The Dow Right Now the Dow history
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Time to Disavow the Dow Right Now? 01.14.2022

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The oldest and still most widely quoted proxy for the U.S. stock market, the Dow Jones Industrial Average (DJIA), or “the Dow” for short, continues to be regularly quoted by news broadcasts, newspapers, and smartphone apps as an indicator of the health (or lack thereof) of the financial markets and U.S. economy.

Newspaper Stand

The Dow history is interesting, as it was created in the late 19th century by Charles Dow, co-founder of Dow Jones & Company and co-founder and editor of the Wall Street Journal (WSJ), and Edward Jones, the WSJ’s other co-founder. It is an index that has gone through 57 different revisions since it was created, and to this day is supposed to encapsulate the overall state of the stock market in a single number.

The composition of the Dow right now is determined by the Index Committee, and is designed to change as the economy changes over time. Initially comprised of 12 of the biggest and most influential companies of the day, the Dow history includes an expansion to 20 companies in 1916; by 1928, it included 30 companies, which continues to be the number tracked today. Any current member of the Dow can be dropped by the Committee if the company is deemed to be less relevant to current economic trends, to be replaced by a new company that the Committee determines to better reflect said trends. The 30 companies that currently comprise the DJIA index, and the year they were added, are as follows:

Dow Jones Industrial Average
Dow Jones Industrial Average

As the U.S. economy has grown over time, so has the value of the Dow. Below is a graph from FRED (Federal Reserve Economic Data) reflecting how the DJIA has almost tripledover just the past ten years, growing from 12,741.02 on 1/12/2012, to 36,252.02 on 1/11/2022:

TPW FRED Graph

Ten years of data not enough for you? Below is a logarithmic chart from Macrotrendsreflecting the Dow history and growth over the past 100 years (the grey bands reflect recessions in the U.S.):

TPW DOW History Graph

Albeit with regular speed-bumps along the way, the continued and sustained growth of the Dow has been pretty amazing!

Interested in learning more? Click the thumbnail below for a straightforward YouTube video from PBS that discusses everything to do with the Dow right now:

The Dow Right Now

However, for all of its “glory” and history as the best-known and perhaps most widely followed stock market index in the world, is the Dow right now really all it’s cracked up to be? At Towerpoint Wealth, we argue the answer is no, as the index is as flawed today as when it was first calculated on May 26, 1896. The various “warts” of the Dow give us pause, and cause us to discourage our clients from considering it a truly useful proxy and viable resource to rely on.

Here are four specific reasons why we disavow the Dow right now:

1. It is narrow – “only” 30 companies are represented in the index.

Because (in theory) the 30 companies that comprise the Dow Jones Industrial Average (DJIA) index are the largest and most influential in the country, they represent only about 25% of the value of the entire U.S. stock market. However, many experts (ourselves included) feel that because it consists of only 30 large capitalization (“large cap”) U.S. companies, and neglects mid cap and small cap companies, the DJIA index does not properly represent the comprehensive state of the U.S. economy.

2. The Dow is a price-weighted index

An index that is price-weighted means that higher-priced stocks have greater weight and influence on the index compared to lower-priced stocks. On the surface this may seem logical, but the problem is that a higher-priced stock has zero correlation with a higher-value company. Put differently, a $9 stock could have a higher value than a $50 stock, but because the Dow is price-weighted, that doesn’t matter.

In a price-weighted index, a stock that increases from $90 to $100 (an 11% increase) will have the same effect on the value of the overall index as a stock that increases from $10 to $20 (a 100% increase), even though the percentage move for the lower priced stock is far greater than that of the higher-priced stock.

Put differently, a percentage change up or down in the Dow doesn’t necessarily mean that the entire market has gone up or down, or even that the Dow’s 30 companies have collectively gone up or down. The higher-priced stocks contained in the index simply exert a much greater influence on its overall direction and movement.

A prime example of why the price-weighted indexing method doesn’t make logical sense is when an index component undergoes a stock split. Prior to splitting 4-for-1 in August of 2020, Apple was the highest weighted position in the Dow at 11%, but once its stock split, it immediately had much less influence on the Dow, as it dropped to the 18th highest weighted stock in the index. While a stock split obviously does not have any influence nor change the underlying value of a company (it just lowers the share price and increases the amount of shares outstanding), it does change the influence a company has within the price-weighted index it is part of.

