Category: blog

Market Commentary

Note: This market review was published on May 24th, 2022 and may not be reflective of current market or investing issues.

“A genius is the man who can do the average thing when everyone else around him is losing his mind.”

~ Napoleon

The news around the economy and markets is getting pretty loud these days. I thought it would be appropriate to look at some facts and practical advice on how to make wise decisions in uncertain times. Let’s first analyze the current situation. Inflation is high. Labor is tight. GDP growth is slowing or has slowed. The Federal Reserve is tightening policy. The US stock market is in a correction (down 10%+) or bear market (down 20%+). The bond market, which is supposed to be safe, has been down more than 10% this year. Housing is slowing. These are leading to more and more headlines on the subject of bear markets and recessions. All of these headlines evoke feelings and emotions that can lead investors to make the wrong decisions at the wrong time. A friend of mine likes to say, “Don’t panic, but if you do, panic first.”  The great Peter Lynch said this, “Corrections are unpredictable. By selling stocks to avoid pain, you can miss the next gain.”  The thing to remember is that corrections and bear markets are natural and not to be feared.

Let’s look at some facts on bear markets. On average, the stock market during a bear market drops 36%, lasts less than 10 months, and happens about every four years.[1]  In other words, they happen fairly frequently and are over relatively quickly. That begs the question, why don’t you exit positions and enter back when the coast is clear? To answer that, let’s look at up days during bear markets. Half of the highest gaining days for the stock market have happened during bear markets. Another 34% of the highest gaining days happened just as the bear market has ended when it’s unclear that it has ended. In other words, it’s extremely difficult to predict these things because there are massive up days, and it’s unclear when they end. One of my investing heroes, Cliff Asness of AQR, had a paper at his firm titled Sin A Little.[2]  In it he describes that you can’t time the market, but if you have a diversified portfolio and see an opportunity to lean into a situation that makes sense to either underweight or overweight holdings, it can help. This is a practical way to help weather turbulent markets.

So, what are some other practical ways to make lemonade when the markets are handing out lemons?

  • Diversification. Having a portfolio that can benefit in different environments and circumstances can help calm fears in a hurry.
  • Tax-loss harvesting. If you have an investment portfolio that is in a taxable account, selling holdings at losses can help with taxes at the end of the year. Rotating those holdings into similar positions can keep your portfolio exposures the same but benefit from those realized losses. It also helps to not anchor to the losses if they are sold.
  • Accelerate investment. If the market gives you a discount and you can afford accelerating your retirement or investment savings, it can pay off down the road. When shopping for a car and you have been seeing prices going up year in and year out and all of a sudden you that same car you want is selling 20% lower, you buy it. The same thing happens in bear markets and corrections.
  • Rebalance. If you are holding a diversified portfolio, you are going to have holdings that are down and some that are up. It makes sense to sell the things that are up and buy the things that are down.
  • Dollar-Cost Average. Dollar-cost averaging is simply buying investments over time. Regular contributions to your investments allow you to take the opportunity to buy over time at potentially lower rates.
  • Limit Distributions. Taking distributions from your accounts as the market is decreasing means there is less available for the recovery. When possible, we recommend limited distributions during a bear market.
  • Stay the course. As indicated above, staying the course can lead to higher returns long- term. The highest gaining days usually occur in a bear market and sharp gains can happen quickly.

Remember, when all you see is negativity that there are some proactive steps that can be taken. Negative returns will come and that is a great time to position for success in the future. Capitalism exists to provide efficient use of resources, and when there become excesses in the system, recessions and bear markets come to correct those misuses. These things can be painful, but they can also lay the foundation for future growth.


[1] https://www.hartfordfunds.com/practice-management/client-conversations/bear-markets.html

[2] https://www.aqr.com/Insights/Research/White-Papers/Market-Timing-Sin-a-Little

Disclosure: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by  Longview Financial Advisors, Inc.), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Longview Financial Advisors, Inc. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Longview Financial Advisors, Inc. is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the Longview Financial Advisors, Inc.’s current written disclosure statement discussing our advisory services and fees is available upon request.

