blog…

  • Read Josh’s latest blog highlighting the 8 ways to put cash to work (0:20)

  • Unemployment holds at 3.6%, lowest in 50 years (0:48)

  • Largest weekly percentage gain for stocks this year (2:08)

  • What now for stocks? (3:30)

  • What bond yield curve “inversion” means and why it matters (5:05)

  • Portfolio activity (10:47)

Weekly Blog - 06-07-19 from Brian Betz on Vimeo.

(sources: Stockcharts.com, FRED) (Video created using Camtasia)

Have a great week!

Brian E Betz, CFP®
Principal

Why It Pays To Know What Is Under Your Portfolio Hood

/ Percension Wealth Advisors, LLC/

Hi everyone,

Here is the rundown of this week’s blog…

  • Our recent encounter rolling over a client’s IRA shows how expensive mutual funds can be (0:10)

  • Stocks fell for the 4th-straight week, as bonds rallied (3:20)

  • The long-term chart of the S&P 500 shows why there should be concern - I explain (4:52)

  • Portfolio activity (8:26)

Have a great week!

Brian E Betz, CFP®
Principal

Stocks Fall For A 3rd-Straight Week

/ Percension Wealth Advisors, LLC/

Hi everyone,

Below is this week’s blog. As mentioned, we are transitioning this from the written format to video form. If you want to skip ahead to certain sections, here is a summary of what I discuss this week:

  • Josh’s blog on the Federal Reserve (0:30)

  • Did you receive a tax Form 5498? (1:00)

  • Weekly stock sector performance (1:50)

  • Analysis of the overall market via S&P 500 (3:20)

  • Portfolio activity (6:25)

  • Financial planning using Right Capital (8:38)

I mentioned it in the video but will say it again — I welcome your feedback. My goal is to ensure we’re providing useful information so if you have opinions, please share. (The quality will improve too over time as I get more accustomed to creating these.)

Have a great week!

Brian E Betz, CFP®
Principal

What You Need To Know About The Federal Reserve

/ Percension Wealth Advisors, LLC/
What You Need To Know About The Federal Reserve

You may periodically notice news headlines that state one of the following:

“The Fed decides to cut interest rates.”
“The Fed hikes rates.”
”The Fed leaves rates unchanged.”

You might ask yourself what these mean. What interest rates? Who is “the Fed”?

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Stocks Top Out As China Trade Tensions Rise

/ Percension Wealth Advisors, LLC/

Hi everyone,

China and tariffs are dominating the headlines right now. Trade tensions between the U.S. and China are being blamed for the recent stock market decline. The two sides are apparently far apart on a deal. as President Trump announced more tariffs going into effect on Friday. And so, because tariffs are bad for commerce, it logically follows that stock prices would fall.

But is this actually the reason stocks have fallen in recent days?

Maybe. But I have another take, which doesn’t involve leaning on the news in hindsight to explain why the market behaved how it did.

Before I go further, let me say that I remain bullish. One bad week doesn’t change that. In regards to last week, it is not surprising that stocks pulled back from recent highs. This is quite common when prices approach previous highs. Take a look at the following chart of the S&P 500 index. After it eclipsed the previous high set back in Sept. 2018, notice the trouble the market has had holding onto those gains (horizontal blue line)…

(chart created via stockcharts.com)

It is not unusual for sellers to show up near previous highs like they are doing here. This can occur independently of a trade war. There is no way to know what motivates each investor to buy or sell. Since we do not attempt to guess as much, we certainly would not peg a market rise or fall to the odds of a trade deal being struck.

There is pretty clear resistance around the 2,925 level for the S&P 500. It might take a couple knocks on that door in order to blow it open to more meaningful highs that actually stick.

If prices slide further from here, we may reduce certain positions if we believe that more losses will ensue. We did this a bit last week, but are still looking to buy if stocks can find some footing. As such, we are sitting on a decent cash position in most accounts. This should be temporary, but I believe it is prudent in the short-term given last week’s move.

As always, if you have questions about where the market is at or want to discuss your portfolio risk to check that it is aligned with what best fits you, feel free to contact me directly.

In The Market...

