Monthly Archives: February 2020

Karl Eggerss was interviewed on CBS and discussed how to avoid making mistakes with your money the closer the election gets.

Sharon Ko:                         Election season gets people fired up on both sides of the aisle. Consider how changes to the oval office can affect your money. First, expect fluctuations.

Karl Eggerss:                      We tend to see a weak stock market after a new president takes office, which makes sense because they may have a different philosophy. Obviously, it could lead to a different Congress. So again, you could have all types of changes happening and that… Wall Street doesn’t like uncertainty.

Sharon Ko:                         But with that, financial advisor Karl Eggerss says, “Don’t let your emotions muddy your strategy.”

Karl Eggerss:                      We saw that back in the last election, as a matter of fact. Nobody really knew what was going to happen, who was going to win, and the market went one direction then changed violently the other direction, started to go up and people were caught that made too big a moves. They were caught on the sidelines not really knowing when to get back in.

Sharon Ko:                         So what is the best action to take? Eggerss says stress tests that portfolio of yours.

Karl Eggerss:                      Think about possible scenarios today because things can change, right? If we do have a different president, if we have a different Congress, tax rates could change. So it’s best to have a diversified portfolio. Sounds a little cliché, but a diversified portfolio that can weather the storm, and that’s one that you can sleep at night with, regardless of the outcome of the election.

Sharon Ko:                         The top assets he recommends to invest in, stocks and real estate, they perform the best long term.

On the Trey Ware Show, Karl explained why stocks have continued to move up recently despite what seems like bad news.

Trey Ware:                         Well, let me get my friend Karl Eggerss in here from a joining here on the Stevens Roofing Newsmaker Hotline like he does every single Monday. And Karl this thing over with the coronavirus, it has been growing and spreading and most of China is basically shut down now. It’s a big, big economic story, isn’t it?

Karl Eggerss:                      It is. What’s interesting though is why is their stock market, it’s erased all of the losses, when the Corona virus first came out and people are wondering, why is that? And it’s because they’re cutting interest rates, they’re injecting capital, and they’re doing these things to stimulate their economy because they are fearful that this is going to spiral down and cause the massive recession. But the stock market has recovered its losses and then you look at our stock market and it’s pretty much near all time highs as well, and it’s pretty much for the same thing. People look at the Federal Reserve and what are they doing? The Federal Reserve is not going to raise interest rates anytime soon. In fact, they’re probably going to cut them.

Karl Eggerss:                      And so that’s the key to making money in this market, is not necessarily reacting to the news. Take the news into consideration, but with your portfolio look at what’s going on behind the scenes and figure out why are stocks [inaudible 00:01:10] the way they are. And it’s really interesting to watch. I mean, you have these countries injecting all this money as if we’re in a recession and Wall Street’s loving it and putting a ton of money in there. Now, again, I want to be clear, I’m not saying that is the healthiest thing long term, so I think that could lead to long term issues, but short term, Wall Street’s loving it.

Trey Ware:                         Yeah. We haven’t reached the 30,000 mark. Any doubt in your mind that we’re going to get there before long?

Karl Eggerss:                      I think we’ll get there. I really do. And I do think we’re starting to see a little bit of complacency on the part of investors, which is interesting to watch. So I expect they pull back at some point here, again, because we have one almost every year in some form or fashion. But, again, as long as the Fed’s staying and their minutes are going to come up this week from their meeting, as long as they say, “Hey, we’re concerned about the coronavirus, we’re concerned about a recession, and we’re not going to raise interest rates,” then the market probably will surpass 30,000 in short order here.

Trey Ware:                         Yeah. And meanwhile, the fundamentals are the same, so stay in there, hang in there, if you’re going to be a long term investor. Thank you, my friend. As always, Karl Eggerss from Check him out and he’s here with us every Monday at this time.


By Justin Pawl, CFA, CAIA

In this week’s edition:

  • Fed Policy Update – The Covid-19 virus may force the Fed’s hand.
  • Losing Altitude – The January retail sales report was crummy.
  • Rising Optimism – Not all economic data releases last week were bad.

Last Week Today. The Treasury auctioned 30-year bonds at 2.061%, the lowest yield in U.S. history, a sign of low inflation expectations as well as an indication of how low/negative global interest rates are pulling down rates here at home. | With Q4 earnings announcements nearly complete, we now have a pretty good understanding of the profit picture. As it turns out, management teams did a good job of sandbagging as S&P 500 company earnings were +2% vs. expectations of -1% at the start of earnings season, boosted by a lower than anticipated effective tax rate of 17% (vs. 20%). | The World Health Organization officially named the disease caused by the corona virus Covid-19. | The U.S. raised tariffs on European Union aircraft imports from 5% to 15%. | On Friday, the U.S. reduced tariffs on $120 billion of Chinese goods as part of the Phase I trade deal.

Two weeks into February, and global equity markets are, so far, shrugging off the negative news and global growth implications of Covid-19, though updates on the pandemic still move markets. The major domestic indices all hit new highs, propelled by growth stocks. The tech-heavy Nasdaq Index is up +6.5% for the month and +8.6% for the year. The more balanced S&P 500 Index gained +1.6% for the week and is +5% YTD. Meanwhile, international stocks are experiencing ‘failure to launch’ thus far in 2020 – the MXEA Index (developed international equities) is up on the month, but it’s flat for the year. Yields on U.S. Treasuries ended the week relatively unchanged, but exemplary of the risk-on appetite, the spreads on high yield bonds ratcheted lower. The price of WTI Crude bounced +3.4% for the week, but remains down -15% for the year at $52.05 per barrel.

For detailed weekly, MTD, and YTD financial market performance, click on the table below:


Fed Policy Update. Federal Reserve Chair Jerome “Jay” Powell spent two days testifying before Congress last week as part of the Fed’s semi-annual Humphrey-Hawkins testimony. Powell’s message was one of confidence that current interest rates are appropriate, similar to his message following the January FOMC meeting. He was, of course, asked about Covid-19’s impact on the U.S. economy. Powell’s response was honest and accurate, and can be summed up as the Fed doesn’t know what the effect will be, but it’s “very likely” to have some impact on the U.S. He went on to say that the Fed will act if the virus “leads to a material reassessment of the outlook”. This stance is consistent with the Fed’s messaging since they stopped lowering rates last October: interest rates are in a good place and will stay here unless the Fed is forced to act. Careful Fed watchers pointed out that Powell’s comments imply the Fed is more likely to ease than raise rates this year, since his original remarks in October preceded Covid-19. Which brings us to the week’s economic data…

Losing Altitude. The retail sales report for January was flat out bad. Although headline sales increased by the consensus forecast of +0.3%, the GDP influencing “control group” was flat (the control group excludes sales receipts from more volatile retailers including auto dealers, building-materials retailers, and gas stations). Adding insult to an already weak report, the previously reported robust retail sales of +0.5% for December were cut by more than half to +0.2%. In sum, consumers began stuffing their hands in their pockets in the fourth quarter, and as of January had still not pulled out their wallets. With consumption making up nearly 70% of GDP, Q1 growth is starting out on shaky ground. Keep in mind that this data preceded the outbreak of Covid-19 and its attendant disruptions to global supply chains, which will not have a positive impact on the U.S. economy.


