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Combating Market Volatility

 

Financial markets are off to a challenging start this year as high inflation and rising interest rates have impacted both the stock and bond market. But at a time when news headlines and investors appear focused on the negative outcomes, we’re here to discuss some proactive moves investors can make to combat market volatility.

 

This year’s decline in both stocks and bonds has been painful for passive investors. Year-to-date a traditional portfolio of 60% stocks and 40% bonds has declined more than 10%, which is on pace for its worst year since 2008.

 

However, with the right professional financial advice, investors can be making proactive portfolio adjustments to better suit the current market environment.

 

Some of these adjustments might include implementing positions that benefit from higher inflation, shifting equity exposure from previous leadership to areas of the market that are emerging as winners in this new environment, and focusing on dividend stocks and higher yielding bonds.

 

Within equities, for over a decade, investors have been able to rely on growth areas of the stock market for leading market returns, however, now these areas such as consumer discretionary and technology are showing early signs of a possibly dimming return outlook.

 

While those areas may be challenged, prospects for other areas of the market appear to be brightening. These include areas such as the natural resource/energy sector, companies with less economically sensitive businesses (such as tobacco, food producers, and large-cap pharmaceutical companies), and companies that pay consistent dividends.

 

To that point, a diversified portfolio of dividend stocks can offer investors a dividend yield of 3 to 4%, with the potential for dividend increases over time. Because dividends have represented 40% of the stock market’s return over the past century, we continue to focus on income an important component of total return.

 

And sticking with a focus on income - as a result of price declines this year, high quality corporate bonds now offer investors a yield (interest rate) of nearly 4.00%, versus only 1.75% a year ago. So, for the first time in several years, bonds are offering reasonable interest rates for investors.

 

But, as always, diversification, and a team approach remain important. If you’re concerned about market volatility and want to learn more, or just have questions about your portfolio or retirement, we’re here to help. Give us a call!

 

 

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Changes approaching with TCJA sunsetting

Posted By Lineweaver Financial Group
March 11, 2025 Category: Tax

By Mark Sipos, Director of LFG Tax Services The Tax Cuts and Jobs Act (TCJA) of 2017 is the signature tax legislation from Trump’s first term in office, and it cut income tax rates for many taxpayers. Some provisions — including the majority affecting individuals — are slated to expire at the end of 2025. The nonpartisan Congressional Budget Office estimates that extending the temporary TCJA provisions would cost $4.6 trillion over 10 years. For context, the federal debt currently rings in at more than $35 trillion, and the budget deficit is $711 billion.  Below is an overview of anticipated changes for both businesses and individuals:  Business Reduce the current 21% corporate tax rate to 20% or 15%, with the goal of generating growth. Eliminate the 15% corporate alternative minimum tax imposed by the Inflation Reduction Act (IRA).  Individuals Eliminate the estate tax (which currently applies only to estates worth more than $13.99 million). Repeal or raise the $10,000 cap on the deduction for state and local taxes. Create a deduction for auto loan interest. Eliminate income taxes on tips, overtime and Social Security benefits. Possible Offsets The House GOP document outlines numerous possibilities beyond just spending reductions to pay for these tax cuts. These include:  Tariffs There is a proposed 10% across-the-board import tariff. President Trump, however, has discussed and imposed various tariff amounts, depending on t

Actively Managed Portfolios at Lineweaver

Posted By Lineweaver Financial Group
March 11, 2025 Category: Markets, Portfolio, Financial Planning, Managed Accounts

By Chad Roope, CFA®, Chief Investment Officer We recognize that the market is currently experiencing turbulence and volatility not seen in several years. Given the strong returns we experienced in 2023 and 2024, the instability of the last week feels particularly unsettling for most of us. Given this volatility, we’ve made recent trades and rebalanced our clients’ portfolios. Despite the current uncertainty, we anticipate that 2025 will be a reasonably good year for stocks. Our belief is that we will finish the year with returns in the mid- to upper-single digits. Over the course of the year, however, we expect the markets to be much more volatile than what we have experienced over the past few years.  Our belief that the economy is still fundamentally strong has three supporting points. The first is earnings, which are growing at a strong rate. In addition to good earnings, we're beginning to see the market broaden beyond just a few top tech stocks. Many other stocks are also trending higher as we enter 2025. Finally, while there’s a great deal of uncertainty in terms of policy, tariffs, trade deals, and other changes in Washington, we also think that these changes – and the volatility that comes with them – are creating opportunity.  Within our clients’ investment accounts, we've recently rebalanced our strategies. Some of the things that did so well last year were slightly above our target weights, leadi

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Posted By Lineweaver Financial Group
February 12, 2025 Category: Tax, Scam, Fraud

By Mark Sipos, LFG Tax Director Tax season is here, and with it are scammers looking for their next victim. Scammers mislead you about tax refunds, credits, and payments, so it’s important to be aware of what their scams can look like.  Common schemes Scammers are always changing their tactics in hopes of exploiting you. There are a flurry of deceptive schemes that pop up and this year will be no different. Recently, the IRS has seen scammers do the following: Request gift cards over the phone through a government impersonation scam or by sending a text message, email or social media message. Remember, the IRS never asks for or accepts gift cards as payment for a tax bill. Pose as an IRS agent and call the taxpayer or leave a pre-recorded voicemail stating they are linked to some criminal activity. Threaten or harass the taxpayer by telling them that they must pay a fictitious tax penalty. Instruct the taxpayer to buy gift cards from various stores. Pressure the taxpayer to buy gift cards, then ask the taxpayer to provide the gift card number and PIN. To verify it’s the IRS, go to IRS.gov and verify the form or visit the Let Us Help You page to verify tax information with self-service options. Know who’s calling If the IRS does need to contact you, they will typically contact you the first time through regular U.S. mail delivered by the USPS. The IRS doesn't initiate contact with taxpayers by email, text messages, or social media channels

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Case studies are intended to illustrate the types of financial issues faced by actual clients. They should not be construed as a testimonial for or endorsement of Lineweaver Wealth Advisors. They do not represent the experience of any advisory client. Each client’s situation is different, and their goals may not always be achieved. Lineweaver Wealth Advisors, LLC, is not engaged in the practice of law or accounting. Tax information provided is general in nature and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. Tax rules and regulations are subject to change at any time.
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