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Will the Beginning of Fall Cause the Market to Stall? 09.17.2021

In the Northern Hemisphere, September (the harvest month) marks the beginning of meteorological autumn, and in many countries, the beginning of the academic year.

ira required minimum distribution

In her short poem about the month of September, the Canadian author Lucy Maud Montgomery (best known for her classic children’s novel, Anne of Green Gables) offers a cheerful tribute to the ‘late delight’ of the month:

Lo! a ripe sheaf of many golden days

Gleaned by the year in autumn’s harvest ways

With here and there, blood-tinted as an ember,

Some crimson poppy of a late delight

Atoning in its splendor for the flight

Of summer blooms and joys

This is September

She could be saluting 2021’s cheerfully buoyant year-to-date stock market returns, with the S&P 500 up +20.35% as of Thursday, September 16th.

However, September has historically been a volatile month for stocks, and in the past has ranked as the least promising month of the year, on average, for the S&P 500 index over the 1928-2021 time frame:

ira required minimum distribution table 2021

Additionally, through September 1st of this year and as depicted by the chart below, the S&P 500 has reached a total of 53 (!) new record closing highs, the fifth highest figure in the past 93 years:

ira required minimum distribution table 2021 Closing Highs

The $64,000 question: Is it reasonable to expect this growth and momentum continue? Here are both sides of the story:

Positive Economic Developments

  1. Improving jobs market: After a rolling sequence of shortages in 2021 (including lumber, used cars, ocean shipping capacity, and semiconductors), labor also continues to be in short supply for many companies. This is reflected in the Bureau of Labor Statistics (BLS) report of an increase to 10.1 million job openings (!) as of the last business day in June, the highest EVER figure since job openings began to be tracked in December of 2000.
  2. “Goldilocks” labor recovery: While the labor market is improving, it does not appear to be improving at such a rapid extent that the Federal Reserve feels compelled to becomes more aggressive in reducing (or “tapering”) its current level of asset purchases (currently $120 million per month)
  3. Services and manufacturing sector expansion: On September 3rd, the Institute for Supply Management (ISM) reported its services index grew for a 15th consecutive month, registering a 61.7 in August after a hitting a record high of 64.1 in July. On September 1, the ISM reported its manufacturing index also grew for 15 consecutive months, with a very good reading of 59.9.
  4. Rising home prices: Spurred by extremely low interest rates, an increased ability to work remotely, and low inventories of homes for sale, the median sales price for single-family existing homes was higher year-over-year in 2Q, 2021 for 182 of the 183 metropolitan areas tracked by the National Association of Realtors (NAR). In fact, in 94% of those metropolitan areas, median prices rose by *more than* 10% from a year earlier!
  5. Potential for scaled back tax increases: In a September 2 Wall Street Journal op-edWest Virginia Senator Joe Manchin indicated that he would not support a social infrastructure spending bill anywhere near $3.5 trillion, thus reducing the chances that such a large package would become law and lead to significantly higher taxes
  6. Significant individual and institutional investor liquidity: The Investment Company Institute (ICI) reports that as of 9/15, total assets of retail money market funds amounted to $1.43 trillion (!), and total assets of institutional money market funds reached $3.03 trillion. This almost $4.5 trillion of CASH currently sitting on the sidelines represents significant buying power for financial assets
  7. Significant corporate liquidityAccording to Dow Jones Market Data, cash holdings among S&P 500 companies reached $1.98 trillion on August 9, a more than 30% increase from two years ago at the end of 3Q, 2019 When combined with significant available credit that remains unused, S&P estimates a total of $6.8 trillion of unused cash liquidity is available to the corporate sector as a whole. This liquidity can be used to buy back stock, increase dividends, and pursue strategic capital investments

Please bear in mind, while this is an impressive and robust list, there are also risks and concerns to worry about: Uninspiring retail sales, weakening commodity prices, slower 3rd quarter GDP growth estimates, and declining consumer confidence, to name a few.

However, at Towerpoint Wealth, we believe the most concerning potential headwind comes in the form of high stock valuations, as the S&P 500’s forward price-earnings (P/E) ratio of 21.2x is the highest it has been in two decades!

High Stock Valuations Price Earning Ratio

Although stretched valuations generally do not represent a causal trigger for a stock market correction, at elevated levels (as is presently), they nevertheless can serve investors well as a cautionary warning sign.


While we will always remain humble about our ability to consistently predict the future with accuracy, we do advise clients and friends to heed these high valuations, and to be vigilant in biasing high-quality, “all-weather” assets in their portfolios, especially in light of complacent stock market volatility readings and the long span of time without so much as a 5% market correction.

