The Cox Connection

Vol 3 Issue 3 ||July 2020

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Does Your Portfolio Fit Your Retirement Lifestyle?

Most portfolios are constructed based on an individual's investment objective, risk tolerance, and time horizon.

Using these inputs and sophisticated portfolio-optimization calculations, most investors can feel confident that they own a well-diversified portfolio, appropriately positioned to pursue their long-term goals.¹

However, as a retiree, how you choose to live in retirement may be an additional factor to consider when building your portfolio.

Starting a Business?

Using retirement funds to start a business entails significant risk. If you choose this path, you may want to consider reducing the risk level of your investment portfolio to help compensate for the risk you're assuming with a new business venture.

Since a new business is unlikely to generate income right away, you may want to construct your portfolio with an income orientation in order to provide you with current income until the business can begin turning a profit.

Traveling for Extended Periods of Time?

There are a number of good reasons to consider using a professional money manager for your retirement savings. Add a new one. If you plan on extended travel that may keep you disconnected from current events (even modern communication), investing in a portfolio of individual securities that requires constant attention may not be an ideal approach.² For this lifestyle, professional management may suit your retirement best.

Rethink Retirement Income?

Market volatility can undermine your retirement-income strategy. While it may come at the expense of some opportunity cost, there are products and strategies that may protect you from drawing down on savings when your portfolio's value is falling—a major cause of failed income approaches.

Footnotes: 1) Diversification and portfolio optimization calculations are approaches to help manage investment risk. They do not eliminate the risk of loss if security prices decline. 2)Keep in mind that the return and principal value of security prices will fluctuate as market conditions change. And securities, when sold, may be worth more or less than their original cost. Past performance does not guarantee future results. Individuals cannot invest directly in an index.Keep in mind that the return and principal value of security prices will fluctuate as market conditions change. And securities, when sold, may be worth more or less than their original cost. Past performance does not guarantee future results. Individuals cannot invest directly in an index.


The Technology Sector

The Covid-19 pandemic has caused a watchful eye on technology stocks and their resilience during this type of market environment.

Technology companies have not been immune to decreasing revenues this year but they have held up well. Money being spent, by both individuals and companies, is being spent on technology. Blackrock, a leading asset management firm, noted in its recent market commentary that a Fortune 500 CEO poll found that 75% of companies plan to increase their technology budgets.

Blackrock also noted that when the U.S. Central Bank increases liquidity the technology sector has historically benefited. An increase in liquidity makes money more available for borrowing by businesses, and if that Fortune 500 poll is correct, an increase in spending on technology is already happening or is on its way.

Technology is doing better than other sectors because locked down communities have turned to technology for entertainment, gaming, telecommuting, increased communications, groceries, and other shopping. Technology has been the reason many businesses can keep moving forward during crises mode and it is the reason so many people have remained close to their friends and family.

Going forward, the presidential election and the development of a vaccine could have a negative impact on technology firms. Large companies could see some slow down with a Democratic win in November and if an effective Covid-19 vaccine increases consumer sentiment, investors may move towards other revitalized sectors for returns. Overall however, the future for technology sector appears positive and resilient.

Source: https://www.blackrockblog.com/2020/05/26/why-technology-is-proving-surprisingly-defensive/

Let's turn to the broader markets and how they have performed during the second quarter of 2020. The global stock markets have come back significantly from the low point of March 23, 2020; as seen with double digit returns from the major stock indices below for the second quarter of 2020. Going forward we expect stocks to remain positive but somewhat volatile as we figure out how schools and businesses will operate in the near term and if a Corona Virus vaccine will help us going into 2021. That combined with the upcoming presidential election will keep investors emotional and active in the markets.

Bonds have performed just as we needed them to so far this year. Their modest returns provided much needed stability in client portfolios and they offer a yield many investors need as opposed to holding cash. The below chart demonstrates the stability bonds offer and why they are such an important part of a diversified portfolio. Going forward investment managers are reassessing their bond positions as the potential for default rates are rising. Once the supply chain normalizes and consumer spending increases, businesses can be fully operational and lower their risk of bond default. During this type of market environment we prefer shorter term high quality bond positions.

Market Performance as of 6/30/20

  • S&P 500 TR: QTD 20.54% and YTD -3.08%
  • Dow Jones Industrial Average TR: QTD 18.51% and YTD -8.43%
  • MSCI EAFE (International Stocks): QTD 14.88% and YTD -11.34%
  • MSCI Emerging Markets: QTD 18.08% and YTD -9.78%
  • Bloomberg Barclays US Aggregate Bond: QTD 2.90% and YTD 6.14%
  • Bloomberg Barclays Global Aggregate Bond: QTD 2.42% and YTD 3.90%

Total returns of the indices mentioned are provided by Morningstar, MSCI, and S&P Dow Jones. None of these firms nor their Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the information on their websites, including, but not limited to information originated by them, licensed by them from information providers, or gathered by them from publicly available sources. There may be delays, omissions, or inaccuracies in the information. Past returns are no indication of future results. Sources: 1)https://www.fa-mag.com/news/looking-back-at-the-markets-in-march-and-ahead-to-april-2020-55001.html 2) https://www.cnbc.com/2020/03/14/a-look-at-bear-and-bull-markets-through-history.html 3)https://www.morningstar.com/ 4)https://us.spindices.com/indices/equity/dow-jones-industrial-average

Consider Adding to Your Savings Plan

Many research analysts are comparing the recent market performance to the 2008 financial crisis. The 2020 recovery is happening faster than the markets did in 2008.

If you are able, now it is a good time to be contributing to your investment accounts.

We welcome your appointment with our office to review your portfolio or current scenario. Please don't hesitate to call 281-395-8300. We want to be there for you when you need us. Let us know how we can help.

With big events come scammers to take advantage of the situation. We want to make you aware that you may a target. Here are the top four scams to be on the lookout for:

  1. Fraudulent account openings and money transfers.
  2. Firm impostors - Cox Global and our investment partners will never contact you requesting secure information unexpectedly. When in doubt call us directly.
  3. Tech support scams - never provide information to someone who calls you without you having requested the call.
  4. Compromised email scams - don't click the link!

Visit https://www.finra.org/investors/insights/fraud-and-your-investment-accounts-during-covid-19-pandemic to learn more about what you can do and how to report a potential scam.

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Cox Global Associates, Inc. || 1260 Pin Oak Road, Suite 204 || Katy, TX 77494 || 281.395.8300 https://www.coxglobalassociates.com/ || info@coxglobalassociates.com

Securities and Advisory Services are offered through Geneos Wealth Management, Inc. FINRA, SIPC. Investment advisory services also offered through Cox Global Associates, Inc., A Registered Investment Advisor.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. "Does Your Portfolio Fit Your Retirement Lifestyle" was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.