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  • How to Invest in Precious Metals: A Comprehensive Guide

    Table of Contents Navigation Key Takeaways How to Invest in Precious Metals Buying the Physical Asset Directly Pros and Cons of Owning the Physical Asset Open a Gold IRA Pros and Cons of Opening a Gold IRA Investing in Precious Metal ETFs, Closed-End Funds, and Mutual Funds Pros and Cons of Investing in Precious Metal Mining Stocks and Funds Invest in Precious Metal Mining Stocks and Funds Pros and Cons of Investing in Precious Metal Mining Stocks and Funds Purchase Futures and Options Contracts Taxation of Precious Metals Final Thoughts Overall Pros and Cons of Investing in Precious Metals Precious metals have been a staple of human civilization for thousands of years. While today, currencies are not backed by precious metals, it was not long ago that most of the world's economy relied on the Gold Standard as the base of currency value. Today, precious metals are still one of the most popular commodities and serve as a way to help diversify an investor's portfolio. Precious metals, particularly gold, are considered 'safe-haven assets,' meaning they are expected to retain or even increase in value during economic volatility. Individuals seek shelter in precious metals due to their tangible nature and potential to protect wealth during economic uncertainty. That said, precious metals are not always a safe investment, even though they are a safe haven asset. Like any other investment, there is a fair market price for precious metals (a spot price). And just like any other investment, the spot price can go up or down. In addition, precious metals are seen as a hedge against inflation and a store of value. This means that precious metals hold their value over long periods. However, history has proven this to be unreliable in the short term. This is because there are periods when precious metals outperform inflation and times when they do not. Like any other investment, you may unknowingly purchase gold at a high price, and when the price drops, it may take many years for it to come back up to get a return on your investment. This is not to say that precious metals are a bad investment. On the contrary, precious metals have historically had a low correlation to the stock market, suggesting they can be powerful tools for diversifying your portfolio. In addition, there is comfort for some investors in the physical nature of the asset, which is otherwise not true in the stock and bond market. How to Invest in Precious Metals There are three predominant ways to invest in precious metals: Purchasing the physical asset directly or through an account such as a gold IRA, Investing in precious metal exchange-traded funds (ETFs), closed-end funds (CEFs), and mutual funds, or precious metal mining stocks, or Trading futures and/or options contracts. It is crucial to weigh the pros and cons of each of these strategies before investing. In addition, some of these strategies are only prudent for some investors, depending on your overall investment goals, expertise, experience, and capacity to take on risk. Buying the Physical Asset Directly Physical precious metals (or bullion) can be an alluring and emotionally satisfying way to own precious metals. They come in various shapes and sizes and can be purchased through a reputable online or local dealer. The value of the bullion is derived from the content and purity of the precious metal, with at least 99.5% (995) being the international standard for investment-quality gold bars. The various forms of precious metals include: Ingots (also called bars) are cast and molded into a shape, usually rectangular, for easy transport. These are also traditionally stamped with the manufacturer's name, the purity, and the weight of the piece. People typically think of these when conjuring the image of gold in a bank vault. Coins are issued by government mints (e.g., the U.S. Mint is the division of the U.S. Treasury Department responsible for producing coinage) and are legal tender, meaning they can be used to buy goods at a store. Collectible coins may have a higher fair market price due to their collector value, the rarity of the design, and the mintage (the number of coins produced in that year). They may also be graded based on their quality. The Sheldon Scale is the industry standard, and it rates coins on a scale of 1 to 70 -- 1 being poor quality and 70 being perfect and flawless. One thing to remember with coins is that using them to pay for goods would be inadvisable. This is because its denomination is substantially lower than the value of the precious metal within it. For example, you could purchase $50 worth of goods with a one-ounce American Gold Eagle coin even though it contains potentially thousands of dollars worth of gold. Rounds are often confused with coins as they are both circular; however, rounds are not legal tender, nor does their design change year after year. Private mints manufacture rounds and bars, whereas government mints usually make coins. Some of the most well-known coins include: American Eagle, Canadian Maple Leaf, South African Krugerrand, Australian Kangaroo, Chinese Panda, and British Britannia. Another way to invest in physical precious metals is by purchasing jewelry. Jewelry is something you can wear proudly and can be a fun hobby to share and appreciate with others. Often, long-standing, high-quality jewelry companies produce pieces with a tremendous history, so owning that piece can be like owning a piece of history. However, the price of jewelry is affected by both the cost of the metal within it and the piece's craftsmanship. Jewelry is usually made of alloys (mixtures of metals) rather than pure gold, silver, etc. The jewelry's gold contents are measured in karats, with 24 karats being 100% pure gold. Moreover, the price of jewelry typically fluctuates more than just owning the precious