The chart above highlights the volatility of retail sales (note the gray line), so it’s possible that next month’s revisions will show an upward adjustment and the troubling trend will reverse. However, if the consumer does not get in gear soon, the Fed will be hard pressed to refrain from cutting interest rates (Presidential election or not) without risking a recession. Moreover, outside of inflated asset prices, the Fed is clear to cut rates as inflationary pressures (as measured by the Fed) are subdued. If the economy were a plane, it would be flying uncomfortably close to the ground. At 2%’ish growth it’s more vulnerable to a recession than if it were growing at 3% or 4%. It’s not time to brace for impact, but the plane did lose some altitude with this latest retail sales report.

Rising Optimism. Economic data released last week wasn’t all bad, though data from even a month ago needs to be taken with a grain of salt since much of it reflects information prior to the spread of the Covid-19 virus. Nevertheless, both the NFIB small-business optimism index (rising from 102.7 to 104.3) and consumer confidence data improved.

The University of Michigan’s consumer confidence measure improved to a near two-year high of 100.9. This closely monitored measure of consumer confidence consists of two sub-indexes:

  • The Present Situation Index – consumers’ assessment of current business and labor market conditions
  • The Expectations Index – consumers’ short-term outlook for income, business and labor market conditions.

Importantly, much of this month’s bounce came from the expectations index, which has been trailing the current conditions index by a wide margin. The general pattern for these two indices is that during periods of economic recovery, the Expectations Index will be higher than the Present Situation Index, as consumers anticipate better times ahead. On the other hand, in the mid-to-late stages of an economic cycle, the Expectations Index tends to lag the Present Situation Index as consumers grow increasingly skeptical about the future. While both data series are volatile, wide gaps between the Present Situation Index and the Expectations Index have presaged economic recessions as illustrated in the chart below.


Sources: Bloomberg, L.P. and Covenant Investment Research.

In February, the Expectations component jumped from 90 to 92.6. While the Expectations Index remains well below current conditions, if consumers are becoming less concerned about the future, they are more likely to spend money now and that could augur for a rebound in retail sales. Every journey begins with a single step.

Be well,


On this week’s podcast, Karl Eggerss explains why the rest of the world is just figuring out what we already knew about China.

Hey, good morning everybody. Welcome to the podcast. My name is Karl Eggerss and this is Creating Richer Lives, the podcast version. Of course, if you want the other version, the website version, just go to And you also can give us a call at (210) 526-0057. And a just a reminder, the show is brought to you by Covenant, lifestyle, legacy, philanthropy. I had somebody this week as a matter of fact, I had a meeting with them.

We were talking about different things, and one of the things regarding social security, I’ll mention in just a minute, but they said, “We always like talking to you because we always realize or learned something that we didn’t know before.” And I said, “Well that’s our goal.” Because yeah, it’s easy to say Covenant does financial planning or does investment management or does tax preparation, but at the end of the day we are a financial advisor really helping you extract value any way we can.

In fact, this particular client didn’t know that they could claim their ex husband’s social security and nobody was going to tell them that except for us, and so we did that. And also speaking of social security, that same individuals got confused about the tax ability of social security. And it got me thinking how many other people out there have this same concern?

And here’s what it is. If you’re single, you can make, I believe it’s $25,000 a year and your social security is not taxable. And then between 25,000 and 34 and change, it’s taxed at half. And then above that, 85% of it’s taxed. She thought that the tax on her social security was 85%, like the tax rate. And I said, no, no, no, 85% of the social security is taxed. So when you look at your tax return, there’s a box that says, what did you get on your social security?

They look at the rest of your income and then a portion of that is going to be taxed and that number gets added to the rest of your income before your deductions and so forth. So big clarification there. And again, she might’ve filled out her tax form incorrectly if she was doing it herself. So watch that. That is something that, I don’t know. Did you think that, and it’s interesting because I’ve had people over the years tell me, my social security is, almost all of it’s taxed.

And I’m wondering if they’re thinking that it literally, we don’t get almost all our social security because it goes away to taxes. That’s not the case, it’s how much of it is taxable. So I wanted to clarify that. Hopefully, you don’t think that. Anyways. All right, well let’s jump right in to the week here, because we had another interesting week, didn’t we?

We had really, we thought Coronavirus was kind of in the rear view mirror and it kind of was, it seemed like at least Monday and Tuesday we saw the market pretty strong on Monday, pretty strong on Tuesday, and really the big news Monday and Tuesday was Jay Powell, head of the Fed of course saying, “Hey, we’re monitoring the Coronavirus.” And the market kind of sold off a little bit, but nothing major, right?

And I was, by the way, I was watching these politicians ask Jerome Powell these questions, and they’re kind of comical because they ask questions that sounds like a third grader asking questions, where they’re trying to ask a question about the economy or interest rates, and they just don’t know what they’re talking about, but they’ve got their time and they’re trying to sound smart, and unfortunately they don’t, and I was literally laughing listening to some of these questions.

So, but he testified and nothing major there. And then of course, Wednesday we had another strong day up almost 300 points for the [inaudible 00:04:53]. So we’re rolling along during the week. And then it got interesting. After the bell, we get some “updated numbers” on the Coronavirus from China. And they said, there’s actually a few more cases because we’ve been, we changed the way we calculate it.

And I had to laugh because the rest of the world’s like, “Oh my gosh, China change their numbers on something? How could they have been so wrong?” And I had to laugh because in the finance world, and you guys know this, because most of you have been listening for a while, China changes their numbers all the time on stuff, and a lot of people don’t believe a lot of the numbers coming out of China, right?

Do you trust the growth rate? Do you trust some of the earnings coming out? Do they use the same accounting methods? Do you trust all of these things? And most of the finance world has always taken some of their data with a grain of salt and now the rest of the world says, “Yeah, maybe we should take all of their data with a grain of salt in terms of the Coronavirus.”

So it got people thinking, is this a bigger problem? Again, is the slowdown that we saw with the Coronavirus, is that really not happening? So we saw a little bit of weakness on Thursday, little bit of weakness on Friday, kind of a flat day during the week. Now Friday, there was a huge divergence between growth, we’ll call growth momentum. We’ll throw that in the same bucket versus value.

