Mike and Doug Town Hall 10-22-20
Mike: Okay, here we go. Hi everybody. I want to welcome you all to another, in our series of quarterly chats, or monthly chats I guess now. I'm Mike Hengehold and co-hosting with me today is one of my partners, Doug Johnson, who chairs our investment committee. For those guests on the call who are not familiar with HCM and where we focus our attention.
We are a wealth management and tax planning firm whose mission is to help people get the most they possibly can, financially speaking, out of their retirement. And there is a lot that's going on now, a lot is obviously driven by the election and the possible change in power. And I know we're all sick and tired of hearing about the election, but we're going to pull you through a couple of ‘what if’ scenarios in the conversation today?
The point is that there are a lot of things that could happen. And some of these things require attention and potentially even action before the end of this year. We'll certainly know a lot more after we know election results. We want to use these calls, and the other ways that we'll be reaching out between now and the end of the year, as a mechanism to bring your attention to these things. And hopefully, where necessary, help you take the appropriate action.
Our call today is, the actual sort of formal comments that Doug and I have prepared, we're shooting for 30 to 35 minutes. So, for your planning purposes you can sort of think around that. Doug has a couple of questions that have come in from clients. And if you would like to submit a question during the presentation, if you hover around the bottom of your screen, you'll see that a Q and A pops up and you can submit questions through the Q and A section right there.
Okay, if you're here you've obviously registered for this call and everybody who's registered will receive the slides via email tomorrow. So, we're going to send the slide deck out tomorrow. That's relevant because the slides today are going to be sort of a guide for discussion. We don't intend to go through every point on every slide. We want to make some bigger points as we move towards the end of the year to get you thinking about what steps you might like to take from a planning perspective.
One last thing, we mentioned this all the time, but don't forget that we are not allowed to discuss individual stocks. So, don't submit any questions with regard to that. With that said, I would say let's get the show on the road. Doug, do you want to kick things off?
Doug: Sure, so I feel like when we do these, it's always best to do a where are we right now? And this chart (slide 2) does a good job of kind of laying out bull and bear markets, going back to around 1966. I think the main takeaway here is that there's no real pattern. I think everybody's trying to kind of find their way in this market, trying to decipher what does it mean that we've just had a rapid bear and then a really rapid bull and trying to kind of predict the future so to speak.
But when you look at this chart, you kind of see a little bit of everything. You see bear markets that are squeezed in between two bull markets. Most notably you can see right around 1983, there was a small three month bear market followed by, one of the longest bear markets in history, from right after the 1987 crash all the way up to the tech bubble. But then you also see bull markets squeezed in between bear markets at the beginning of the chart there.
So, I think the takeaway here is that after a pretty good bull market that we saw starting from the end of the great financial crisis to pretty much this year. We only had a one month bear market, and now things are almost kind of back to normal. But the duration of a one month bear, that's not a normal occurrence. You can see the average duration is about 15 months.
But one thing I would point out on this and it's worth noting. We talk a lot about the math of loss and what that means. So, if you look at that chart all the way to the right, you see, okay, if I lost 34% and then I gained 50% back, naturally you’d think, okay, not a bad scenario because I’m up 16%. Well, it doesn't quite work like that. The math of loss would actually indicate that if you start at, let's say 100%, you're down 34%, and then you makes 50% of that back. You're actually right back to braking. So, after all that we've gone through, we're kind of right back where we started.
And I think everybody's trying to figure out now what happens next, so to speak. We've had a lot of questions come up about, are we in a bubble, the Faangm stocks are they out of control? I think there's a little bit of truth to that, but let's take a look at some other manias of the past decades (slide 3)
Now some of these go back quite a ways and they may not be as prominent as some of the most recent ones. Mike, do you remember Walt Disney being a significant mania back in the sixties?
Mike: I'm afraid I don’t.
Doug: So, they list the Walt Disney, they have gold Japanese banks, but the most notable one here is the NASDAQ 100, back during the tech bubble. What you can see is the Faangm stocks that are listed here.
