What the Recent Bank Failures Mean For Investors

By David Munn, CFP

Over the past couple weeks, the Federal government intervened to take operational control of two banks, Silicon Valley Bank (SVB) and Signature Bank, NY (SBNY). SVB represents the second largest bank failure in US history and the largest since the 2008 financial crisis. 

What happened?

When banks receive deposits from customers, they pursue opportunities to earn a return on those funds. This can be done through giving out loans or a portfolio of investments. While Federal regulations restrict the types of investments banks can utilize and the amount of risk that can be taken, there is still risk. 

In the case of SVB, their portfolio of long-term government Treasuries–which are risk-free if held to maturity–experienced significant drops in market value over the last 18 months as the Federal Reserve aggressively raised interest rates.  

As new deposits slowed and customers withdrew funds recently, the bank was forced to liquidate these bonds at steep losses, which not only necessitated the bank raise more capital to sustain operations, but also scared customers who panicked and created a bank run.  As the bank did not have sufficient cash on hand to meet the massive withdrawal requests, the FDIC was forced to take over and has since insured that all customers will be made whole, including accounts that exceed the $250,000 FDIC limits.

Will there be more bank failures?

We do expect more banks to fail in the coming months, but believe the vast majority of banks are not exposed to the same level of portfolio mis-management. The government’s intervention and guarantee of all deposits will likely alleviate a panic that could have rapidly spread to other banks with weak balance sheets, and allow for a more controlled unwinding–or acquisition– of the failing banks’ operations, as we observed over this past weekend with Credit Suisse. 

Is my money in the bank safe?

While it is generally advisable to stay within FDIC limitations on bank deposits, there is no need to panic regarding the security of most banks. 

What is the impact on investment portfolios?

Clients of Munn Wealth Management have not had direct exposure to SVB, SBNY, or any of the regional banks which have experienced a sharp sell-off. The overall reaction of the stock and bond markets to the bank failures has been positive as investors are expecting the Federal Reserve to adjust their plans for continued interest rate increases in light of the recent events. 

Are my investments at risk if the custodian fails?

Client accounts are always held with a third-party custodian. While banks invest client deposits, custodians are prohibited from doing so with client assets, which is why custodians have other means of generating revenue. If a custodian were to experience a business “failure”, client assets would be preserved and unimpacted.

Munn Wealth Management is registered as an investment adviser with the United States Securities and Exchange Commission. This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client.  All readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors.  1323GQH

Outpacing Inflation on Your Cash Savings

By Robert Lange

An important constant in any financial plan is a stable allocation of cash, easily accessible and free from market fluctuations. Whether that’s an emergency fund, designated savings (vacations, vehicle purchase, home renovations, etc.), or just a cushion to help weather market volatility, there are alternatives to leaving it in a standard savings account at your local bank. While interest rates on savings accounts in the 80’s and 90’s reached upwards of 5%, now they’re lucky to breach 1%, hardly making a dent against currently elevated rates of inflation. 

However the recent rapid rise in interest rates has created better opportunities to generate yield with extremely low levels of risk, including options that may exceed what is being offered by your local bank. Many FDIC-protected, online-only money market and high-yield savings accounts are offering interest rates as high as 4-5% per year. These rates tend to outpace those offered by brick-and-mortar banks due to lower expenses of not having physical branches.

• Popular Direct, for example, is offering 4.4% in an online high-yield savings account, requiring a $5000 minimum opening deposit. 

• Bask Bank has no such minimum balance, but comes with a lower 4.25% APY. 

• Sallie Mae’s money market is at 3.6%, but offers check writing, if that is something of value. 

One important consideration to note is that interest rates for high-yield savings and money markets are not locked in for any period of time. They fluctuate due to any number of factors, and as such, can go both rise and fall in the future, though the principal of your investment is protected. 

Another option that does have fixed interest rates is Certificates of Deposit (CDs). CDs are less liquid, however, as the investment principal is essentially locked away and subject to early withdrawal penalties until the end of the term, which can range from a few months to several years. This illiquidity can be addressed by creating a ‘ladder’, investing in multiple CDs with staggered maturity rates (ie: 1 year, 2 years, and 3 years), ensuring you’ll have access to some of your funds at regular intervals. Currently, CD rates with various online banks are in the 4-5% range for 12 month terms.

