2022 May Stock Market Drop

The S&P500 has not hit the “20%” mark for a market correction but we have hit 14% drop since our last market high for the year. I wanted to provide you some analysis and commentary but ultimately we will want to remain patient and not attempt to time the stock market.

Early in the Year Market Declines “Feel” Worse

As of 5/5/2022, we are down 14% from our market high for 2022 and today (5-9-2022) is starting out rough as well. This decline feels more painful when it occurs at the beginning of the year vs later in the year. For example, 2018 saw a 20% decline most of which occurred in the last few months of the year. The market ended up down 6% in 2018 but most investors did not “feel the pain” as much as we do when the drop occurs early in the year.

Investors often feel that when January 1st hits, the returns earned previously are somehow “banked”, so a drop in the beginning of the year often causes more anxiety than a drop later in the year. When investors see a drop later in the year, they seem to feel some of that drop is “the house’s money”. We realize the fact that a loss is a loss regardless of when it occurs, but it is also important to understand this is human nature. It is perfectly normal for market declines earlier in the year to psychologically impact us more than declines later in the year.

How much does the market drop on average?

According to JP Morgan’s excellent “Guide to the Markets”, the market decline’s 14% on average in the last 42 years. The market still ended the year positive in 32 of 42 years.

Market intra-year drops of 14% on average despite positive returns 32 of 44 years

Perhaps one of the greatest examples is the decline in 2020 where the market dropped 34% in only a couple month when the pandemic hit. The market then proceeded to rebound rapidly to finish the year up 16%. Investors that sold even at half way down at 17%, still lost significant upside trying to time the market.

Is this time different? People around me seem really pessimistic?

Interestingly enough, pessimism tends to be good for stocks. If we look at this chart:

Consumer Confidence low is a good sign for future returns

According to the chart above, below average consumer sentiment is a good indicator for better future returns. The logic playing out here is that markets continue to drop as people/investors feel worse about the future. Once all the negativity and selling pressure has run its course, the market then can then rebound. One interesting thing to note is that sentiment is worse than even April of 2020 when the pandemic hit.

Rates are rising, Does that mean the stock market will tank?

Its possible but one of the interesting data points to look at is the following:

Stocks have generally performed well with rising rates as long as they were lower than 3.6%

A few things jump out at me about this chart. The first is that stocks have done well when rates were rising as long as the total yield was relatively low (3.6% since 2009 and 4.5% from 1965-2009). Currently, we are at around 3% for the 10 year bond. If we think the past 13 years or past 55 years are any indication, the current rising rates on the 10 year bond should not choke off stock market growth.

Further, we can look at past rate hike cycles:

Market has averaged 5.8% in tightening cycles

If we look at the past 7 rate hike cycles, the market on average ended up 5.8% and ended up positive in 4 out of 7 cycles. The moral of the story: there is not a convincing enough argument to try to time the market based on Fed tightening.

What about the “I” word…… Inflation?

Inflation has roared ahead dramatically since mid 2021 with the most recent numbers from March of 2022 being 8.6%.

Inflation on a comeback

While food and core CPI are higher than the 50 year average, energy has been dramatically higher at 32%. Energy is notoriously volatile but current pace is increasing quickly. While energy inflation is a concern. The biggest concern from the Fed when they raise rates are wages.

Unemployment at extreme lows and wages are growing rapidly

Unemployment is the lowest it has ever been. Wonder why McDonald’s is advertising for jobs in the drive thru? They are desperate for help. The lack of labor available has caused a run on wages with wage growth growing very quickly.

The Federal Reserve is the most concerned about historically low unemployment and wage pressures more than other items affecting the inflation.

The Federal Reserve has a dual mandate. The Fed reserve seeks to keep unemployment low and keep prices stable. Currently, we have prices increasing rapidly with ultra low unemployment.

Do not let the short term ruin your long term investing plans

This mantra has been my consistent advise to clients that have worked with me over the years. It is very challenging but we need to make sure we do not let short term movements affect our long term plans. I will leave you with a few charts to explain why we need to stick it out with our long term plans.