Guest Post: WellStone Emergency Services Director of Development, Karen Petersen, CFRE

It’s about time: “ER” for mental healthcare is finally coming to Madison County

You go to the emergency department for a broken bone or heart attack. But where can you and your loved ones go for emergencies involving mental health? For years, there were only two choices in Madison County: The ER or jail. Fortunately, a third, more effective and appropriate option is coming to the Rocket City.  

WellStone, Inc., a 501(c)3 nonprofit organization, is building North Alabama’s first crisis intervention center. The 25,000 sq. ft. facility, which will be operated by WellStone Emergency Services, or WES, is scheduled to be completed in June. It’s on WellStone’s main campus on the Parkway near Torch’s Freedom Center. Experts say the 24/7 stand-alone psychiatric center will be a game-changer for mental healthcare in the Rocket City. The timing couldn’t be better.

After all, more people than ever are affected by mental illness and substance abuse. Fallout from COVID-related conditions have been detrimental to our collective mental health. It’s getting better, but statistics show that at one point, more than 40 percent of American adults reported symptoms consistent with anxiety or depression. Additionally, reports of substance abuse spiked, and overdose deaths surged to more than 100,000 in 2021.

Since the pandemic began, we, as a society, have also been hearing more about mental health crises.  A mental health crisis is defined as “A situation in which a person’s behavior puts them at risk of hurting themselves or others and/or prevents them from being able to care for themselves or function effectively in the community.” A mental health crisis could involve several situations, including (but not limited to) suicidal ideation, psychotic episodes or substance abuse.

When WES opens its new facility, those in crisis will finally receive the compassionate mental healthcare they need with the dignity they deserve. When they leave, it won’t be the end, but the beginning, of their recovery journeys. Some will be referred to other programs and services within WellStone, such as therapy, medical regimens, group homes, support groups or Intensive Outpatient (IOP) treatment for alcohol or drug addiction, clinically referred to as substance use disorder (SUD). We also work with community partners, linking clients to other community agencies and organizations that can assist with sustained recovery plans.

WES won’t just change the level of care for clients in crisis. Currently operating in a limited capacity at a temporary location, WES is already making a difference for law enforcement. When police are called to a mental health crisis, they typically spend hours with that individual, admitting them to the hospital or booking them in jail. Thanks to its partnership with WellStone, officers can bring a person in crisis to WES and be back patrolling our street in about 15 minutes.

“If it is a mental health crisis, there should be a mental health response,” said Huntsville Police Chief Mark McMurray. “By building a relationship with WellStone and our other community partners, we have been able to decrease the number of repeat encounters with law enforcement for people experiencing a mental health crisis. This partnership has not only served to increase safety for these individuals and our officers but has diverted those in need of appropriate behavioral health services away from the criminal justice system.”

The diversion center will also alleviate the burden of ER staff. An estimated 8,000 people wind up at Huntsville Hospital every year due to mental health crises. Unless there is an accompanying physical emergency, mental healthcare clients will go to WES, not the ER.

This facility has been in the works for several years, after the Alabama Department of Mental Health announced the state had a significant gap in its continuum of care. Those in crisis were slipping through the cracks.

In October 2020, Governor Kay Ivey announced that WellStone would be one of three agencies to operate mental healthcare crisis centers in Alabama. The state awarded WellStone $3m for construction of the new facility. Madison City, Madison County and Huntsville are generously contributing as well. Even so, WellStone remains $5m short of the $10m costs associated with this enormous construction project.

That’s why WellStone is launching a capital campaign and inviting North Alabamians to invest in this initiative. Community members are invited to “Be the Rock,” and help “build a foundation of community, compassion and connection for those in mental health crisis.”

As we roll out this campaign and prepare to open WES’s new facility, we hope people will open their minds to what it means to be in a mental health crisis. Additionally, we hope they also open their hearts, extending kindness to those whose pain, though harder to recognize and even comprehend, is often just as excruciating. Sometimes even more so.

If you are interested in learning more about WES or WellStone’s other mental health programs and services, please visit our website. For information about our “Be the Rock” campaign, including ways to support, click here or contact Karen Petersen at karen.petersen@wellstone.com. You can also like stay updated by liking WellStone’s Facebook page.

Quarterly Market Commentary

Note: This market review was published on November 2nd, 2021 and may not be reflective of current market or investing issues.

