2019 Fourth Quarter Review


Fed lowered rates 3 times in 2019. Inflation remains low.

Bonds: The U.S. 10-year Treasury yield fell from 2.7% to 1.8% over the course of the year, and the Barclays U.S. Aggregate has returned over 8% year-to-date.

Although at a lackluster 2.3%, the 30-year U.S. Treasury bond yield is higher than all other government debt of developed countries, so buyers might just be buying the best house in a bad neighborhood.


The stock market reached all-time highs in 2019, with all major asset classes positive for the year. U.S. stocks continued to outperform international. The broad-based S&P 500 index was up 31.5%.

Bonds also had a very good year, up 8.72%, but most of that growth was through September.

Yes, gains in 2019 were big, but remember the almost 20% market drop at the end of 2018? The stock market finished 2019 up about 10% from the previous peak in September 2018. Much of the gain in 2019 was making up ground from the sell-off at the end of 2018.


What will the market do in 2020?

The first quarter of a new year and a new decade brings questions about what the market has in store. We know the market will go up and the market will go down, sometimes on the same day. There will be short term volatility regarding the election, impeachment, trade wars, and potential military actions.

There will always be short-term bumps and noise on the road of long-term investing.

While this could cause some bumps in the road ahead, unemployment remains low, inflation remains under control, and wages are making modest increases. All of these bode well for stock prices.

2019 is a prime example of successful investing for investors that tuned out the noise of politics and warnings of the imminent end of the longest bull market in history. Ironically, a year ago everyone was talking about the possible looming recession. The concern now is that no one is talking about it. After more than a decade of economic growth, we will continue to keep our eye on underlying fundamentals and corporate earnings.


What impact does this have on the economy?

December unemployment hit a 50-year low of 3.5%, with employers trying to fill vacant jobs at all skill levels. Although wages have remained stagnate for the past decade, there has finally been some improvement in 2019. This is particularly true for the lowest-paid workers, mostly due to the mandate of rising minimum wages in many states and cities.
This is good news for the economy, since lower-income earners tend to have higher marginal spending, but increased wages could eventually cut into corporate profits.

Our Contact Information

3838 Camino del Rio North
Suite 365
San Diego, CA 92108


Effective with the enclosed statement for Q4 2019, we have enhanced our reporting with a blended benchmark to more accurately reflect the makeup of the underlying portfolio and to measure the portfolio’s performance. The previous benchmark used the S&P 500 for stocks and the Barclays Aggregate Bond Index for bonds. The new benchmark includes proxies for additional asset classes of mid cap, small cap, and international stocks, and for short term bonds.

Stock Benchmark

60% S&P 500 Index
12% Russell Mid Cap Index
10% Russell 2000 Small Cap Index
18% MSCI EAFE (Europe, Australia, Far East) International Index

Bond Benchmark

70% Barclays Aggregate Bond Index

30% Barclays U.S. Government/Credit 1-3 Year Index

Stock Benchmark

If your asset allocation target is 50% stocks and 50% bonds, your benchmark will be made up of:

30% S&P 500
6% Russell Mid Cap
5% Russell 2000
35% Barclays Aggregate Bond
15% Barclays U.S. Government/Credit

What this means for your portfolio

There will typically be a small difference between the benchmark and our performance since we report our performance net of fees. The indexes do not have fees since investments cannot be made directly in an index.
If you wish to discuss the new benchmark, your portfolio allocation, or any other concerns, please call us. As always, we appreciate your trust and confidence.

Warmest regards,
Platt Wealth Management

2021 2nd Quarter Review

2021 2nd Quarter Review


The S&P 500 was up 8.55% in Q2 and 15.25% since January 1st. The tech-heavy Nasdaq 100 was up 11.38% in Q2 and 13.34% since January 1st.

The MSCI EAFE (international index) was up 4.37% for Q2 and 7.33% YTD.

Earnings for companies within the S&P 500 rose 19.7% YTD.

The unemployment rate ticked lower to 5.9%, while wage growth remains steady at 4.6%.


The Consumer Price Index increased 5% through May of 2021 for the previous 12 months. This upsurge so startled investors that the Fed issued a statement stating the increase was “transitory.”

The Fed feels the increase in inflation will be short-lived. Last year the economy was at a standstill, forcing corporations to drop prices on their goods and services. With restrictions easing and “pent-up-demand,” supply is now outpaced by demand, resulting in higher costs. While the increase in inflation is expected to be transitory, the Fed has stated that they will allow inflation to run above 2% to make up for previous periods of low inflation.


