AWM Insights Financial and Investment News

 AWM Insights

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A Tax Boost for your PortfolioGuest: Alan Trice, Head of Advisory Services, Gurtin Municipal Bond Management.

Making money off your investment portfolio is only a part of the puzzle, what are your portfolio's tax implications? It's paramount to ensure you fold a tax plan along with investment strategies into your portfolio. On this front, municipal bonds is a fixed investment that will also help your tax strategy. On this week's episode you'll learn the ins and outs of the muni bond industry

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 00:18

“It doesn’t matter how much you make it’s about how much you keep.” 

What matters most to your portfolio is not your gross, it’s your net.

1:07

How important is tax planning when it comes to your portfolio? Here’s an example of what Californians are paying at tax time. 

2:45

Fixed income in general fits into a portfolio for two purposes: 

1- To provide steady and consistent income 

2- Balance in a portfolio: it’s there for safety and diversification

3:36

Municipal Bonds are extremely tax efficient: almost all munis are completely exempt from the federal income tax rate.

5:33

What’s unique about municipal bonds compared to equities and other fixed income markets?

6:26

80% of the municipal bond market is in the retail space.

7:58 

Munis are really part of a highly diverse market, only around 30% of the municipal  market is general obligation debt.

10:15

Average Joe’s vs. the Pros: What’s the advice in getting in the municipal bond market

“This is a pretty misunderstood market. Generally would not recommend individual investors invested directly on their own in this market.” 

Register for the free webinar on how to optimize your portfolio in the most tax efficient way: AWMWebinar.com

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Focusing on the Process 

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Another great reminder that not all private market opportunities are without substantial risk. Plus, the electric car boom is approaching and how to make sense of all of the noise surrounding the election and the impact the outcome will have on your taxable assets. 

00:55

Why Brandon might have to burn his “Bummer” t-shirt, as the Hummer is going electric!

1:34

Quibi seemed to be on a great financial trajectory and had all kinds of talent, they decided to shut down. Brandon talks about the market implications for the closing of Quibi. 

2:56

We’re also seeing new economic data that’s just being released as we ended Q3. The important takeaways from the data including great news for the economic rebound.

5:30

In Average Joes vs. Pros:

How should you react to the differing tax policies based on the Presidential election?

6:10

History tells us you can’t correlate performance of financial markets with the party holding presidency. 

6:52

How to avoid the knee-jerk short term reactions that will hurt your portfolio.

Register for the free webinar on how to optimize your portfolio in the most tax efficient way: AWMWebinar.com

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An Absolute Must Have in Your Portfolio

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Guest: Dave Plecha, Global Head of Fixed Income at Dimensional Fund Advisors

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The importance of folding Municipal Bonds into your portfolio has been a common discussion on AWM Insights, this week Dave Plecha, the Global Head of Fixed Income at Dimensional Fund Advisors, joins the show to provide expert analysis on Municipal Bonds to further the discussion. There’s a tremendous opportunity based on the cash flow available and tax free nature of Municipal Bonds.

1:27 - 3:20

Where do Municipal Bonds fit for Dave Plecha in a broadly diversified portfolio? 

Stocks are the area to grow your portfolio, however the second component of a portfolio should be in minimizing risk. Municipal Bonds satisfy both in terms of growth, but also minimizes risk and is extremely helpful in terms of taxes. 

3:25 - 6:10

Why are not all Municipal Bonds created equal?  There are two types of Municipal Bonds: Term and Credit

 6:20 

What are the differences between Municipal Bonds between states and what are the taxable implications on income made from Municipal Bonds. 

Key takeaway: 

There’s a tremendous opportunity based on the cash flow available off of Municipal Bonds.

Register for the free webinar on how to optimize your portfolio in the most tax efficient way: AWMWebinar.com

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Avoiding the Investment Noise

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Avoid the noise during earning season! The financial media only draws on quarter over quarter numbers, which is not a great indicator of long term gains or success. Plus, beyond making the right investments, understanding the tax component of your investments is most important.

:15 - :44

The latest news on the Stimulus Package and the impact and volatility of the market because of the unknowns surrounding the stimulus package.

:54 - 2:12

The House Judiciary committee released a 450-page report on the 16th month investigation into the tech industry and the recommendations made by the government on the state of the competition in the digital economy. Plus the energy sector and Honda pulling out of Formula 1 to focus on the electric car market.

2:22 - 3:31

There will be no shortage of news that the financial media will be covering during earning season, so it's important to avoid the noise because it's far too short term to focus on.

 3:40 - 4:40

Average Joe’s vs. Pros:

Peloton is a great example: "This is typically what we see in earning season, is trying to anticipate the future, 'What is popular in our network right now, should I invest in that.'"

Would the Pro take advantage of this earning season because the volatility might be the perfect time?

4:42

Justin Dyer, AWM Capital, Chief Investment Officer: "The quarter over quarter stuff is just noise and there are all these anecdotal statements over earning season."

6:20

Be tax aware: "After tax returns are what truly matters, that's what people are going to spend at the end of the day, or give away."

8:21

Key takeaway: 

Regardless of whoever wins the election: Trump or Biden there are going to be critical changes you will need to make to your portfolio based on taxs.

Register for the free webinar on how to optimize your portfolio in the most tax efficient way: AWMWebinar.com

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Hims for Us?

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How has President Donald Trump contracting COVID-19  impacted the markets? Plus, the most important investment strategy you'll need is a tax strategy. 

:45 - 1:25

The latest in investment news: Two software companies: Palantir and Asana both went public. In addition, Hims is doing a reverse merger into a SPAC that's backed by Oak Tree.