3. The Index Committee has only five members, and uses a vague methodology for including a stock in the Dow

Discretion is an integral part of how indices are constituted, and the Dow is certainly no exception. Unlike the S&P 500, which has a long list of eligibility requirements that some big companies can’t meet, the Dow does not have hard-and-fast rules regarding how a stock gains entry to the index. It is not governed by quantitative rules, with S&P Global subjectively stating that “A stock is typically added only if the company has an excellent reputation, demonstrates sustained growth and is of interest to a large number of investors.”

Additionally, on the Dow’s Committee there are only two representatives from the Wall Street Journal and three from S&P Global. Given the cozy size of the Committee, the subjective nature of how the index is constructed, and the sheer size and financial importance of the Dow, any decisions to include or remove companies from the index impact trillions of dollars of investor funds, not to mention the potential retention of institutional investor clients by S&P Global. This can create conflicts of interest, or even opportunities for illegal activity and fraud. Don’t believe us? In September of 2020, James Yang, a member of the Index Committee, was charged with being part of an insider trading scheme leading to more than $900,000 in profits.

4. The Dow right now does not contain some of the largest and most dominant companies in the U.S. economy

Even though they represent well what has become the most dominant sector of the U.S. economy, three of the largest and most influential technology “titans” – Alphabet (formerly Google), Amazon, and Meta Platforms (formerly Facebook), are not part of the Dow. Why? See #2 above – their share prices are too high. While there is nothing fundamentally wrong with these companies, because of the Dow’s price weightings, they won’t be included in the index because they would swamp it due to their high share prices.

The only way the Dow would ever be able to accommodate any of these three stocks is if they went through a stock split, which makes zero sense, as does excluding companies from the Dow who clearly are excellent representatives of the overall United States economy just because their stock prices are too high.

The Dow has been around for 125 years, is not going anywhere, and continues to clearly be in the mind’s eye of investors. However, the four reasons listed above support our belief that it does not accurately represent the market, and just because the Dow right now is an old, familiar, and oft-quoted figure does not make it accurate, and it should not be used as a proxy for investors to gauge the health of our economy or to measure the progress (or lack thereof) of the stock market.

What’s Happening at TPW?

A big thank you and shout-out to two excellent Towerpoint Wealth clients, David Junod and Pauline Lhote, for the very generous and thoughtful sparkling wine holiday gift fromDomaine Chandon!

Now we just have to find an excuse to actually pop a bottle or two and enjoy, rather than just pretending! Cheers!

Team Photo with Chandon

Just last week, our President, Joseph Eschleman, CIMA®, earned his Certificate in Blockchain and Digital Assets (CBDA) from the Digital Assets Council of Financial Professionals.

The CBDA course is the only cryptocurrency certificate program designed specifically for financial professionals. Graduates of the program have gained the essential knowledge and understanding of blockchain and digital assets, better equipping them to provide investors the expertise and advice they need about this new and transformational asset class.

Click HERE to review exactly what Joe learned, and HERE to discuss with us how your portfolio might benefit by adding digital assets and cryptocurrency to it.

President, Joseph Eschleman, earned his Certificate in Blockchain and Digital Assets from the Digital Assets Council of Financial Professionals.
DACFP

TPW Taxes – 2022

2022 will assuredly be a different year than 2021, with income taxes no exception. Click the image below to access the 2022 Quick Tax Reference Guide, a practical resource providing a plethora of consolidated and easy-to-understand information to help you make sense of the complex and ever-evolving array of U.S. federal tax rules.

At Towerpoint Wealth, we recognize that income taxes are a “necessary evil” when helping you build and protect your wealth and net worth, but fortunately they can be planned for, managed, and oftentimes minimized!

Click HERE to read more about our “tax sensitivity” and philosophy towards reducing your obligation to Uncle Sam.