A third option to consider is money market mutual funds. Not to be confused with standard money market accounts offered by banks, these follow the same guidelines as other mutual funds, except at a much lower level of risk. Recently, rates have increased dramatically and in some cases now exceed 4.5%. Money market mutual funds can be purchased in most investment accounts and are completely liquid. 

There’s no telling if these higher interest rates are here to stay — they could fall or rise even higher — but it is a great opportunity for those with available cash to earn greater return without taking on market risk.  

---

Robert is our newest service advisor and is available to assist clients with account-related requests and questions. He has a background in logistics and warehouse management, using his history with administration to transition into the financial world. Robert and his wife, Christina, reside in the Old North End of Toledo and in his spare time you’ll find him at Rustbelt Coffee working on his latest novel.

Munn Wealth Management is registered as an investment adviser with the United States Securities and Exchange Commission. This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client.  All readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors.  1323GQE

What does a recession mean for investors?

By David Munn, CFP

President

Munn Wealth Management

Coming into 2022, the US economy appeared to be on solid footing. Gross Domestic Product (GDP) increased 6.9% in the fourth quarter of 2021, more than double its long-term average rate.

Now just six months later, the word “recession” is in more and more economic forecasts,  analyses, and news coverage. 

So what does recession mean? And more importantly, what does recession mean for investors?

During the vast majority of modern American history the economy has been growing. Technological advances and population growth are two main drivers of the consistent increase in production and overall economic activity (buying and selling goods and services).

However, from time to time, the economy contracts, meaning that for a period of time, less is bought and sold than the previous year. When this contraction occurs over two consecutive quarters (GDP is measured quarterly), it is labeled a recession. Since 1945 there have been 13 recessions, which averages out to about one every 6 years.

A recession can be triggered by any number of factors: the 2001 recession was the popping of the tech bubble; the 2007-2009 “Great Recession” was the popping of the real estate bubble; the 2020 recession was COVID and subsequent global shutdowns.

So a recession is a normal part of an economic cycle and simply means the economy stops growing for a period of time.

As you would imagine, the stock market does not like recessions.  Stock prices are based on an expectation of future profit growth, and while some select companies may continue to grow profit during a recession, most do not. 

However, the stock market is forward looking and constantly pricing in available information.  Many times the market will price in a current or future recession, even before the GDP data indicating a recession is available.  Consequently, as the chart below shows, more often than not the stock market has actually produced positive returns during recessionary periods, though that has not been the case with the last three. 

Earlier this year it was announced that GDP in the first quarter of 2022 decreased at a rate of 1.5%. That means if Q2 data also shows contraction, we will have experienced–or be in the midst of–a recession. 

The data could also show growth in Q2, meaning we avoided a recession–for now.  In either case, the market will likely not react, as it doesn’t care what happened in the past, and is focused on future economic conditions (which humans are very poor at predicting). 

---

This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client.  These materials are not intended as any form of substitute for individualized investment advice.  The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own.  Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors.  Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment, investment strategy (including the investments and/or investment strategies recommended by the adviser), will be profitable or equal to past performance levels. The S&P 500 is an unmanaged index used as a general measure of market performance.  You cannot invest directly in an index. Accordingly, performance results for investment indexes do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results. Munn Wealth Management is registered as an investment adviser with the United States Securities and Exchange Commission. 1323GKC

Does A Bear Market Have Teeth?

Investors watching the financial markets or news reports recently have likely heard there-emergence of the term, “bear market”, in reference to recent stock market volatility. Naturally, this has prompted questions about what exactly the term means, and what the implications could be for investment portfolios.

A bear market is defined as a drop of 20% or more from an index’s most recent high. Conversely, a bull market is when an index rises 20% or more from an index’s recent low. So by those definitions– as there is some variance in the industry as to when the terms are used– a particular index is always in either a bear or bull market.

However, because the use of either bear or bull is based solely on past market activity, it is important to note that it indicates nothing about the future market direction. Granted, the emotional impact of a falling or rising market could generally lead investors to believe the current trend will continue, and the “talking heads” in the news will lean in to these emotions and reinforce the fear or greed investors are feeling at the time.