Some of the hardest-hit sectors during the pandemic were restaurants and domestic travel. In Q2 2020, seated diners dropped 100%, and travel declined 96%. Also, the unemployment rate in April of 2020 was 14.8%, the highest level since the Great Depression. With restrictions easing and the deployment of vaccines in full effect, the U.S economy is responding.

Restaurants and travel have exceeded, or are approaching, their pre-pandemic levels. Unemployment is at 5.9%, lower than the 50-year average of 6.3% and substantially lower.

than the levels experienced in Q2 of 2020. Labor demand is at the highest levels since 2000. Consumer confidence and small business owners’ confidence are on the rise, too. Graph by JP Morgan


On June 16th, 2021, the U.S Federal Open Market Committee (FOMC) voted to leave the federal funds rate unchanged at 0%-0.25%. This rate has a direct impact on consumer loans and the overall stock market. Also, the Fed will continue to purchase $80 billion of Treasury securities and at least $40 billion of agency mortgage-backed securities per month. These purchases help provide stability to the credit markets.

Our Contact Information

3838 Camino del Rio North
Suite 365
San Diego, CA 92108

The FOMC had previously stated that rate hikes would not materialize until 2024. A recent survey of its members now suggests that rate hikes could occur as early as 2023. As the economy recovers, we should also watch for the Fed to taper their purchasing


We believe the economic environment does not warrant an increase in fixed income maturities and durations. The additional yield on longer-term fixed income securities is not worth the risk at present. We continue to allocate fixed income portfolios to high-quality short and intermediate-term bond funds and individual issues.

For the past 10-years, growth stocks have outperformed their value counterparts. A reversal in this trend occurred in the 1st quarter of 2021, as value outperformed growth. In the second quarter of 2021, growth again was the leader with the Russell 1000 Growth posting returns of 11.93% compared to the Russell 1000 Value with returns of 5.21%. Relative valuation between the two asset classes suggests that value stocks are “cheaper” compared with growth. We continue to balance these two asset classes within our portfolios to offer you further diversification.


Your goals, dreams, and aspirations are our priorities. We look forward to meeting with you to discuss any changes to your financial situation. We are here to serve as your partner throughout your financial journey.

Warmest regards,
Platt Wealth Management

2020 Q 2 Review


S&P 500 up 20.5% in Q2. The index is now down just 3.1% for the first half of the year.

All major domestic stock indices experienced double-digit growth in Q2, whether they be large, mid, small, value, blend or growth.

10 of 11 sectors in the S&P 500 were up 12% or more in Q2, with three of them up more than 30%.

International markets up 14.2% in Q2, but still down 12.6% for the year.

Bonds up 2.9% in Q1 and 6.1% through the first six months of 2020.


What will be the shape of the economic recovery?

Will it be an initial such as U, V, or W? Or might it be a symbol such as the Nike swoosh or a square root or a reverse square root? Multiple factors will be determinative:

Unemployment – how high can it get and for how long?

  • Consumer spending – when do the pocketbooks re-open?
  • Corporate profits – dependent on consumer spending.
  • State & local budgets – revenues to decline, but by how much and for how long?


Lockdowns are re-implemented due to increased virus cases, stifling any chance for economic growth. Second waves occur in areas that re-opened too soon and in areas were social distancing was not practiced and the need for masks was not deemed essential. Schools, both primary and secondary, will be forced to close after attempting to open in late summer and early fall, as do most colleges and universities.

Small businesses are not able to re-open and permanently close. Stocks may or may not test their March lows, but they may decrease by 20% to 25% from their mid-year rebound.


We adapt to this “new normal.” The new normal is multiple and ever-changing new normals. Restrictions necessitated by the virus constrains economic growth. However, an accommodative Fed and government stimulus packages allow for some growth. The government extends unemployment benefits set to expire at the end of July.

The markets remain choppy as different sectors and companies respond and while most are hurt, some temporarily and some permanently, others adapt and benefit by the then current “new normal.” A vaccine appears on the horizon, if not yet developed. New therapy treatments improve the outlook for many who suffer from the virus.