2022 Quick Tax Reference Guide

TPW News You Can Use

Useful and interesting content we read the past two weeks:

  1. Desperate No-Vaxxers Paying COVID-Positive People $150 for Dinner and COVID Infection – The Daily Beast – 1.12.2022

    A new vaccination mandate in Italy requires everyone over 50 to be vaccinated or pay a hefty fine. Some are opting to pay to get infected with COVID instead.
  2. The 2022 NFL Playoffs – Everything You Need to Know – com – 1.9.2022

    AFC, NFC, and Super Bowl 2022 schedule. Seedings. TV times, dates, locations. Find everything you need to know about the NFL playoffs here.
  3. Hillary 2024? Don’t Rule It Out – The New York Post – 1.12.2022

    Could a third time be the charm for Hillary Clinton? That’s the case made by two prominent Democrats who claim a “perfect storm” of President Biden’s plummeting job approval ratings, Vice President Kamala Harris’ own unpopularity, and the commander-in-chief’s advanced age could provide an opening for the former first lady and secretary of state.

Chart/ Infographic of the Week

After a 26.9% gain for the S&P 500 in 2021, many investors are hopeful that 2022 is another strong year for the markets. And while consistently and accurately predicting the future is next to impossible, the chart below from Morningstar gives hope to what the future may have in store for the market this year:

SP500 Chart

Quote of the Week

Staying positive and keeping a good attitude is key!

2022 Positivity Quote

Trending Today

As the 24/7 news cycle churns, twists, and turns, a number of trending and notable events 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.

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

Towerpoint Wealth Sacramento Independent Financial Advisor

We enjoy social media, and are actively growing our online community!

Follow us on any of these platforms, message us there and let us know your favorite charity. We will happily donate $10 to it!

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President Joseph Eschleman Earns New Digital Assets Credential
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President Joseph Eschleman Earns New Digital Assets Credential 1.7.2022

Earlier this week, our President, Joseph Eschleman, earned his Certificate in Blockchain and Digital Assets from the Digital Assets Council of Financial Professionals.

President, Joseph Eschleman, earned his Certificate in Blockchain and Digital Assets from the Digital Assets Council of Financial Professionals.

The Certificate in Blockchain and Digital Assets course is the only certificate program designed for financial professionals. Graduates of the program gain the essential knowledge and understanding of blockchain and digital assets, better equipping them to provide investors the expertise and advice they need about this new and transformational asset class.

Click HERE to see what Joe learned.

Trending Today The Better Build Back Better Bill Tax Changes
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Will You Pay More or Less? The Build Back Better Bill Tax Changes! 12.17.2021

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The Build Back Better Bill tax changes – do you stand to pay MORE, or less?

''Everybody has a plan until they get punched in the face.''

Will the Build Back Better bill tax changes translate to an unexpected de-facto holiday bonus, or instead, an unwelcome lump of coal? Read on to find out more!

While Build Back Better is a good marketing slogan, it is obviously important to unpack and better understand what this 2,135 page (click HERE to read the whole thing!), $1.75 trillion piece of spending and legislation might mean for YOU. What exactly are the key provisions of this signature bill, and importantly, will the proposed Build Back Better Bill tax changes cause you to pay MORE or LESS to Uncle Sam if the proposed legislation passes?

Days versus Decades. Decide which to focus on...

Let’s briefly “unpack” the Build Back Better Act, discuss which provisions are NOW being negotiated in the Senate, and importantly, evaluate the potential Build Back Better bill tax changes, and the tax consequences of what a final package might look like.

First, a brief background. The Build Back Better Act is the third and most economically significant part of President Biden’s Build Back Better Plan. Originally an immense $3.5 trillion social spending package, lawmakers in the House of Representatives have scrambled and negotiated over the past six months, finally ending up here – approving and sending to the Senate a “slimmed-down” (but hardly modest) $1.75 trillion (!) version of the plan. Now, the REAL debate and negotiations begin.

With two noteworthy holdouts…

Stick to your investment strategy - Do not turn temporary declines into permanent losses.

…Senate Democrats are mostly united in passing this major legislation, but haven’t yet been able to agree on what should be kept and what should be scrapped to obtain the two needed votes from the aforementioned holdouts. On the flip side, and unsurprisingly in today’s partisan political atmosphere, all 50 Senate Republicans are aligned against it.