metal outright due to the added volatility of the fashion of the time and any deformities to the jewelry from wearing it. Pros and Cons of Owning the Physical Asset Open a Gold IRA A gold IRA, also called a Self-Directed Precious Metals IRA, has the same tax structure as a Traditional IRA -- money can be contributed pre-tax, investments in the account grow tax-deferred, and when money is withdrawn upon retirement, you pay income taxes on the distributions. The main difference between your average Traditional IRA and a gold IRA is that the latter can purchase physical bullion, whereas the former cannot. The Internal Revenue Code also regulates which precious metals can be held in gold IRAs. Only bullion that meets minimum fineness requirements and is produced by governments or approved private manufacturers/refiners can be purchased within a gold IRA. Not every brokerage firm offers gold IRAs. There are three entities involved in getting started with a gold IRA: a distributor/dealer, a custodian, and a depository. If you want to open one, you will have to go to a dealer -- the company that sells physical precious metals. These dealers work with specialty brokerage firms called custodians, who set up the gold IRA, manage the transfer, rollover, or contribution of funds into the account, and facilitate purchasing and transporting the precious metals to where they will be stored. The place where the metals are stored is called a 'depository' and is separate from the custodian. The investor can take possession of the metals at any time, however, the IRS deems this a distribution from the account, and the investor will pay taxes and likely a penalty if they are under 59 1/2 years old. That being said, most major depositories offer the ability to visit and inspect your metals on-site upon request. Gold IRAs are also subject to the same contribution limits as Traditional IRAs, and you must also take required minimum distributions (RMDs) once you reach your required beginning date. Pros and Cons of Opening a Gold IRA Investing in Precious Metal ETFs, Closed-End Funds, and Mutual Funds Many individuals already have at least one investment account and can purchase exchange-traded funds (ETFs), closed-end funds (CEFs), and mutual funds. This is a more liquid and lower-cost entry into the precious metal market. These funds may buy the precious metal themselves, and the fund's price will track the cost of the physical precious metal. Like most other funds purchased in the stock market, these funds charge fees that can be higher or lower than the cost to store and insure the precious metal yourself. The ongoing fee is called the expense ratio, and mutual funds may have an additional commission for buying the fund, referred to as a load. Mutual funds tend to have higher fees than ETFs if they are actively managed, meaning the fund manager and their team research and analyze the investments and make decisions for the fund on an ongoing basis. Meanwhile, ETFs are usually passively managed, which means there are very few if any, ongoing changes and decisions made about the investments in the fund after it is opened. Pros and Cons of Investing in Precious Metal ETFs, CEFs, and Mutual Funds Invest in Precious Metal Mining Stocks and Funds In addition to purchasing funds, investors can buy stock in companies that mine, refine and trade precious metals. Like with funds, individual stocks can be purchased directly from an investment account, which is often simpler than buying the physical metal. Mining stocks have the added benefit for investors in that the companies can profit in two ways: firstly, the price of the metals rises and, therefore, so too do their profits; and secondly, the company may raise production over time. Also, these funds may provide income through dividends and interest for individuals looking for extra portfolio income. Pros and Cons of Investing in Precious Metal Mining Stocks and Funds Purchase Futures and Options Contracts Of the ways to invest in precious metals listed above, trading futures is the riskiest. Futures contracts are agreements between two parties in which one party agrees to sell, and the other agrees to buy a good at a set price at a future date. When the settlement date of the contract arrives, the seller delivers the goods, and the buyer receives the goods at the agreed-upon price. These contracts are traded on an exchange (for U.S. gold futures, the exchange is the New York Mercantile Exchange) by speculators and commercial traders (those who make and use the commodity). An individual could also purchase or sell options on precious metal stocks or ETFs. If you purchase an option, you make a contract with another party representing the right, but not the obligation, to buy the investment at a specific price. These contracts have expiration dates, and for more experienced investors, they can be a way to invest without needing to put up a lot of upfront capital. These forms of investing are very complicated and highly speculative. For these reasons, it is mainly done professionally by sophisticated investors, not at a beginner level. Moreover, investment accounts need special approval from the brokerage firm to trade these investments. Taxation of Precious Metals Sales of precious metals are subject to special tax rates. This only applies if you own the asset directly or invest in ETFs backed by precious metals in a taxable account like an individual brokerage account or a trust. These special rates do not apply in a tax-advantaged account, like a retirement account. In a retirement account, there are no taxes paid for selling precious metals. It is only when you make distributions from the retirement account that you pay taxes at your ordinary income tax rate. Usually, when you sell an asset, it is subject to capital gain rules: If you hold an asset for a year or less and sell it for a profit, the gain is taxed at your ordinary income tax rate. This