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The Biggest Stock Market REVERSAL in History

It is normal for the stock market (in this case defined as the S&P 500) to experience intra-year declines. To wit: From the all time highs it set early in 2020, the S&P 500’s deep 34% decline in March.

And while stating that the stock market goes up and down is not at all profound, in this context it has a lot of meaning and important context. Just how common are these intra-year declines?

Put differently:

And while there are still three weeks until we turn the page on 2020 (HOORAY!), the tremendous swing we have experienced since the above-mentioned huge losses in March to the 15.5% gain through yesterday will likely make history as the largest stock market intra-year reversal in history. Did anyone see this coming?

Most of us continue to reel from and deal with a myriad of COVID-19-related challenges, but at Towerpoint Wealth we feel the light of optimism at the end of the tunnel is getting brighter, and anticipate:

In summary, while things certainly feel and look bleak right now, there are many reasons for cautious optimism heading into next year. To quote A Wealth of Common Sense:

The stock market can look like a raging lunatic in the short-term but that doesn’t mean you have to invest like a raging lunatic as well.

…not panicking, even when stocks are down big, remains one of the best investment strategies on the planet.

What’s Happening at TPW?

Please help us welcome our new Client Service SpecialistMichelle Venezia! We feel fortunate to add Michelle to our Towerpoint Wealth family, as she brings over 30 years of wealth management industry and operations experience to TPW. Our PresidentJoseph EschlemanDirector of OperationsLori Heppner, and Director of Research and AnalyticsNathan Billigmeier, are all keenly aware of Michelle’s skills and experience, having worked side-by-side with her for a number of years at Wells Fargo Advisors.

Michelle is a huge Denver Broncos fan, and enjoys traveling and wine tasting when not spending time at home with her two “fur babies,” Sissy and Mr. Blue. Please call (916-405-9140) or email her (mvenezia@towerpointwealth.com) with any service-related questions or needs, or simply to offer her a warm TPW welcome!

Michelle’s official signing day!

Lori and Michelle, deeply involved in a training session.

Decorating the office for the holidays!

TPW Service Highlight – Cash Management Consulting

Holding cash provides safety, stability, and liquidity / immediate availability (a.k.a. “dry powder“), or in other words, peace of mind. On the other hand, in today’s ultra-low interest rate environment, holding too much cash can be extremely unproductive, as most banks and credit unions are paying next-to-nothing in interest to account holders.

Towerpoint Wealth can help you make intelligent decisions regarding holding and managing your cash balances, working to maximize the interest you are receiving, while aiming to maintain the benefit of the “emergency blanket” that cash provides. In addition to providing clients with customized due diligence on the highest yielding local and national checking, savings, and money market accounts (and CD rates), we also leverage partners such as MaxMyInterest and Reich and Tang, as well as help clients evaluate cash equivalent exchange traded fund (ETF) strategies such as PIMCO’s MINT and First Trust’s FTSM. All of these can potentially put consistent additional interest into your pocket. Reach out to us by clicking HERE to discuss your circumstances further.

Investment return and principal value will fluctuate with most cash equivalent strategies, so fund shares may be worth more or less than their original cost when sold. Past performance is no guarantee of future results, and most cash equivalent strategies are not FDIC insured.

Chart of the Week

Despite the ugly-sounding acronym, FAANG stocks (Facebook, Apple, Amazon, Netflix, Google) have earned significant attention his year – understandable, considering their performance has had a substantial influence on the overall return of the stock market in 2020.


The chart below is a microcosm of this FAANG influence – Apple’s $2.1 trillion market capitalization (a common measure of the size of a company) is more than double the size of the “market cap” of the entire energy sector!  

As always, we sincerely value our relationships and partnerships with you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely complicated place, and we are here to help you properly plan for and make sense of it.

– Joseph, Jonathan, Steve, Lori, Nathan, Matt, and Michelle

CLICK Here To Download Towerpoint Wealth PDFs
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The Great Disconnect

The U.S. econom – way down.