Now, regardless of whether you are a Democrat or a Republican, and regardless of whether you agree or disagree with the need to pass this IMMENSE bill, at Towerpoint Wealth we believe that it is a when, and not an if, some version of this legislation ultimately DOES pass and become law, even if it isn’t until 2022. And while the final terms are obviously still unclear, the bill is proposing to make MAJOR changes to four main areas:

1. Social services and programs
2. Clean energy
3. Immigration
4. Build Back Better bill tax changes

And as Joe Manchin, Senator from West Virginia and one of the two Democratic holdouts who is squarely in the middle of this debate, said earlier about the bill, “We should be very careful what we do. We get any of these wrong, we’re in trouble.”

If you are interested in a deeper breakdown of the first three areas (as well as Build Back Better tax changes highlighted below), we encourage you to click the thumbnail below and watch our newly-produced educational video:

Today’s Trending Today is specifically focused on the proposed Build Back Better bill tax changes, which would raise a SIGNIFICANT amount of tax revenue from the very wealthy and corporations, and also offer a proposed tax cut for those who live in high income and mostly blue tax states.

The Congressional Budget Office (CBO) estimates the bill will cost a total of almost $1.7 trillion, and add $367 billion to the federal deficit over 10 years. Adding in $207 billion of revenue that is estimated to result from increased tax enforcement in the bill, and the net total increase to the deficit is projected to be $160 billion.

Originally, President Biden’s initial Build Back Better plan was to raise taxes on families earning more than $400,000/year, which would have overturned the Tax Cuts and Jobs Act passed in 2017. However, this provision was dropped in the final version of the bill passed by the House of Representatives on November 19, as holdout Democratic Senator Kyrsten Sinema of Arizonabalked at it, saying she wouldn’t accept any additional higher tax rates: not for individuals, not for capital gains, and not for corporations.

Instead, a significant and updated House-passed Build Back Better bill tax change imposes surtaxes on taxpayers with extremely high incomes. When would this surtax kick in? When adjusted gross income eclipses $10 million, a 5% surtax on income would be applied. Additionally, taxpayers would be subject to an additional 3% surtax on any income over $25 million. Clearly these proposed Build Back Better bill tax changes would only be punitive to very high income earners.

Something else to keep in mind – the new surtaxes applicable to the $10 million and $25 million adjusted gross income thresholds INCLUDES capital gains taxes. So, if you have owned highly appreciated securities (think Apple or Tesla or Amazon stock) for a long time, and then sell your shares and realize a large capital gain, that income is also included when calculating whether or not you would be subject to them.

Additionally, another major Build Back Better bill tax change would be to INCREASE the state and local income tax deduction, commonly known as the SALT deduction.

The SALT deduction is a tax deduction that allows taxpayers of high-tax states to deduct local tax payments on their federal tax returns. Before 2017, there was no limitation on the SALT deduction. However, under the Trump administration’s Tax Cuts and Jobs Act, the SALT deduction was CAPPED at $10,000. The Build Back Better bill tax change to SALT proposes a new INCREASED deduction limit of $80,000, benefitting wealthier residents of high-tax blue states like California, New Jersey, and New York.

This change would cost the government $229 billion in revenue, and was not part of Biden’s original BBB plan – it was added later in the House negotiations.

Backdoor Roth IRA conversions, a popular technique oftentimes used to fund a tax-free Roth IRA without being subject to the Roth IRA income limitations, would also be eliminated as another Build Back Better bill tax change.

And lastly, income recognized on cryptocurrency transactions would be subject to 1099 reporting by crypto brokers and custodians.

Here is a visual summary of the Build Back Better bill tax changes:

Head spinning yet? Obviously the myriad of proposed Build Back Better bill tax changes is a lot to keep track of. However, at Towerpoint Wealth, that is exactly what we continue to do on a regular basis.

Considered by some to be the most consequential economic legislation in the past 50 years, negotiations on the Build Back Better bill are far from over. And any tweaks to this massive legislation will then require another vote in the House. However, regardless of how and when this situation plays itself out, we feel it is safe to say that YOU WILL feel the effects of at least one component of the proposed Build Back Better bill tax changes, and encourage you to contact us (click HERE to do so) to have an objective conversation about how you will be positively or negatively affected by the tax changes you will personally see from this bill.

What’s Happening at TPW?