is referred to as a short-term capital gain. Conversely, if you hold an asset for longer than one year and sell it, the gain will be taxed at a rate of up to 20%. This is called a long-term capital gain. However, for tax purposes, precious metals are treated the same as collectibles (like art, comic books, baseball cards, etc.), and these items have special, less favorable tax rates: If you hold a precious metal for a year or less and sell it for a profit, the gain will still be taxed at standard short-term capital gains rates -- at your ordinary income tax rate. However, if you hold it for longer than a year and then sell it, the gain will be taxed at your ordinary income tax rate up to 28%. For example, if you are in the 22% bracket, the gain will be taxed at 22%. But if you are in the 32% tax bracket, it will be taxed at 28%. Note that these special capital gains rates also apply for trading ETFs backed by physical precious metals. This is because the IRS deems each share of the ETF as ownership in the underlying metal itself. This is not true, however, for stocks, ETFs, or mutual funds not backed by physical precious metals (like individual shares of mining companies or funds of mining companies). Final Thoughts Owning precious metals can be a great way to diversify your investment portfolio and hedge your investments against downward swings in the stock market and real estate. For example, from November 2008 to March 2009, the S&P 500 fell about 30%; meanwhile, the price of gold increased by about the same amount. For this reason, precious metals are often seen as a 'safe haven asset' -- an asset that tends to retain (or even increase) its value during challenging economic times. Investing in precious metal stocks, ETFs, closed-end funds, and mutual funds is often the most prudent way for investors to get exposure to the asset. That being said, be careful. Every form of investing carries risks, and investing in precious metals is no different. Like any other asset, the value of precious metals goes up and down. For example, if you had bought gold when it peaked in September 2011, you would not have seen a nominal return on your investment until July 2020, and in between then, your investment would have bottomed down over 40% in November 2015. If you want to buy or sell precious metals and are wondering what the price is, look for the metal's 'spot price.' At this price, buyers and sellers mutually agree to trade for the asset today. The spot price is usually measured as a dollar amount per troy ounce. Troy ounces are the standard unit of measurement for precious metals and are typically abbreviated 't oz' or 'oz t.' Note that standard ounces and troy ounces are not the same. Troy ounces are about 10% heavier than standard ounces. As measured in grams, a troy ounce is about three grams more than a standard ounce. Overall Pros and Cons of Investing in Precious Metals If you have questions about whether investing in precious metals may be right for you, talk with a financial advisor or tax professional. You can schedule a complimentary, no-obligation call with us here! If you liked this post, please share it and let us know if you have any comments or questions! ** This writing is for informational purposes only. The author and Holzberg Wealth Management do not guarantee or otherwise promise any results that may be obtained from using this report. No reader should make any investment decision without first consulting their financial advisor and conducting their own research and due diligence. These commentaries, analyses, opinions, and recommendations represent the personal and subjective views of the author and do not constitute a recommendation, offer, or solicitation to make any securities transaction. The information provided in this report is obtained from sources that the author believes to be reliable. External links to third parties are being provided for informational purposes only. Holzberg Wealth Management is not affiliated with the third-party websites linked to, unless otherwise explicitly stated, and does not constitute an endorsement or approval by Holzberg Wealth Management of any of the third party’s products, services, or opinions.

  • Debt Ceiling Part 2: Why the Debate Continues to Matter

    HWM Market Recap - May 2023 For the past year, the stock market has gone sideways. At the beginning of May 2022, the S&P 500 Index was 4,130.61. Twelve months later, it began May 2023 at 4,166.79. Then, two days later, the index closed at 4,090.75. That is about as sideways as you can get. Naturally, there have been lots of ups and downs along the way. As we have written about in previous newsletters, we believe those fluctuations are the market’s way of working through short to intermediate-term uncertainties about the future. These stock market zigs and zags are unsurprising given the changing economic fundamentals (e.g., rising interest rates and inflation) and political disruptions (e.g., continued war in Europe and supply chain issues) facing the world economy. For now, as things look worse, the market will go down and as things look to be improving, the market will go up. Perhaps the most immediate and timely political puzzle to solve is raising the debt ceiling. That is, increasing the amount the federal government is legally allowed to borrow. The point being that since the federal government spends more than it collects in taxes, it must borrow money. As discussed in our February newsletter, January 19th marked the day the federal government reached its debt limit of $31.381 trillion. In addition, we noted that the government would likely not reach an agreement until the eleventh hour: “...short to intermediate-term solutions will be found, but most likely not until the last minute or even slightly beyond the last minute. This is to say that the ‘last minute’ is not some precise moment in time but rather a moving target that goes from, let’s say, June