The U.S. stock market – way up.

Why the big disconnect?

Click below to watch our President, Joseph F. Eschleman, CIMA, discuss that while longer-term stock market returns almost always have roots in a strong economy, shorter-term market fluctuations are rarely a good gauge for the economy.

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Potholes in the Rear View Mirror, Smoother Roads Lie Ahead

Any concerns about the economic carnage seen in the rear view mirror were overshadowed again this morning by the hope and optimism of the economic recovery that is seen when looking out the front windshield.

Yesterday, we were not surprised to receive confirmation from the U.S. Department of Commerce that an economic contraction of historic proportions occurred in the second quarter of this year, as the coronavirus-induced shutdowns battered the United States economy:

Yes, the U.S. economy shrank by one third just in the second quarter alone. Here is a graphical depiction of this GDP plunge:

With a headline number this horrific, one might expect the financial markets to immediately tank, and panic to ensue, exacerbating the depth and darkness of the hole that our economy cratered into between April and June of this year. However, chaos, fear, and a huge selloff were anything but the case.


Three reasons why the economy tanked but the financial markets have recovered:

  1. We are coming out of the crater, not driving into it (front windshield, not rear view mirror)
  2. Demand for technology companies, and tech stocks, continues to explode
  3. A large economic/GDP bounce back is expected in the third quarter:

FacebookAmazonApple, and Google (Alphabet) all reported their quarterly earnings results yesterday afternoon, and all four companies beat already-high expectations. Facebook posted 11% revenue growth and issued stronger-than-expected sales guidance for the current quarter. Amazon’s sales soared, and operating income nearly doubled compared with the big drop that analysts had expected. Apple easily exceeded sales and profit estimates, and announced a 4-for-1 stock split. And Alphabet investors, while tolerating the company’s first year-over-year decline in advertising revenue, had sales from its cloud-computing segment come in well above expectations.

Through yesterday, Amazon is up 61% and Apple is up 31% for the year (and both stocks appear set for additional gains based on trading so far today), while Facebook and Alphabet have both gained 14% so far in 2020. Truly a historic run for these tech behemoths.

We believe this outperformance should not come as a huge surprise, given the work-from-home trend the pandemic has advanced, further accelerating technology’s leadership position; however, the pace, and scope, of this outperformance has certainly been noteworthy.

All is certainly not well for the U.S. economy – far from it. And while a full economic recovery is still a long way off (we do not expect an unemployment rate below 4% until at least 2023 or 2024), the economy is at least generally headed in a better direction. And, while assuming the recovery will be anything but a smooth ride, we are confident that we are driving away from the worst of it, and looking at a better road ahead.

What’s Happening at TPW?

For many people, spending time in Mother Nature has been a welcome respite during the COVID-19 lockdowns, and this has held true true for several of us here at Towerpoint Wealth.

Our Partner, Wealth Manager, Jonathan LaTurner, in the throes of enjoying a large dose of the great outdoors in Mammoth Lakes, hiking and fly fishing on the San Joaquin River with his partner, Katie McDonald.

Our Director of Tax and Financial Planning, Steve Pitchford, on an eight mile hike on the Salmon Falls Bridge / Darrington Trail in El Dorado Hills.

TPW Service Highlight

Are you eligible for a 401(k)403(b)457TSPprofit sharing plan, or an employer-funded defined benefit (pension) plan through your employer? Do you have a Roth option available within your defined contribution retirement plan? Have you qualified for a single or multiple grants of restricted stock units (RSUs) or non-qualified stock options? Do you have an employee stock purchase plan (ESPP) available to you, perhaps offering a discount on shares of your employer’s stock? Is employer-sponsored (group) life insurance and long-term care insurance part of your benefits offering?

We welcome working side-by-side with you to conduct a thorough deep-dive and audit of all of the various perks and benefits your employer offers. Analyzing, leveraging, and maximizing your employee benefits package could be one of the most impactful decisions you make in the service of your longer-term economic health, and we stand by ready to offer our counsel, expertise, and experience in this multi-faceted and oftentimes confusing area. Click HERE to find out more.