The third quarter was an eventful one in the US, although the S&P 500 only ended up gaining 0.11%1.  Markets started the quarter strong, before giving back almost all of their gains during the month of September where they had a drawdown of nearly 4%1.  There was a lot going on that lead to the drawdown, but one of the biggest issues was the federal governments budget negotiations. 

The federal government has a fiscal year that runs from October 1st to September 30th every year.  This year Republicans and Democrats were clashing over the annual spending bill and passed the October 1 deadline to fund the government.  While this is not the first time that this has happened and there has been a government shutdown, this time there was a real threat that the government was going to miss a payment on their debt, resulting in the United States government defaulting on what is considered to be one of the safest investments in the world.

In addition to fiscal spending issues, COVID and the Delta variant made a huge resurgence in the late summer with cases in the United States peaking around the first week of September and deaths peaking around two weeks later2. While most of the country was able to avoid severe restrictions and lockdowns, they did come back in some areas which put pressure on economic growth.

The hot topic in the world of finance right now is inflation.  From gas stations to grocery stores, costs are increasing at a faster pace than they have since the Great Recession over a decade ago.  The Consumer Price Index rose at an annual rate of more than 5% in September3. While inflation has been increasing for most of the year, the Federal Reserve has continuously downplayed the effects that it will have and labeled it as “transitory.” However, they have now come to admit that it is persisting longer than they expected due to labor shortages and supply chain issues.

As we look toward the end of 2021, which we cannot believe is only two months away, there are plenty of things to keep our eye on concerning our investments.  First, the federal government seems to be nearing a compromise on another large spending bill which is currently priced at around $1.75 trillion in addition to another $1 trillion infrastructure bill that has already been passed by the Senate, the spending bill will need to be passed before the end of the year to avoid another government shutdown and potential default.  Next, inflation is likely to remain elevated into the near future as the labor shortage and supply chain issues show no sign of being corrected as we enter the holiday shopping season. Finally, the latest wave of COVID cases is in decline and vaccinations continue to rise, if these trends are to continue, they should be supportive of further economic growth.

References

1https://www.cnbc.com/quotes/.SPX

2https://covid.cdc.gov/covid-data-tracker/#trends_dailydeaths_7daycasesper100k|new_death|seven_day_cum_new_cases_per_100k

3https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm

Disclosure: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by  Longview Financial Advisors, Inc.), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Longview Financial Advisors, Inc. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Longview Financial Advisors, Inc. is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the Longview Financial Advisors, Inc.’s current written disclosure statement discussing our advisory services and fees is available upon request.

Guest Post: Community of Hope Executive Director, Mandy Kilgore

Huntsville Community of Hope

Huntsville Community of Hope was born through frustrations of not being able to find long term housing solutions for our homeless friends that were ready for that big step.  We began searching for solutions, and through that we stumbled across another organization, Community First! Village in Austin, Texas.  We have plans already in place to replicate their amazing village right here in Madison County.  In 2018, our team traveled to Austin, TX where we attended their symposium and learned the tools needed to replicate that successful model.  Their holistic approach is truly the best way to not only get our friends off the streets, but to keep them off the streets.  This allows our emergency and transitional shelters to be just that.  Unfortunately, you will find that many of our friends tend to stay long term in places only meant for temporary shelter.  If you have not heard of this organization, we would definitely recommend researching them.  You will find a vast amount of information and videos that will be helpful.  Click here for more information on Community First! Village https://mlf.org/community-first/

Community of Hope History

We have spent years building relationships and walking alongside our local homeless community here in Huntsville.  Together, we have witnessed both the success and failures of our homeless friends as they seek permanent shelter and take critical steps to improve their lives.  We have also discovered a gap in permanent affordable housing.  Housing our friends can afford is not readily available in Huntsville.  Through this shared experience, and proven successful models in other cities across the nation, we have learned it will take a community approach to make a real difference.  In 2019, our 501©3 was founded.  We carefully selected servicing our chronic disabled homeless friends.  This selection was made after researching the services made available to our homeless community.  Our homeless families, children, and women are well loved on and have services to support them.  Our chronic homeless friends need services directed at the specifically, and Community of Hope is happy to fill this much needed gap here in Madison County.