into the fall.” On May 1, 2023, Treasury Secretary Janet Yellen sent a letter to the Congressional leadership stating that the funds available to the Treasury Department “will be unable to continue to satisfy all of the government’s obligations” as soon as June 1st. Since January, in addition to tax receipts, the Treasury has used ‘extraordinary measures’ to meet the government’s spending obligations which are expected to be soon exhausted. According to the U.S. Department of the Treasury: “Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents.” At this moment, what is important to understand is that we are going to hear and read a great amount of information about what is being proposed and about what agreements are acceptable. One purpose of this article is to outline the proposals that are under consideration and to suggest what will happen before an agreement is reached. The important thing for us to understand is that there could be significant financial market disruption along the way to a compromise. History shows that financial market turmoil is needed to motivate reaching an agreement. In the meantime, both parties have dug in their heels and are waiting for the other side to blink. Forewarned is forearmed, so do not be surprised by market aggravation caused by the risk of debt default. Current circumstances have happened before. Let’s frame the terms of the debate. Currently, the only legislation that exists to raise the debt ceiling is the Limit, Save, Grow Act of 2023, recently passed by the House of Representatives. Items in the legislation: Raise the debt ceiling by $1.5 trillion or until March 31, 2024, whichever comes first. Limit discretionary spending for fiscal year 2024 to the level of fiscal year 2022. Limit the growth in discretionary spending to 1% maximum for the next decade. Rescind unspent COVID relief funds, which will be returned to the Treasury. Make changes to energy, regulatory, and permitting policies. Cut the increased spending for the Internal Revenue Service. Prevent implementation of the plan for student debt cancellation. Impose or expand work requirements in several federal safety net programs. The executive branch’s position is that they do not want to negotiate; they will only agree to a “clean” debt limit raise or suspension. In other words, without any conditions. The reality is that we have a divided government where legislation requires bipartisan compromise. While the politicians argue, the financial markets will endeavor to sort it all out as millions of people react to the evolving risks and seek to protect their savings and investments. Both parties want to avoid a government default on its debt, which could lead to sustained damage to the financial markets and the economy. As long as the Treasury has funds, there is little incentive to compromise, but once the limits are reached, there is every reason to make a deal. Defaulting on our national debt payments would be a choice made by the White House and the Treasury. This is because there are more than enough tax revenues to pay principal and interest when due. If the debt ceiling is not raised, many other payments may not be timely made. By prioritizing federal debt obligations, we will not have a default that would, in turn, impair the full faith and credit of the United States. Some will say that the House is attaching conditions to the debt limit increase, is holding the economy hostage, and thereby threatening default. The reply is that the Limit, Save, Grow Act raises the debt ceiling. Some will say the White House is the obstacle to raising the debt ceiling because the Senate could adopt the House bill, and then the President could sign it into law, thereby raising the debt ceiling. What makes the most sense is for the politicians to begin negotiations with the aim of arriving at a timely compromise agreement. However, the debate will likely continue to unfold until financial market turmoil forces the parties to agree. We continue to live in an elevated-risk environment, and market volatility could increase as events unfold. There is much to be concerned about at this moment in geopolitical history; the disagreements over raising the debt ceiling are but one of many. In the meantime, we have been earning dividends and interest, with the interest earnings at levels not seen in many years. We remain cautious, and as always, we are just a phone call away. Monthly Changes in Indices Year-to-Date Changes in Indices S&P 500: +1.46% S&P 500: +8.59% Dow Jones Industrial Average: +5.34% DJIA: +3.48% Nasdaq Composite: +0.04% Nasdaq Composite: +16.82% Monthly Performance By Sector Year-to-Date Sector Performance Communication Services +7.20% 1. Comm Servs +25.19% Real Estate +6.99% 2. Technology +21.46% Financials +5.63% 3. Cons Discret +14.79% Energy +5.41% 4. Cons Staples +4.34% Consumer Staples +5.36% 5. Materials +4.11% Health Care +5.06% 6. Real Estate +2.90% Technology +4.63% 7. Industrials +2.21% Utilities +4.55% 8. Health Care -1.39% Consumer Discretionary +4.31% 9. Utilities -1.46% Materials +3.57% 10. Energy -1.75% Industrials +1.79% 11. Financials -2.56% Monthly Top 5 Performers Communication Services +7.20% Communication Services jumped from the second-best-performing sector in March to the best-performing sector in April. Its leaders included: Meta Platforms Inc (+13.39%), Comcast Corp (+9.89%), Twitter Inc (+7.64%), Electronic Arts Inc (+5.67%), and Paramount Global (+4.57%). Real Estate +6.99% Real estate finished the month of April as the second-best-performing sector after finishing second-worst in March. Its leaders included: Ventas Inc (+10.84%), Welltower Inc (+10.50%), AvalonBay Communites Inc (+7.32%), Invitation Homes Inc (+6.85%), and Equity Residential (+5.42%). Financials +5.63% Financials were hit hard in March following the issues in the banking industry. The sector finished the month strong as the third-best-performer with its leaders