And this is no, really nothing new under the sun, right? We continue to see that, but big big divergence on Friday and for the year, we’re sitting here with value stocks down on the year. Meanwhile, the NASDAQ is up quite a bit over 8%, and so what’s going on here? Well, I saw an interesting thing this week talking about previous bubbles. I don’t know if you think we’re in a bubble or not. I don’t think the market is in a bubble, but I do think there’s pockets of bubbles, but they called this particular bubble, the disruptors bubble.

And I think that makes sense. I think if you look at the companies that are getting rewarded. Amazon changing retail, that’s a disruption. They’re changing the way retail is happening, not new. They’ve been doing it for a while, but changing it.

Tesla, the stock that’s gone vertical as of late. Why now? Well, disruption, right? Changing the way automobiles are running from a combustible engine to battery technology. Google, right? I can look up any information in less than a second on Google, and the way they really have monetized advertising.

Microsoft, how much more productive has Microsoft made us. You see though that most of these are technology companies and that’s pretty much what’s been working, but they’re not cheap. That’s the key. Why don’t we just go and dump money in that if that’s the key?

Well they’re not cheap. I mean, I frankly think Microsoft is very expensive right now. And I understand why it got to this point, but very expensive and that’s… Microsoft is a fascinating and great company, all of these companies are, that’s not really the issue. It’s what are you paying for these companies. Had you overpaid for some of them during the dot-com bubble, you had to wait 15 to 20 years just to break even.

So I think that’s the decision as investors we have to make is, we want to continue to participate in the market. The market has been strong, we’re still in a bull market. The Coronavirus is for the most part being shrugged in terms of the financial markets. So we want to participate, but we have to continue to participate in a smart manner, because things are getting more and more expensive. And so you have to really continue to know what you own.

But look, let’s switch gears, why is the market continued to go up? Why is it shrugging off Corona, and it is. How do I know that? Because we were at an all time high just a few days ago. The reason why it’s going up, let’s go look at the Fed’s balance sheet, the Federal Reserve, go look at their balance sheet. They were trying to shrink it in 2018.

Now, yes we had tariffs, but they were trying to shrink it and they were shrinking it in the market through a tizzy, right? And the fed was raising rates, and we had that 20% decline in the fourth quarter practically of 18. Why did it turn around so dramatically? Yes, it was oversold. Right? But the Fed stopped raising interest rates and not only that, they started increasing their balance sheet. Go look at a picture, it’s a V-bottom.

I mean it literally turned around and now they’re increasing their balance sheet, doing these repo agreements and all of that. They are injecting money into the system and as they continue to do that, that’s all the market seems to care about. That is the main thing driving stocks right now.

Now, are companies going up in their stock prices because their profits are rising? Yes, there’s plenty of companies doing that, that’s why stocks go up. But when you look at the overall market and see the persistence it has had you wonder why this is. I mean, Morningstar put out a piece the other day saying that there has not been a 2% trading day up or down for stocks since August 23rd of 2019, 110 trading days. Why is that? The Fed’s injecting capital.

So, as investors it confuses us sometimes. We look and say, but what about the news? But what about world war three? Remember that a few weeks ago? What about politics? All of this trumps that. And that’s the key, is to understand what’s moving the stock market more than why you think it should be moving the stock market. A lot of people have been sitting out this rally because they don’t agree with it. You can do that, but at your own peril, because it has been going up and it’s been strong, and it’s primarily been because the Fed has been injecting more money in there.

Now let’s spend a couple of minutes. I got this question earlier in the week. How do politics factor in to the stock market? Well, we know over the next few months, things may get a little more volatile, especially if the poll numbers start to change a little bit. And the reason why is, nobody likes change, right? Even if you don’t like the current president or love the current president, or like the current policies or hate the current policies, you know what you’re dealing with.

And when they’re stumped in changes coming, that’s when markets get a little unsettled. And that’s why you tend to get a weak stock market after there’s a change in the presidency, because there’s a change. Something is going to change. That president who got in there didn’t run on, “I’m going to keep everything in exact same.” Right? That wouldn’t get anybody elected. They say, I’m going to fix this and fix that and I promise this promise that.

And therefore markets tend to struggle in the first year after a change. So if we get a change, yes, could we see some, a weak market? Absolutely. But there’s other factors in there. Right? I just mentioned the big one, which is the Fed. What is the fed doing? And then right now the Fed is keeping rates very low and they probably will all through the election and look, another reason they’re keeping them low, by the way, is got some pretty crappy retail sales report on Friday.

So we need to continue to watch the consumer. Next week, we’re going to get housing coming out. Watch that. Watch the consumer here. Watch the hours worked, watched their wages. That could give you an indication on, yeah, the fed may not be raising interest rates, but if the economy gets too weak, is the Fed not lowering enough? So yes, the market’s loving the capital injection right now, it just may not love how slow the economy may get.

So let’s watch that, too early to predict, right now the market loves the Fed injecting money even though the economy is kind of cruising along. But getting back to these politics. Look, if you try to predict what’s going to happen in the election and drastically change your portfolio, you could get hurt.

Look what happened in the last election. People tried to bogey that, really really got hurt. What I would suggest, be proactive, not reactive. Have a portfolio that you automatically say, if the market fell 10%, 15%, 20%, if interest rates rose a little bit, how would mine react? And there’s ways to test that. But if you look at that and you build a portfolio you can sleep with now that’s built on not only can you sleep with it, but is it really accomplishing your goals for the long term?

If you have that portfolio, then you don’t worry as much about the election. Could it be stressful and bumpy times? Yes it could. But what you don’t want to do is say, “I’m going to be very aggressive right now while things are good and then when the election comes, I’m just going to sell and then I’m going to buy back in the low.” It doesn’t work that way. Again, go back and look when’s the last time you did that successfully?

So, have a portfolio that can withstand some of that. I hate using the term all weather, because that makes it sound like it’s bulletproof and that’s not what I mean, but an all weather portfolio that at the end of the day is diversified. A little tip here, as you get ready for tax season, you’re gathering your things, all of that. One of the best ways to do it, obviously make a file as the year goes along, but go ahead and make a checklist of things that you’re providing to your CPA or you’re doing yourself, and then next year you’ll have that checklist so you know what you’re waiting on.

Are you waiting on a K-1, are you waiting on a 1099? And that way it’ll be a little easier and you can check those off as they come in. So tax organization, big, big dealers, there’s portals to do it. If you’re working with a CPA, maybe they’re providing that list to you, but the more organized you get, the easier it will be.

And nowadays with everybody using the standard deduction, it seems like taxes are a little simpler than they used to be. At least that was the goal. And we got news late Friday that, speaking of taxes, that the white house is proposing that we may be seeing some tax incentives for Americans to buy stocks, that was the late news on Friday. Basically, who knows what it is, but outside of your 401k, maybe getting a tax deduction for investing.