But the volatility the markets are currently experiencing is not unexpected, or even unusual. The third and fourth quarter of 2018 saw similar market activity, driven by concerns over actions of the Federal Reserve and geopolitical relations with China (sound familiar?). The first quarter of 2020 saw much more significant market drops as concerns mounted around a mysterious virus that was rapidly spreading around the globe.

In both cases, the volatility passed and the market had surpassed its previous highs in less than1 year. So should we expect the same outcome this time around?

Not necessarily. Stocks could keep falling . . . or the recovery may have already begun. The markets could take a while to recover . . . or the recovery could happen rapidly, as was the case in the previously mentioned scenarios. The reality is that no one knows what the market will do over the coming months and years, which is why attempting to time the market ups and downs generally proves counterproductive.

Our advice to clients is to always maintain a diversified allocation that supports your long-term objectives and allows you to stay the course and ride out the volatility, without panicking or losing sleep. For retirees, having at least 5-7 years of cash needs set aside in conservative investments is the preferred course of action, as this allows plenty of time for stocks to recover, and avoids the need to liquidate investments at an inopportune time.

We also believe volatility creates opportunities. For those with available cash, it is a much more favorable buying opportunity than we have seen in some time. For those with non-qualified investments, we will be evaluating opportunities for tax loss harvesting, selling investments that have lost value and dropped below their cost basis and deploying the proceeds into investments with similar or greater upside potential. And our investment team is diligently evaluating changes that may be merited in our clients’ portfolio in light of the rapidly changing market conditions.

We value the trust you have placed in our team and welcome your questions or concerns. Please do not hesitate to reach out.

Article written by:

David Munn, CFP®

President

Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment, investment strategy (including the investments and/or investment strategies recommended by the adviser), will be profitable or equal to past performance levels. This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors. Munn Wealth Management can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein. 1323GLX

Market Commentary

June: A Confluence of Positives

By Paul Hoffmeister, Chief Economist

During the last month, we’ve seen a confluence of positives in some of the major macro variables: Fed policy, trade and Brexit.

To us, the latest macro developments are very encouraging. But the equity market outlook remains tricky, and we do not believe it’s a one-way ticket up in equities for the third and fourth quarters.

My biggest concern at the moment is the slowing global economy, which is permeating into the United States.

During the last month, we’ve seen a confluence of positives in some of the major macro variables. Most notably, Chairman Powell said on June 4th that the FOMC was prepared to act in response to the economic outlook, including the trade disputes with China and Mexico.[i] His comments suggested that interest rate cuts were on the horizon, sparking a 2.1% rally in the S&P 500 for the day.[ii] The rally marked the beginning of the recent turnaround in equities after the weakness we saw in May. 

Arguably, the Fed outlook has been the most important macro variable of the last year. From our perspective, Powell’s comments on October 3rd that the fed funds rate was a long way from neutral catalyzed the beginning of the multi-month selloff in equities, and his pledge on January 4th that the Fed would be patient with any further rate increases laid the foundation for this year’s rally. [iii][iv] And now more recently, we have Powell seemingly coming to the stock market’s rescue.

During the last month, we’ve also seen positive developments on trade and Brexit.

Of course, Presidents Trump and Xi agreed to restart trade talks during the G20 meeting at the end of June. Trump promised to hold off on putting a 25% tariff on nearly $300 billion of Chinese imports, and he lifted some restrictions on Huawei. Meanwhile, Xi reportedly promised to start large scale purchases of American food and agricultural products.[v]

In addition to renewed hopes for a US-China trade deal, American and Mexican negotiators reached a deal on June 7th in which the Mexican government agreed to take new measures to curb the influx of Central American migrants into the United States. This averted new tariffs on Mexican imports.[vi]

There was also some good news on the Brexit issue. While Brexit still appears to be on track to occur by October 31st, Boris Johnson -- the frontrunner to become the UK’s next prime minister – has promised to cut personal income and corporate taxes. This follows Jeremy Hunt, another contender for Prime Minster May’s job, who wants to reduce the UK’s corporate tax rate from 19% to 12.5%.[vii]

As we’ve stated in the past, news during the last year of a Brexit divorce not occurring seems to have been received positively by financial markets. Nonetheless, we’ve believed that Brexit could happen without being disruptive to markets if it was combined with new, pro-growth policy measures. Major tax cuts (such as lowering the UK’s corporate tax in line with Ireland’s 12.5% rate) and new trade deals (Trump keeps dangling a major post-Brexit, US-UK trade deal) could be exactly the pro-growth package that turns Brexit from a market negative into a market positive.