The S&P 500 fell -2.0% last week. Let's look under the hood:

(price data via stockcharts.com)

The S&P index had its worst loss since early March, as every major stock sector was in the red. The bond market provided a nice hedge of sorts, as investor demand to migrate into bonds pushed bond prices higher.

We were a bit more active than normal last week. A couple of our stop-loss orders triggered, which means a portion of a position was sold when its price fell to a specified value. Meanwhile, we purchased a Semiconductor sector fund (XSD), as we believe it has the potential to rally after falling some -9% from its recent peak. This is the same fund we owned a number of weeks ago and had sold near the previous top. Given its pullback I think it once again looks appealing to own.

In Our Portfolios...

What's New With Us?

I am going to switch up this blog in the coming weeks. Instead of doing a written post I will instead post a brief video containing our weekly update, narrated by me. I think it may be a bit more engaging so I welcome your feedback when we make that change.

On a personal note, we enjoyed a nice Mother’s Day that included going to dinner at Anthony’s along the waterfront. Since the weather was so great I stained our new fence, which is nearly finished.

Have a great week!

Brian E Betz, CFP®
Principal

Unemployment Falls To A 50-Year Low

/ Percension Wealth Advisors, LLC/

Hi everyone,

U.S. stocks climbed to fresh highs last week, but that was soon overshadowed by President Trump’s announcement on Sunday that tariffs on certain Chinese imports would be increased from 10% to 25% due to prolonged trade negotiations. The stock market fell sharply Sunday night and has opened the week in the red.

As you know, these types of events do not influence our investment decisions. It is foolish to react emotionally because you think that a current event will cause the market to behave a certain way. The fact that prices moved sharply is significant and it will influence our buying and selling decisions should current price trends shift, but it is too early to make that call.

Lowest unemployment in 50 years: The unemployment rate fell to 3.6% in April, which is the best/lowest rate since Dec. 1969. No commentary or opinion on this one. Here is a look at the unemployment trend dating back 70 years…

(source: U.S. Bureau of Labor Statistics)

No interest rate increase: The Federal Reserve left its benchmark lending rate (the “Federal Funds Rate”) unchanged at 2.5%. This is the rate that big banks use when they lend cash to one another. After raising interest rates four times in 2018, there have been no increases to the Fed Funds Rate in 2019. Rate hikes are likely to occur at some point in the future to prevent the economy from overheating, but the Fed has indicated it won’t budge interest rates anytime soon.

In The Market...

The S&P 500 gained +0.2% last week. Let's look under the hood:

(price data via stockcharts.com)

As mentioned, the S&P index extended its record highs thanks to a small weekly gain. The S&P rose +4.1% in April, staying a perfect 4-for-4 in terms of its monthly winning streak to begin the year.

Despite the losses to start this new week, our stock market outlook remains neutral-to-positive. However, we are coming up on the Summer months, which tend to be flatter than the October thru March timeframe of the stock market year.

We shuffled some funds around, selling a S&P 500 index fund (SPLG) for a nice gain. We then took a partial position in a more Tech-heavy index fund (SPYG), which we aim to add to in the near future. On the bond side we reduced our Corporate bond fund position (SPLB) and still hold both High-Yield bonds (SHYG) and Treasury bonds (SPTL) for accounts that own bonds.

In Our Portfolios...

What's New With Us?

I am pleased to announce that Josh Baird has been promoted to Investment Adviser Representative! He will assume his new role starting in June and will be tasked with building his client base within our firm. If you happen to communicate with Josh in the coming days make sure to congratulate him on a position well earned.

Have a great week!

Brian E Betz, CFP®
Principal

3 Tax Tips And A New Stock Market High

/ Percension Wealth Advisors, LLC/

Hi everyone,

As a follow-up to our recent recommendation to start planning your 2019 taxes, Josh Baird wrote a useful blog post highlighting 3 tax tips for 2019, which you can READ HERE. I encourage you to read it in light of the recent tax law changes.

The U.S. stock market closed last week at a new all-time high of 2,940 for the S&P 500 (not including dividends). Let’s dive right into that and more. 

In The Market...