Mike: Hang on one second, Doug. I want everyone to know this was not rehearsed, what were you suggesting when you asked did I remember stock prices from the sixties.
Doug: Well I figured that you've been in the business so long that if Walt Disney was an obvious mania, that you would have some good insight on that.
Mike: Yeah. I might've been a fan of Mickey Mouse then, but I certainly wasn't following the market. Okay. Proceed.
Doug: Fair enough. So, what you can see is the NASDAQ 100, and the tech bubble, and then the Faangm stocks right now. So that's, Facebook, Amazon, Apple, Netflix, Google, Microsoft, and you could probably throw a Tesla in there and that would make that line a little higher and a little steeper.
But what you can see is that the comparison, the history here, is we're getting a pretty rarefied air. In terms of these names running significantly, in the NASDAQ, back in the tech bubble, and now these are running right around the same level in terms of bottom to top. Now that doesn't mean they have to follow the same analog so to speak, but this does do a pretty good job of showing that trees don't necessarily grow to the sky and at some point this will most likely have to resolve itself in some way. I think the question is just, what is that going to look like?
So, to build on that, one of the big three themes that we've been talking about, if you joined us for the Klientop webinar we touched on a few of those as well, but this idea of the divergence between growth and value. So, this chart (slide 4) shows kind of a relative return of those two features. So, if you see the dark blue line that's pointed almost straight up, that is the MSCI world growth, relative to the MSEI world value. And this goes back, the chart goes back to 1995, but you can see the jaws really really open up right before 2015. And these conditions have been present for a while. We've talked about this divergence and we've kind of highlighted it, but it continues to get wider and wider. So, when we look at that, we say, okay, what is really kind of the driver bond?
So, you think of value stocks can be very cyclical. They need strong economic growth, maybe a little bit of inflation, and maybe a little bit of rise in interest rates. Now, I don't know about you, but I think those are three things that everybody has been expecting to see in some form since the end of the great financial crisis. When the fed said, hey, we're going to throw all this money into the system. And everyone was panicking because rates had to go up then.
Mike: Yeah, so that's correct, and we've seen the system sort of absorb a lot of that in different ways. We sort of expected to see the growth and so forth, and instead what we've seen is a bit of a bifurcation in the haves and the have nots. The magical disappearing middle class, which is sort of a different way of reallocating wealth and inflation. And we are set, obviously absorbing trillions of dollars of stimulus that's already been injected and were expecting probably two plus trillion dollars, you know, congress is playing their political games with it right now. But one of the things we know for sure, there's a lot of things we know for sure right now, we don't understand the timing, but one of them is that we're going to get boatloads of government money that's going to come in. The shape it takes depends a little bit on the election outcome and so forth, but we're going to be up against that same sort of question. Is this going to drive the type of recovery that will generate this transition into these different asset classes?
Doug: Well, we'll talk a little more about that when we get into some of the election scenarios. But I think this chart (slide 5) does a really good job of showing just how out of balance some of these things have become. So, you've got the green line there is the S and P 500 index weight of just Amazon, the company Amazon, how much weight it has in the S and P 500.
And then the gray line, you have the entire S and P 500 materials and energy sectors combined. So we're talking probably 50, 60 stocks, and back at the very middle of the great financial crisis you had those companies representing close to 20% of the index where Amazon represented maybe 1%. Now you have a single company in Amazon representing close to 5% of the index, while two entire sectors combined only represent 5%. So that seems like a pretty big imbalance that will have to get remedied at some point. But like you said, the conditions need to be there to kind of have the trigger, so to speak.
Building off that value and growth, we also have the U S international divergence as well. So, this is a similar chart (slide 6) to what we just showed. Just relative value and performance of the US versus what we say is called developed markets ex-US. So as that blue line goes higher, that represents US outperformance. And you can see, that as of September 30th, we're well above one standard deviation of what the normal is.