Herd immunity against COVID-19 slows the spread. A vaccine is discovered and
becomes available by the end of the year or the first half of 2021. Unemployment
numbers fall and consumer spending improves and corporate profits rebound. The
new normal becomes a memory and the old normal returns.

We believe the moderates win out, but hope for the bulls’ scenario to come to fruition,
while allowing for the possibility that the bears are right.

The Fed maintains interest rates at or near zero, allowing companies to borrow at
attractive rates to weather the economic storm. The unprecedented purchase of fixed income securities by the Fed backstops a panic in the credit markets.

We are here for you.

If you wish to discuss your portfolio or any other financial matters, please contact us. We can also discuss tax and planning opportunities like Roth conversions and refinancing debt that may be attractive now.

We can schedule a phone call or a virtual meeting via GoToMeeting that many of you have already discovered how easy it is to use. Knowing that you are still
on track to reach your goals can give you peace of mind.

Warmest regards,
Platt Wealth Management

2020 Third Quarter Review

2020 Third Quarter Review


The FANGs have driven up the technology dominated Nasdaq 24% YTD.

The Fed will now allow inflation to run above 2% to adjust for previous periods of low inflation.

The 7.9% unemployment figure is down significantly since the near 15% in April.

Home sales rose 10.5% year-to-year in August, with new home sales at a blistering 43% year-to-year.


The 3rd quarter continued a remarkable turnaround for the stock market. The S&P 500 and Nasdaq Composite indexes reached record highs in Q3, up 8.5% and 11%, respectively. The Nasdaq has now risen 45% over the past six months, its largest two-quarter gain since 2000. The Dow Jones Industrial Average trailed the other indexes but was still up a respectable 7.6% in Q3.

Year-to-date the S&P 500 is up 4.1%, and the Dow is down 2.4%. This year’s darlings, the FANGs (Facebook, Apple, Netflix, and Google), have driven the Nasdaq up 24%. Yet days after reaching its all-time high, the Nasdaq fell into correction territory dropping more than 10% in only three days.

This just meant large value did not lose as much as large growth. The Russell 1000 Value Index was down 2.6% while the Russell 1000 Growth Index fell 4.8%. For 2020 that same Growth Index was up 23% and the Value Index fell 13%. However, this chart “ Value vs. Growth Relative Valuations” suggests that Value is cheap and Growth is expensive. Graph: J.P. Morgan


The Federal Open Market Committee (FOMC) approved a change in how it sets interest rates assuring a prolonged period of low rates. The Fed will now allow inflation to run above 2% to adjust for previous periods of low inflation. The current fed funds target rate is 0.00%-0.25% and anticipated to be maintained for the rest of the year and throughout 2021.


The unemployment rate fell to 7.9% in September, down from 8.4% the previous month. Americans gained 11.4 million jobs back after losing 22 million jobs in March and April. However, recent layoffs announced by corporations, particularly in the airline industry and Disney, do not bode well for a V-shaped recovery. While the unemployment figure is down significantly since the near 15% in April, it may be understated as many people have quit looking for work and are not counted as part of the labor force.

Our Contact Information

3838 Camino del Rio North
Suite 365
San Diego, CA 92108

Consumer spending has increased, albeit from the dreadful levels of March. One bright spot is the housing market as mortgage rates are at or near all-time lows. Home sales rose 10.5% year-to-year in August, with new home sales rising at a blistering pace 43% year-to-year. Yet, the services and manufacturing PMIs suggest a slowing recovery for most other sectors of the economy.

Portfolio Investment Themes

With rates well below historical norms, we do not think it is the time to increase maturities and fixed income durations. The additional yield does not warrant the additional risk. We continue to move up the credit ladder with both individual issues and bond funds.
While we have been underweight international equities, they are becoming more attractive from both absolute and relative valuation measures, along with their relative growth prospects. The adjacent chart “Developed Markets: Relative Price-to-Earnings Ratio” depicts that international stocks are the cheapest they’ve been in the past 20 years based on the relative P/E metric. Graph: J.P. Morgan


We look forward to meeting with you and taking the time to make sure you’re on-track to achieve your goals. We also want to know if anything has changed recently that could impact your financial future. It’s always a good idea to revisit your asset allocation to make sure you are invested in a portfolio that is right for you. The right asset allocation enables you to stay the course when challenging market environments occur. Let’s also review any short-term cash needs to help maintain the discipline needed for long-term investment success.

Warmest regards,
Platt Wealth Management


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