The Presidential election is just 26 days away and many investors are worried about the implications to their investments. While we know that polling isn't perfect, former VP Joe Biden is leading national polls and is well ahead of where Hillary Clinton was four years ago. A lot can happen in four weeks, but if Joe Biden wins the election, will his policies mean higher taxes and potential big losses to your investment portfolio?
The Federal Reserve recently signaled that it's likely to keep interest rates at zero through 2023. This is bad news for savers and retirees who are looking for a safe place to park their cash. Gone are the days where you could leave money in a bank to earn 4-5%. In response, investors have been forced to take more risk, often investing in lower quality bonds or more stocks. Faced with a weakened economy from a global pandemic and an uncertain Presidential election, where can retirees look for a safe return? One potential solution is multi-year guaranteed annuities (MYGAs).
The annuity business has grown in popularity as investors, especially those nearing retirement, look for options to protect themselves from stock market volatility and give them a decent income stream in retirement. With over $200 billion in annual sales, the annuity industry is big business with lots of salespeople trying to persuade you to make a purchase.
Today I will dig deep into the Allianz Index Advantage Annuity. This annuity is the insurance industry's newest innovation, RILAs or registered indexed-linked annuities aka buffer annuities. These annuities appeal to investors who are risk averse but also need growth - some protection on the downside in exchange for a cap on a stock index's performance. Sales of RILAs rose 38% to $4.9 billion in the first quarter of 2020.
The Allianz Index Advantage Annuity is listed in Barron's best RILAs with downside protection with stock-like returns.
Chris Wang returned to The Watch List with Nicole Petallides this afternoon to discuss the financial markets, Peloton, and Conagra Foods.
With the COVID-19 shutdown profoundly impacting the US economy with over 30 million job losses, just one in 10 fund managers expect a V-shaped recovery according to the FT. Is this the right call? Luckily we can look to the Far East as a crystal ball and what we may have in store in the next few months.
China re-opened their economy in mid-February so they are about 3-5 months ahead of the US economy as the US is opening states at differing schedules.
What does it suggest about a V-shaped recovery? Some sectors have rebounded in a strong V, while others have been slow to recover. Let's take a closer look.
While many people are hoping for a V-shape recovery for the economy, restaurateurs aren't so optimistic. It is scary to think about what the restaurant landscape might look like in the fallout of COVID-19 especially for fine dining which simply can't operate at half capacity.
Recently, the Las Vegas mayor Carolyn Goodman made waves for pushing for the reopening of Las Vegas. While it may not make sense from a health perspective, their economy relies on tourism, conference and gambling. Even if the governor decides to reopen, it isn't clear how quickly things can return to anything close to normal. Casinos will need to spend more on regular cleanings and gamblers will likely need to wear masks, have their temperatures checked, and sit with social distancing. This doesn't sound like an ideal environment to gamble. Whatever the case, we can look the Far East to the Macau casinos to see how they have done.
In the last three weeks, over 15 million people have filed jobless claims. This is sharpest employment loss in history. The unemployment rate will surpass 15% in short order and could even go to 20%+. Optimists say that when the economy re-starts, jobs will return; however, we are concerned that not all jobs will come back right away and employment will take time to recover.
There is an investment adage that says, "Don't fight the Fed." Put simply, when the Fed is providing liquidity to the markets, it should be an overall positive for the stock market, and you should be invested. Historically, this meant investors should watch what the Fed is doing in terms of interest rate policy. Today, with the Fed already hacking the rate back to zero, investors have to look at quantitative easing and it is truly epic.
The Senate today agreed to a massive $2 trillion stimulus deal (roughly 10% of GDP) to combat the economic fallout from COVID-19. This is a bigger stimulus deal than the Great Recession. Here are some of the highlights:
IMPORTANT DISCLOSURE INFORMATION
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 Runnymede Capital Management, Inc.-"Runnymede"), or any non-investment related content, made reference to directly or indirectly in this blog 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 blog serves as the receipt of, or as a substitute for, personalized investment advice from Runnymede. Please remember that if you are a Runnymede client, it remains your responsibility to advise Runnymede, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. 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. Runnymede is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Runnymede's current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Please Note: Runnymede does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Runnymede's web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.