So it almost work like an IRA, I suppose. I don’t know what all the rules are, they didn’t really say what all the particulars are tossing things out there. And you’ll probably see this as we move along the rest of the year, where you’re going to see all kinds of proposals being tossed out there, because tax cuts get votes, right? So we’re going to hear a lot about that. We’re going to hear a lot about, we’re going to get drug prices down. We know the usual game coming into the election season on both sides.

So let’s see that, but that was interesting, came out late in the week regarding taxes, but stay organized and don’t let it overwhelm you. We’re sitting here on February 15th, so we got a couple of months still. Hey, by the way, don’t forget Monday the stock market is closed in recognition of president’s day. You guys have a wonderful weekend and don’t forget Our telephone number (210) 526-0057, if Covenant can do anything to help you and your situation, don’t hesitate to reach out to us. Take care everybody, have a great weekend.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy or product, including the investments and or investment strategies recommended or undertaken by Covenant Multifamily Offices LLC, Covenant, or any non-investment related content will be profitable, equal any corresponding indicated historical performance levels, be suitable for your portfolio or individual situation or prove successful.

Moreover, you should not assume that any discussion or information serves as the receipt of or as a substitute for personalized investment advice from Covenant. To the extent that a listener has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with a professional advisor of his/her choosing.

Covenant is neither a law firm nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of our current written disclosure brochure discussing our advisory services and fees is available upon request or at


Karl Eggerss was interviewed on CBS discussing easy ways to improve your FICO score.

Sharon Ko:          It’s a three digit number that can help you get a reasonable loan for a home or car. Let’s take a look at the Fair Isaac Corporation Score or FICO score. It’s based on five areas, your payment history, amounts owed, new credit, length of credit history and credit mix. Now, if you’re starting from scratch, this is one way to get ahead of the game.

Karl Eggerss:       Become an authorized signature on somebody else’s credit card. So, even if you don’t use the credit card, you may get that credit applied to you that looks like you have more credit.

Sharon Ko:          These are the credit score ranges. The lower the number, the higher the risk to lenders. A financial advisor says one of the best ways to improve that score fast is to make payments to your credit card often.

Karl Eggerss:       In fact, you may even pay them more frequently than the monthly cycle they’re on. You want to pay them off, have the balance be zero, but a lot of people go and close those credit cards. Don’t do that. If you leave that credit available, it actually will improve your FICO score.

Sharon Ko:          Lastly, it is always a good idea to check your credit history.

Karl Eggerss:       Make sure there’s no errors on there. There could be something in the past that was a hundred dollar bill that you did pay off. They still have it outstanding on your credit even though you’ve paid off that loan or that piece of credit. It’s still sitting out there.

Sharon Ko:          For a link to check your credit score report head over to

On this week’s show, Karl Eggerss discusses the meteoric rise in Tesla shares this week and how this one stock has proved so many wrong and yet so many right.

Hello. Good morning, everybody. Welcome to the podcast. My name is Karl Eggers, and if you want to get more information, you can go to or our telephone number is (210) 526-0057. Just a reminder, the show is brought to you by Covenant, lifestyle, legacy philanthropy. By the way, if you do go to our website, what you will see on there is our First Quarter Economic Review and Outlook.

So if you’re somebody that says, “I don’t really get that,” there’s some very brief I guess you would call it kind of a synopsis at the top, and it’s broken down into some pretty bite-sized pieces. If you’re someone that says, “You know what? I don’t like to read a lot. I just like to see the pictures,” those are in there too. So the 2020 First Quarter Economic Review and Outlook is up on our site hot off the press at

Of course, we put the podcast up there every week. Articles, TV interviews, anything to really help you in your financial future is right there on the website, and if you need our help, you can always reach out to us as well. In fact, if you scroll down on, you’ll see all the services that Covenant does provide: financial planning, investment management, tax planning and preparation, estate planning, charitable giving, family office services. A wide array.

All right. Well, let’s jump right in the show. It’s a pretty crazy week for a lot of reasons. I said last week on the show, “Watch for the peak.” Not in the peak of the cases of the Corona virus, but the peak in the growth of the new cases, the second derivative, the statisticians and the mathematicians might call it. It was slowing down. That was one good thing, and then secondly, we saw over the weekend the massive amount of stimulus that China put in and cutting their interest rates. Remember, we talked about that right here last week. We said, “Look, watch for China to do something and America if need be,” and we are already getting lower oil prices, we’re getting lower interest rates, and those are stimulative. China may add on and pile on, and that’s exactly what they did last weekend.

So lo and behold, we come out, and the market bounced and was up over 350 points at one point on Monday. But Dow did finish up about 150, so it was off its best levels. It didn’t change things like oil on Monday. Oil had been down 15 out of 19 days, and now oil is officially in a bear market, at least the way the technicians would use the definition. It’s down over 20% from the high, which was early January all the way toward this, and copper, another… something that really points to the global economy and potentially China slowing down with this Coronavirus. Copper, down 13 days in a row, but we came back Tuesday, 500-point jump. We did see interest rates jump a little bit.

Then, look, the Dow was up about 500, but it still finished up about 400. So we saw some solid moves Monday and Tuesday, but the 30-year fixed rate, this was something else that came out on Wednesday, is at 3.71%. The lowest since October of 2016, and we told you, “Hey, if you can lock in an interest rate to refinance or to buy a home, lock it in. Interest rate is very, very low.”

Another strong down Wednesday. The Dow is up 400 points, so it was kind of like, “Hey, the Coronavirus is in the rear-view mirror. Markets are at all-time highs once again, and we saw oil bounced. We saw energy stocks bounced, but it was really just for one day because they kind of gave some of those gains up on Thursday and Friday, but another good day for the markets on Thursday.

Then, Friday, we saw the Jobs Report come out better than expected, 225,000 jobs created in January, the non-farm payrolls. Better than the 165,000 jobs, but here’s the kicker. The jobs’ growth continues to slow, and so just like… and this is a great lesson. Just like the Coronavirus started to slow, the growth rate started to slow. It was still building new cases, right? We still have new cases happening, new outbreaks and new deaths, but the rate of change is slowing down, and that’s precisely what some people look at for the economy.

It’s not about, “Are we growing at 3%, or 2%, or 1%?” It’s, “How fast are we growing?” and the difference between those rates each time it’s reported, and so what’s happening is even though the jobs market looks stable and is very good, 225,000 jobs created, the growth is slowing. So you have to look forward and say, “Well, if the growth is slowing, does that mean the wages are going to slow and continue to slow, and the hours worked are going to continue to slow, and people will spend less? If that happens, then do we get an economy that may start to struggle?

