As we look ahead to the summer months, we can’t help but think what a challenging year it’s been so far. At the same time, we’re encouraged by the resiliency and accelerated innovation among US businesses and the efforts by our national, state, and local governments to support our communities. And we continue to be amazed by the unparalleled dedication and cooperation among our front-line healthcare professionals and medical researchers to see us through to the other side of this health crisis.

In a similar way, the recent strength of the financial markets appears to be looking beyond continued economic weakness. Much of the economic news has been dismal, and there may be more bad news ahead, but economic data is backward-looking. It’s important to remember that the stock market (#investing) looks forward.

Economic numbers are still negative, but they aren’t as bad as they were a month ago, and that’s usually been a prelude to things starting to get better. New claims for unemployment are still historically high, but they’ve improved eight weeks in a row, and the total number of people on the unemployment rolls has actually started to drop (US Labor Bureau). Manufacturing activity contracted in May, according to the Institute for Supply Management Purchasing Managers’ Index, but it was better than the prior month for the first time since January. And new home sales actually rose in the most recent US Census Bureau data for April, when they were widely expected to collapse.

Small businesses are anticipating better times ahead, too. In a recent survey by the National Federation of Independent Business (NFIB), small businesses expressed the most optimism about the economy improving than at any time in the last year and a half. And if they expect improvement, they’ll prepare for it—by retaining or rehiring workers, restocking inventories, and continuing to follow best practices for keeping customers safe.

Looking forward also means gauging the ongoing impact of fiscal support. In the United States, Congress is working on a new stimulus package. The European Commission recently announced an unprecedented 750 billion euro stimulus. Japan has announced additional stimulus that could bring its total pandemic response to 40% of that country’s gross domestic product (GDP). While debt levels are rising and may have to be addressed in the future, these current fiscal actions continue to play an important role in limiting any long-term economic damage from the recession.

The stock market may have gotten a little ahead of itself, and there still may be bouts of volatility, but recent gains in the S&P 500 Index are not out of character. Like us, the markets are seeing things to look forward to. Consider the recent rally as the stock market’s version of anticipating dinner out with friends, enjoying a ballgame, or planning a vacation. These may not be right around the corner, and there may be setbacks along the way, but the plans have been made.

In the meantime, stay safe, thank you for supporting your local small businesses, and please contact me with any questions.

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Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of June 3, 2020.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All index data from FactSet.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

You probably know that the U.S. national debt is exploding, but if you don’t, try looking at the U.S. debt clock ( which shows how high our national debt is every second (currently $23.2 trillion and counting).  Our federal budget deficit will exceed $1 trillion this year.  The clock says that the federal debt per individual taxpayer is $187,632—and rising.  (The clock also calculates interest paid, debt per citizen, debt per family, mortgage debt, gross domestic product and a lot of other interesting things.)

Sooner or later, our federal debt will have to be paid back—or, at least, we will have to reduce the annual deficit to more manageable numbers.  The question is: how?  A recent article looked at different options that politicians will eventually have to consider.

One is a new inheritance tax.  You probably know that the first $11.58 million of a deceased person’s wealth is now exempt from federal estate taxes, which means that very few people will pay any estate taxes at all—today.  The article says that if we moved the exemption threshold down to $2.5 million, the government would raise an estimated $34 billion more a year.  At a lower threshold of $1 million, taxes collected would go up by $92 billion.

The article considers the wealth tax, which is favored by Democratic presidential candidates Bernie Sanders and Elizabeth Warren.  The Hamilton Project has proposed four types of wealth taxes, which would tax people with wealth ranging from a low of $8.25 million to taxes that would start at a net worth of $25 million.  Each of the wealth tax options would raise approximately $300 billion a year.

Another possibility is a value-added tax—a tax levied at various levels of production for goods and services.  This, of course, is popular in most developed nations, and it causes prices to rise for consumers.  A 10% VAT would raise around $1 trillion a year—which might conceivably reduce our annual debt to $0.

A final possibility is a financial transaction tax, which would put a 0.1% fee on all trades of stocks, bonds and derivatives.  This would raise costs for investors, but it might, if implemented, raise government revenues by $60 billion a year.

The article also talks about raising corporate taxes, but the problem there is that you would have to get tax havens like Ireland and Luxembourg to go along.  Otherwise, companies would set up shop in those lower-tax countries (many have already) and avoid the higher U.S. rates.  It might be possible to raise the highest corporate tax rate from 21% (today) to 25% or 28% and not cause corporations to create offshore tax solutions.  This would raise an additional $110 billion per year, and might also boost economic growth and stimulate investment.

The point of the article is that some form of additional taxation is coming.  What the article doesn’t say is that raising today’s personal income tax rates (particularly on the higher end) will probably be the first thing our next President and Congress consider.


As you may know the SECURE Act was signed into law on December 20, 2019. This landmark piece of retirement legislation could have an impact on decisions you may want to make regarding your retirement savings strategy. click here for a one-page summary that highlights some of the key changes as well as some additional detail regarding the specific provisions. 

Please feel free to contact us at or 925-824-2880 if you would like to discuss how these changes may impact you.

Tracking #1-934057

The following article is courtesy of The Wall Street Journal

The findings from the field of behavioral economics apply to everyone. Especially you.