So, you've got back when the nifty 50 was around in 68. And then they talk about well obviously in 2000, even then it didn't get much above one standard deviation. Now we're way above. But again, what we've talked about as we've seen these, these are probably what we call mean reversion trades. But it can take a very, very long time for that mean reversion to take place. So, we see the conditions there, we can recognize them but we've got to have that trigger in order to begin that process. We think we might be starting to see some of it in the international side. You're starting to see dollar weakness; you're starting to see some coordination in terms of stimulus globally. There was some optimism around COVID responses, but over the past two weeks we've seen the cases have exploded, not just in the US but all over the world. So as those lockdowns become more restricted, if they do, that could certainly be a massive headwind to growth going forward.
So, the value versus growth theme, and the international versus US theme, are two probably mean reversion opportunities that we're certainly paying attention to. But the timing of that is still somewhat uncertain.
Mike: Yeah, I think the charts show us that those transitions are inevitable. But the issue of timing it is nearly impossible because there's so many forces at work. So, our sort of M.O. is to recognize when the deck is stacked in favor of these transitions, and clearly, they are. But then to focus on technical observations to make sure that these trends are well in place before we commit funds.
So, Doug you can answer the question more specifically, but obviously, one of our main tenants is diversification. So, we always have international exposure, both emerging and developed, but we're still a tad underweight. Are we not?
Doug: Yeah, so on the international side we are a tad underweight. On the value side though, that was a trade that we kind of lean into a little bit coming out of the lockdowns. So, I'd say we have a slight overweight to value. And for those clients who have the dividend growth portfolio, I think that that portfolio is always going to have that value bias, just by the nature of what it holds.
So, I think we're a little bit more positioned right now for the value trade. But it certainly doesn't mean that in the near future we wouldn't start to very tactically add to the international side, if conditions present themselves.
Mike: Okay. Thank you.
Doug: So, everybody's favorite topic right now, the election. This is probably a chart (slide 7) that a lot of people are going to look at and they're not going to particularly like it. But you know, I'm going to say, when you look at this, it's almost one of those things where you say, okay, it doesn't matter who the president is.
Markets have a tendency to go up over the long term. And this goes all the way back to 1960 Kennedy, Johnson, Nixon, Ford, Carter, Reagan, Bush one, Clinton, Bush two, Obama, Trump. There's only a few spots on that line where you see significant kind of what I'd say, drawdowns. And I'm not sure that it's as much of who the president was, as opposed to just the fact that we happen to have a recession during that time.
So I think with everything going on, and I don't want to say nothing's going to happen after the election, because somebody will probably take this and then something will happen and they'll throw it back in my face. But I think the most important thing to remember is Republican, Democrat, who the president is. The most harmful thing for a market is a recession and outside of a recession, you usually don't have bear markets.
Doug: Is there anything you want to add?
Mike: Yeah, so I think that it's, how would I say this? It's a correction when your neighbor loses his job, but it's a recession and a depression when you lose yours.
So, I think part of the challenge is here is to think of this in terms of a proper time horizon. So, when we look at the chart, because this is a long-term chart, the things that jump out at us, for example, are the recessions. So, the easy one, for example, between Bush and Obama is coming in the real estate crisis. We all remember that, and the markets were hit hard and it was protracted.
But we were met with lots of stimulus, things resolve themselves and so forth. What's difficult to see in a long-term chart like this, is how it's just simply littered with corrections. 7% here, 10% there, things of that nature, that are really stock market realignments when things get ahead of themselves. Or transitions, as we're talking about, between value and growth, or small and large, and international and US and so forth.
And to realize that those are not things to fear, those are things to take advantage of. When people see us make tactical adjustments, things can't be predicted, but it's when the risk is real that we could be tipping into a recession type event. So, the risk was real for that earlier in the year, and then that risk was met with a wall of stimulus of biblical proportions that hasn't stopped yet.
So, the chances of seeing a recession next year are probably very slim because of the wall of government stimulus, the tidal wave that's going to hit us. So, I would say, and again, I would ask you to speak to this. The tactical adjustments we may make would be more to take advantage of those correction moves and not be preparing for recessionary type events.