That’s what Wall Street is focused on. I think that’s what may have caused a little bit of the downdraft on Friday. But look, at the end of the day, it was a very good week for the markets. In fact, if we look at the Dow Jones, Dow Jones was up about 3%. Standard and Poor’s 500 up about 3%. You had the Nasdaq up over 4%. [Big Magoo’s 00:06:37] volatility fell 18%. I mean, in value, actually jumped in the game, which it hasn’t done recently as you know. So a very good week pretty much across the board.

The things that kind of led were: Biotech was really strong, up 7%. Metals and mining, up about 5%. Technology, as I mentioned, up about 4.5%. The things that were down were things like the gold miners, down over 3%. Oil, down another 2.5% as I mentioned. Gold itself, down 1%. Treasury bonds, down 1%. Utilities, down a half of percent. So you saw the risk back on, but it’s interesting to look at because the stock market right now seems to be… Even though it had a really good week, it seemed to lack a little bit of intensity, and you have to look underneath the hood to see what’s really going on with the stock market. You can’t always just look at the Dow Jones or the Standard and Poor’s to figure out what kind of strength is behind it.

So let’s see if we pull back. Remember, we went to kind of the… We broke out to new highs, but not by much. Let’s see if the old highs that were there in mid January, if we break back above that, or did we lose a little bit of momentum here? It wouldn’t surprise me to see us continue to pause because the stock market is still in the big picture pretty stretched. But again, I want to reiterate. The bull market, as I see, is not over, especially if we see earnings start to re-accelerate, but we could see a little pullback simply because of the fact that you’re seeing some real just, I would say, a little stretched on the upside.

Now, probably one of the biggest things that was talked about this week was Tesla, and I’ve said it for literally years. Tesla is probably the most polarizing stock that I have ever seen in my career for as big of company as it is as polarizing. What do I mean by that? It seems like there are just as many people that hate that company, smart people that say it is going to zero, they’re going to go bankrupt to people on the other side that are super smart money managers and observers that say this thing is going to a trillion dollars of revenue. Not a trillion dollars of market cap, a trillion of revenue. That’s what one person predicted this week.

Tesla went on this crazy, crazy tear the last couple of weeks, and it’s up. Get this. Since June of 2019, it’s up over 300%. June of 2019, like as in last summer. 2019. I’m not talking about June of six years ago. I’m talking last summer, and remember the whole funding secured. I want to take it private and got in trouble for that. Stock was moving all over the place. People thought, “Man, they’re going to go private.” Stock jumped up, and then of course, they didn’t really have funding secured. Stock went way down.

Well, now, it’s just going straight up, and it’s pretty amazing to watch, and nobody can really explain why now, why has it made this run in January like it did. Who knows? There could be short-covering. Right? There’s a lot of people betting against it, and when it goes up, they have to cover their shorts. There’s a lot of FOMO, right? FOMO is the acronym for Fear of Missing Out. You have a lot of that going on, but there are plenty of people who say, “I wouldn’t touch that thing with a 10-foot pole,” and there are some people that say, “It’s going to the moon.” But interesting to watch. I mean, that was probably the biggest news story from a stock perspective that we saw this week despite what was going on with the stock market.

Speaking of that Tesla move, by the way, there’s a really interesting picture. I don’t remember who put this out, but they were comparing all the previous peaks and the Standard and Poor’s 500 tend to come hen something is going parabolic, something is going straight up. So right now, it’s Tesla. Tesla goes up at this rapid rate. Everybody is watching it. It tends to be… Is that something that could lead to or is reminiscent of a bubble in the stock market? That’s what they were getting at.

We had things like Tesla, of course, right now. We had Beyond Meat. Remember, that was last summer, right, before the market peaked. Actually, that was in 20… yeah, 2019, and the market kind of sold off. We had natural gas back in 2018. It went on a really big spike, and then the stock market sold off. We had Bitcoin in 2017. Remember Tilray? We had Tilray in 2018. So who knows? We’re just only a couple of years, but they’re pointing out that when you have some kind of spike and some asset that’s going straight up, you tend… When that tends to fall, you tend to get the stock market shortly after doing the same thing. It kind of makes sense. It’s kind of rational, but that’s what caught my attention this week, especially given the Tesla rise.

Now, speaking of other car companies, I mean, remember, Tesla right now is going up obviously for who knows what reason. Toyota and Honda… and maybe this has something to do with it. Well, those are Japanese companies, but they have big manufacturing facilities in China. They’re going to extend their shutdown. So these car companies are having to shut production down because of the Coronavirus, and for you, that could be a good deal as shoppers in the next few months as they may have to slash some prices to entice buyers to come in.

The other thing I wanted to bring up before we wrap up today is Goldman Sachs came out with a pretty interesting little stat, a little pie graph, and it had to do with what rich people invest in, the wealthier households, the top 1% compared to the bottom 50%. Now, some of this is a little self-fulfilling prophecy, right, because some people don’t have the money to invest. So of course, what they invest in is going to look very different, but the top 1% on average have about 61% of their wealth is in equities and stock. About 12% in cash, about 11% in real estate, and then the rest in other little smaller things, but the vast majority is in stocks. That’s the top 1%, which is about $35 trillion.

The bottom 50%, which is about $7 trillion, has 55% in real estate and has only 4% in equity. So they have a… Just what I was just talking about, they have a lot of money tied up in a home that if they’re not going to sell it, they can’t use that for cashflow purposes. So that is something to really consider, and one way to get wealthy over the longterm is to have more equities.

Now, 401(k)s obviously help, dedicated savings accounts, and again, some of this is a self-fulfilling prophecy. Right? There’s people that are going to have a house, and they just can’t save, and they’re living paycheck to paycheck, and the equity is in their house. I get that, but there is a vast difference between what the bottom 50% do and what the top 1% do. I think for those striving to be one of the top 1% in terms of wealth, they don’t keep a ton of money in real estate, about 11%, but the rest is in equities, and that can come in stocks. It can come in mutual funds. It can come in ETFs, but they do own equity.

So it was a wild week, but look, at the end of the day, we’re sitting here right now. 29,100 we’ll call it on the… The Dow Jones is pretty close to all-time highs. We have earnings continuing to come in, and we’re not… We’re seeing the earnings come in pretty good, but we’re not seeing the reactions to those earnings really helping the stocks out that much. So let’s continue to watch. Again, the market is a little stretched. It would not surprise me to see the Dow pull back to maybe 20, even 27,500. I could see the Dow having a 10% correction here for the next few months, a couple of months on its way back up to new highs.

