Equity Income as Bond Alternative Given Inflation Expectations

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Equity Income as Bond Alternative Given Inflation Expectations

As we make our way through 2021, bond investors continue to face the challenge of finding income/cash flow in a world of low interest rates. While the 10yr US Treasury bond rate has had a meaningful increase to start the year from just under 1% to about 1.6%, this interest rate is still at extremely low levels compared to historical context. Bond investors have seen yields drop for close to 40 years now. The drop in yields over these 40 years has resulted in amazing returns for bond investors because as market rates fall, bond prices rise. This inverse relationship between bond prices and interest rates is known as interest rate risk and is defined as the risk a bond’s value could change due to movement in prevailing market rates, shape of the yield curve, and various other interest rate relationships. In addition to interest rate risk, bond investors also face credit default risk, which reflects the borrower’s ability to repay the loan over time. In this piece, we will focus on where to find income and the asymmetric interest rate risk bond investors face today.

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Webinar - Understanding Senator Sanders' Proposed Estate Tax Policy

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Prefer to just listen? Click below

In 2020, Presidential Candidate Joe Biden and Senator Bernie Sanders teamed up for the Biden-Sanders Unity Task Force with Recommendations for Combating the Climate Crisis and pursuing Environmental Justice. This 110-page document outlined many platform considerations, including their like-mindedness on Estate Taxes.

On Thursday, March 25th Senator Bernie Sanders officially released his proposed estate and gift tax reform legislation. This 18 page bill contains major changes to current legislation that would have serious implications for many of the families that work with Clearwater Capital.

The effective date of multiple sections of the proposed legislation is upon enactment; therefore, now is the time to consider how these changes may affect you and future generations.

April Private Client Letter

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April Private Client Letter

It has been just over a year since the equity markets hit their COVID-19 lows. On Monday March 23rd, 2020, the broad indices all hit new lows after nearly a month of indiscriminate selling as the scope of the pandemic became clear. Since then, the Dow Jones Industrial Average and the S&P 500 have both gained just about 80% and the NASDAQ 100 is up about 90%. Many large cap stocks have doubled, tripled or more from their panic-induced 2020 lows.

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Internet of Things - An Overview

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Internet of Things - An Overview

In 1997, the world had its own pandemic scare with the first human cases of the Avian Flu, The Titanic and The Lost World: Jurassic Park were both released, and the first Harry Potter book was published.I(1) Yet, the most meaningful event of the year may have come when a man named Vic Hayes created the standards for what we know today as wireless internet, or Wi-Fi.(2)

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The Beginning of the End

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The Beginning of the End

Oh what a difference a year makes. For a moment, and I know it’s scary, transport yourself back to where you were 365 days ago. The S&P 500 was down about 20% in the month of March, 2020. We had witnessed the Dow Jones fall almost 3000 points in a single day, panic and uncertainty was pretty much the only thing we had to hold on to. It was just a bit before this time when our firm released our first COVID - 19 related commentary.

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An Intro to Bitcoin

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An Intro to Bitcoin

Over the past year we have seen a pandemic, social unrest, all-time market highs, and a meteoric rise in the price of Bitcoin. In the early days of Bitcoin, few people knew about it and even fewer people discussed it. In January 2017, Bitcoin was trading under $1,000. By October of that year, the price had jumped to over $5,000 and by the end of December it was trading over $19,000. Needless to say, Bitcoin quickly grabbed the attention of retail investors and Wall Street. However, Bitcoin would soon fade away as the price dropped to $4,000 in 2018. Bitcoin had lost traction and wall street stopped talking about it.

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Outlook 2021 - The Great Acceleration

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Outlook 2021 - The Great Acceleration

We have frequently thought the word “unprecedented” has been used far too casually to describe relatively ordinary events. This said, 2020 was in the very literal sense of the word, a truly unprecedented year.

Never have governments locked down entire economies to fight a global pandemic. Never have we seen such a rapid bear market – followed by the fastest recovery on record. Never has an effective vaccine been developed in less than a year, and never has one been produced using mRNA technology. The list of astonishing “Nevers” and “Firsts” could go on.