Doug: Yeah, I think one thing to point out on this too, is that, specifically, you look at the end of the Clinton term and then the end of the Bush term, and you see kind of two prominent down droughts (slide 6). When we look at those on the chart, we may say, oh yeah, we see those, we just kind of went through one of those. Well, those bear markets or recessions were 18 months long. The one that we just went through was one month. So, there's certainly a timing element around that with what we just went through, almost an unprecedentedly fast bear market, fast recession. And I think if we see a commitment to stimulus, and it can't be indefinitely, but for the time being. And then we seem like we get, I don't want to say control of the virus because I don't think that's the right word, but I think if business continues to open back up and we don't have any regressive actions that could be the backdrop where if you saw election volatility, you may think the worst, but it could actually be an opportunity to add money to risk positions.
Now everyone kind of always wants to talk about scenarios. Well here are four scenarios that I would lay out. I don't know that any of these are set in stone, but bigger themes to think about (slide 7).
So, let's just walk through them from left to right. So, let's say you have a Biden presidency with a Republican Senate. And I think at the same time, if we go all the way to the right, we could lump in, let's say you have a Trump presidency with a Democrat Senate. So, the idea around these two things is that you are going to get two sides that will agree on absolutely nothing. They will do everything they can to prevent the other one from doing anything meaningful, and it's just going to result in a stalemate, so to speak.
So, the macro scenarios at the bottom, you see with the Biden presidency, Republican Senate, you get a deflationary environment. So that would be from a macro standpoint, probably the most damaging. Deflation, certainly not something that we want to see, especially in an environment like this. And then stagnation would be very low, low levels of growth. Possibly a continuation of the type of things that we've seen recently, where you have growth, large cap, corporate bonds are the things that perform really well. And the cyclicals and value sectors, is maybe something that lags a little bit.
But the middle two I think are the most interesting because there are basically straight tickets. So, if you have a Biden presidency with a democratic Senate, the expectation is that you are going to absolutely open the spickets for stimulus money. It may not be the same as if the Republican stakeholder, but it's going to be stimulus, nonetheless.
And that could be the environment where you see that value trade start to take off. When you start to see a little bit of inflation. Where you start to see some pressure on the dollar, that maybe becomes a tailwind for international assets. And I think you can see the same thing with a Trump presidency and a Republican Senate as well.
So those middle scenarios I think are the ones where money is really flowing and you could possibly see this rotation that everybody's been kind of waiting on, but they've got their eye on. Whereas the wider scenarios might cause a little bit of a stalemate and could cause a little bit of headwind going forward.
Now I don't want to give the impression that if any of these scenarios play out that on November 4th we're going to follow this chart to a T. I think this does a good job of breaking down some of the possibilities, but you never really know until it actually starts to play out. I was pointing out to the last election how the polls predicted Hillary was going to win and the 95% confidence. Trump ended up winning futures were down 5% overnight, and then in the morning they were up 5%. So, I think we all want to predict and know exactly what's going to happen. But the reality is, we need to let this play out a little bit to kind of sort out where we are, what path we might take.
Mike, do you have anything to add to that?
Mike: I think that pretty much covers it.
Looking at the clock here as well.
Doug: Yeah, I'll try to burn through these last ones pretty quickly. So, when we talk about economic recovery, jobs is one of the big aspects of that. So, this chart shows from peak to trough (slide 9), we lost about 15% of peak employment during this. Now we've gained a lot of it back, but even where we are right now, we're still below where we were in the 2007 recession. So, making some progress there, but you hear a lot about V-shaped recoveries and things like that. Well, the trajectory right now is good, but it needs to continue to follow through, to kind of get back to where we were. And again, it took almost 80 months for the 2007 employment situation to get back to where it was.
I'm going to go ahead and skip this slide here (slide 10). It talks a little bit about where fixed income rates are, longer rates. But I know we've got some tax things that we really want to get to.
