What a Difference a Year Makes
By Selwyn Gerber CPA and David Zwebner Commstock Financial advisors, agents of RVWwealth.com Licensed by the Israel Securities Authority davidz@ecommstock.com 0544-332621
A year ago, we were all quarantining at home and wondering how the COVID-19 pandemic was going to impact our lives. On March 23rd, 2020, the Standard & Poor’s 500 (S&P 500) Index level was 34% off the alltime high set just one month earlier on February 19th. In the two weeks leading up to March 23rd, the financial markets had experienced extreme volatility, including three trading days with losses that were so significant that they are now nicknamed “Black Monday I,” “Black Thursday,” and “Black Monday II,” respectively.
While many individual investors and other investment managers were panicking, RVW calmly used the opportunity to reach out to our clients with reassurance that this too would pass and proceeded to do selective tax-loss harvesting, making lemons into lemonade where the opportunity presented itself.
THE JOB RECOVERY CONTINUES:
“The U.S. economy might be stronger than it’s ever been. It feels like an incredible claim, but a host of economic indicators are flashing bright green. For starters, the goods and service sectors are growing at rates simply not seen in a long time. March 2021 index levels for the U.S. service and manufacturing growth came in at 63.7 and 64.7, respectively. A reading above 50 indicates growth”.
The next day, March 24th, something DID happen. What did not happen was a press release telling us the losses would stop, nor an announcement that the government was stepping in to make stock market losses illegal. In reality, there was no fanfare at all. Instead, on March 24th- with no warning - the recovery began. Those who took their money out of the market while they looked for the “all clear” signal never got one.
THE MANUFACTURING SECTOR IS STRONG AND GROWING:
The recovery was swift and steady. By September, the S&P 500 index level reached its pre-pandemic high. Since then, it has continued to climb, rewarding those investors with the wherewithal to withstand the volatility.
Equity markets in general are in one very long bull market with occasional and unpredictable volatility along the bumpy road upwards. Every downturn over the past 200 years has been followed eventually by a strong rebound, taking the market to ever-greater heights.
ATTENTION U.S. TAXPAYERS LIVING IN ISRAEL:
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– Barron’s, April 2021
With tax rates set to increase, the minimal current income tax typically generated within an RVW portfolio make our style of investing even more attractive. Active managers, mutual funds and stockpickers are likely to be hit with ever-increasing taxes annually on gains made, while gains made within typical RVW portfolios are almost entirely free of current U.S. income tax.
Those of you who are being asked to leave your US brokerage houses are welcome at RVW. The relationships we have with leading discount brokers enable us to invest assets of US taxpayers who live in Israel, to them - where you will receive red carpet treatment and ultra-low pricing.