Community of Hope has a highly innovative approach to dealing with homelessness.  Our Restoration Works Program will provide jobs on site for our homeless friends.  This is a critical and necessary step as our friends will pay rent to live in the community.  COH will provide access to care, by providing healing opportunities for physical health and mental health.  We will also have on site a community general store, gardens, animal husbandry, orchards and so much more.  Once aspect we really want to highlight will be our missional that live on site.  They will be our boots on the ground and provide the instate community support so desperately needed for success in a housing first model.  Housing will never solve homelessness, but community will.  Our friends will finally have a place they can call their forever home. 

Our Vision

Solving chronic homelessness through community.

Our Mission

Building a residential community for our chronically homeless neighbors and empowering our surrounding community into a lifestyle of love and service.

2021 Goodness

The Community of Hope team is searching for 50 acres in our community to begin building a residential master planned community.  Partnerships are being built with organizations that will help us advance our mission and create systemic change in our homeless community. 

Our first capital campaign amount is $1.5 million.  This amount will allow us to purchase land and cover initial development cost.  This property is tremendously important.  It serves as the catalyst to get off the streets and out of the camps and into a community they can call home. 

In the Fall of 2022, Community of Hope will launch our next capital campaign.  This funding will breathe life into our vision of providing homes, jobs on site, healing opportunities for physical and mental health, a community general store, animal husbandry, gardens, orchards, and so much more.

If you are interested in learning more about Huntsville Community of Hope or in giving, you can contact Mandy Kilgore at mandy.kilgore@hsvcommunityofhope.org or 256-504-3326. You can also visit them online at www.hsvcommunityofhope.org.

Wes Johnson Named as Longview’s New Chief Investment Office (CIO)

Press Release
July 2021
For Immediate Release

Longview Financial Advisors Selects New Chief Investment Officer

Longview Financial Advisors, Inc. is pleased to announce the appointment of Charles Wesley Johnson as its next Chief Investment Officer. Wes will take over the Chief Investment Officer role from Jeff Cedarholm on July 1, 2021.

Cedarholm, who is semi-retiring at year’s end, is excited about this transition.  “It’s hard to believe, but I met Wes Johnson at least 20 years ago, and at our first meeting, we discussed investing. Here we are years later and not only is he still intrigued, but has become a very good investor himself.  Wes earned his bachelor’s degree in economics from Jacksonville State, then earned a master’s degree in Family Financial Planning and Counseling from the University of Alabama. He has recently earned his CIMA® Designation (Chartered Investment Management Analyst®) from the Investment and Wealth Institute.  He has been working on our firm’s investment team since 2006. As his long-time colleague, I feel you will find Wes very knowledgeable and forthcoming about investing and also very caring of client and fellow employee needs.”

“I am honored and humbled to step in as the Chief Investment Officer” says Johnson. “Longview has high standards of education and transparency that I look forward to continuing.  I will continue to foster a collaborative environment focused on helping clients achieve their goals.  I am excited to be a part of Longview as we help people to live with fulfillment and give with purpose.  I truly cannot overstate how excited I am to be chosen to serve in this role” he continued.

Longview Financial Advisors is a financial planning and wealth management firm which specializes in tax, estate, and retirement planning along with philanthropic giving. For more information about Charles Wesley Johnson and the team at Longview Financial Advisors visit https://longviewfa.com/.

1st Quarter 2021 Market Commentary

Note: This market review was published on May 3rd, 2021 and may not be reflective of current market or investing issues.

The first quarter saw strong equity returns in the US with the S&P 500 up just over 7%1. International markets lagged the US, with the MSCI ACWI ex US increasing almost 3.6%2.  Under the surface, there was a rotation of leadership that took place in the market from growth to value assets.  Many of the large cap growth companies, that were up strong following the COVID-19 crash, have begun to lag the more cyclical companies.  The largest company in the world, Apple, has experience two 20% drawdowns in the last six months3.  In spite of the declines in large cap tech companies, like Apple, the broader market has been able to push to all time highs because of this rotation. Along with the rotation from growth to value, small cap stocks have also started to outperform large cap names.  It begs the question “what’s going on?” 