The S&P 500 gained +1.2% last week. Let's look under the hood:

(price data via stockcharts.com)

I have said it time and time again. New record highs are bullish, not bearish. The S&P 500 did just that last week. The more separation the S&P index gets from it previous highs set back in 2018, the less likely stock prices will flatten out for a few weeks as I had expected and the more likely it is that a bigger rally will ensue. Take a look:

(chart created via stockcharts.com)

There is not a whole lot to nitpick right now. A number of factors support the continuation of this rally:

  • When looking at the price trend of the S&P index, both short-term and long-term timeframes appear bullish.

  • Relative Strength (RSI) reflects that there is a tailwind of momentum behind the rally. This is the smaller of the two charts above.

  • There still seems to be a decent dose of pessimism among investors. Pessimism usually leads to gains.

  • There is good breadth among the 10 sectors that comprise the market. This means that, for the most part, the sectors are rising in unison rather than a few sectors doing all the heavy lifting to push the S&P higher.

There is one thing worth remembering, however. The last time the market was in a similar position back in Sept. 2018, it appeared as if stocks were primed to really zoom higher. In that instance, the index only ended up eclipsing the previous record high (set in Jan. 2018) by roughly +3% before the bottom fell out in early October. So the thing to remember here is that while a sell-off may not be likely, if it does happen it could be swift and sharp.

In Our Portfolios...

What's New With Us?

I want to remind everyone that our new financial planning software is readily available if you would like us to map out your plan. Let us know — it might be worthwhile if you have wanted to gain better clarity or instill better discipline around your long-term financial plan.

Have a great week!

Brian E Betz, CFP®
Principal

2019 Tax Planning: 3 Things to Consider

/ Percension Wealth Advisors, LLC/
2019 Tax Planning: 3 Things to Consider

For the first time since 2013, the amount you can contribute into an IRA is increasing, from $5,500 to $6,000 ($7,000 if age 50 or older). The 401k contribution limit is increasing as well. The amount of pay you can defer into your 401k plan goes up from $18,500 to $19,000 ($25,000 if 50 or older). This chart details the 2019 contribution limits for various accounts, as well as the gift and estate tax exclusions. Take a look:

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Buy, Sell Or Hold Boeing Stock?

/ Percension Wealth Advisors, LLC/

Hi everyone,

I usually keep our rationale to a minimum in these blogs whenever I discuss portfolio buying and selling. This is intentional. We refrain from celebrating wins and try to learn from losses. In either case, we do not dwell. We ask ourselves if we used our best judgment in the decision-making process and then move forward.

I bring this up because we are in a unique spot with one of our current holdings: Boeing (BA).

We bought Boeing back in March, at a time when it appeared it was set up well for further gains. That did not occur. The opposite, in fact.

Shortly after we bought, an Ethiopian Airlines-operated Boeing 737 MAX plane crashed. These type of one-off events are impossible to predict. I rarely assign the price movement of a stock to a particular event, but this was a rare exception. The Boeing share price fell some -12% over that weekend and, just like that, we were quickly down on our position.

No excuses here. It did not work out as we thought. Did we use our best judgment in arriving at the decision to buy? Yes. If another investment presents us with a similar price-trend, we would buy that without hesitation.

So now what? This is where the work lies. When an investment has such a sharp move like Boeing did, the outlook changes considerably. So now do we…

Sell?
Hold?
Buy more shares?

We decided to purchase more shares of Boeing for accounts that had the room to do so. Since that time, Boeing has been pretty flat. Each week we analyze whether this is merely a blip in the long-term uptrend (the positive outcome) or the beginning of a steeper decline yet to come (the negative outcome).

Right now it is hard to say. I would not advocate buying more shares of it right here. However, as our own behavior implies, if you own shares of Boeing I would not sell them just yet. We would not continue to hold Boeing if we did not think there was a decent chance of it rallying in the coming weeks. But my conviction is not strong enough to advocate buying right here. I say this while considering the importance of time. If we own something that is fledgling around, we are missing the opportunity to own something else that we believe has a better chance to rise in the weeks ahead.

(Side note: Only accounts that own individual stock own Boeing currently. If your portfolio only owns exchange-traded funds, ETFs, this does not affect you. I am happy to discuss your portfolio make-up and whether individual stocks makes sense for your situation.)

