Ladies and gentlemen, the weekend! In this space each week, Greg and I share some of our favorite articles, notes, and graphics from the past week along with our commentary. Please feel free to provide feedback and forward along to others if you enjoy. We appreciate you taking the time to read. 

If you are a client, we truly appreciate your business. If you are not a client, please click below to learn more about our firm and contact us.

New Local Wealth Advisory Firm Launched through RBG Partnership

“That ideal timing and fit has led to RBG Wealth Advisors, an independent, fee-only wealth advisory firm led by Davis and Ellis, which was created through a partnership with RBG. But while RBG is a strategic partner that’s made an investment in the business — both are located at 5100 Wheelis Drive — RBG Wealth Advisors is a separate entity.

And though it’s poised to take on RBG clients in need of a wealth advisory service, it will work with others, as well…

‘It’s nice to start your business with a blank sheet of paper, looking for only the best technology and best service model you can build for clients,’ Davis said.

As he and Ellis are aware, Memphis isn’t short on established wealth advisory firms. But they’re confident in their prospects, as they believe they’ll be strengthened by their partnership with RBG — the sixth largest accounting firm in the area, according to MBJ research — and their technical service offering, which Davis asserted will be ‘best in class.’”

The Memphis Business Journal ran an exclusive article to announce the launch of our firm. It was great to be featured, and have the opportunity to share our plans and value-add for clients. Exciting times!

August 2022 Market Summary

“The ‘summer rally’ fizzled out in August as most equities drifted lower. The Dow Jones Industrial Average ended August down 3.7%, the S&P 500 fell 4.1%, and the NASDAQ was off 4.5%. Remarks made in late August by Federal Reserve Chair Jerome Powell suggested the central bank will continue hiking interest rates to combat inflation and stabilize prices. Jay-Pow’s address soured the so-called ‘summer rally’ that started in July following a Q2 earnings season that broadly beat Wall Street expectations. Year-to-date, the Dow is off 12.0%, the S&P 500 is 16.1% lower, and the NASDAQ is firmly back in bear market territory, down 24.1%.

Further signs of decay emerged in the housing market as new and existing home sales both declined, and for the sixth time in the last seven months. The latest data from July shows US New Single-Family Home Sales tumbled 12.7%, while Existing Home Sales fell nearly 6%. On the inflation front, July’s inflation rate fell to 8.52%, while core inflation stayed about flat month-over-month at 5.9%. Finally, the average US gas price hasn’t started with a “$3” since February 28th—that changed in August, as gas prices clocked in at $3.94 by month’s end.

The 1-Year T-Bill sported the second-highest rate among US Treasuries as of August 31st. Only the 20-Year Bond’s 3.53% yield was higher than the 1-Year’s 3.50%. Seven of the nine US treasury instruments closed out August with rates above 3%, and the 1-Month T-Bill neared its relative high of 2.51% set in March 2019. In spreads, the widely followed 10-2 Year Spread was inverted by 30 basis points, while the 10 Year-3 Month Spread continues to float just above negative territory.”

YCharts puts together a good, numbers-heavy monthly market and economic recap. We closed August on a sour note after hawkish comments from Fed Chair Jerome Powell. As you may note in the commentary and numbers, the market is reacting almost exclusively to inflation, interest rates, and Fed policy, which are all inter-correlated.

How Much Do Retirees Spend on Uncertain Health Costs?

“How much do retirees pay in lifetime out-of-pocket health costs, excluding premiums and including long-term care? The analysis proceeds in two steps. It first calculates the distribution and evolution of total non-premium health care spending over the lifecycle of retired households. It then determines the amount covered by public and private insurers and subtracts this portion from the total to obtain out-of-pocket spending…

The focus, however, is spending risk throughout the retirement period. Therefore, at each age, the present discounted value of remaining lifetime spending is calculated, using an annual real discount

rate of 3 percent.

At age 65, households will incur, on average, $310,000 in health care spending [excluding premiums] over the remainder of their lives. However, $243,000 is covered by insurance, resulting in out-of-pocket spending of $67,000 (see Figure 2). The 90th percentile of the spending distribution shows a similar pattern, resulting in out-of-pocket costs of $138,000.”

There was a recent study of retiree out-of-pocket health care costs (excluding premiums costs). The data was sourced from Medicare and Medicaid records, the Health and Retirement Study surveys, and the Medical Expenditure Panel Survey in an effort to capture Medicare, Medicare Advantage plans, and private insurers' costs and reimbursements.

Medicare premiums and even Medicare supplement premiums can be reliably projected to put into financial planning projections. It’s the potential out-of-pocket, non-covered health care events that can be worrisome. Having a better understanding of the potential range of costs is a helpful input for financial planning.

While the COVID downturn was the deepest stock market downturn since the Great Financial Crisis, this downturn could make a run at the distinction of being the longest downturn. The only longer stretch of stock market downside was in 2011-12. During that time, the Eurozone debt crisis, US credit downgrade, and government shutdown caused the S&P 500 to stay in negative territory from April 29, 2011, to February 24, 2012.

Thanks for reading. Have a great Labor Day weekend!