Confused? Worried? In need of discipline, direction, and/or a plan? Have questions or concerns? Click HERE to contact us for an objective, no-strings-attached conversation about you and your circumstances, as we fully support and echo Warren Buffet’s philosophy:

Warren Buffet Philosophy

What’s Happening at TPW?

Our Partner, Wealth Advisor, Jonathan LaTurner, wrapped up an amazing trip to Washington D.C. with his fiancée, Katie McDonald, stopping by 1600 Pennsylvania Avenue and also the Smithsonian’s National Museum of Natural History.

Looks like an awesome tour of our nation’s capital, Jon!

The San Francisco Giants are hot right now (!), and our Director of Tax and Financial Planning, Steve Pitchford, and his partner, Katie, took in an AMAZING extra-innings Giants ‘W’ versus the Dodgers two Fridays ago at Oracle Park! #BeatLA

Illustrations/Graphs of the Week

You cannot keep funds in a retirement account indefinitely, as the government wants their share! Required minimum distributions (RMDs) represent the minimum amount that you must withdraw from your IRA or employer-sponsored retirement plan account each year. With the exception of Roth IRAs and Roth 401(k)s, from which withdrawals occur tax-free and are not required until after the death of the owner, regular RMDs can be a “tax thorn” in the side of many investors who have accumulated wealth in any tax-deferred retirement account.

In addition to the two resources found in the news stories at the bottom of this newsletter (discussing RMDs and QCDs), the table directly below, courtesy of Michael Kitces from Kitces.com, does an excellent job of outlining the various strategies available to reduce, minimize, and delay these pesky mandatory, and taxable, retirement account withdrawals:

retirement account withdrawals

Confused? Have questions or concerns? Click HERE to contact us for an objective, no-strings-attached conversation about you and your retirement account circumstances.


Trending Today

As the 24/7 news cycle churns, twists, and turns, there have been a number of trending and notable events that have occurred over the past few weeks:

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 unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

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

Towerpoint Wealth team - Sacramento financial planner
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Sacramento’s WHITE HOT Residential Real Estate Market! 04.02.21

Recently, our President, Joseph F. Eschleman, sat down at Old Soul Co. for a cup of coffee with 33-year-veterean real estate agent Brian Kassis, of RE/MAX Gold, sharing an in-depth discussion about the current and future status of the “ridiculously hot” Sacramento real estate market. In their conversation, Brian and Joseph covered a myriad of different current topics and issues, answering the following questions:

  • How does today’s hot market compare with the hot market back in 2005/2006?
  • Why are housing inventory levels so low?
  • How can I make my offer stand out (hint – CASH)?
  • How are historically low interest rates and sub 3% mortgage rates (!) affecting this market?
  • When and potentially why might the market cool off or begin to slow down?
  • How has the pandemic changed the residential real estate landscape here in Sacramento?
  • How has the migration from the Bay Area affected demand and real estate prices here in Sacramento?
  • What parts of the greater-Sacramento area may still offer decent value for buyers?
  • What should residential real estate investors be considering, and be optimistic about, in this environment?
  • What are Section 1031 tax-free exchanges, and how have they helped support real estate prices in Sacramento?

Click HERE to contact Joseph.

Click HERE to contact Brian.

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“Will the Big Blue Wave Leave You Money to Save?”

It seems ridiculous in times like these to write a newsletter about finances and money, but we feel it is our responsibility at Towerpoint Wealth to do so, even if only to provide some respite from politics to our growing family of readers and Trending Today subscribers. We have heard from a few clients that, for a number of good reasons, you already feel like this: 

And while we understand that it has been a tumultuous week, let’s not be too quick to throw in the towel on 2021!


2020 ended with a record close for both the the S&P 500 (3,756.07, representing a +16.3% price gain for the year) and the Dow Jones Industrial Average (30,606.48, representing a +7.2% price gain for the year). So far in 2021, equity prices have continued their upward trend, even with concerns including:

  1. The economic implications of the Democratic wins in both Georgia Senate runoff elections and the tumultuous events in our nation’s capital on January 6th
  2. The likely trajectory of a resurgent third coronavirus wave
  3. Expectations of additional public health-driven economic restrictions and/or lockdowns
  4. A deflation of the currently high levels of investor optimism
  5. Growing levels of speculative activity in some quarters of the market (high volumes of options trading, a robust IPO calendar, and the popularity of cryptocurrencies)  
  6. An interval of market consolidation following such an annus mirabilis as investors have experienced over the past 12 months in the financial markets.