A huge thank you to Ascent Builders for the AMAZING holiday wreath, and perhaps an even better gift, the personal delivery from their esteemed controller, Patty McElwain (holding the wreath and standing next to our phenomenal Client Service Specialist, Michelle Venezia)!

Spreading cheer is an Ascent Builders specialty, and they are a firm we feel very fortunate to have such a long and productive partnership with.

Our President, Joseph Eschleman, spent some time earlier this month celebrating Christmas (yes, that is a Griswold Family Christmas t-shirt he is wearing!) with close Towerpoint Wealth friend and business partner, Niki Dawson. Niki is the President of TaylorMade Web Creations, and she is absolutely amazing if you have any web design and/or digital marketing needs!

Graph of the Week

Tesla’s market value is now more than General Motors, Ford, Volkswagen, and Mercedes-Benz, COMBINED!

The below chart indicates that electric vehicle sales will exceed gas-powered vehicles by 2040 – do you agree? Disagree? Click HERE and message us – let us know your opinion!

Cartoon of the Week

We came across this gem that provides a different and unique “take” capturing the essence of what perseverance means, and felt compelled to share!

Illustration of the Week

Surprisingly, in the wealth management industry, there are two different standards of care for clients:

  1. The fiduciary standard – a legal obligation requiring a financial advisor to act solely in a client’s best interest, 100% of the time, when offering personalized financial advice, counsel, and planning
  2. The suitability standard – a much lower legal hurdle to clear than fiduciary, not obligating a financial advisor to put their client’s best interests first, and instead only requires a reasonable belief that a recommendation is “suitable” for a client

While we believe that consumers and clients are harmed with the absence of a uniform fiduciary standard that applies to ALL financial professionals, this is the world we live in. A non-fiduciary is legally allowed to sell you a product or investment that pays the highest commission, as long as it is considered suitable.

Click HERE for a full list of the major Wall Street firms and banks. If you have an advisor who works for any of these firms, he or she is NOT a fiduciary to you. Conversely, if you are working with an advisor at a fully-independent, SEC-regulated investment advisory firm (such asTowerpoint Wealth), he or she IS a fiduciary to you!

Put differently…

Trending Today

As the 24/7 news cycle churns, twists, and turns, a number of trending and notable events 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.

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

We love social media, and are always actively growing our social media community!

Follow us on any of these platforms you use, and then message us with your favorite charity, and we will happily donate $10 to it!

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Retirement Savings Secure Act 2.0
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NEW Rules to Ensure That Your Retirement is SECURE? 07.09.2021

Here we go! “How much do I need to retire? How much in retirement savings should I have?” – two questions virtually all of us have asked ourselves as our non-working, non-earning years draw closer.

If (or perhaps we should say WHEN) the Secure Act 2.0 becomes law, many pre-retirees will have a myriad of additional new options and opportunities to save and invest for retirement, and to build and protect their net worth. And while there is no such thing as a “sure thing” in Washington D.C., the Securing a Strong Retirement Act of 2021 has bipartisan support, and was approved unanimously by the House Ways and Means Committee just over two months ago.

What is changing, and what kind of new net worth building and retirement saving options and opportunities will be available? Click the link below to watch an engaging six-minute educational video that we just recently published, featuring our President, Joseph Eschleman, *jam-packed* with information highlighting six MAJOR ways your retirement savings plan may change (for the better!) if the Secure Act 2.0 becomes law:

Click HERE to watch Joe’s video.

Build Wealth Joseph Eschleman Secure Act 2.0 You Tube Retirement Savings

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Towerpoint Wealth on YouTube!

“How much savings do I need for retirement?” is a question we look forward to helping clients, colleagues, and friends (i.e., YOU) succinctly and tangibly answer. We specialize in retirement income planning, and – understanding how unique everyone’s personal and financial circumstances are – we encourage you to click HERE to contact us and begin a no-strings-attached dialogue about how to answer this important question for yourself.

Shifting gears, the June 23 cryptocurrency/Bitcoin webinar we hosted along with our partners at Eaglebrook Advisors was extremely well-received. Please click on the story tile below to read Eaglebrook’s latest white paper, Bitcoin’s Role in Model Portfolios, and if you missed our 6/23 webinar…Click HERE to watch the replay!