We enter 2021 anticipating successful vaccination programs and the reopening of our economy. Accordingly, we are pleased to share with you Outlook 2021, our core economic thesis for the coming year. Here you will find our expectations, as well as an in-depth discussion of how we arrive at various conclusions.

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Robin Who? - By James Chapman

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Robin Who? - By James Chapman

With 2 days left in the first month of 2021, it seems there is no plan in sight to slow down the insane headline trend from 2020. So far this year has brought us a run on the capital, another attempt at impeachment, an inauguration, and that brings us to this week. In what some have coined “The Reddit Revolt” we have witnessed a never before seen intersection of social media and the financial markets. Seemingly every time you open your phone to look at Twitter, Instagram, even Tik Tok at this point, you cannot avoid headlines about Gamestop, AMC, and a few other individual stock names. Millions watched their screens as we saw these positions absolutely soar to levels that had even the most astute financial professionals scratching their heads. Given the inquiries we have already fielded regarding these happenings this article will seek to lay out what happened, how it happened, and what lessons it may have produced.

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What is Fintech? The trend towards mobile payments and a cashless economy.

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What is Fintech? The trend towards mobile payments and a cashless economy.

Recently, my wife and I stopped by our local Costco, which was rare for me because I had not stepped foot in a retail store in a while, particularly since the COVID-19 period began. I was surprised at what I saw.

Rather than the social distancing and other COVID-related protocols that the store had implemented, it was the check-out process that intrigued me.

Behind a protective plexiglass shield there was an attendant who used a scanning device for all steps in the checkout process - including scanning through the plexiglass our credit card which was displayed on my wife’s mobile phone.

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College Planning for High Net Worth Families

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College Planning for High Net Worth Families

College planning and high net worth families typically aren’t two topics combined in the same writing. Most families in this category plan to either pay tuition costs from current assets they have already accumulated or to simply pay it out of current cash flow. However, there may be situations where families are paying more than they need to and may be ill advised to forgo the college planning process all together. There are various strategies that all families should take for college planning regardless of the size of their balance sheet. This post will focus on 5 considerations for college planning for HNW families:

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October 2nd Special Market Update

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October 2nd Special Market Update

Just when we thought this crazy year could not possibly become more chaotic, we receive the news that the President, the First Lady, and a senior aide tested positive for COVID-19. Of course we wish the President, and the others, a speedy recovery. With the elections on 32 days off, it is nearly impossible to predict how the President's diagnosis will impact the election and the markets.

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2020 Estate Tax Considerations

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2020 Estate Tax Considerations

Is now the right time to consider estate lifetime gifts? Yes, we believe proactive estate strategy management leads us to encourage individuals to pause and consider the following.

Wealth Management includes planning for tax expense risks which arise when one considers different policy paths over the coming years. There are always known laws and unknown possibilities. This summary is not meant to predict what may or may not happen following this election season; however, it is intended to raise awareness regarding planning opportunities which should be considered.

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Outlook 2020 - Mid Year Update

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Outlook 2020 - Mid Year Update

The COVID-19 pandemic continues to dominate our lives, the economy and capital markets. Our base case for the economy and markets presented in our Outlook 2020 report, published just last January, has been wiped out by the COVID outbreak. We must now reconstruct our expectations for the balance of the year – while assessing a recovery that will likely stretch into 2021 and 2022.

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The Driven Fiduciary - Precautions for Young Traders

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The Driven Fiduciary - Precautions for Young Traders

Market displacements over the past 4 months have led to a massive boom in American trading activity. The extreme volatility, unusual amount of free time due to working from home, and availability of trading apps has led to more Americans day trading than ever before. According to popular mobile trading app Robinhood, they have added more than 3 million users year to date. More than half of these users are millennials who are opening an investment account for the first time. Everything considered, I think this is great for the world of finance that younger investors are getting involved. However, I think there are some important precautions I would like to raise to this generation of traders.

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