While recognizing the cogency and reality of these concerns, at Towerpoint Wealth we have maintained an essentially constructive view of equity prices, based upon the following factors:

  • Continuing monetary stimulus from the Federal Reserve, with ultra-low policy interest rates and $120 billion per month in “Quantitative Easing” money printing, augmented by significant growth in the M-2 money supply, which tends to produce a stimulative environment for consumer prices, GDP, and financial assets (as shown below, over the past year, the U.S. M-2 money supply has increased at +25.2%, the highest rate of growth in four decades!);

Although we believe stock valuations are elevated and investor optimism is high, equity prices were well aware of and already somewhat discounting the possibility of the outcome of the Georgia Senatorial runoff elections tilting Democratic. Additionally, after a possible short-term pullback/correction, the stock market can continue to move higher, with extra caution and care called for, and perhaps even with some cash raised that can stand ready to be invested on a disciplined basis during a market retrenchment.

Implications of the Georgia Senatorial Elections

In our opinion, assuming no defections from party lines, a Democrat-controlled Senate appears likely to produce:

  1. Higher Taxes: Tax increases may not necessarily materialize to the degree that markets may have feared earlier, given that the Senate is likely to feature essentially a 50-50 Democratic-Republican tie — with Vice President-elect Kamala Harris in a position to cast a tie-breaking vote in favor of the Democrats, and with Senator Joseph Manchin III (D, WV) and/or others possibly voting to weaken or reject the tax increases. With some delays and/or dilutions, higher corporate, payroll, income, capital gains, and estate taxes may eventually be on the horizon for many taxpayers (the proposed levies in the Democratic platform amount to $4 trillion, with something in the neighborhood of half that amount deemed likely to be passed). The essential tie in political power in Congress may limit the extent of any changes in tax policy, and an important consideration to be kept in mind is the effective date of any tax increases, including the possible likelihood of retroactivity to January 1st, 2021. 
  2. More Spending: With proposed spending increases amounting to $7 trillion stretched out over a decade, the new Administration favors entitlement expansion, healthcare, climate, and green infrastructure initiatives (to accelerate the use of clean energy in the power sector, building construction, and transit); hiking the minimum hourly wage to $15 (which could support household incomes and augment growth in consumption); housing; education; and infrastructure. President-elect Biden has several times expressed support for drug price reforms. 
  3. Increased Regulation: Through job appointments, executive action, and legislation where feasible, the Biden administration may favor increased restraints on the financial sector and some portions of the healthcare sector, with continued antitrust and market dominance scrutiny applied toward mega-cap technology and social media companies. Statements by President-elect Biden have indicated that his administration might limit pipeline approvals and curtail drilling activity on federal lands.
  4. Spotlight on Relations with the Judiciary: Although we deem such actions unlikely, President-elect Biden may possibly favor certain proposals from within his party to attempt to curtail the Supreme Court’s authority over specific laws by attempting to: (i) impose term limits; (ii) expand the size of the Court; or (iii) through legislative action, divest the Court of its authority over contentious social issues (referred to in academic circles as “jurisdiction stripping”). Any proposed limitation of the Supreme Court’s own powers will very likely spark intense and determined pushback via lawsuits by the Supreme Court as well as by battling parties on either side of the issues involved. 

“Blue Wave” Affected Sectors

Democratic control of the White House, the House of Representatives, and (even if by the narrowest of margins) the Senate (a so-called “blue wave”) could be deemed favorable to large managed-care organizations, renewable energy firms, and the ESG space (companies reflecting and/or supporting Environmental, Social, and Governance initiatives and ideals). Other perceived sectoral beneficiaries of a “blue wave” include, among others: the weakening of the U.S. dollar versus foreign currencies; tax-exempt state and local government municipal bonds; high-yield bonds, small-cap stocks; construction and engineering, manufacturing, materials, industrial machinery, and related firms focusing on the U.S. transportation, maritime, and aviation infrastructure; renewable energy (including wind farms, solar projects, and high-voltage direct current transmission facilities); healthcare equipment and supplies; and cannabis-related companies.

Sectors perceived to be less favorably affected by a slim-margin “blue wave” include: large firms that benefited from the 2017 corporate tax cuts; large-cap pharmaceutical stocks; content liability-protected social network companies (currently shielded by Section 230 of the 1996 Communications Decency Act); dominant technology antitrust targets; the oil and gas sector; tobacco companies; aerospace and defense firms; health insurance companies; student loan servicing companies, asset managers, credit rating firms, and stock exchange operators; precious metals and precious metals mining shares; and labor-intensive enterprises sensitive to minimum wage increases (e.g., retail and grocery companies, restaurant and fast food chains, for-hire ride-sharing companies, and courier and package delivery firms).

What’s Happening at TPW?

Our Director of Research and Analytics, Nathan Billigmeier, and Partner, Wealth Advisor, Jonathan LaTurner, slipped away yesterday to play a round of golf at the #1 public golf course in America, Pebble Beach Golf Links!

Our President, Joseph Eschleman, found a good (albeit chilly) lockdown activity to do with his family last week, watching The Croods: A New Age at the West Wind Drive-In in Sacramento!