Bitcoins Role in Model Portfolios

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Towerpoint Wealth on YouTube!

What’s Happening at TPW?

Our President, Joseph Eschleman, and Director of Tax and Financial Planning, Steve Pitchford, couldn’t be happier being vaccinated and getting back out to spend IN PERSON face-to-face time with a number of important Towerpoint Wealth clients and colleagues!

Joseph and Steve Shaffer in downtown Davis, CA

johnny and dorace lynch joe Towerpoint Wealth Sacramento Wealth Management

 Joseph, Dorace Lynch, and Johnny Lynch in Vacaville, CA

bill kendall and nancy kendall meeting with steve and joe retirement savings


Joseph, Nancy Kendall, Bill Kendall, and Steve in Elk Grove, CA

Cartoon of the Week

As the cartoon below illustrates, inflation is not always immediately visible, and not always “feelable” (although if you have purchased a tank of gas, a new home, or a new or used car lately, your wallet has certainly felt it!) and its insidious nature can be quite problematic when investing to grow your net worth. Trying to answer the question “How much do I need to retire?” cannot be done without considering the impact that inflation will have on the cost of your future retirement lifestyle.

inflation and summer of recovery

At Towerpoint Wealth, we feel that avoiding risk when investing (i.e. prioritizing that your nest egg and retirement funds do not fluctuate up and down in value) by focusing on owning CDs, money market funds, and cash “safely” in the bank, is akin to letting inflation peck away and erode your net worth. We believe that “risk,” in and of itself, is not a bad thing – it is one of the few variables we have direct controlover. The binary question of “if” risk should be taken is inappropriate in our opinion – instead, we believe that evaluating, measuring, and justifying exactly howmuch and/or what level of risk should be taken is the more important consideration.

Highlighted by the deterioration in value (in REAL dollars) that “safe” investments can and oftentimes do experience due to inflation (and income taxes), it is important to understand that both “safety” and “risk” are relative terms, and to think critically about both concepts when developing, implementing, and managing a customized financial, investment, and retirement plan and strategy.

first class mail Stamp cost

In addition to new legislation and inflation gyration, a number of trending and notable events 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.

Click here to Download

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

Towerpoint Wealth Sacramento Independent Financial Advisor
Time to Tiptoe Towards That Crypto Is Crytrocurrency The Future Towerpoint Wealth Trending Today
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Time to Tiptoe Towards That Crypto? 06.18.2021

Whether you are skeptical, cautious, and apathetic, OR enraptured, excited and intrigued by it, crypto has exploded in global popularity over just the past year, and has, to one degree or another, captured the attention of most of the civilized world.

Bitcoin was released as the first decentralized cryptocurrency in 2009, and nine years later, in 2018, the Merriam-Webster Dictionary approved “cryptocurrency” as an official word. While many (ourselves here at Towerpoint Wealth included) believe that crypto is here to stay, there are still plenty of “no-coiners” who feel otherwise:

Many Westerners find it difficult to understand how a 12-year-old digital currency could be safer to hold than the US dollar, which has long been recognized as the reserve currency of the world. However, once you understand that the Federal Reserve, America’s central bank, has inflated the money supply to achieve its macroeconomic goals, it becomes a bit clearer. Note the “infamous” comment made by Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, in a March 22, 2020 interview on CBS’ 60 Minutes:

Do we have your attention now?

Rather than opine on the intrinsic details and inner-workings of crypto, it is important for most investors to note three main takeaways:

  1. Cryptocurrency is a digital, or virtual, asset. Many cryptocurrencies are decentralized and aspire to be a form of money and a medium of exchange
  2. Unlike fiat currencies, most cryptocurrencies operate without government oversight or intervention
  3. Most cryptocurrencies are managed by a large group of network participants, and are secured by advanced cryptography. Explaining the Crypto in Cryptocurrency does an excellent job of explaining cryptography further

Concurrently, the shift to embrace crypto as an investment vehicle is certainly on the rise. According to the Financial Planning Association’s 2021 Trends in Investing Survey, conducted by the Journal of Financial Planning:

  • More than a quarter (26%, to be exact) of financial advisors plan to increase their use or recommendation of cryptocurrencies over the next 12 months
  • Almost half (49%, to be exact) of advisors indicated that clients had asked them about investing in cryptocurrencies over the past six months

Do these two facts alone make crypto “good” or “appropriate” for integration into one’s investment portfolio? Certainly not, but it does speak to the inflection (some may say tipping) point where we find ourselves. El Salvador is pushing to become the first country to adopt bitcoin as legal tender. This feels more like a movement than a trend.