All right, everybody. Have a great weekend. Hey, don’t forget. is our website, and our telephone number, (210) 526-0057. Have yourself a wonderful weekend, and we’ll see you right back here next week.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product, including the investments and/or investment strategies recommended or undertaken by Covenant Multifamily Offices, LLC, Covenant, or any non-investment related content will be profitable, equal any corresponding indicated historical performance levels, be suitable for your portfolio or individual situation, or proved successful.

Moreover, you should not assume that any discussion or information serves as the receipt of or as a substitute for personalized investment advice from Covenant to the extent that a listener has any questions regarding the applicability of any specific issue discussed above to his/her individual situation. He/she is encouraged to consult with a professional advisor of his/her choosing. Covenant is neither a law firm nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of our current written disclosure brochure discussing our advisory services and fees is available upon request or at



We are entering a new decade in the midst of an old expansion. The length of the expansion does not suggest a recession is imminent, but it does imply that GDP growth will struggle to exceed 2% consistently even as interest rates remain near historic lows. The Federal Reserve is faced with the daunting task of moving interest rates higher without squelching the expansion so it has more firepower to stimulate a recovery when the next recession hits. In this update, we evaluate what current economic trends mean for the future and why, paradoxically, the Fed is more likely to cut interest rates this year than raise them.

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On the Trey Ware Show, Karl Eggerss discussed the effect of the coronavirus on the economy and the steps China has taken to help their economy and effectively the global economy.

Trey Ware:                         Now there’s been people talking this weekend about how this is going to affect the economy and the stock markets and so on. So let’s go to Karl Eggerss, Karl, what do you think about this? Is it going to affect the economy? Will it have an effect on the markets?

Karl Eggerss:                      It’ll probably have an effect on the Chinese economy more than the U.S. economy. But the interesting thing Trey is, Wall Street’s watching and I think they’re watching the number of cases each day and the rate of change that those are increasing and it’s actually starting to slow down a bit. And I think that’s why you will see a little bounce perhaps in the market. We saw a pretty tough day Friday. But here’s what’s interesting, you have oil prices dropping really fast, you have interest rates falling really fast and overnight you had China come out and actually cut their interest rates and put more money into their economy. So everybody’s kind of treating this almost like a recession and it’s almost going to fuel the economy even further, I think. So lower gasoline prices coming your way and lower interest rates is going to actually spark the economy and then China doing what they’re doing.

Karl Eggerss:                      So that’s why I think the stock market is watching this so closely because the global economy is cruising along, but it’s cruising along at a pretty low altitude, we’ll call it. And there’s not a huge room for error, at least over there. You saw their stock market down over 8% last night because they’d been closed for several days due to their holiday and they had extended it. So yes, it could affect the economy, not necessarily in the U.S. just yet, but everybody wants to try to prevent that.

Trey Ware:                         Yeah. Could affect it even further. You’re talking about gas and oil prices going down. I’ll have you explain that in a second. But I had a friend tweet that she saw it at a $1.93 in San Antonio yesterday. So what about buying products out of China? Will that be affected? Are people going to back off from buying products out of China with a fear of infection or whatever?

Karl Eggerss:                      How can we? I mean, honestly, look at everything you purchase every day. I think that part’s impossible. I think obviously that the travel there, you’re seeing the foot traffic in Macau, the big gaming area, down 90%. So I think again, it’s going to be more localized in terms of China, but this is a huge, huge economy. So there’s no doubt it’s going to affect them. Can it translate into something over here? Absolutely it could, but in terms of us buying products, I don’t think we know when we’re buying Chinese stuff and when we’re not.

Trey Ware:                         Real quick, why is the oil price going down because of this?

Karl Eggerss:                      Essentially, it’s a global commerce slowing down. It’s the fear that, you know what? Airplanes aren’t going to be traveling as much perhaps because they’re grounding some of those and there’s this less demand. So this is a less demand story, not a supply story.

Trey Ware:                         Got it. All right. Karl Eggerss,, with me every Monday morning at this time and other times as needed. Thank you, Karl. Appreciate it very much.

By Justin Pawl, CFA, CAIA

In this week’s edition:

  • Q4 Earnings Update. A summary of corporate earnings announcements through last Friday.
  • Election Volatility. Democratic caucuses increase the likelihood of additional market volatility.
  • Good, But Not Great. The U.S. economy is plodding along, but the all mighty consumer is showing signs of fatigue.
  • Fed Speak. The market ain’t buying what the Fed’s selling.

Last Week Today. The U.K. officially cut the cord with the European Union on Friday and is once again an independent country. The U.S. did that nearly 250 years ago, ironically from the U.K., and we wish our mates the same type of success the U.S. has enjoyed in its independence. | President Trump signed the USMCA trade deal, officially relieving one source of potential trade conflict. | The World Health Organization declared the coronavirus a global health emergency.  In  related news, China announced it will inject $174 billion into money markets today (Monday), but thus far the impact is difficult to detect as Chinese equities opened this morning down nearly -8%.

The continued spread of the coronavirus ignited investor anxiety. Once again, emerging market stocks bore the brunt of the selloff, falling nearly 5% as traders wrestled with how China’s efforts to contain the virus (quarantining entire cities) will impact the country’s economic growth. In the U.S., the major indices fell for the second week in a row. Down about 2%, the S&P 500 is now flat for the year, while the high-growth, technology concentrated Nasdaq Index is up 2% YTD. The last two weeks broke the eerie calm accompanying the markets’ races to new highs, but the S&P 500 is only 3% below its recent record level. Symptomatic of the risk-off sentiment and aided by the Fed’s current messaging (see Fed Speak below), bond yields plummeted, and the yield curve inversion became more pronounced. The 10-year bond yield fell to 1.5% – a quick descent considering it was yielding nearly 2% at the beginning of the year. In the “flight to safety” gold rallied 1.1%, while oil declined 4.9%. Oil is now down 15.6% for the year, which should manifest itself in lower gasoline prices, leading to consumption increases in other parts of the economy.

For detailed weekly, MTD, and YTD financial market performance, click on the table below:


Q4 Earnings Update. Thus far, nearly half of S&P 500 companies have reported earnings for Q4, and the results are not bad against lowered expectations. Approximately 45% of reporting companies announced earnings “beats” and nearly 40% have been ahead of top-line revenue forecasts – results that are in line with historical scores (Goldman Sachs). Nearly 100 more companies will bare their Q4 financial souls to investors this week. Coming into the quarter, analysts forecast a 1% decline in year-over-year earnings, but with results thus far, actual earnings are tracking toward even. Better-than-expected earnings are stemming a portion of the negative impetus from the coronavirus, keeping U.S. indexes near flat for the year while international (-2.1%) and emerging market (-4.7%) indices have not been as fortunate.

