Ron’s Market Minute – Important Stuff: Changes to Income Taxes, Your Retirement Funds, and Some Suggestions.

Yes, we usually present the ‘Market Minute’ last, but there is so much we need to mention this week.  So, Market Minute first and then for those of you who enjoy a scary story, the recap of March. 

First, we suggest that those of you who do not see your primary care physician regularly take a moment to look up his or her office hours and location. Those guys are really busy these days.

Note that the IRS is doing a bit to help us in that our income-tax filing due date has been moved to July 15th to give us more time. It appears from my reading that we also have until July to pay taxes that are due. (Note this is Federal Tax only — check with your State for changes also.)

You also have till July to make IRA contributions for 2019. And in a surprise to me, there will be additional access to your qualified plan fund (IRA, etc.) for those under age 59 ½. One of the recent bills enacted allows you to access funds from your plans WITHOUT an early withdrawal penalty, and if you pay them back within three years, no income tax either. 

Now, here’s a surprise. Many of you ask us each year if there’s a way to delay or skip your Required Minimum Distributions. You will be able to skip the distribution for 2019 entirely with no penalty.  (Note this was also done in 2009.) And on that note, for those of you who have asked, yes that means you can discontinue distributions for the rest of this calendar year to give your qualified plan some time to potentially build back up.  We remind you that this is our reading of some parts of the recent bills passed.  Check with your tax professional for current status.

We also continue to receive calls from people asking if this is a good time to add stocks to your investing accounts.  As you’ve heard me say, ‘no one can time the exact bottom’.  Stocks certainly appear to be ‘on sale’, but rather than add a bunch at this time, you might add 1/3 of the amount you’re thinking about each month for three months, for example.  From a historic standpoint, on very large pullbacks (20% or more) stocks have usually retested their lows before moving to a new UP market.  Given that the peak of the new virus infections and death rates are currently expected to peak around the third or fourth week in April, we would expect horrific headlines and perhaps a re-test of the market lows at that time or later. 

And on that note, (whew), remember that we are here to answer your questions, have a video chat, or a phone call. Remember that all of the past market plunges have passed, and markets have gone on to new highs. We believe that will again be the case. But for now, stay home, stay safe, and stay healthy!

Weekly eLetter: Wildest Month Ever

You have just lived through the wildest month EVER in stock market history. It was wilder than any month in 1929, 1987, or even 2008. What do I mean? It was NOT that March of this year was the worst performing month in the history of markets. That title goes to September 1931 in which the DOW Index* dropped a record 30.7%! By comparison March 2020 is the 16th worst month overall for worst single one-month loss (since 1915) with ONLY a 13.7% decline. But March was the craziest.

I’m talking about what really knots the stomach: volatility! March 2020 had the same total market movements as EIGHT average months — all stuffed into one month. That’s why March felt like the longest month ever (for us, at least!). It had some records we don’t want to re-live. It had the highest VIX ever recorded (measure of market volatility) since VIX began in 1993, the 3rd largest daily loss and 5th biggest daily gain since 1915. Here’s how the volatility looks on a chart.

Now that chart may not look all that extreme, but have a look at a comparison vs. January, a more normal month.

January was somewhat volatile but looked absolutely placid compared to March.

But on top of the numbers, March was especially insane for investors because of the constant news media blaring the speed at which everything was happening. Media gave us up-to-the-minute number of Coronus infections and deaths — even on a state-to-state basis. The NYSE circuit breaker tripped multiple times within multiple days, and DJT sent Lou Dobbs a signed stock market chart, and put out more tweets and posts than ever…it was truly overwhelming. It gave us a deluge of information, fear, and most importantly…uncertainty. And to finish it off, we spent the past week or more separated from each other every day. This makes it feel like March was much more real than what we might read in a history book.

It’s one thing to read a history of the Great Depression, but that’s not at all the same as watching the economy grind to a halt. It’s not the same as seeing Costco run out of peanut butter (and other essentials!), and it’s certainly not the same as seeing the unemployment numbers suddenly increase by 10 million- in the space of two months!

I can only hope and pray that my now more recent (very) limited understanding of an event like the great Depression STAYS LIMITED. As wild and insane as March was, I hope we never see one like it…. NEVER. And that this horrific memory will fade into the history books.

Thankfully, volatility has fallen sharply of late and even though the bull market hasn’t returned, market moves are becoming more manageable and I am not seeing waves of forced selling at any price. This is all part of a process that will take time.

I’ll end on a positive note – and yes, we can report a couple of positive items from this past month: first, the downward force of market momentum on March 23 was the greatest that I’ve ever seen. Second, the VIX (volatility indicator) appears to be settling down to the mid 50’s.  Both of those are technical indicators seen closer to the bottoms of market pullbacks. We’re not calling a bottom, but noting that these are indications that the worst may be behind us. We will be breathing easier when the 5-day moving average of the VIX reaches below 45.

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk

This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners and/or select but unaffiliated third parties. DSWP provides Market Information for illustrative and informational purposes only. If you wish to receive this weekly commentary by email please contact us at 602-252-8700 or by e-mail at lindaw[@] If you are receiving this commentary via email and would prefer not to please let us know either by email or phone.

Ronald Denk is an Advisory Representative offering services through Denk Strategic Wealth Partners, A Registered Investment Advisor. He is also a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

Denk Strategic Wealth Partners is not affiliated with Lincoln Financial Securities Corporation. Information in this commentary is the sole opinion of Denk Strategic Wealth Partners. Past performance is no guarantee of future returns. All market related investments involve various types of risk, which include but are not restricted to, credit risk, interest rate risk, volatility, going concern risk, and market risk.

The Update provides information of a general nature regarding legislative or other developments. None of the information contained herein is intended as legal advice or opinions relative to specific matters, facts, situations or issues. Additional facts, information or future developments may affect the subjects addressed in this document. You should consult with an attorney, accountant or DSWP planner about your particular circumstances before acting on any of this information because it may not be applicable to your situation.

Lincoln Financial Securities and Denk Strategic Wealth Partners and their representatives do not offer tax advice. Please see your tax professional regarding your individual needs.

*The indices are representative of domestic markets and include the average performance of groups of widely held common stocks. Individuals cannot invest directly in any index and unlike investments, indices do not incur management fees, charges, or expenses, therefore specific index returns will be higher. Past performance is not indicative of future results.