As a brief crypto aside/FYI, the term HODL (hold on for dear life) was coined (yes, pun intended) by a user in an internet bitcoin forum who misspelled “hold,” and now refers to a devout buy-and-hold crypto philosophy. Now you know!

Perhaps next month, Trending Today (TT) should pivot from cryptocurrency and cover NFTs (non-fungible tokens)? Is your head spinning and ready to explode yet? While we are joking about NFTs being the next TT topic, we cite them in light of our dialogue above about cryptocurrency, as NFTs are just another specific example of how quickly our world (both inside and outside the world of finance and investing) is changing. Are these immature assets with room for development? We would argue yes. However, we also argue for (read: encourage) you to be careful about dismissing new technologies too quickly, and to be scrutinous yet open-minded about the speed at which our society is evolving.

Aside #2: If you have three minutes, click HERE to watch an extremely funny (and surprisingly educational) Saturday Night Live skit about NFTs.

Crypto – Join Us for Our Cryptocurrency Webinar!

Bitcoin and Ethereum are two of the most popular of the more than 4,000 different cryptocurrencies in existence as of January 2021. Crypto has exploded in popularity over the past year, and has emerged not only as a new asset class, but also as an alternative store of value – some call it “digital gold.”

Click below to RSVP for this 45-minute educational Zoom webinar, in which Christopher King, CEO and Founder of Eaglebrook Advisors, will discuss the question: “Bitcoin – what is it?” as well as how cryptocurrencies and digital currencies can play an important complementary role within a properly diversified investment portfolio.
Wednesday, June 23
12:00PM – 12:45PM PST
Click HERE to RSVP

For every participating attendee, we will make a $10 donation to the Leukemia and Lymphoma Society – please invite a friend, colleague, or family member to also RSVP with this link!

What’s Happening at TPW?

As a work family, part of the Towerpoint Wealth culture is to regularly volunteer and find opportunities to give back to our community. Earlier this week, in conjunction with the Cathedral of the Blessed Sacrament and with the help of Marilynn Fairgood, the Cathedral’s Brown Bag Lunch program coordinator, we had an opportunity to assemble, and then distribute, sack lunches and other supplies to assist Sacramento’s homeless community.

Unquestionably this was a fulfilling experience for everyone involved, as the sincere gratitude and appreciation we received was both heartwarming and priceless.

Click HERE for an excellent article from KHOU-11 for additional information on how to help and volunteer for the Brown Bag Lunch program.

Chart of the Week – Crypto, Bitcoin

In our opinion, the most effective way to reduce and manage the risk of a properly diversified portfolio is to own various assets and investments with low correlations to each other. Understanding that no one can accurately predict the future performance of any investment, owning low (or even negatively) correlated assets can help mitigate damage during any particular market cycle.

Below is a simple chart (specifically, the darker blue dotted rectangle) that delineates the correlation between Bitcoin and the S&P 500 – at 0.19, this is an attractively low correlation. Put differently, Bitcoin oftentimes zigs when the stock market zags.

In addition to technology’s permeation into finance, a number of trending and notable events 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.

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

Towerpoint Wealth Sacramento Independent Financial Advisor
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What is Cryptocurrency? Why would you want to own it?
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What is Cryptocurrency? Why would you want to own it? 06.07.2021

Educational Webinar Event

Date of Event: June 23, 12:00 – 12:45 PM PST

Featured Speaker:  Christopher King, CEO and Founder, Eaglebrook Advisors

Bitcoin and Ethereum are two of the most popular of the more than 4,000 different cryptocurrencies in existence as of January 2021. “Crypto” has exploded in popularity over the past year, and has emerged not only a new asset class, but also as an alternative store of value – some call it “digital gold.” The United States government has dramatically increased the money supply since the beginning of the COVID-19 pandemic last March, which has led to a decrease in the value of the U.S. dollar, and stoking fears of inflation.