Election Volatility. Investors, already skittish due to concerns about the coronavirus, will be faced with a new worry when the Democratic presidential selection process begins with the Iowa caucuses on Monday. The WSJ/NBC News poll shows the self-proclaimed democratic socialist Senator Bernie Sanders holds a slim lead over former VP Joe Biden. Voting results over the next month, which include caucuses in New Hampshire, Nevada, South Carolina, and Super Tuesday (March 3), are likely to affect financial markets if candidates with less friendly business policies emerge victoriously.

Good, But Not Great. The first estimate for Q4 GDP growth came in at 2.1%, and 2.3% for all of 2019, in line with the average “Good, But Not Great” growth rate characterizing the post-Crisis recovery. Consumption, the workhorse of the economy, rose at a mediocre 1.8% pace, and housing continued to recover, improving by 5.8%. Business investment (-1.5%) and shrinking inventory levels (-1.1%) detracted from growth. Foreign trade added 1.5% (see the gray portion of the Q4 column on the far right in the chart below), but that “growth” was flattered by an 8.7% decline in imports, underscoring weak consumer spending in the quarter. On balance, economic growth was relatively stable in 2019. Still, consumer demand is showing signs of weakness, and continued deterioration in spending would put the longest expansion in U.S. history in jeopardy. We are putting the finishing touches on our Q1 2020 “Economic Review and Outlook” letter, where we detail our perspective on current economic trends. Look for the letter in your Inbox and on social media in the next few days.


Fed Speak. The Federal Reserve Open Market Committee (FOMC) held its first meeting of the year last week and, as expected, made no change to interest rates. The Fed messaged that the economy is in a good place, and monetary policy (i.e., interest rates) is at an appropriate level. The Fed did modify their language around the outlook for inflation, emphasizing they would like to see inflation average 2%. This nuanced change implies that the Fed is willing to let the economy run “hot” with inflation exceeding 2% for a while. This messaging comes amidst the Fed’s comprehensive review of its monetary policy approach, the results of which are expected to be released this summer. Our assessment is that Chairman Powell’s message was too sanguine about the economy and the Fed’s ability to hit the 2% inflation target. The market agreed as bonds rallied, and the yield curve inverted more deeply.


Against this backdrop, 2020 may be the Fed’s most critical test since the Financial Crisis. The Fed charged with both sustaining the expansion and preparing for how they will approach the next recession with little room to lower interest rates before encountering the zero-boundary line. Hence, findings from the Fed’s comprehensive monetary policy review, due later this year, will be watched closely. The hope is that the world’s brightest economists and Chairman Powell can translate the findings from the review into a modified approach for monetary policy that syncs with the post-Crisis economic environment to generate higher inflation. Higher inflation would allow for higher interest rates, giving the Fed more ammunition to combat future downturns with the most potent weapon in any central banker’s toolbox – cutting interest rates. The key is to get interest rates higher from where they are now without pushing the economy into a recession. And for that reason, paradoxically, the Fed is more likely to cut rates than raise them this year. Lower rates sooner could keep the expansion going and create the higher inflation the Fed needs to raise rates later without killing the expansion.

Be well,


The selloff this week on more coronavirus fears has many thinking it’s going to negatively affect the economy.  But, there are a few big moves this week from some key areas that could actually help the economy.  Karl explains on this week’s podcast.

Hey, good morning everybody. Welcome to Creating Richer Lives, the podcast. My name is Karl Eggerss, I am your host. Thanks for joining me, we appreciate it. The show is brought to you by Covenant Lifestyle Legacy Philanthropy. If you need our help, (210) 526-0057, our website A lot of information on there, and we try to put everything in one package on Monday afternoons and one distribution so if you want to sign up for Covenant you, please do so because you’re going to get not only this podcast, but you’re going to get a lot of information, articles we put on there. You’re going to get our weekly blog, which is really a quick five minute read, a synopsis of the week prior that’s written by our chief investment officer, Justin Pawl, so you can get all of that information. But again, the easiest way to get ahold of us if you need something very specific for your particular situation. (210) 526-0057 is our telephone number.

Well what a week, huh? The, the stock market really had a tough time on, especially Friday as this coronavirus continues on and usually if you go back and look at some of these viruses, they do linger a while in terms of their effect on the market. Before we get into it, let’s talk about what happened this week. We saw some volatility finally, and I say that because it does create some longer term opportunities than a market that’s just going straight up and you don’t really, how do you get into it if you’re sitting on the sidelines with some cash? So we saw, the 450 point drop on Monday and the market tried to balance, but of course we’re seeing airline stocks get hit and gaming stocks and everything surrounding anything having to do with China or commerce in China really getting hit.

Tuesday of course we got the turnaround Tuesday, the bounce. Ended up about 200 points. It’s one of the best days for the stock market in a few months. We had some good, better than expected economic news from the durable goods orders and an actual manufacturing index called the Richmond fed manufacturing index was better than expected. And we’re seeing some green shoots from the manufacturing sector, which has been in a recession, no doubt. So the market was in a good mood. And then we saw Apple come out with earnings.

And then of course Wednesday we heard the fed didn’t, didn’t change interest rates, not a big shock there. Thursday, market was down about 200 points, rallied to finish up almost 200 points and then came Friday where the DOW Jones was down almost 600 points or over 600 points and really a just a sell off from the get go, Friday into the close.

Now keep in mind that we are sitting here, DOW Jones was down about 2% on Friday. We’re sitting here down about 3% from all time highs. So again, let’s take this into consideration that this is very different than even a couple of years ago, Christmas of 2018 or so when we, really a year and a half ago, not even a year and a half ago, where we saw that really nasty sell off that was really persistent every day this is different. What we’re watching here is investors in Wall Street really discounting, trying to predict the future. So what’s going to happen is, they’re watching the coronavirus and as we see the number of cases continue to go up at a fast rate, it’s been one of the faster rates when we look at some of these other viruses over the last several years, the death toll hasn’t been what it was in previous viruses, but as that ramps up, you see the stock market continues sell off more.

If we can see that peak and it is contained, that would cause us probably to have a bounce back pretty quickly and I’d think we have to be encouraged that this is something that the whole world, pretty much all the scientists around the world, all these laboratories are on the same page as much as they can be. From what I understand and they’re putting a lot of attention to it. This is not being downplayed. You’re seeing quarantines, you’re seeing airlines really restricting traffic and things of that nature in and out of these particular areas in China. That’s something, that’s a good thing, but until we see that look contained, the market’s probably going to continue to struggle here.