I could speak at much greater length about Boeing and our investment decision-making process. Feel free to ask me. For now I thought you might find it interesting to hear my take on a current position we own, specifically one that has yet to play out in our favor as we had anticipated. With that being said, the book is not fully written just yet. Let’s see what happens from here. If there is enough interest in Boeing stock I’ll provide greater detail next week into our rationale for buying it.

In The Market...

The S&P 500 was essentially flat last week. Let's look under the hood:

(price data via stockcharts.com)

The S&P index entered the holiday shortened week at 2,907 and finished it at 2,905. So not much happening. Roughly half of the stock sectors gained, again led by the growth-oriented areas of the market (Industrials, Technology, Consumer Discretionary). This is certainly a positive, but it’s tough to make too much out of that just yet. If the overall market is to hit new highs these sectors must continue to lead the way.

Portfolio-wise we sold both our Semiconductor Fund (XSD) and Industrials Fund (XLI) this past week. With the broader market hitting a pause, this presented a good opportunity to sell those positions for nice gains before reallocating the proceeds elsewhere. As such, I anticipate reinvesting these funds in the near future, although I would like to see the overall market surge to new highs before we do.

In Our Portfolios...

What's New With Us?

I hope everyone enjoyed a nice Easter Sunday. We were supposed to go up to Newcastle for a brunch and Easter egg hunt but our daughter was sick all weekend (she’s fine now). We did finish our back yard project, which is a plus. We had a new fence installed and pushed out a retaining wall to provide us some more space.

I will be out of the office this Friday. If you need something urgent, shoot Josh an email that day.

Have a great week!

Brian E Betz, CFP®
Principal

Get A Jump On Tax Planning

/ Percension Wealth Advisors, LLC/

Hi everyone,

I want to make a request. If you know someone who could benefit from our service and expertise, we would appreciate referrals you have to potential clients. We want to add some new clients over the next year, but as always, want to make sure it is a mutual fit as well. Thank you in advance!

2019 Tax Planning: Assuming you filed before today, tax season is over. For most of you, taxes are something you deal with and then ignore for 11 months until it is time to file again. However, now is the perfect time to get a jump on tax planning for 2019, particularly given the significant tax law changes that went into effect. (If you prepped and filed your own taxes then you know what I’m talking about because the Form 1040 alone has a very different look than it did under the old tax code.)

Josh is writing a post on some tax tips for 2019, which we will post sometime next week. If you would like to discuss measures you can take to be more tax-efficient in 2019, let us know.

In The Market...

The S&P 500 gained +0.5% last week. Let's look under the hood:

(price data via stockcharts.com)

Stocks rose for the third-straight week, finishing with a nice jump on Friday. The S&P 500 closed above 2,900 and is now just 1% below its previous record high from Sept. 2018. It was a pretty quiet week considering that stocks are approaching all-time highs.

The following weekly chart of the S&P 500 illustrates how far stock prices have rallied back to get to where they are. There are a couple things I want to highlight, starting with just the price movement of the index. Take a look:

(chart created via stockcharts.com)

Notice how the S&P 500 has clawed back to the previous high. If you look at the smaller chart above it, that blue line reflects the increasing number of stock prices that are above their respective 200-day moving averages. Currently, 73% are above, which bodes well for the longer-term outlook because it shows that the overall market is rising as a whole (rather than it being driven by a few areas).

The S&P is so close to its previous high though that I suspect we may see some stagnation over the next few weeks. Then again, I thought volatility would pick up in March and we really didn’t see too much of that.

Technology still looks like the strongest sector, which is reflected in our portfolio allocations. We added to our Cloud-Computing Tech fund (SKYY) this past week and continue to own a Tech-heavy index fund (SPLG) as well as a Semiconductor fund (XSD) in most accounts.

On the bond side we added a Long-Term Treasury fund (SPTL) to many accounts. Despite the late-week slide I think the Treasury market remains appealing in the weeks ahead.

In Our Portfolios...

What's New With Us?

This past weekend was great. We are almost done with a yard project we have been planning for a long time, Tiger won the Masters and Game of Thrones finally returned after a 2-year wait.

Have a great week!

Brian E Betz, CFP®
Principal