The confluence of positives related to interest rates, trade and Brexit appear to have been the predominant catalysts behind the strong equity market performance in June. This begs the question, do we have clear skies for the remainder of the year? After all, it appears that we have a Fed that won’t be raising rates, the US and China will continue to negotiate their differences, and Brexit could go through more smoothly than expected.

To us, the latest macro developments are very encouraging. But the equity market outlook remains tricky, and we do not believe it’s a one-way ticket up in equities for the third and fourth quarters.

My biggest concern at the moment is the slowing global economy, which is permeating into the United States.

As we’ve shown in recent months, GDP for the major foreign economies (China, Japan, Germany and UK) has been slowing, while US GDP has been accelerating. But economic data at the margin suggests that the strength in the US could fade.

According to the Institute for Supply Management, the US Manufacturing PMI Index peaked at 60.9 last August, and June’s reading was 51.7 – down from 52.1 in May and 52.8 in April. [ix] Note, readings below 50 signal contraction in the manufacturing sector. We have warned that should this reading fall to 50 or less, the US economy will be at a heightened risk of entering recession.

It’s economic deterioration such as this that likely underpins the Fed’s motivation to reduce interest rates, despite the fact that the S&P 500 is trading near all-time highs. 

As we see it, the good news is that June brought positive macro event catalysts, and holding all variables constant, one or two quarter-point rate cuts by the Fed could get the Treasury curve out of inversion. But the current inversion in the Treasury curve should be respected, and it will be important to see global economic growth stabilize after almost a year of deceleration.

Paul Hoffmeister is chief economist and portfolio manager at Camelot Portfolios, managing partner of Camelot Event-Driven Advisors, and co-portfolio manager of  Camelot Event-Driven Fund  (tickers: EVDIX, EVDAX).

*******

Disclosures:

•       Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment, investment strategy (including the investments and/or investment strategies recommended by the adviser), will be profitable or equal to past performance levels.

•       This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client.  These materials are not intended as any form of substitute for individualized investment advice.  The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own.  Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors.  Camelot Portfolios LLC can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.

•       Any charts, graphs, or visual aids presented herein are intended to demonstrate concepts more fully discussed in the text of this brochure, and which cannot be fully explained without the assistance of a professional from Camelot Portfolios LLC.  Readers should not in any way interpret these visual aids as a device with which to ascertain investment decisions or an investment approach.  Only your professional adviser should interpret this information.

•       Some information in this presentation is gleaned from third party sources, and while believed to be reliable, is not independently verified.

[i] “Stocks Jump as Fed’s Powell Suggests Rates Could Come Down”, by Jeanna Smialek and Matt Phillips, June 4, 2019, New York Times.

[ii] Ibid.

[iii] “Powell Says We’re a Long Way from Neutral on Interest Rates, Indicating More Hikes Are Coming”, by Jeff Cox, October 3, 2018, CNBC.

[iv] “Powell Says Fed ‘Will be Patient’ with Monetary Policy as It Watches How Economy Performs”, by Jeff Cox, January 4, 2019, CNBC.

[v] “Trump and Xi Agree to Restart Trade Talks, Avoiding Escalation in Tariff War”, by Peter Baker and Keith Bradsher, June 29, 2019, New York Times.

[vi] “Trump Announces Migration Deal with Mexico, Averting Threatened Tariffs”, by David Nakamura, John Wagner and Nick Miroff, June 7, 2019, Washington Post.

[vii] “Boris Johnson Promises Tax Cut for 3m Higher Earners”, by Rowena Mason, The Guardian, June 10, 2019.