Now I don’t think it is also a coincidence that as we’re seeing Bernie Sanders poll numbers rise, we’re also seeing stocks back off a little bit. Why is that? While this isn’t a political statement, this is simply the fact that Bernie Sanders, his marginal tax rate that he wants is somewhere close to 70% and a capital gains rate of somewhere around 50% so if you’re sitting there with a portfolio of stocks considering selling, you think you better do it now or wait told next year or two years from now under a Sanders administration. So that has to play a part. We saw a similar volatility pickup back in oh, August, September, I can’t remember exactly when we saw Elizabeth warren’s numbers spike up a little bit as well, just because again, we have a change, a potential drastic change in how really money flows in and out of the United States and in and out of your pocket. And so that’s something that may be being discounted right now. So it was a good opportunity for investors to sell because we have that.

In addition, we have the coronavirus. And remember we were very stretched here recently. The Covenant investment committee met last week, as I mentioned on the podcast. And lot of people with a lot of different strengths and a lot of good information around the table and there was a handful of us and very clear that the economy is cruising at a lower altitude and so we’re more vulnerable to shocks such as the coronavirus, the potential for a slowdown that could really affect commerce and so forth. But we also were stretched and a lot of the technical indicators that I had come up with the last few years were clearly shown at the time they were stretched. That didn’t mean we necessarily had to do anything about it. It just meant that we wouldn’t be surprised to see a pause. The coronavirus is certainly something that gives people an excuse, a reason to sell stocks and again they’re trying to discount the stock market is a discounting mechanism.

So you have to think about that. If you own a stock, whether it’s an airline or a casino stock and they’re temporarily seeing their volume down. I mean you’re hearing about 90% drops in the foot traffic at some of these casinos and Macau, is that something that’s going to last forever or not? Because remember we’re discounting the future cash flows and profits of companies for years and is a few days, weeks, maybe even months going to affect the company in the long-term. So that’s what you have you have to ask. And so investors are discounting some of these stocks and they may be great opportunities, so we need to watch that. But watch over the next few days, do we see some type of peak in the number of cases, etc. And we’ve got obviously the volatility index, which has been low for quite a while down in the almost single digit range, is pushing 20 up is up about 30% this year. Or excuse me this week. And so that was clearly one of your winners this week.

And look, the things that one this week in terms of gains and they weren’t huge, but treasuries, gold, utility stocks, it’s the usual suspects. And on the flip side, anything having to do with a growing economy, copper, energy, industrials, anything like that really suffered this week, not a big surprise. Hey, by the way, go refinance. The 30 year bond is back below 2% again and the 10 year bond in the United States around one and a half percent. Interesting to watch because you see oil prices dropping 5% or 6% this week and down a lot recently. You see interest rates coming down.

Are those two things doing the heavy lifting to support our economy? In other words, they’re doing some of the work that maybe the federal reserve doesn’t have to do, but here’s the thing we need to consider. Not only do I think the world is paying attention to the coronavirus and doing everything they can to contain this, but China and the US are there to provide more stimulus if need be. Now I can hear some of you saying we don’t want the central banks intervening any more than they have to. I understand that, I’m not judging what they do or how they do it. All I’m simply saying is it’s clear when they provide liquidity to markets like it and you make money and that’s what’s been happening and so can they do more? Absolutely they can do more and they will do more if this virus continues to spread. But don’t underestimate the power of lower interest rates on the housing market, lower gasoline prices in your car and the boost that that might provide. So interesting that the coronavirus might actually be stimulated in the long-term here.

So let’s watch that. But again, this is a very news driven type of sell-off. We need to be watching earnings as we’re getting more and more of these earnings coming out because that’s really what you’re buying as an investor. So let’s watch that. Now I do want to switch gears because last week I talked briefly and I didn’t get to it because we just ran out of time about your 401(k). How do you fund your 401(k)? Depending on that answer, you may or may not be getting the full company match. So if you go back and look, and let’s just say hypothetically your company matches dollar for dollar up to 5% of your paycheck and at the end of the year you go and look at what your earnings were and you also look at the match that was given to you by the company. And if it’s not 5%, you didn’t get the full match.

And the reason why that may have been is because they are matching on a per paycheck basis. And depending on your income, you may be stopping your funding of the 401(k) because you’re maxing out earlier in the year. So for example, depending on your salary, you may max out your 401(k) in July or August. And so you’re really literally not putting any more money in in September, October, November, December. And so you’re not getting the match on that. And so you think, well, I’m going to save as much as possible and as early as possible so that I can get it in the 401(k) and growing and that’s a good rule of thumb. However, when it comes to the match, generally spreading it out over the rest of the year is better and it’s a mathematical equation formula, what have you.

So maybe I’ll come up with up a little calculator to figure that out for you. But if you’re a lower income earner, that’s probably not the case. If you’re a higher income earner. There’s a high likelihood that you may not be getting the match, I’ve known people that that has happened to. If you need help calculating that, reach out to Covenant, (210) 526-0057, we can help you figure that out so that way doesn’t happen to you. And furthermore, along those same lines, should you even be doing the pre-tax if you have a Roth 401(k) available to you? What if you have a brokerage link available to you? Are you taking any consideration if you should do the mega Roth? So those are all things that have to do with the 401(k) and other things to consider.

But I did want to point out because I’ve seen this where people may not be getting their maximum 401(k) contribution. So just look at yours and again, if you need help reach out to us, we’re here to help you. But I wanted to bring that up because that is a key thing. That is free money that you do not want to miss because if they’re matching in my example dollar for dollar up to 5% you put in 5% you are doubling your money, you do not want to not have that type of return. That’s regardless of what the stock market or the bond markets do. So I hope that’s helpful to you.

Again, our whole purpose here is to really educate you on everything financial and look, at Covenant, we do a lot more than financial things for a lot of our clients, but financial and educating you, it’s near and dear to my heart. That’s what this podcast has been about for more than 10 years is putting out education for you. And along the way I get to help some of you on a day to day basis and I get to meet a lot of you and I get, some of you we’ve met one or two times, some of you have just emailed back and forth and you’ve been listeners a long time. So we want to continue to do that, broaden the show and educate you even more. And bringing up things like this, we’re going to bring them to you, we’re going to continue to do that. So I hope you have a great weekend and this should be an entertaining Superbowl. So go enjoy it and we’ll see you right back here next week on Creating Richer Lives, the podcast.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product, including the investments and or investment strategies recommended or undertaken by Covenant Multifamily Offices, LLC, Covenant, or any non-investment related content will be profitable. Equal any corresponding indicated historical performance levels be suitable for your portfolio or individual situation or prove successful. Moreover, you should not assume that any discussion or information serves as the receipt of or as a substitute for personalized investment advice from Covenant. To the extent that a listener has any questions regarding the applicability of any specific issue discussed above to his or her individual situation, he/she is encouraged to consult with a professional advisor of his/her choosing. Covenant is neither a law firm, nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of our current written disclosure brochure discussing our advisory services and fees is available upon request or at