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2019 Third Quarter Market Commentary

For Every Positive, There is a Negative - In the US, large cap stocks finished the quarter up close to 2%, but mid cap stocks were flat and small cap stocks lost about 2%. Outside of the US, developed market stocks were just barely negative but emerging market stocks were down over 4%. In commodities, gold posted a strong 4% return, but the broader commodity index lost 2%.

Resulting

“Resulting” is a word that’s often used in the world of poker, and it was popularized by former World Series of Poker Champion Annie Duke in her excellent book, “Thinking in Bets”. As she describes it, resulting is “creating too tight a relationship between the quality of the outcome and the quality of the decision. You can’t use outcome quality as a perfect signal of decision quality, not with a small sample size anyway.”

Inverted Yield Curve

The yield curve recently inverted, which means you now earn a higher rate of interest on two-year US Treasury bonds than you do on ten-year US Treasury bonds. In a “normal” environment, you should earn a higher rate of interest for locking up your money for a longer time period. I wrote about this concept last year as the yield curve was flattening, and it’s worth revisiting now that the curve has inverted.

3 Thoughts From France

We spend a lot of time helping clients plan for the future for themselves and their families. Our clients are successful financially, often accumulating significant wealth. We help them with estate planning and tax strategies to maximize that wealth. But unless you do that planning in the context of your broader, life planning goals, the process loses much of its meaning. We want to make sure you are living your ideal life and that your finances are woven into that life in a way that is meaningful for you and your family.

Social Security Administration Scam

There have been many scams in recent years where people impersonate authorities in an attempt to gain access to your personal information. The most common we have seen is scammers who pose as the IRS. They call or email unsuspecting individuals demanding information and threatening to call the police if you don’t comply. The IRS explains on this website:

IRS Penalties Waived

The IRS requires you to pay in 90% of your current year tax liability or 110% of your prior year tax liability. These amounts are considered “safe harbor” payments. If you are a W-2 employee, the withholding from your wages will typically cover this safe harbor payment amounts. If you are not a W-2 employee, you need to determine if it’d be best to pay in taxes based on 110% of your prior year tax liability or on 90% of your estimated current tax liability. If you don’t meet either of these thresholds, the IRS will assess underpayment penalties based on the amount of the underpayment and the time period when you were underpaid.