[viii] Squawk Box, June 27, 2019, CNBC.

[ix] “US Factory Gauge Drops Less Than Forecast But Orders Stall”, by Katia Dmitrieva, July 1, 2019, Bloomberg.

[x] “US Services Gauge Drops to Lowest Since 2017”, by Jeff Kearns, July 3, 2019, Bloomberg.

First Quarter Market Commentary

First Quarter Market Commentary

by David Munn

If you happen to be an investor who only checks your portfolio every 6 months--and your last check was at the end of September--you might think the markets have been serene and uneventful over that time period, having experienced very little change.  But alas, your conclusion would be wrong, though you would have enjoyed the tremendous benefit that comes from not following the day to day turmoil to which other investors willingly subject themselves.

Since reaching new highs in September of 2018, the market has taken stockholders on a roller coaster of prices and emotions.  A fourth quarter that at one point saw price declines around 20%, and included the worst December since the Great Depression (1931), the worst single month (December) since the Great Recession (Feb 2009), and the worst Christmas Eve plunge ever, was followed by a significant rebound in the first quarter, including price increases of 20% or more over the Christmas Eve lows for many parts of the market.

In other words, there has been a lot of movement to essentially go nowhere.

Meanwhile, the bond market and more conservative side of the investment spectrum, which had a rough ride for much of 2018 as interest rates rose precipitously, has also experienced a sharp recovery from fourth quarter lows. 

As we communicated in our previous commentary, we believe the Federal Reserve’s decision with regard to interest rates and global trade agreements were driving much of the Q4 volatility, and would be a primary factor in 2019. Both of these issues appear to be trending favorably in the eyes of investors, and are not commanding the headlines they were several months ago.

Instead, the focus appears to be shifting to the strength of the global economy, the timing and inevitability of the next US recession, and--heaven help us all--the politicking and posturing that is the 2020 Presidential election that is still 19 months away.

All these factors point to continued choppiness in the markets, which we view as a long-term positive for investors, unless you watch your portfolio daily and have untreated high blood pressure.  For your sanity and health we would recommend you address both those issues.

https://www.cnbc.com/2018/12/31/stock-market-wall-street-stocks-eye-us-china-trade-talks.html

https://www.nbcnews.com/business/markets/dow-drops-653-points-worst-christmas-eve-trading-day-ever-n951661

Fourth Quarter Market Commentary

by David Munn, CFP

As the ball dropped in Times Square on New Year’s Eve, many investors likely breathed a collective sigh of relief that 2018 had come to an end.  A year that started with a strong surge for stocks ended with the worst December since the Great Depression1, resulting in the worst calendar year since the Great Recession crash of 20082.  In the following commentary, Paul Hoffmeister, Chief Economist for Camelot Portfolios, analyzes the factors that caused the markets to behave how they did, and looks ahead to what 2019 might hold.

Summary:

• The primary macro variables driving equities in 2018 appeared to be the Fed and US-China trade. Positive news in both during 2019 are likely to spark a strong rally.

• Market volatility and seemingly abrupt weakness in US manufacturing will likely cause the Fed to raise the funds rate once this year, if at all. Meanwhile, political and economic pressure should cause President Trump and Xi to reach a partial trade deal.

• During Q4 2018, the S&P 500 Index declined 14.0% (not including dividends). Prior to the last quarter, the S&P 500 has experienced 16 quarters since 1970 in which the index has declined 10% or more. The average return in the S&P 500 four quarters later was 16.1% (not including dividends). In only four instances did the S&P 500 suffer a negative return 4 quarters later.

• For us to become worried about an approaching recession, we need to see US manufacturing and employment conditions worsen significantly more.

When we look back at the ups and downs of the stock market in 2018, three things are apparent to us: 1) the two primary macro variables moving equities last year were the Fed and US-China trade; 2) nervousness about aggressive Fed policy led to the two 2 major market selloffs (in February, and then between October and December); and 3) positive and negative news in US-China trade negotiations led to a lot of the intervening market volatility.

