The Armstrong Report: Spring 2023 Firm Update

Greetings! I had this all prepared in early March, but then we had the Silicon Valley Bank failure. Time for a new article!

ECONOMY

Many indicators, such as the Conference Board’s Index of Leading Economic Indicators (LEI), the yield curve inversion, and a slew of others, point to a recession in the near future. However, recent strength in the stock market, retail sales, and a few other indicators suggest that a recession may either be avoided or put off for a while. The bank stress we are witnessing may compound things, though. We will likely know which is correct within a few months.

MARKETS

While US stocks are not cheap, if we avoid a recession they certainly can climb from here. If, however, we do get a recession, then it is very likely markets take another leg lower. By the way, foreign stocks have quietly been outperforming US stocks recently. Whether this is a flash in the pan or something more enduring, we will have to wait and see. Many of our models have the highest foreign stock exposure in years. Bonds, in the wake of the bank scare, are having a tremendous rally.

HEALTH SAVINGS ACCOUNTS (HSAs)

For years these types of accounts have been one of the best ways to handle medical expenses. Individuals and families must have a high-deductible health insurance plan in order to open and contribute to an HSA. This basically means your premiums should be lower, but you may have more frequent out-of-pocket expenses while maintaining catastrophic coverage. So, what’s the big deal? First, any investment (yes, you can invest the money) growth is untaxed. Distributions for qualified medical expenses are also untaxed. Also, there is no “use it or lose it” mandate. Plus, once you are 65, you can use it for any regular expenses. You will be taxed, but not penalized. Recent federal legislation makes it even better. Please see the HSA Chart—courtesy of Ed Slott’s IRA Advisor—in this newsletter for more information.

HOW SAFE IS YOUR MONEY?

With the failure of two banks (as of this writing), the question for many is whether their money is safe in a bank. My answer is, regardless of bank, if you have $250,000 per social security number or less, you should be fine. If, however, you have more than that in one bank, may I suggest one of two options: 1) Consider reducing your deposit at each bank to $250,000 or less per individual, OR 2) consider adding to your LPL accounts. I know that sounds self-serving, but accounts at LPL actually have far more protection and oversight than most realize. Please see a listing of these in this issue. Call your wealth manager if you have questions.

Have a fantastic Spring!