Dear Friends,

Recently, thanks to the content-editing app VidAngel, our (Mitch’s) family has been watching classic movies that we previously couldn’t watch because of certain scenes or language that we didn’t want our 9 year-old son to repeat at school (and now he’s “that kid”…!).  By “classic” movies, of course I mean 80’s movies.  “Back to the Future”, starring Michael J. Fox as Marty McFly, is one of the all-time classics and one of the great scenes is where Marty is getting into the time machine which must reach 88 mph to start the time transport into the Future.

Marty McFly: Hey, Doc. You’d better back up, we don’t have enough road to get up to 88.

Dr. Emmett Brown: Roads? Where we going we don’t need (to worry about) roads!

It is well documented how smooth and calm financial markets were last year (2017), achieving all time low measures of volatility (defined as up and down price movements).   While we knew it wouldn’t last forever and have prepared portfolios for the inevitable changes, 2018 so far has been like going “Back to the Future” with the return to higher volatility.  While it may continue for a while, it is a healthy reminder that risk and return are related in that if an asset carries a higher risk, it should also offer a corresponding prospect of a higher return.  Absent volatility equity returns would ultimately migrate into more of a bond-like return, thus limiting growth and appreciation potential.  It is that very same volatility and risk that remind us to allocate our investments consistently with our financial needs and objectives.  As we go forward, you can be sure that as the market digests news around trade agreements, unstable dictatorships, social and regulatory environment changes, there will likely be more movements and the opportunities that go with it.  We look forward to capitalizing on those opportunities through strategic rebalancing and dollar cost averaging for ongoing investments.

Moreover, when you have a long-term, strategic financial plan in place that accounts for time horizon, liquidity needs, and other specific priorities, then we don’t have to be panicked when the flux capacitor kicks in and the up and down volatility shows up.  So then, just like the movie, we can say that where we are going we don’t need to worry about the roads (or the volatility)!

Some tax-related thoughts as we wrap up tax season for 2017 and head into the rest of 2018:

With the recently passed new tax laws, many things have changed and some opportunities have been created for tax-efficiency in the new year.  Some of these include lower tax rates for many LLCs and S-corps, and significantly lower rates for C-corps.  There are several other changes to individual exemptions and credits as well so we look forward to updating strategies as we work together this year.

As always, at E|Financial Alliance we have much gratitude for the opportunity to serve our families and businesses together.

Mitch & Destin