Click below to RSVP to this 30-minute educational webinar, in which Christopher King will discuss the question: “Bitcoin – what is it?” as well as how cryptocurrencies and digital currencies can play an important complementary role within a properly-diversified investment portfolio.

Hope for Immunity in Our Community Trending Today 3.12.2021
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Hope for Immunity in Our Community? 03.12.2021

A year ago yesterday, on March 11, 2020, the WHO officially declared COVID-19 to be a global pandemic. Later that night, the NBA pulled the plug on two scheduled games (including the Pelicans/Kings game here in Sacramento), and then immediately suspended its season after Rudy Gobert and Donovan Mitchell both tested positive for the disease:

NBA Immunity

The battle against coronavirus has unquestionably been a difficult, painful, arduous, and seemingly constant one over the past 12 months, with the underlying question constantly on everyone’s mind: “When will we reopen and get back to normal?” And while we are by no means at the finish line yet, at Towerpoint Wealth we believe we are much closer to the end of the pandemic than we are to the beginning of it.

Why the hope? We will let the visuals support a number of key reasons for our optimism:

Huge declines in COVID-19 cases, deaths, and hospitalizations

Widespread vaccine distribution

Extreme fiscal stimulus

Measured re-opening of the economy

Pending herd immunity

At Towerpoint Wealth, we believe it is also time to look forward, without letting our guard down, with expanding optimism and appreciation for what the future holds. Understanding we will always remain pragmatic, and avoid cockeyed optimism, we do believe that the marathon is almost at its conclusion.

What’s Happening at TPW?

Our lovely Director of Operations, Lori Heppner, along with her Bella. 🙂

Our Partner, Wealth Advisor, Jonathan LaTurner, spent a few days last month in Tulum, Mexico, doing some wedding venue due diligence with his bride-to-be, Katie McDonald. Yes, we’re all very jealous of you two, walking Tulum Beach and both looking great!

TPW Service Highlight – Charitable Giving

It used to be (and still can be) as simple as writing a check and mailing it off to your favorite charity. However, simply giving cash may not be the best, nor the most beneficial or impactful, way to be philanthropic. Fortunately, today’s donors have a myriad of gifting strategies that can increase the economic benefits of their gifts, both for the charity, as well as for you.

From charitable remainder trusts, charitable lead trusts, and private foundations, to donor advised and pooled income funds, and from IRA qualified charitable distributions (QCDs) to charitable gift annuities, there are many options for those who are inclined towards philanthropy. Determining which charitable strategy is best for your personal circumstances can be challenging, and as experts in this field, we stand ready to help you better understand the advantages and disadvantages of each as we develop the most appropriate gifting strategy for you. Click HERE to talk more with us about your philanthropic intent and charitable gifting plan.

Issuance of Amended 2020 Form 1099s – Don’t File Too Early!

Have you received your 2020 Form 1099s in the mail or via email? Have you already received amendments to your original 1099s? Scroll down to read a newly-published report authored by our Director of Tax and Financial Planning, Steve Pitchford, to find out why we recommend NOT actually filing your tax return until early April!

The Frustrations of Form 1099 | It's Tax Time

Chart of the Week

It’s not unusual to see -2%, -5%, and even -10% pullbacks in the stock market. Frankly, we should *expect* them to happen, remain objective and not worry about them when they do, and have a plan and the flexibility to make tactical portfolio adjustments to take advantage of them when they occur.

Trending Today

In addition to shots and stocks, 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

Cryptocurrency – Wait, I Have to Pay Taxes??!!
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Cryptocurrency – Wait, I Have to Pay Taxes??!!

Do you own/trade cryptocurrency? Interested in investing in Bitcoin, Ethereum, or any of the other 4,000 cryptocurrencies currently available to own and trade?

If so, it is important you understand the income tax consequences of owning crypto.

If you are thinking about buying, selling, or trading cryptocurrencies, watch this quick video from our Wealth Advisor, Matt Regan, to learn the tax consequences of doing so.


"Will the Big Blue Wave Leave You Money to Save?" - Trending Today - 1.8.2021
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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