So, and the last thing, market-related, we talk a lot about valuations. I think it's important to remember that they still remain at pretty elevated levels. We don't think that that's a very good short-term market indicator. But what we have seen is that it does a good job of predicting returns being above or below average over the next 7 to 10 years. So, if anyone's asked us about this we've been pretty straightforward that we think there's a good possibility that you're going to see below average returns over the next 7 to 10 years. And that's an equation that we're already actively trying to work with when we do planning and things like that. Building those scenarios and then trying to figure out how do we battle that. And at the same time with all the stimulus that we've seen with rates where they are, everything that's kind of changed, how's the valuation equation changed? I don't know that we're there yet, but certainly have people asking those questions.
So, Mike, I'm going to go ahead and let you transition into the tax portion of this right now.
Mike: All right, I just want to mention one thing about that last slide (slide 11) and some of the comments you were making. As Doug said, we'd been very straightforward about the fact that there are just a handful of things, usually there's not much that you know for certain, right now there's a fair amount that we know for certain.
One of them is with interest rates near zero, traditional fixed income, high-quality fixed income, is going to have extremely low returns over the next 5 to 7 years. There's no doubt about that, it's arithmetic. However, with regard to this expectation of fundamentally when stocks are expensive, they typically have to work off that expensive situation. And that's what suggests that over time equity, at least US equity, returns should be lower than historical averages over the next 7 to 10 years. Jeff commented and talked about this with regard to foreign securities. The fact that foreign securities have underperformed US securities during this timeframe creates the avenue and sort of opens the door to transition to different classes of equities to still achieve equity type returns. So again, here, we're focused on the S and P 500 (slide 11).
But what I wanted to add is to acknowledge that with all the stimulus that has come into the system, there is a possibility that fundamentals will change. And we may not see that we may see decent returns. That's something when we talk about waiting for the technicals to suggest the direction of things is part of what that's about. So, I just wanted to fill that in.
So now we can hop to the tax. So, as I mentioned at the outset, we're going to send out the slides tomorrow to everybody who's registered for the call. So I do want to be respectful of our time commitment and I never did really intend to walk through each thing from a year-end tax planning perspective. Everybody has been through a lot of the check the box items every year in the past.
But what I want to do is emphasize sort of the difference between what's your accountant might do thinking about year-end tax planning and the way we come at it. And I think they're complimentary, I'm not suggesting one is more valuable than the other, but they are different. So, your accountants focus is to make sure you have enough paid in, is there anything that you need to do to minimize your taxes as you're withholding appropriate things of that nature?
Our perspective towards planning and tax planning, as part of the wealth planning process, is a very long-term exercise. We like to think of tax plans as being sort of 10 year rolling exercises. And that's especially important this year because things they are a changing. So, we encourage everybody to think long-term and consider significant life events which may be the obvious ones like retirement. I am working right now with a client on their 2021 income plan because three years ago this person's spouse was diagnosed with a terminal illness. And what that means is that this married couple who, at this point, while they're still both living, enjoys married file and joint tax rates. We expect that in 2021 the spouse who is ill will pass and the survivor will become a single individual. So that means that in 2022 there will be much higher tax rates applied to this person, even if the regular tax rates don't go up, just because of being in a different situation. So, this is something that we're dealing with because of an illness but remember for older couples this is life. This is the way things unfold.
So, we want to think about significant life events. We want to have this long-term view. And then as we approach tax planning every single year the real exercise is built around bracket management. So, what we're thinking about is what is your tax bracket today? What is your tax bracket going to be in the foreseeable future? And how can we sort of optimize your lifetime tax bill? (slide 12)
Doug's running the slide. So, Doug, if you can pop to the next slide (slide 13).
So, when we're talking about this bracket management, we have deferral strategies and acceleration strategies. The obvious things for people who are still working, presumably, the general assumption, is usually that you're in your highest tax brackets in the years before retirement, because you're at your highest salaries and things of that nature. And you're probably saving. So, what we want to do is get money out of those higher brackets today and have them recognized in the future when you're retired. And presumably in lower tax brackets.