Graph of the Week

Investing in the stock market can be volatile. For this reason, we believe it is important to keep proper perspective when stocks rise or fall over shorter periods of time. History has shown that the odds of achieving a positive return are dramaticallyincreased the longer the investment time horizon.

We think First Trust’s illustration below does an excellent job of conveying this ideal.

As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely complicated place, and we are here to help you properly plan for and make sense of it.

– Nathan, Raquel, Steve, Joseph, Lori, and Jonathan

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Gotta Own FAANG For Your Portfolio to Hang?

The COVID-19 crisis has challenged and changed us all in different ways, including what we think of as essential. The conversation over what qualifies as an “essential” versus “non-essential” business has impacted many companies that produce and sell items and services considered essential for everyday use. What do you think of as essential (?) – we encourage you to reply to this email and let us know.

Traditionally defined, consumer staple stocks are broken down into five main industries: beverages, food, household goods, personal and hygiene products, and tobacco – services and items that individuals are either unwilling or unable to eliminate from their budgets even in times of financial trouble. Recently, a more contemporary definition of a consumer staple has emerged from our pandemic-altered lifestyles, and consequently, the definition of a consumer staple stock has arguably changed. Introducing, the FAANG stocks:

Facebook (social media). Amazon (e-commerce). Apple (smartphones and tech hardware). Netflix (video streaming). Google (online search and services). All five companies are known for their dominance in their respective industries and sizable customer bases. Combined, they have a market capitalization of more than $4 trillion! Additionally, as a group (below, in purple), the stocks have collectively outperformed the overall stock market (as measured by the S&P 500, below, in yellow) by a healthy margin so far in 2020: 

While many other companies have experienced major interruptions to business operations during the COVID-19 pandemic, revenue and earnings for the FAANG stocks have been excellent. Facebook doubled its first quarter profit from 2019; Amazon’s first quarter revenue in 2020 increased 26.4% from the same period a year ago; Apple increased its dividend by another 6% on April 30; Netflix now has 182.9 million subscribers, more than doubling its own projections for new paying customers in Q1 of 2020; and Google’s parent company, Alphabet, experienced year-over-year revenue growth of 13% (to $41.2 billion) in the first quarter of 2020. Clearly impressive numbers for these “essential” businesses.


Will companies like the FAANG stocks continue to dominate in the hazy and nebulous “new normal” we are all continuing to get used to, or will things revert and this outperformance be temporary? One thing is for certain – we should get used to life, as well as the financial markets, remaining unsettled and uncertain for the foreseeable future.

Pandemic Notes

  • Did you know that COVID-19 is an acronym for coronavirus disease of 2019? The name was selected by the WHO, the World Organization for Animal Health, and the Food and Agriculture Organization of the United Nations, working in cooperation. Their joint guidelines required that the name and its abbreviation be easy to pronounce, related to the disease, and not refer to a specific geographic location, a specific animal, or a specific group of people.
  • Good news heading into the weekend: While one additional coronavirus diagnosis is too many, the curve is flattening, as new COVID-19 cases in the United States have been stable for over two weeks now, according to Deutsche Bank, the World Health Organization, the CDC, and Worldometer:
  • More than 90 Sacramento restaurants are re-opening for dine-in service this weekend. To see the full list within the Sacramento Bee article, create a free account with the SacBee, or click HERE, and then cut and paste the URL into a web browser opened in “incognito mode” (a nifty little trick):


In addition to our dependence on the aforementioned technology behemoths and our desire to dine out again, a number of trending and notable events occurred over the past few weeks:

We are seeing early signs that these times of separation are beginning to pass, and opportunities to be back together in person with those we have been missing, are beginning to grow. And as always, whether in person or via a Zoom teleconference, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have – the world continues to be an extremely complicated place, and we are here for you.

– Nathan, Raquel, Steve, Joseph, Lori, and Jonathan