The average investor (many of which have investment advisors) have underperformed nearly every asset class. How does that happen? Investors try to time the market and jump in and out of different investments at the wrong time. Had the investor simply picked ANYTHING other than commodities, they would have performed better. Moral of the story, stick with our plan and try not to time the market and jump to the latest fad.

As can see from the above chart, our greatest ally is time. We need to be patient and let the 5 and 10 year returns reward us. Diversified portfolios over 5 and 10 year periods are overwhelming positive. While past returns do not guarantee future results, I do think the wise investor should find comfort in their long term goals matching with the markets long term returns.

Ultimately, we need to stick to our long term plan.  It will be nearly impossible to time the next big drop in the stock market.  Should we try, we are more likely to make the call incorrectly and hurt our long term returns.  Attempting to time the stock market is similar to the old “Siren’s song”  longing boats to veer off course and into trouble.  I remain vigilent and will continue to position our portfolios to withstand market jitters and help us reach our long term goals.  If you have any questions, please do not hesitate asking.

I will leave you with the last few times we had similar articles to reassure you that these drops are common and more times than not, they are not signs of worse things to come.


** The information on this website is intended only for informational purposes. Investors should not act upon any of the information here without performing their own due diligence. Reh Wealth Advisor clients should discuss with their advisor if any action is appropriate.

Alot of the slides were take from


SBA EIDL Updates


On March 29, 2020, following the passage of the CARES Act, the SBA provided small business owners and non-profits impacted by COVID-19 with the opportunity to obtain up to a $10,000 Advance on their Economic Injury Disaster Loan (EIDL). The Advance is available as part of the full EIDL application and will be transferred into the account you provide shortly after your application is submitted. To ensure that the greatest number of applicants can receive assistance during this challenging time, the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. The Advance will provide $1,000 per employee up to a maximum of $10,000.

You may be eligible for another loan program, the Paycheck Protection Program, which is available through participating lenders. Below is a comparison of the two loan programs:

                                 Paycheck Protection Program                  Full EIDL Loan

PURPOSEForgivable if used for payroll (minimum of 75% of the funds received) and the remaining for certain operating expenses (amount of any EIDL advance is not forgivable)To meet financial obligations and operating expenses that could have been met had the disaster not occurred (amount of any EIDL advance is forgiven)
TERMSUp to $10 million1% interest rateUp to $2 million3.75% for businesses2.75% for non-profits
MATURITY2 years30 years
FIRST PAYMENT DUEDeferred 6 monthsDeferred 1 year

To locate a Paycheck Protection Program Lender, please visit: www.SBA.gov/PaycheckProtection.

Information on available resources may be found at www.sba.gov/coronavirus. For more information on these services, please go to www.sba.gov/local-assistance to locate the email address and phone number for the nearest SBA district office and/or SBA’s resource partners.

Small Business Help – EIDL and PPP

There are two programs for small business owners, the EIDL loan/grant and the PPP (payment protection plan) loan. Both offer assistance for small businesses. Information is coming out rapidly and the details do seem to be changing slightly as it comes out.

EIDL – Economic Injury Disaster Loan

This loan is taken out directly from the SBA and this is one of the better summaries I have found:


You can also apply for it here:


EIDL mainly required businesses to have less than 500 employee and the corona virus has qualified the location for all 50 states. In addition to employer (corporations) it also includes:

  • Sole Proprietors
  • Independent Contractors
  • and Self Employed people

Approval conditions:

  • Borrow up to $200k without personal guarantee
  • 1st year tax return not required, can borrow based on credit score
  • Do not have to prove you cannot get loans elsewhere
  • $25k or less loans require no collateral
  • Must allow SBA to review tax records

The biggest benefit was the $10k advance that would be a grant and should arrive within days of filling out application. Unfortunately, at this time, it appears that the SBA has been overwhelmed and they are running slow getting them out.

Further, I have found there appears to be some changes coming about based on this story of limiting the 10k to 1k per employee with 10k as the max.

PPP Loans – Paycheck Protection Program

Here is the Fact Sheet from the US Treasury covering the PPP Loans


Highlights, 1% fixed rate loans for small businesses. All Loan terms are the same for everyone.