1:25 - 2:26

Why the markets are a bit shaky and unpredictable at the moment, beyond just President Donald Trump testing positive for COVID-19. Plus what is the latest on the pandemic economic recovery?

2:40 - 4:03

Average Joe’s vs. Pros:

Should I be looking at buying Municipal bonds if I'm looking to limit risk?

4:08

Key takeaway:

Capturing high expected returns? It can get exciting, but ultimately it's all about your after tax returns in the public markets. So make sure you have a tax strategy as much as you have an investment strategy. 

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Investing in Tik Tok US? 

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Investment in Tik Tok US is starting to make headlines; Erik, Brandon and Justin give you The Average Joes vs. Pros on Tik Tok impact in public + private markets.

:40 - 1:16

Apple’s app store charges are back in the news.  Spotify, Fortnight’s Epic Games and Tinder have all partnered with the non-profit coalition called the Coalition of App Fairness to bring legal action against Apple to see if they can bring down their charges.

1:34 - 2:50

The latest legal standing for Tik Tok in the United States. President Trump being asked to defend his status on Tik Tok to a US District Court. 

3:02 - 5:30

Average Joe’s vs. Pros:

What does the Tik Tok news mean for investors? Should you go buy Oracle and Walmart stock with their investment to Tik Tok US?

5:31 - 8:28

What does the Tik Tok news mean for the private markets?

8:42 

Recapping the news on Tik Tok and the impact it will have on the public and private markets.

Judge says U.S. must defend or delay TikTok app store ban by Friday

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A Period of Rising Inflation

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Last week, we discussed the Federal Reserve’s recent meetings where they signaled a willingness to allow a rise in inflation over the next 10-20 years. We received a lot of good feedback and follow up questions, and as a result are following up in a part two this week where we can address a few of the implications for investors.

Our managing partner, Brandon Averill, is joined again by our Chief Investment Officer, Justin Dyer to discuss:

• With the Fed signaling that they would likely allow inflation to rise over the next 10-20 years, are we as investors happy about that?

• Would a higher than normal rise in inflation impact our investment strategies for our clients? Would it dictate a change in our portfolios?

• Could inflation change investment performance over time? Are there ways to protect or adjust for that?

• Are there any adjustments that are needed to allow for inflation?

• What are Treasury Inflation-Protected Securities (TIPS)?

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Important Inflation News for Investors

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You might be familiar with the terms “inflation” and “deflation,” but do you know how they positively and negatively impact us as investors? About 2 weeks ago, the Federal Reserve held a virtual conference where they said they would be willing to let inflation run higher over a certain period of time to make up for lower inflation we’ve experienced in the recent past. So, over the next 10 years they could target a higher inflation rate than has previously been seen.

To understand how this might impact us as investors, Brandon Averill, managing partner of AWM Capital, is joined again by Justin Dyer, AWM’s Chief Investment Officer, to discuss inflation and the implications it has on investments.

Key Topics:

• What exactly is inflation?
• What does a quart of milk have to do with how inflation is measured?
• Why is inflation important to investors?
• What happens with slow inflation?
• What is typically considered the ideal inflation rate for the U.S. economy?
• What is the Consumer Price Index (CPI) and what does it impact?
• What is the Personal Consumption Expenditure (PCE) and what does it impact?
• Why has inflation been in the news recently?

Resources:

• Investopedia has some great resources on Price Level, Basket of Goods, and Purchasing Power
• Also, be sure to read Dimensional Fund Advisors great article on Inflation’s Impact on Investors

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Trump or Biden For Investment Returns?

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Are certain presidential candidates better for the stock market? If so, is there a “correct” party to vote for to improve the chances of stronger returns? We often hear political pundits offering advice or predictions around presidential election season, and suggest that the answer to both of these questions is unequivocally “yes.” There are certainly many ways political candidates impact our country, and because of that, it is extremely important we exercise our right to vote. However, as we wade through to the real issues – should a candidate’s impact on the stock market be one of them? 

In this week’s episode of AWM Insights, Brandon & Erik, armed with more than 80 years of data, break down this question – and the answer might surprise you. Discussed questions and topics include:

• How do presidential elections impact investment returns?
• Which 2 presidents have seen the best S&P returns while in office?
• Which presidents experienced negative S&P returns during their terms?
• Is it true my political party is better for the stock market?
• What drives the stock market?
• How is the stock market different than the economy?
• How might the two candidates’ tax proposals impact my finances?
• Are there any ways to curb those impacts?
• Do tax rates matter to stock markets?

RESOURCES

To see the data discussed during this episode, CLICK HERE

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With an estimated $44 billion worth of startups like Snowflake, Unity Software, JFrog, Sumo Logic and Amwell going from private to public right now, is it time to try and strike it rich by investing in the next unicorn company during its initial public investment (IPO) phase? If you only got your investment advice from the mainstream media, you might assume that this is the best way to create massive wealth, but  as you might have guessed, it’s not quite that simple.

The private to public or - IPO - step in the lifecycle of a business is incredibly important. And when companies go public, they often garner massive media coverage. However, is this the best time to invest in a company across the board? The data might surprise you.

In this week’s episode of AWM Insights, Brandon Averill, Managing Partner at AWM Capital, is joined by Justin Dyer, our Chief Investment Officer, to discuss how and when companies typically create the most value. Topics and questions covered include:

Do IPOs favor the investor? Are they a good investment on their own?

Why do companies decide to go public?

·What exactly is a unicorn company, and what stage in a company’s lifecycle is generally considered to be the ideal time to invest?

·When does most of the value creation for a company occur?

What is a direct listing and how is it different from a traditional IPO?

Are direct listings similar to SPACs? (For more on SPACs see our previous episode HERE)