including: Brown & Brown Inc (+12.14%), Arthur J. Gallagher & Co (+8.76%), Marsh & McLennan Companies Inc (+8.54%), Aflac Inc (+8.26%), and JPMorgan Chase & Co (+6.85%). Energy +5.41% Energy was the fourth-best-performing sector in April, with its leaders including: Hess Corp (+9.61%), EQT Corp (+9.18%), Exxon Mobil Corp (+7.92%), Pioneer Natural Resources Co (+6.52%), and Devon Energy Inc (+5.57%). Consumer Staples +5.36% Consumer staples has been in the top five best-performing sectors for the last three months. Its leaders in April included: Molson Coors Beverage Co (+15.09%), Mondelez International Inc (+10.04%), Church & Dwight Co Inc (+9.85%), Kimberly-Clark Corp (+7.95%), and The Hershey Co (+7.33%). After reporting it had lost $102 billion in deposits following the collapse of Silicon Valley Bank, authorities seized control of First Republic Bank and sold most of its assets to JP Morgan Chase. This is the second-biggest bank to fail in U.S. history, topping Silicon Valley Bank’s collapse in March. The government-brokered acquisition is the latest in a series of bigger banks swallowing failing, smaller banks. First Citizens bought SVB, New York Community Bank bought Signature Bank, and UBS bought Credit Suisse. Check out our newsletter from last month, where we discuss what happened with Silicon Valley Bank’s collapse. In a 102-page report, the Federal Reserve analyzed the collapse of Silicon Valley Bank, citing its inadequate supervision and the bank’s failure to manage risks and fix vulnerabilities. Also, in an accompanying letter, the Fed’s Vice Chair for Supervision called for stricter rules and more supervision to be applied to financial institutions. Minutes from the Federal Reserve’s March 21-22 meeting showed that policymakers considered pausing rate hikes due to the issues in the banking industry but ultimately determined that because of high inflation and the tight labor market, they would raise interest rates by 0.25% (25 basis points) despite the likelihood of a recession. The minutes also indicated that the banking industry fallout would send the economy “into a mild recession starting later this year, with a recovery over the subsequent two years.” The Consumer Price Index (CPI) rose 0.1% month-over-month and increased 5% in March from a year ago, down from the 6% year-over-year increase in February. This is the smallest gain for the CPI since May 2021. Core CPI, which excludes food and energy prices, increased by 0.4% in March and was up 5.6% from a year ago. March was the 13th time in the last 14 months that home sales fell. U.S. existing-home sales decreased by 2.4% in March from February and lost 22% year-over-year. In addition, the national median price for an existing home declined by 0.9% in March from a year ago to $375,700, the largest annual decrease since January 2012. This marks the second consecutive month where prices have fallen annually, the first time in eleven years. The average rate for a 30-year fixed mortgage sits at 6.43%, up from 6.32% at the end of March and up 1.33% from a year ago. A new report from Redfin found that some Gen Zers took advantage of low mortgage rates before interest rates increased, putting them on a better homeownership trajectory than other generations. About 30% of 25-year-olds owned their homes in 2022—which is higher than the 27% of Gen Xers and 28% of millennials when they were the same age and a little lower than the 32% rate for baby boomers. Gen Zer homebuyers were most prevalent in Virginia Beach, VA, accounting for 9% of all home purchases last year. The 2022 median sale price for a Gen Z buyer in the area was $255,000. U.S. rents fell 0.4% year-over-year in March to $1,937. This marks the first annual decrease since the pandemic was declared in March 2020 and is the lowest median asking rent in 13 months. Austin, TX and Chicago, IL saw the largest declines in rent over the last year, -11% and -9.2%, respectively. Raleigh, NC and Cleveland, OH had the most aggressive gains, +16.6% and 15.3%, respectively. According to the Financial Times, companies have committed to invest more than $200 billion in U.S. manufacturing projects since the government passed the Inflation Reduction Act and the CHIPS Act. The investments in clean technology and semiconductors are almost double the commitments made to those sectors in 2021 and nearly twenty times those in 2019. As WalletHub’s 2023 Credit Card Landscape Report reported, the average interest rate on new credit card offers in Q1 was 22.15%, up from 18.32% a year ago. Business credit cards saw the highest increase in interest rates, rising by 24.75% year-over-year. At 20.92%, the overall average credit card is the highest since the Federal Reserve began tracking this measure in 1994. If you liked this letter, please share it and let us know if you have any comments or questions! ** This writing is for informational purposes only. The author and Holzberg Wealth Management do not guarantee or otherwise promise any results that may be obtained from using this report. No reader should make any investment decision without first consulting their financial advisor and conducting their own research and due diligence. These commentaries, analyses, opinions, and recommendations represent the personal and subjective views of the author and do not constitute a recommendation, offer, or solicitation to make any securities transaction. The information provided in this report is obtained from sources that the author believes to be reliable. External links to third parties are being provided for informational purposes only. Holzberg Wealth Management is not affiliated with the third-party websites linked to, unless otherwise explicitly stated, and does not constitute an endorsement or approval by Holzberg Wealth Management of any of the third party’s products, services, or opinions.

  • How Silicon Valley Bank Collapsed and What Are the Consequences to the Broader Markets?