Loan amounts can be forgiven for:

  • The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
  • Employee and compensation levels are maintained.
  • Payroll capped at $100k for each employee.

The funds are run through SBA Lenders (your typical banks and credit unions usually). The tricky part is that it appears the banks are only helping their current customers.

If you think either program may apply or help you. Please contact me and we can review your situation.

** The information on this website is intended only for informational purposes.  Reh Wealth Advisor clients should discuss with their advisor if any action is appropriate.

Cares Act

Congress has passed the Cares Act. (link below to full text)


  There are many items that could affect you and I will be crafting a longer analysis of items that may impact you and those you know.  Here are some highlights:

1) Individuals making under $75k AGI in 2019 will received $1,200 payment, married couples under $150k will receive $2,400.  An additional $500 for each qualified child.

2) Elimination of 10% early withdrawal penalty for distributions from retirement accounts related to the Corona Virus.  Can be repaid back into the retirement accounts over 3 years.  Income tax may be spread over 3 years as well.

3) It appears all RMD’s from retirement and beneficiary IRA’s have been suspended.  It also appears you can give back distributions taken already this.  I will be confirming these details.

4) Unemployment increased $600 over normal state unemployment.  Benefits available without waiting the normal 1 week period.

5) Additional benefits for small businesses such as loans at maximum 4% interest, potential tax credit, and potential deferring of payroll taxes.

For those looking for additional reading, the best resource I have found so far is here:


Kitces’s intended target market is investment advisors so his articles tend to be technical in nature.

Please do not hesitate reaching out to me with any questions and please do not act without discussing it with a financial advisor.


Steve Reh

Corona Virus – Market Update

Today saw the largest one day drop since 1987 as fear of the corona virus hit the markets. Most market indexes are now down 20% from their high which is what qualifies as a market correction. In 1987, the market dropped over 22% on what is referred to as “Black Monday”.

When Was the Last Market Correction?

Our last market correction of 20% occurred less than 2 years ago in the second half of 2018. It was not as fast as this most recent drop, but markets recovered very quickly in 2019.

Wait, why are some outlets saying we haven’t had a correction since 2008?

I really do not know. They seem to be ignoring the definition of a market correction which by definition is a drop of 20%

How Quickly did we recover from 2018’s Drop?

By April of 2019, the S&P500 had fully recovered from the 20% drop that occurred from late August through December of 2018.

Source: https://en.wikipedia.org/wiki/Closing_milestones_of_the_S%26P_500

Do you see any other times in history that might be a guide?

I do see some parallels with 9/11 in that the world as we previously knew it seemed to be changing and we faced fears we had not seen before.

Due to fear and concerns over the financial firms inside the World Trade center the stock market stopped trading until 9/17. The NY stock exchange opened on 9/17 with a 7% loss and continued to lose over 14% for the week. It was one of the largest 5 day losses the market had seen.

Less than one month later the stock market had regained its pre 9/11 levels


What if we have another 2008?

What do I mean by 2008? I mean another “worst stock market of our lifetime” period. How long did it take to recover from the 2008 stock market?

The recovery came swift and a return to value

  • 40% stocks/60% bond portfolio recovering by November 2009
  • 60% stocks / 40% bond portfolio recovering fully by October 2010
  • The 100% stock S&P500 recovered full by March 2012

The Takeaway

Time periods like we are experiencing now are very challenging for investors. Time periods such as we are in now are tempting to feel that there is no relief in site. However, looking at history, we can see that the stock market, our economy, and country have recovered from even the worst of time relatively quickly. Its persisting through times such as we are in now that allows up to capture the upside of investing. Market timing is tempting and “feels right” when times are rough, however, research has shown us that market timing is extraordinarily difficult (need to be correct over 70%-80% of the time) and in most cases, trying to time the market has hurt our portfolio returns. We are reminded of the “average investor” returns the past 20 years from this slide:

Had the average investor since 1998 simply picked any other the other asset classes and stuck with it, they would have performed better. Further, they did not even outperform inflation.

I will continue to be vigilant in monitoring your portfolios and to ensure we are acting in prudent matters. Please do not hesitate contacting me if you have any questions.

