“Just when I thought I was out…they pull me back in.” Michael Corleone

 The S&P 500 dropped 34% in just a few days in March. The Coronavirus created chaos in our lives and our financial systems. Then, in a dramatic reversal, stocks roared back, with the S&P 500 rocketing 44% from its March 23rd low[1] and the NASDAQ hitting record highs over 10,000. Businesses and beaches opened after lockdown. The pandemic seemed under control. Ah, but not so fast. The globe tilted again as people protested, looted, and gathered to fight bigotry and police brutality. As COVID 19 cases spiked, the markets, and most of our lives, succumbed to reality. The world has been scarred forever with the events of 2020.

The tumultuous first half 2020, finds the S&P 500 down 4%, the DOW lower by 9%, and the NASDAQ higher by 12%. The best sector to be in this year has been Technology (+11%). The worst: Energy (-37%) and Financials (-25%).[2] With unemployment having “caught” COVID 19, it appears that the economy will take a while before the ventilator can be removed. However, a vaccine discovery will change everything.

As Ryan and I continue to buy investments with growth potential for our clients, we navigate these financial storms with caution. Pacific Sun is proud to announce that we have hired Bobby Hearn to assist us with our growing business. Bobby will be working together with Judy and Ryan to help manage a variety of responsibilities in operations, client services and research. Bobby grew up in Orange County and attended USC. He played college baseball and graduated with a BA in Economics followed by his education at Southwestern Law School. Bobby enjoys golf, baseball, racing, music, trying new food, and the outdoors.

 The recently passed Secure Act gives us a waiver on RMDs (Required Minimum Distributions) in 2020. So, if you can afford to skip your IRA or Retirement Plan distributions, by all means…save the taxes. The age limit for contributions has been removed, too. The new starting age for distributions is changed from 70 ½ to 72.

One of the silver linings in this pandemic is the new attitude for virtual communication and business. For nearly 20 years, I have been working remotely from our various office locations. Ryan has done the same. Now, Judy is completely set up at home and working even more efficiently. Clients have been most accepting of online forms, digital signatures, and money link transfers. Thank you.

On a zoom call recently with Disney’s Chairman Robert Iger, he told us: “Most of our employees are working remotely now. We would rather collaborate in person, but this is the new reality. Our Shanghai Disneyland was closed, but now admits 10,000 visitors a day. That is down from 80,000 but we are open. Our parks will be better and safer than ever. On July 3rd, our Disney + channel is gifting the film of ‘Hamilton’ with the original cast.”

When can I retire? That is a question that comes up regularly from clients who are not there yet. My response, “Right now…if you feel like it. You may already have more money than you really need. We can run some financial scenarios. If you think your resources are not enough right now here, you may want to consider the breathtaking scenery of Costa Rica, Portugal or similar places.” In temperate San Jose, for example, a couple can live well on $2,000 a month. Full health care coverage for two is $150 monthly and a three-course dinner for two is about $25.[3] Until we have the COVID vaccine, you may have to wait until these countries allow us entry.

What will be next in our financial future? Here is one economist’s view: “We still project that the recovery process is going to take years; we do not expect an unemployment rate below 4.0% until at least 2023.  However, even with a steep drop in corporate profits in the second quarter, in the current low interest rate environment our model still says stocks are cheap, suggesting we are unlikely to see the market retest its lows.  Brian S. Wesbury – Chief Economist, First Trust RIA & Institutional Investments[4]

Please stay calm, enjoy your extra time at home, and find a positive way to contribute to others. There is no doubt that we will weather this incredible confluence of difficult occurrences. To quote my friend, author, and Rabbi, Steve Leder: “We all have lost something in these tough times: our freedom, a job, our innocence. We have the ability to survive, to heal and to grow. Ask yourself: is this a problem or an inconvenience?

We know that the first half of 2020 has been a problem. Hopefully, the second half will be only an inconvenience.

Mitch Fisher

[1] Davis Funds 6/24/20

[2] JPM Asset Management 6/29/20

[3] Trip Advisor 6/22/20

[4] First Trust 6/29/20