The simplest way to answer that is the expected, and ongoing, economic recovery.  With the rollout of the COVID-19 vaccines in the United States going better than expected, and states beginning to reopen their economies, economic activity is increasing.  When there is strong economic growth, along with expectations that growth will continue or accelerate, value stocks tend to outperform their growth counterparts and small cap stocks tend to outperform large cap. 

There are still a few concerns that could de-rail this economic recovery.  First of all, while the vaccine rollout in the United States has been faster and more effective than most thought it would be, countries around the world are not seeing the same success. If other countries are not able to increase the speed of their vaccinations, their economic issues could affect our economy due to how intertwined global trade is.  Second, it seems that every few weeks there is another variant of the COVID-19 virus that pops up somewhere around the world.  We have seen the UK variant that seemed to have a higher transmission rate, the South African variant that seemed to have a higher fatality rate, and now there is an Indian variant that has started to spread.  If one or more of these variants are found to be transmittable despite one being vaccinated, then we could end up seeing mask mandates, social distancing, and lockdown protocols being issued again, which would at best slow the economic recovery and at worst send us into another recession.

While the economy seems to be off to a strong new expansionary period, there are also concerns as to whether or not the expansion is sustainable once fiscal and monetary support are scaled back or removed.  Currently, the Federal Reserve Bank of the United States has their primary interest rate set between 0% and 0.25%, making capital very cheap for businesses that need it.  The federal government has been spending money at a record pace in order to support businesses, state and local governments, and individuals.  Unemployment insurance has been expanded to support more people, at a higher level, for longer periods of time. Direct payments have been sent to individuals who meet certain income requirements, state and local governments have received monetary support due to decreased tax revenue, and businesses were able to apply for PPP loans that for many were forgiven.  Once these support systems of the economy begin to fade away it is unclear if the economy will be able to stand on its own. 

Additionally, with the amount of spending that has been seen there is an increased fear that inflation could see a meaningful increase for the first time in well over a decade.  There have already been a few companies that have come out publicly and said that they are going to have to raise their prices due to increasing costs that they have seen over the past few months.  If these trends continue, inflation could exceed the Federal Reserve target of 2%, which they have said they would welcome based on their new average inflation target.  It is important to know what the effects would be if inflation were to see a sustainable increase of over 2%.  Some of the first effects would likely be commodity prices and interest rates rising, and the value of the US Dollar declining.  What would this mean for asset prices though?  Bonds, especially treasuries, would decrease in value as interest rates rise. Stocks would most likely have a mixed reaction.  Growth stocks that have done so well over the past decade, especially those that have not proven profitable, would likely struggle as the cost of capital rises for them and they are no longer able to fund their growth with cheap debt.  Value stocks, especially those that have higher pricing power, would likely benefit from the strong economic growth and increased spending of consumers. 

While there will always be more questions than answers when it comes to future performance in markets, we can use current data and historical references to make informed investment decisions.  As the supposed quote from Mark Twain goes, “history doesn’t repeat, but it does rhyme.”

1https://www.cnbc.com/quotes/.SPX

2Morningstar.com

3https://www.cnbc.com/quotes/AAPL?qsearchterm=aapl

Disclosure: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by  Longview Financial Advisors, Inc.), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Longview Financial Advisors, Inc. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Longview Financial Advisors, Inc. is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the Longview Financial Advisors, Inc.’s current written disclosure statement discussing our advisory services and fees is available upon request.

What Does Fiduciary Mean to Us?

A fiduciary standard, when applied to a financial advisor, says the advisor has a legal duty to act in good faith and trust, placing your best interest above that of the advisor or their firm. The advisor is ethically and legally bound to act in this manner.

At Longview, we aren’t just fiduciary by law; we’re fiduciary by choice. All of our advisors sign a fiduciary oath to put your interest before our own.

Recently, several of our team members talked about what being a fiduciary means to them. Check out the videos below to hear what they had to say.

Disclaimer

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Longview Financial Advisors, Inc.), or any non-investment related content, made reference to directly or indirectly in this newsletter or post will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter or post serves as the receipt of, or as a substitute for, personalized investment advice from Longview Financial Advisors, Inc.. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Longview Financial Advisors, Inc. is neither a law firm nor a certified public accounting firm and no portion of the newsletter or post content should be construed as legal or accounting advice. A copy of the Longview Financial Advisors, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.


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