Mortgage Rates Likely to Drop

Mortgage rates dropping

10 Year Treasury Approaching 1% could result in lower 30 year mortgage rates in history

Mortgage rates dropping

The 10 year Treasury Impacts the 30 Year Mortgage

The rates on the 10 year treasury bond is linked closely to 30 year mortgage rates. The simple reason is that mortgage bonds (bonds issued by quasi government entities Fannie and Freddie) compete with the 10 year treasury bond with investors. If the 10 year rate drops, the mortgage bond rate is not far behind and then mortgage rates to consumers are not far behind.

Why have rates not dropped already

Simply, its too soon. The 10 year dropped extremely quickly and mortgage bonds take time to issue and until there is stability in rates (meaning its expected to remain relatively stable), then lenders issuing the bonds will feel more comfortable locking in home refinances at lower rates. Current mortgage rates are around 3.5% but a 1% 10 year, implies that we could see rates approach 3% for 30 year loans.

What should I do?

I am of the belief that any time you can enough of a rate advantage to be worth your time in filling out the paperwork than your should refinance. If rates are better today than your current rate than refinance today. I would not wait for rates to get better. While the 10 year dropped dramatically in a week, it can just as easily reverse course.

One quick item to note. I generally believe in zero cost refinances. You will take a slightly higher rate but the costs to close on the loan will cost you nothing. It makes the math MUCH easier to compare with your current loan (is the rate less?). It also removed the “how long do I have to keep the loan to make the refinance worthwhile” because you immediately benefit from the lower rate. I have also found that those people that pay points to get a lower rate or even who have to pay out of pocket to refinance, are reluctant to refinance their mortgage again even when there is clear advantages.

Its the old “sunk cost” aversion. What that means, is that I paid $3k for my last refinance, I don’t want to lose that money by refinancing. The reality is that 3k is gone and part of the last mortgage. In finance and accounting we call it a sunk cost. It called a sunk cost because it should not affect a future decision to refinance because that cost affect your previous loan and not your current loan.

By taking a slightly higher rate and receiving “negative points” (cash back from lender), the refinance costs you nothing and you can continue to refinance as rates drop without the costs of the loan hurting you.

Any clients should call me whenever thinking about a refinance and I can help advice you on the best loan for you and your goals. I do not sell loans but help you sort through and decide on the best course of action with whomever you use for your refinance.

2020 Corona Virus Market Correction

The corona virus continues to dominate the financial press and has resulted in one of the fastest 10% drops in the stock market that we have seen. While its been fast and furious, I think its important to remember that throughout history the patient investor has been rewarded for taking risk and staying in the market.

The Average Drop in any given year from the market high is 13.8%

As the chart above shows, in any given year we see an average drop of 13.8% from the market high. Even with the recent 10% drop the S&P500 quickly saw. We still have not gone beyond a “normal” stock market pull back. While it can be difficult its important to remember the patient investor is rewarded.

While less common, we can see market corrections of 20% like we saw near the end of 2018. Investors that were patient and stayed invested, enjoyed a great 2019.

It has Always been a bumpy ride even when hindsight feels smooth

The past run since 2008 has survived:

  • Muni Bond “Crisis” – some analysts were calling for massive losses in the municipal bond market and that it would not only hurt the bond market but would hurt equities. Neither the bond market or stock market sufferred and its been a long time since we have heard concerns about massive amounts of muni bond defaults.
  • Greece’s Economic Mess would take down Europe and the US would follow – The market dropped in 2011 but it was short lived and the market continued its climb
  • War on terrorism
  • Previous Epidemic Scares
    • Swine Flu in 2009
    • Cholera in 2010
    • MERS in 2013
    • Ebola in 2014
    • Measles/Rubeola End of 2014 Early 2015
    • Zika Virus at Olympics in 2016
    • Measles/Rebeola 2019

Previous Epidemics have had minimal long term impacts on the Market

You can read the article I wrote a few days ago which discusses the previous impacts of epidemics here:

Doing the “Right” thing feels a little wrong

There is a temptation to “do something” despite research showing us that time and time again, the best advice is to persevere through market pull backs and corrections. Trying to time the market is paved with people that have failed attempting to do so. Here is a quick reminder of the rewards of sticking to our model and long term plan:

This chart from JP Morgan shows us a few things. The Average investor under performs nearly any asset class over the past 20 years. The only way the average investor can under perform nearly every investment is by market timing or by jumping from one fad to the next. Had the investor stuck with a 60/40 portfolio they would have earned over 3% higher returns. Bear in mind the past 20 years from 1998 to 2018 are starting at nearly the peak of the dot com bubble. So the returns are inclusive of both the dot com bubble bursting and the financial crisis.