    HWM Market Recap - April 2023 Up until several weeks ago, many pundits and economists would say that the market was showing signs of looking up. Inflation was still high but easing, and consumer spending was resilient. Outside of a few industries, the labor market was strong. Retail investors started pouring record amounts of money into the stock market. The Federal Reserve's goal of a soft landing, or no landing, seemed achievable. And then it happened. First, it was Silicon Valley Bank and Signature Bank, then First Republic Bank, and then Credit Suisse. A number of banks are in hot water as their overexposure to risk is boiling to the surface. So what is going on? Let's focus on Silicon Valley Bank (SVB), the largest U.S. bank to fail since the Great Financial Crisis of 2008. Arguably the cracks began to show for the bank in January. During its quarterly earnings report, SVB revealed that the assets it was holding had tens of billions of dollars in unrealized losses. These assets were heavily invested in long-term government bonds with substantial interest rate risk. Therefore, as the Fed increased interest rates aggressively, the value of SVB's bonds decreased substantially. In other words, if it were forced to liquidate the bonds, SVB would be underwater -- which at the time seemed unlikely. Every bank has a risk department that monitors the risk levels of their assets, but SVB was operating without a Chief Risk Officer from April 2022 until January 2023. The next piece of the puzzle was a billionaire tech venture capitalist named Peter Thiel -- a co-founder of Paypal and one of the first investors in SpaceX and Facebook. By Thursday, March 9th, the influential VC had withdrawn all of his firm's money from SVB while also advising his portfolio of companies to do the same. Word got out, and many other tech leaders started doing the same, followed by individuals hearing the news, leading to a run on the bank. The next day, the Federal Deposit Insurance Corporation (FDIC) closed the bank. The FDIC is a federal program that insures bank deposits up to $250,000. Therefore, so long as you have less than $250,000 in cash at a bank, that money is guaranteed by the full faith and credit of the U.S. government. If you have more than the insured limit, the FDIC will only guarantee the first $250,000 but nothing beyond that. SVB, unfortunately, had an unusually high percentage of uninsured deposits. In fact, as of December, about 95% of deposits were over the $250,000 FDIC limit. So consequently, heading into the weekend when banks are closed, customers had no guarantees that they would get all their money back -- at least the amounts over the insured limit. Naturally, people started getting rightly concerned about the status of the banking industry. Over that weekend, no deal was brokered to buy out the bank, so the Treasury Department, Federal Reserve, and FDIC issued a joint statement and took an extraordinary and necessary step to instill confidence in the financial system. The U.S. authorities agreed to make additional funding available to instill confidence that vulnerable banks will be able to meet the withdrawals demanded by their customers, even those uninsured. As of today, First Citizens BancShares acquired SVB's deposits, loans, and 17 bank branches, and the bank's U.K. arm was sold to HSBC for £1. However, some $90 billion of SVB's assets remain with the FDIC. So, what can we take away from this? With the Federal Reserve raising interest rates from near zero to 5% in one year, something was bound to break. No one could know beforehand what or when it would be, so our strategy was to proceed with caution. Even now, it is difficult to say what sort of ripple effect this will have on the economy in the longer term. Small and mid-sized banks saw many of their customer's deposits walk out the door and go to their 'too big to fail' competitors. It is estimated that since the collapse of SVB, around $500 billion was moved into money market funds and bigger banks. Yet still, there are over $7 trillion in uninsured deposits. Shortly after regulators seized control of the banks, shifts in the market indicated that investors were predicting the Fed would be forced to pause raising interest rates and potentially even begin cutting them. But this didn't happen. The Fed raised rates by another quarter of a percent to continue its fight against inflation. Nonetheless, most of the macroeconomic and monetary data we track points to the fact that we remain in an elevated risk environment. As we discussed last month, markets continue to digest various domestic and international problems, and the debt ceiling debate is still ahead of us (as we wrote about in February). All of this is to say we anticipate continued volatility. For this reason, we believe we are not out of the woods yet and remain cautious. Monthly Changes in Indices Year-to-Date Changes in Indices S&P 500: +3.51% S&P 500: +7.03% Dow Jones Industrial Average: +2.07% DJIA: +0.90% Nasdaq Composite: +6.69% Nasdaq Composite: +16.77% Monthly Performance By Sector Year-to-Date Sector Performance Technology +10.84% 1. Technology +21.62% Communication Services +8.67% 2. Comm Servs +21.19% Utilities +4.88% 3. Consumer Discret +16.13% Consumer Staples +4.21% 4. Materials +4.26% Consumer Discretionary +3.05% 5. Industrials +3.44% Health Care +2.21% 6. Real Estate +1.92% Industrials +0.64% 7. Cons Staples +0.68% Energy -0.05% 8. Utilities -3.26% Materials -1.05% 9. Health Care -4.32% Real Estate -1.41% 10. Energy -4.41% Financials -9.52% 11. Financials -5.55% Monthly Top 5 Performers Technology +10.84% Technology was the best-performing sector for the second month in a row. Its leaders included: Intel Corp (+31.05%), Advanced Micro Devices Inc (+24.73%), Salesforce Inc (+22.11%), Arista Networks Inc (+21.02%), and NVIDIA Corp (+19.66%). Communication Services +8.67% Communication Services jumped into the top five performing sectors for March, with its leaders including: Meta Platforms Inc (+21.15%), Alphabet Inc Class A (+15.18%), Alphabet Inc Class C (+15.17%), Activision Blizzard Inc (+12.25%), and Take-Two Interactive Software Inc (+8.90%). Utilities +4.88% Utilities was the third-best performing sector for the month of March. Its leaders included: Southern Co (+10.34%), NextEra Eneregy Inc (+8.52%), Edison International (+7.73%), Pinnacle West Capital Corp (+7.55%), and Consolidated Edison (+7.07%). Consumer Staples +4.21% Consumer Staples was again one of the top five best-performing sectors. Its leaders included: The Kroger Co (+14.44%), McCormick & Co Inc (+11.96%), Kimberly-Clark Corp (+8.28%), Procter & Gamble Co (+8.09%), and Mondelez International Inc (+7.56%). Consumer Discretionary +3.05% Consumer discretionary was the fifth-best-performing sector in March. Its leaders included: Chipotle Mexican Grill Inc (+14.57%), Domino's Pizza Inc (+12.61%), Inc (+9.61%), Lennar Corp (+8.65%), and Darden Restaurants Inc (+8.51%). The Consumer Price Index (CPI) rose 0.4% in February, easing from a 0.5% gain in January. Over twelve months, prices were up 6%, down from a rate of 6.4% year-over-year in January. The core CPI (which excludes food and energy prices) rose 0.5% month-over-month in February and was up 5.5% annually. This is the smallest 12-month increase since September 2021. The Federal Reserve again raised interest rates by 25 basis points (0.25%) this month, marking the ninth straight interest rate hike. The Bureau of Labor Statistics reported that U.S. employers added 311,000 jobs in February. That said, unemployment did tick up to 3.6% from January’s over-50-year low of 3.4%. Following the news of Silicon Valley Bank and Signature Bank, the yield on 2-year U.S. Treasury Notes fell at a rate we have not seen since Black Monday in 1987. Two-year treasury notes dropped 55.6 basis points (5.56%) to 4.03%. According to Freddie Mac, the average rate on a 30-year fixed mortgage is 6.42%. Rates increased slightly in March and peaked at 6.73%, the highest since November when they hit a two-decade high of 7.08%. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which tracks the change in value of the residential housing market, saw the rate of increase for housing slowing for the seventh month in a row. The index was up 3.8% year-over-year in January, easing from a rate of 5.6% in December. It was the slowest annual rise since December 2019. The cities with the most significant annual price gains were Miami (+13.8%), Tampa (+10.5%), and Atlanta (+8.4%). Prices fell annually in San Francisco (-7.6%), Seattle (-5.1%), San Diego (-1.4%), and Portland (-0.5%). According to the National Association of Realtors, the national median existing-home sale price fell 0.2% year-over-year to $363,000 in February. This marks the end of 131 months of consecutive annual increases, the longest on record. The Western U.S. and Northeast experienced the most significant price cuts, while prices climbed in the Midwest and South. Sales of previously owned homes, which comprise most of the market, increased by 14.5% from January to February, snapping a twelve-straight-month streak of declines. In his first veto, President Biden rejected a bill that would have overturned a Labor Department rule regarding ESG funds -- also known as sustainable or impact funds. The now-preserved DOL rule allows retirement fund managers to consider environmental, social, and governance (ESG) factors in their investment choices. Protestors in France have flooded the streets of cities across the country, showing their disapproval of President Emmanuel Macron’s plan to raise the national retirement age. President Macron used his executive power to bypass Parliament and raise France’s official retirement age from 62 to 64. Macron campaigned on the promise to raise the official retirement age to help keep France’s shrinking pension fund alive, noting that the retirement age needs to reflect that French citizens are living on average three years longer than a few decades ago. Apple and Microsoft now make up 7.11% and 6.14% of the S&P 500, respectively. This is the highest level of dominance that any two stocks have had in the index since IBM and AT&T in 1978. If you liked this letter, please share it and let us know if you have any comments or questions! ** This writing is for informational purposes only. The author and Holzberg Wealth Management do not guarantee or otherwise promise any results that may be obtained from using this report. No reader should make any investment decision without first consulting their financial advisor and conducting their own research and due diligence. These commentaries, analyses, opinions, and recommendations represent the personal and subjective views of the author and do not constitute a recommendation, offer, or solicitation to make any securities transaction. The information provided in this report is obtained from sources that the author believes to be reliable. External links to third parties are being provided for informational purposes only. Holzberg Wealth Management is not affiliated with the third-party websites linked to, unless otherwise explicitly stated, and does not constitute an endorsement or approval by Holzberg Wealth Management of any of the third party’s products, services, or opinions.

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  • About Us | Holzberg Wealth Management

    About Us At HWM, we strive to provide you with the vital information you need to make safe and profitable financial decisions as we travel together through the uncharted waters ahead. OUR MISSION We work with you to create personalized financial plans to act as a map along your financial journey. At HWM, we provide expert financial planning and investment management services and strive to help individuals and families achieve financial security and independence. We are committed to providing unbiased, transparent, and client-centered services to help you make more informed decisions about your money and reach your financial goals. See How We're Different O U R S TORY Holzberg Wealth Management was founded in 2013 as an independent, family-owned and operated wealth management practice based in Marin County, servicing clients locally in the San Francisco Bay Area and virtually nationwide. ​ As a father-son team... We bring a special dynamic to our work, and we love what we do. We love meeting new people. We love hearing abo ut their journeys and what led them to us. And we love every opportunity to exp lore and grow with our clients as we walk the path to financ ial freedom together. ​ Growing together Each new individual and family we meet is an opportunit y for us to positively impact their lives. It brings us great pride and joy that we can help plan unique financial paths so that you can pursue your most fulfilling life. Our clients appreciate the personal touch and meticulous attention to detail we bring to the financial planning process. As Harris says, ​ "Every detail is a whole new world." ​ We are committed to helping you achieve financial success, and we believe this is evidenced in the long-lasting relationships