We are halfway through 2020 and to say it is has been a unique year is an understatement!  Our mission is help you preserve your assets and protect your lifestyle. 2020 has confirmed how important it is to take a diligent and thoughtful approach to help you achieve these goals.

In this month’s Guardian Standard Newsletter, we highlight our second-quarter market commentary and provide you a link to the full report. In our "This is Life" section we discuss the most recent passing of my mother and some of the lessons I have learned and include a tool that we hope you take the time to use for you and your family.  Enjoy!

It’s Been a Wild First Half … Where Do We Go From Here?

Equity investors have been on quite a roller-coaster ride this year. After hitting an all-time high on February 19, the S&P 500 Index plunged a gut-wrenching 34% over the next month, marking the quickest bear market in U.S. history. Smaller company stocks did even worse during that period, losing more than 40%. Investors who remained strapped in as we did—keeping our arms and legs inside the car at all times, of course—then experienced an equally surprising and gravity-defying upturn. From the March 23 low, the market soared nearly 40%, notching its best return ever over any 50-day period. Talk about whiplash. For the full second quarter, larger-cap U.S. stocks gained 21% and smaller-cap stocks climbed 25% (Vanguard 500 Index and the iShares Russell 2000 ETF, respectively). Despite the medical, economic, and social turmoil all around, the U.S. market is down just 3% year to date and is only 8% below its all-time high on February 19. (As a reminder, after a 34% drop it takes a 52% gain to get back to breakeven.)

However, there is a major bifurcation beneath the surface. The Russell 1000 Growth Index is up 10% on the year, but its Value sibling is down 16%. That’s a stunning 26-percentage-point difference in only six months. Viewed from another angle, the tech-heavy Nasdaq Index is up 13%, while the Dow Jones Industrial Average languishes, down 8%. One more perspective: The S&P 500 technology sector is up 12% on the year, while the financials, industrials, and energy sectors are down 24%, 14%, and 35%, respectively. So for many companies, things are not nearly as sanguine as they may appear looking only at the market overall.

Looking overseas, developed international stocks rose 17% (the Vanguard FTSE Developed Markets ETF) and emerging markets (EM) stocks gained 19% (the Vanguard FTSE Emerging Markets ETF) in the second quarter. For the year, they are down 11% and 10%, respectively. As in the United States, growth stocks are crushing value stocks overseas as well. The U.S. dollar depreciated slightly during the quarter, providing a modest tailwind to foreign market returns for dollar-based (unhedged) investors.
Moving on to the fixed-income markets, core bonds gained almost 3% for the quarter (Vanguard Total Bond Market Index), as Treasury yields dropped slightly (falling bond yields imply rising bond prices) and investment-grade corporate bond spreads narrowed, rallying along with the equity markets.
 
As the market continued to drop, we were prepared to add another increment to U.S. stocks. But, (no) thanks to the Federal Reserve’s massive “whatever it takes” monetary interventions, we didn’t get the chance. We don’t rule out the possibility U.S. stocks will revisit their March lows (2,237 on the S&P 500) and we are ready to act again when a compelling opportunity arises. 

Please click here to view the entire quarterly commentary. 

This Is Life 

Is your house In order?  It’s a simple question and one that we need to seriously ask ourselves. As you know, we try and make this section every month about experiences that are real and relevant in our lives. Recently my mother passed after a long battle with dementia. She turned 86 on July 2nd and left this world on July 4th peacefully. A remarkable life with so many life lessons passed on to me over the years for which I will always be grateful. As I have dealt with the “practical” side of my mother passing, I realized this period of time has been much easier to cope with due to advance reviewing of whether she had all the necessary pieces in place to have her “house” in order.

As I wrote her eulogy, I was reminded of another valuable lesson I learned from her. Many of you know my passion for golf. For many of my younger years, my mother would take me to the Singapore Island Country Club for lessons. It was not unusual for me to spend 3 to 4 days a week practicing and getting lessons. She told me many years later after I had left Singapore and come to the United States that the location of the club on Sime Road was where she and her family had been in POW camps during World War II. It was another example of mother’s grace and kindness, and her ability to put other people first.  It’s hard to imagine that every time she dropped me off with a smile and hug that she was reliving some part of her POW life. I never knew, and it's clear from her actions she did not want me to know…… She simply wanted me to go enjoy the day and feel safe.

Our role as fiduciaries has a similar intent behind how we treat all clients and people we come in contact with as financial and wealth advisors. We are committed to placing your needs above our needs. Sometimes it requires a conversation about budgets and planning. Other times it simply involves us just listening and looking out for your best interests.

This experience has given me an important perspective on how critical it is to discuss your loved one’s or family member’s wishes before time runs out and to make sure you have done the necessary “housekeeping” to better navigate what can be a very emotional and challenging time.

A few of the lessons I’ve learned:

• Living Trusts – review and make sure all aspects of the trust are current and accurately represent your wishes. Is there a clear executor to your estate named? Does it make sense to add someone as a co-trustee?
• Assets – Many estates are made up of a variety of assets like real estate and investment accounts. Make sure all these accounts are properly titled and clearly designate who you wish to have as the stated beneficiaries.
• Personal Property – Examples would be furniture, jewelry, and art. These personal items are sometimes overlooked,  and can cause arguments between siblings and relatives. We suggest taking some time to designate “who” inherits “what”,  and making sure items you wish a specific person to receive is clarified in writing in advance.
• Critical Documents – Examples would be Medical Directives, Living Trusts, and Life Insurance. In addition, any wishes you would like communicated clearly to your heirs and family. They are the one’s looking for direction after you are gone. Anything that can help them better navigate a very trying time is priceless.
• Family values and your story- People often focus on the financial legacy but we believe the most valuable asset of one's life is their life perspective and story. We encourage you to capture your story in a journal or video. Amazon provides great inexpensive ways to capture your life.

We have developed a simple tool to organize the financial aspects of your life, personal wishes, and your/their estate. We call it – Life In A Book®.

Life in a Book®

Life in a Book® is designed to help you get better organized, make better decisions, and in an emergency help you or loved ones have access to important information and documents quickly. The Life in a Book® Checklist is a guide for the type of information you may want to organize.  We suggest you use a binder to store your checklist and documents. Once complete, store it in a secure location. Be sure to let loved ones or the executor of your estate know where it is stored and how to access it. Please contact us to get your complimentary Life in a Book checklist. 

We are here to help and offer objective advice. If you would like to discuss any of these topics or any questions relating to financial planning and/or our view of the markets, please click here and pick a time on our calendar.