The next thing to remember is that 2008 was the worst stock market of our lifetimes. However, the recovery came swift and a return to value

  • 40% stocks/60% bond portfolio recovering by November 2009
  • 60% stocks / 40% bond portfolio recovering fully by October 2010
  • The 100% stock S&P500 recovered full by March 2012

A Reminder not to let short term results impact your long term plan

Its often easy to say that we should invest for the long term and stick to our plan. However, once we are in the middle of a market correction, it can be challenging. Here is a reminder of the article I sent the last time the market dropped 20% in 2018 before having a great 2019:

Clients should not hesitate reaching out to me to schedule a meeting or call. I am here and working on helping you reach your financial goals.

** The information on this website is intended only for informational purposes.  Reh Wealth Advisor clients should discuss with their advisor if any action is appropriate.

Corona Virus – History Lesson

Today (2/24/2019) the Corona Virus impacted stock markets driving market indexes down more than 3%. Fears of the impacts of the virus results in a relatively large one day drop for the stock market. I wanted to review past Epidemics to help calm investors and understand the risks to their portfolios and the most prudent action going forward.

Is it Time to Panic?

The simple answer is no. The panicking investor has rarely been rewarded. Right now is the time to look at history and review the results. Market Watch has a great article that shows the past results of similar health scares. https://www.marketwatch.com/story/heres-how-the-stock-market-has-performed-during-past-viral-outbreaks-as-chinas-coronavirus-spreads-2020-01-22

Past History lessons of Health Epidemics with the US Stock Market

EpidemicMonth end6-month % change of S&P12-month % change of S&P
HIV/AIDSJune 1981-0.3-16.5
Pneumonic plagueSeptember 19948.226.3
SARSApril 200314.5920.76
Avian fluJune 200611.6618.36
Dengue FeverSeptember 20066.3614.29
Swine fluApril 200918.7235.96
CholeraNovember 201013.955.63
MERSMay 201310.7417.96
EbolaMarch 20145.3410.44
Measles/RubeolaDecember 20140.20-0.73
ZikaJanuary 201612.0317.45
Measles/RubeolaJune 20199.82%N/A
SourceDow Jones Market Data

Note: I borrowed that table and information from the marketwatch article.

As we can see of the 12 previous epidemics, only one had a 6 month negative return for the S&P500 (HIV/AIDS 1981 0.3% Loss). Only two epidemics had negative returns over the next 12 months (HIVE/AID 1981 16.5% loss, and Measles/Rubeola 2014 with a nearly flat 0.73% return).

World Stock Market Impacts

Great Chart from the Market Watch Article

The above chart I also took from the market watch article. This chart shows the world market return as many of these epidemics started outside the US. As expected, the performance was worse than the US market, however some interesting findings are there.

  • Average returns are not just positive over the 1 , 3, and 6 month periods, the 6 month average return is an impressive 8.50%
  • 9 of 13 periods showed a loss over a 1 month period
  • 4 of 13 showed a loss over a 3 month period
  • The same 4 epidemics showed losses over the 6 months period, with losses of 3.25%, 4.30%, 0.57%, and 3.49%. In all cases, these 6 month losses are fairly tame.

Conclusion – Epidemics historically have had minimal risk to portfolios

While its always possible “this time is different”, history has show us that epidemics are likely the least cause for worry for our portfolios. The fear is that we could have another black plague that devastated Europe and Asia in the 1300s that killed 20 million people in Europe (1/3 of the population). However, modern sanitation and public health practices has mitigated the black plague. The combination of modern medicine, health practices, and modern sanitation greatly reduce the odds of another mass plague.

