Towerpoint Wealth No Comments

“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

Towerpoint Wealth No Comments

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
Towerpoint Wealth No Comments

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