By Jason Zweig

As much as all of us investors wish we were perfectly logical calculating machines, we are human: emotional, distractible, impatient, inconsistent. Behavioral economics is the study of how real human beings—not the walking, talking spreadsheets that traditional economists pretend we are—make financial decisions. Unfortunately, it’s all too easy to persuade yourself that the findings of behavioral economics apply to everyone else but you. After more than 20 years of studying research in that field, here’s how I think most investors interpret it. How many of these sound like you? I know many of them sound like me.

  • Behavioral economics teaches that people are overconfident: They believe they know more than they do, or they assume their knowledge is more precise than it is.

I’m 100% certain that’s true for everybody else, but there’s no way that applies to me.

  • Behavioral economists say that confirmation bias leads most people to seek out evidence supporting what they already believe or to ignore data that might disprove their beliefs.

That’s so ridiculous I’m not even going to waste my time refuting it.

  • Behavioral economics says investors are myopic: Short-term losses or costs can blind them to the pursuit of longer-term rewards.

I could explain all that to you, but I gotta run.

  • Behavioral economists say you should inform your decisions with the base rate, or the best available historical evidence of how likely an outcome is.

Why would I do that when my gut feelings give me the right answer, like, pretty much almost all the time?

  • Extensive research documents unconscious biases, or factors that shape our behavior below the level of awareness.

Are you kidding me? I’m not aware a single decision of mine that could possibly have been affected by unconscious bias.

  • Most people tend to be unrealistically optimistic, overestimating how likely they are to have good fortune and underestimating how many bad things will happen to them.

Ha! Just you wait until Facebook buys my great new scratch-n-sniff app for $10 billion!

  • The disposition effectleads investors to sell their winning stocks too soon and hold onto their money-losing positions too long.

Well, I sure don’t suffer from that. I don’t have any losers!

  • The sunk-cost fallacyleads many people to keep trying to justify a past decision even after it’s become obvious that it was a mistake.

That’s nonsense, and I’ll prove it to you after I finish checking the price on this stock I bought five years ago. [Pause.] I’ve only lost 85%, so I’ll be back to break-even in no time.

  • Research in dozens of countries around the world shows that investors almost everywhere keep most of their stock portfolios in shares of local companies instead of spreading their bets worldwide. This “home bias” leaves them underexposed to the benefits of global diversification.

I’m not surprised people in backward countries would do something dumb like that. I’ve got at least 10% of my assets outside the U.S.!

  • Research shows that many people are prone to “status-quo bias” or investing inertia, preferring to leave their current portfolio in place even when they might be better off switching to other choices.

But all my investments are already perfect. Why would I want to change?

Well, sure, but haven’t these scientists ever noticed somebody wins Powerball almost every week? The jackpot’s up to $459 million, so excuse me while I go buy 25 tickets.

  • Many people exhibit what’s called the bias blind spot, or the tendency to see clearly that other people’s behavior isn’t optimal while remaining oblivious to our own shortcomings.

The more I think about it, the more I can see how that might apply to people like you.

  • Experiments in behavioral economics show that most people are prone to anchoring. People who compare prices to the last digits of their Social Security number, for instance, are willing to pay more for something if their final digits are high.

People are so irrational! Hey, can you believe this guy on CNBC? He just said Apple stock’s going to $300 a share. There’s no way it’s worth more than, like, $285.

Without even thinking about it, I can come up with three people who would never do that: me, myself and I.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Past performance is no guarantee of future results. Global investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

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The most meaningful measure of how well we’re serving our clients is whether we exceed their expectations in delivering the value and commitment they need to pursue their life and financial goals.

That’s why I wanted to share with you the news that LPL and its affiliated advisors, including Cornerstone Wealth Management, were recently ranked No. 1 in customer loyalty among 21 leading financial distributor firms. It means a great deal for us to be part of a network that’s a recognized industry leader in providing quality personal service—and it’s an even greater honor that LPL has risen in these rankings in each of the past three years.

The rankings were among the findings in Investor Brand BuilderTM, a Cogent ReportsTM study released by Market Strategies International, in which 4,408 affluent investors nationwide were surveyed.*

The study explored the key aspects of client experience that drive investor loyalty. On each of the top 5 drivers of investor loyalty, LPL earned No. 1 rankings by exceeding client expectations in the following areas:

  • Quality of investment advice
  • Financial stability
  • Easy to do business with
  • Range of investment products and services
  • Retirement planning services

In addition, LPL ranked No. 1 in the likelihood of its investors recommending the firm and its advisors to their friends, families, and colleagues.

As an advisors affiliated with LPL Financial, I we are proud of this recognition by investors of the value of the objective financial advice we offer to help clients pursue their goals, and of the innovative products and services our affiliation with LPL allows us to provide access to.

I appreciate the opportunity to partner with you, and I look forward to our continued work together. Thank you for your business.

This letter was prepared by LPL Financial LLC. This is not a recommendation to purchase, or an endorsement of, LPL Financial stock. LPL Financial and Cogent are unaffiliated entities.

*Market Strategies International, Cogent Wealth Reports, “Investor Brand Builder™: Maximize Purchase Intent Among Investors and Expand Client Relationships,” November 2017.

ABOUT THE REPORT: Market Strategies International’s Cogent Wealth Reports: Investor Brand Builder™ provides a holistic view of key trends affecting the affluent investor marketplace. The November 2017 report is based on a web survey of over 4,000 affluent investors, who hold $100,000 or more in investable assets. A total of n=82 LPL advisor clients were represented in the study. Customer Loyalty is based on how likely the participant would recommend each of their investment account companies to friends, family, or colleagues. Participants also evaluate their investment account companies using a 5-point rating scale across 10 aspects of client experience.