So while the Corona Virus is scary, the odds are your portfolio should weather this threat well. While we cannot predict the future and the risk that “this time is different”, the past epidemics in modern times have had minimal impact on portfolios. As is usually the case, maintaining market risk/exposure is the prudent course of action and the calm/patient investor will most often be rewarded.

** The information on this website is intended only for informational purposes.  Reh Wealth Advisor clients should discuss with their advisor if any action is appropriate.

Secure Act Summary

In the closing months of 2019 Congress Passed the Secure Act and it has some relatively large impacts on retirement savings and retirement plans going forward. I have read several articles digesting the impact of the act but I think Fidelity has put together the best article that details the impacts fairly well.

Secure Act – Fidelity’s Article here


Secure Act – High Level points:

  • Require Minimum Distribution Age has been changed to 72 from 70.5
    • This only impacts those that have not started RMDs. Those who started RMD’s in 2019 will need to continue to do so even if they are younger than 72
    • As a reminder this is the age you MUST start taking distributions from your retirement accounts that are tax deferred (Roth’s are post tax and are not subject to RMD’s as of the time of this article).
  • Removed the age limit on Traditional IRA contributions (still required earned income)
  • If you worked part time > 1000 hours in one year or > 500 hours over 3 years, you are now eligible for your employers 401k.
  • Parents can withdraw Penalty free up to $5k from retirement accounts the year of a child’s birth or adoption
    • NOTE – This will still be subject to income taxes
  • Basically killed the “stretch” IRA. If someone inherits an IRA that is a non-spouse, funds must be distributed and pay tax with 10 years
  • Added a tax credit for small businesses starting a retirement plan
  • Allows up to 10k to be distributed from a 529 plan to pay down student debt.

If you have any questions on how this may apply to you, please do not hesitate contact me. Please note that the information from this post is meant to be educational and should not be considered advice. Clients should contact me to receive specific advice on your situation.

Schwab Acquiring TD Ameritrade

TD AcquiresSchwab

Schwab Acquiring TD Ameritrade

The Quick Summary of Impacts to TD Clients

  • Minimal impact for the next year
  • Costs are unlikely to change
  • It does not appear any new paperwork will need to be done
  • New competition will keep pressure on costs even with TD/Schwab size
  • We use TD because they provide great service for a great price. If the Schwab does not continue to provide great service and value, we have other options

Longer Version

TD Ameritrade and Schwab have announced intentions for Schwab to acquire TD Ameritrade.  I do not see a huge difference that will impact any of the experiences my clients face as a result of this merger.   My concerns are more that two of the largest discount brokerages are combining forces and I wonder what the impact will be for consumers in general.

Pricing Competition has been good for us

TD Ameritrade and Schwab have both reduced transaction fees for stocks and ETF’s to zero which has been great for consumers.  The competition between them has been great for the consumer.

The reduction to zero was not a result of TD and Schwab competition. A new upstart called Robinhood was the putting pressure on the discount brokerage houses like TD and Schwab so they really had no choice but to match.  Schwab dropped prices at first then TD followed.

What has past acquisitions taught us?

We can also look at past history.  TD was the result of a merger between Ameritrade and TD Waterhouse.  After the merger we have only see cost for financial transactions decreasing and we will likely see that continue.  When Scottrade and TD combined, we did not see costs increase in the industry either.

There are still other competitors and new ones entering the industry

On the RIA advisor custodian side (brokerages that work with firms that are independent Registered Investment Advisors), we are seeing the two largest RIA custodians combine and that competition reduce.  However, E-Trade has been growing their advisor solution and there are rumblings of Vanguard also re-entering the space.  The end result will hopefully be continued competition which is good for all.

Minimal Impact for us

At this time, I do not see merger being bad or good news.  I never like to see our choices or options reduce.  I have also spoken with TD and they have told me the combined Schwab and TD firm is committed to serving advisors like me and my clients.

You are unlikely to have to redo account paperwork (Scotrade clients did not need to “repaper” accounts).   After the acquisition completes, you will likely have to use Schwab’s client portal and will start receiving statement that say Schwab instead of TD Ameritrade on them.

If you have any questions or concerns please do not hesitate reaching out to me.