TPW Service Highlight – Client Family and Culture

In addition to providing them with the economic peace of mind that comes with the suite of comprehensive wealth management services we provide, as “family members” Towerpoint Wealth clients have also come to expect us to host regular, fun, and unique client appreciation and education events, which we happily deliver on. If you aren’t currently a client, here is what you have been missing out on (!):

Chart of the Week

As mentioned above, the news yesterday of the Democrats taking control of the Senate led investors to believe that the government will boost fiscal stimulus, which would in theory boost consumption and economic growth, and in turn, inflation.

The chart below compares the relative performance of stocks that benefit from inflation (blue) vs. those that benefit from deflation (black).

Trending Today

In addition to history making and money making, a number of trending and notable events have occurred over the past few weeks:

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

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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

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A Sugar High From the Money Supply?

“There are no roller coasters that can replicate what stocks have done so far in 2020.”

– Ryan Detrick, Senior Market Strategist, LPL Financial

“Why is the market doing so well when our economy is doing so poorly?”

“How can this bounce back possibly continue?”

“Don’t you think it has come too far, too fast?”

All familiar questions we have recently heard from even the most seasoned and level-headed of Towerpoint Wealth clients, and seemingly for good reason. As of Wednesday, it had been 50 trading days since the S&P 500 hit its COVID-19 crash intraday low (2,191.86) back on March 23. Since then? The index is up almost 40%, marking the biggest 50-day move since 1952! If today’s huge advance holds, the S&P 500 will be just a stone’s throw away from reaching breakeven for 2020, and quickly reapproaching the all-time highs it hit back in February. While not necessarily an enjoyable one for many investors, it certainly has been an epic roller coaster ride.

2020 S&P Roller Coaster

As unemployment and joblessness have soared in the U.S., so has the stock market. The coronavirus pandemic and the social distancing measures implemented to contain it have adversely affected both the overall demand and overall supply of goods and services in the economy, causing output to plunge. However, the deepest recession since the Great Depression looks increasingly likely to be the shortest. While a full recovery from COVID-19 and the Great Lockdown is not expected until at least 2022, the “green shoots” of recovery have already sprouted, highlighted by today’s historic jobs report.

After losing 20.7 million jobs in April (by far the worst monthly decline on record), the Bureau of Labor Statistics yesterday morning reported that the United States unexpectedly gained 2.5 million jobs in May, the biggest jobs increase ever:

May Job Gains Largest 1 Month Increase

While one month certainly does not make a trend, yesterday’s employment report provides further evidence about how nascent this economic recovery is, and how unpredictable it is, as economists expected a loss of 8 million jobs in May. Nobody said accurately predicting the future is easy! Regardless, this is truly a blowout number, providing hope for a “V” shaped recovery, and clearly the catalyst for the Dow’s 800+ point advance yesterday.

Not convinced? Perhaps noting these additional pieces of information – evidence of economic “green shoots” – will help:

While some investors believe the market is on a “sugar high” due to the vast amounts of government stimulus ($9 trillion globallyso far) that has been doled out, we remain optimistic that the underpinnings of a more substantive – and sustainable – economic recovery are in place. And while virtually all measures of economic activity remain substantially lower than where they were last year at this time, a recovery does have to start somewhere. Additionally, investors have hoarded cash in 2020, providing an ample amount of dry powder to potentially be redeployed elsewhere (and more productively) as investor confidence increases and the recovery takes hold:

Cash Levels Remain High

While the pace of the growth of these green shoots of economic (and employment) recovery will remain a question for some time yet, at Towerpoint Wealth it seems clear to us that this recession, while unprecedented in its depth, will prove to be short-lived and temporary. And around the corner? Hopefully the foundation for a brighter future again for all of us.

What’s Happening at TPW?

A couple of familiar faces, back together!

From the left in the photo below, our Partner, Wealth Manager, Jonathan LaTurner, our Director of Research and Analytics, Nathan Billigmeier, our Director of Tax and Financial Planning, Steve Pitchford, and our President, Joseph Eschleman, all enjoyed going out to eat together for a business lunch earlier this week at Sauced BBQ and Spirits in downtown Sacramento.

While the crew was missing both our Director of Operations, Lori Heppner, and our Client Service Specialist, Raquel Jackson, who were working from home, the boys enjoyed BBQ and southern-style side dishes as the lockdown in California continues to ease.


In addition to green shoots and collard greens, a number of trending and notable events occurred over the past few weeks:

The lockdown is ending. Life will be different for the foreseeable future, but opportunities to be back together in person with those we have been missing are growing. 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 to help you make sense of it.

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

Sacramento Wealth Financial Planner Towerpoint Wealth Team