As 2018 closes, we believe that market participants have heavily discounted for excessively aggressive Fed policy in 2019 and, at best, a 50/50 probability of Presidents Trump and Xi reaching a trade deal. This suggests that positive news from both variables – such as no rate increases in 2019 and at least a partial US-China trade deal – will ignite stocks.

As we assess the monetary and trade variables today, we’re seeing encouraging signs, leading us to believe that the worst is over for equities during the near-term and that 2019 will see a strong rally.

First, Fed officials appear to have been caught off guard and worried about the significant stock market weakness following the December 19 FOMC meeting where the Committee telegraphed a policy trajectory wildly out of line with market expectations.3 The Committee collectively expected two more quarter point rate increases in 2019, whereas the futures market is currently expecting not even a single rate hike.4 The ensuing stock market selloff appeared to have led New York Fed President John Williams to go on CNBC on December 21 in order to soothe markets. He indicated that Fed rate forecasts in 2019 were not promises, and the Fed will adjust if necessary.5 Willliams said, “We’re going to go into the new year with eyes wide open, willing to read the data, listen to what we’re hearing, reassess our economic outlook and take the right policy decisions that will keep this economy strong.”6

The manufacturing surveys of the last month are showing, in our view, that the slowing housing market and declining oil prices are creating stresses in key segments of the economy. Furthermore, and perhaps more importantly, the specter of aggressive Fed policy that seeks to limit growth, which has been omnipresent since February and especially pronounced since October, is arguably restraining economic activity and risk taking more than many appreciate.

In sum, as we assess the weakening economic data and the apparent concern on John Williams’ part over the recent market panic, we expect Fed policy to shift decisively dovish in 2019. And if monetary policy is the most important macro variable today, as it seemed to be in 2018, then it should hold that the indications of such a shift will spark a strong equity market recovery.

There are also encouraging signs in the US-China trade variable. On December 29, President Trump announced via Twitter that he had a “long and very good call” with President Xi, and that a “deal is moving along very well!”7 We continue to be more optimistic than many that at least a partial trade deal will be reached, as the pressure seems to be severe on both leaders to strike a deal.

Of the myriad risks and uncertainties around the world, and their potential impact on markets, we are especially concerned that markets could react negatively to political instability in the United States, stemming from the Mueller investigation.

Our base case for equity markets in 2019, however, is that this scenario will be avoided. It is probably most likely that the Mueller investigation will inflame both parties in Washington, but ultimately, given the rebuke Republicans received in the 2018 midterms, Democrats will avoid impeachment proceedings and let voters decide President Trump’s fate in the 2020 election cycle.

Meanwhile, we expect the Fed will back off its rate-hiking cycle and raise the funds rate only once in 2019, if at all; and Presidents Trump and Xi will reach a partial US-China trade deal.

1.       https://www.cnbc.com/2019/01/07/investors-flee-stock-and-bond-funds-in-record-numbers-amid-equity-panic-in-december.html

2.       https://www.cnbc.com/2018/12/31/stock-market-wall-street-stocks-eye-us-china-trade-talks.html

3.       “Why 2019 Could Be Very Good Year for Stocks, After Worst Year in Decade,” by Patti Domm, December 31, 2018, CNBC.

4.       Ibid.

5.       “Fed Official Tries to Soothe Nervous Investors,” by Binyamin Appelbaum, December 21, 2018, New York Times.

6.       Ibid.

7.       “Trump Hails Call with China’s Xi, Says Trade Talks Are Making Good Progress,” December 29, 2018, Reuters.

Disclosures

•       Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment, investment strategy (including the investments and/or investment strategies recommended by the adviser), will be profitable or equal to past performance levels.

•       This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client.  These materials are not intended as any form of substitute for individualized investment advice.  The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own.  Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors.  Munn Wealth Management can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.

•       Any charts, graphs, or visual aids presented herein are intended to demonstrate concepts more fully discussed in the text of this brochure, and which cannot be fully explained without the assistance of a professional from Munn Wealth Management.  Readers should not in any way interpret these visual aids as a device with which to ascertain investment decisions or an investment approach.  Only your professional adviser should interpret this information.

•       The S&P 500 is an unmanaged index used as a general measure of market performance.  You cannot invest directly in an index. Accordingly, performance results for investment indexes do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results.