we have with our clients, some of whom have been with us for decades. ​ A passion for serving others... Our clien ts value not only our expertise and experience but the genuine care and dedication we give each of them. Our passion for serving others encourages a deep appreciation for what is important in life, resulting in outstanding outcomes for you and your family. P ROUD M EMBERS O F About Harris Harris is a Chartered Financial Consultant® (ChFC®) and Chartered Life Underwriter® (CLU®) at Holzberg Wealth Management. He began his career four decades ago, traveling the country and teaching the securities licensing exams to stockbrokers and supervisors. He has worked at many prestigious firms, including Prudential-Bache, First Union Securities, Wedbush Securities, and The Equitable Life Assurance Society of the United States. Harris has also distinguished himself as an expert witness in domestic and international arbitrations testifying in complex securities litigation. He has also contributed his expertise to help write test questions for the financial advisor licensing exams on behalf of the North American Securities Administrators Association (NASAA). t : 415.891.4046 f : 415.945.8821 e : Talk to Harris About Marcus Holzberg About Marcus Marcus is a CERTIFIED FINANCIAL PLANNER™ at Holzberg Wealth Management. Before joining the firm, Marcus worked for the private equity and consulting firm AlphaSights in downtown San Francisco. From there, he moved to Manhattan, working in the entertainment industry for Sloss Eckhouse Dasti Haynes LawCo and Cinetic Media. During his time at the firms, he worked across both companies in various advisory capacities, including business and legal affairs, financing, corporate consulting, brand relations, and more. Talk to Marcus t: 415.847.3433 f: 415.945.8821 e:

  • Holzberg Wealth Management | Home

    W ELCOME T O H OLZBERG W EALTH M ANAGEMENT Y OUR P ARTNER I N F INANCIAL P LANNING & I NVESTMENT M ANAGEMENT O UR S ERVICES Comprehensive Financial Planning Develop and implement financial management strategies into an integrated plan to maximize the potential to meet your financial goals. Investment Management & Advising Professional portfolio design and management customized to align with your risk tolerance, investment experience, financial objectives, and personal values. Retirement Planning Safe withdrawal rate analysis, savings and income strategies, and an enhanced understanding of retirement benefits, so you retire with confidence. Income Tax Planning & Projections Leverage tax credits and deductions to augment your savings and reduce your tax burden for a more financially secure future. Estate Planning & Legacy Building Build a program for effective and efficient asset transfer in accordance with your wishes, along with charitable gifting strategies. Insurance & Risk Management Planning Evaluate and identify risk exposures, and lend guidance on how best to reduce, retain, or transfer risk. Explore More Of Our Services WHY HOLZBERG WEALTH MANAGEMENT OUR PROMISE Together, we create a customized plan that helps you achieve financial freedom by aligning your money with your priorities and aspirations. We work closely with you to help you achieve those goals by upholding our fiduciary duty to deliver value that is always in your best interests. How We're Different M EET U S A Registered Investment Advisory Firm Since 2013 As financial advisors, we help you transform the 'guesswork' of making financial decisions into a more measured path forward. We accomplish this by utilizing sophisticated yet easy-to-understand methods of analysis coupled with best-in-class research and technology. Harris Holzberg Harris Holzberg ChFC®, CLU® Chartered Financial Consultant® Chartered Life Underwriter® The founder of Holzberg Wealth Management, Harris is an expert in investing and retirement planning with over four decades of experience. Read More Marcus Holzberg, CFP® CERTIFIED FINANCIAL PLANNER Marcus specializes in financial planning and investing for young professionals, as well as student loan analysis and employer stock options. Read More TM Connect With Us! Rest easy knowing your financial future is in good hands. H OW I T W ORKS We understand that planning for your financial future can be overwhelming. We're here to guide you every step of the way to help you achieve your financial goals. INITIAL ASSESSMENT We start by identifying your initial concerns, objectives, and life goals. We take this time to assess your unique needs, and uncover where you are financially and where you want to be. We aim to align our thinking with your sensibilities to strengthen our collaboration along your financial journey. Initial Assessment Lead to Evaluating and Planning Evaluating and Planning Leads to Monitoring and Modifying Your Financial Plan EVALUATE & PLAN With your goals and objectives as a roadmap, we design and configure a plan tailor-fit to you. Together, we weigh the alternatives available with the potential changes in outcomes. We'll also provide insights into making the road ahead clearer and more achievable. MONITOR & MODIFY As circumstances and assumptions change over time, we work with you to monitor your plan to ensure we are making progress toward your goals. As necessary, we restructure or modify the plan to ensure we stay on track. Learn More About How It Works A S S EEN I N O UR I NSIGHTS Investment Planning How to Invest in Precious Metals: A Comprehensive Guide Discover how to invest in precious metals and gain valuable and historical knowledge into the benefits of diversifying into these assets. Newsletter Debt Ceiling Part 2: Why the Debate Continues to Matter Newsletter How Silicon Valley Bank Collapsed and What Are the Consequences to the Broader Markets? Newsletter Navigating Volatility. What You Need to Know About the Market Right Now. Explore More Insights

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    C ONTACT U S Submit Thank you for your submission! POTENTIAL TOPICS TO TALK ABOUT... Comprehesive Financial Planning Comprehensive Financial Planning Investmet Management and Advising Investment Management & Advising Retirement Planning Retirement Planning Income Tax Planning and Projections Income Tax Planning & Projections Estate Planning and Legacy Building Estate Planning & Legacy Building Insurance and Risk Managemet Planning Insurance & Risk Management Planning Call Us +1 (415) 891-4046 Email Us HQ Corte Madera, CA Servicin g clients in the SF Bay Area and nationwide.

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