So, we accomplish that by all the things on the list (slide 13). Again, nothing new here so I don't want to necessarily have to drag you through all of these things. You will receive the slides, but I just briefly want to say if you're not doing these things, you probably should. Not necessarily everybody should, but you probably should be. So, it's funding the retirement accounts, funding deductible IRAs, if you don't have a deductible IRA, can you do a Roth? If you can't do a Roth because of your income, have you looked at backdoor Roths? We can help you set that up, that may require some manipulation, we can help with that. But time is a wasting if you're going to try and accomplish that, because you have to shift money between your employer plans and your personal assets. So, there's a lot of things going on here, but the deferral in those situations can make sense.
For people who are working the HSA, the health savings account, if you have high deductible insurance is something that should be fully funded. It doesn't always come natural to people. But leave it alone, It's usually best for people to go ahead and fund that money and use it as a tax deferred, or I should say tax-free, accumulation mechanism. It is one of the few tools that are triple tax advantage, and you want to take advantage of that.
And then finally again, employee benefits, FSAs. These are the sort of use it or lose it plans, but they do create a tax advantage. The use it or lose it rules have been relaxed a little bit in the COVID year, but you still want to pay attention to those balances and so forth.
Next slide please (slide 14). Staying with the notion of bracket management, if we think about the long-term planning, one of the biggest things we're always focused on with people is that RMD spike. So, people who do a great job in saving and getting money into their 401k plans and their IRAs, and then they postpone taking the money out because it's a taxable event. And then they wind up being in a higher tax bracket in retirement than they were when they were working. Well, that's not good planning, and so we want to pay attention to that. And this is one of the reasons we encourage people to do this sort of 10 year plans. That doesn't mean you have to have a spreadsheet with 10 columns on it, although that is the way we do it internally. But you want to be thinking about what your income is going to be and what would happen, again, if a spouse passed and this income had to come out in single tax rates.
In this year in 2020, everybody who's tuned in here because we've beat the drum on it, knows this is an RMD holiday year. But that doesn't mean that you should just enjoy the low taxes. What this means is you should probably use that hole in your tax return as a way to draw down traditional IRA balances to avoid these issues in the future. And again, those are going to be individualized, but this is what needs attention. Bunching itemized deductions, with the way that their tax rules changed back in 2018, standard deduction was doubled. What that does is it creates an opportunity for bunching where you drive your itemized deductions very high in one year, and then very low in the next. The basic mechanism here is charitable gifting, but there are other things where we've got slides that you'll see on medical deductions.
If you have insurance premiums and Medicare premiums, and you're getting close to the deduction threshold, which was scheduled to be 10%. Most people who have been paying taxes all their lives know you have to get over a hurdle. Again, it was supposed to be 10%, it was reduced to 7.5% again, a COVID adjustment. But if you're close and you need elective surgery then you probably want to have the surgery and pay for it this year if this is a bunching year.
So, I don't want to get ahead of myself on some of these things. But if you're going to do this acceleration, the thing you have to be aware of, especially if you're in retirement, is the tax torpedo (slide 14). What that means is you would be turning what would otherwise be tax-free social security benefits and into taxable benefits. So, you may be taking advantage of a low rate, but by creating income out of thin air you're effectively doubling your tax rates because you're paying tax on income that would have otherwise been tax-free.
The net investment income limits, high bracket taxpayers know what I'm talking about. There are certain thresholds where, to help pay for Obamacare, this net investment income tax came in as a 3.8% tax on investment income. And it triggers at certain points. You want to be aware of that because that obviously increases your tax rate. And of course, capital gains, depending on what your income level is can be taxed at three different tax thresholds, you want to be careful where those are.
Something that's not here, or it is here when we say Medicare tax penalties but remember that when your income goes over certain thresholds your Medicare premiums actually will go up two years in the future. So, you want to be thinking about all these things as you're laying these plans out.
Charitable giving, and then Doug, if you want to advance the slide. I had mentioned about the medical expenses (slide 15). Again, you'll get these slides, I've covered these points already, so we can pop to the next slide.
Taxes everybody's familiar with the salt limits (slide 16), the state and local taxes got limited to $10,000. This is one of the things that, for example, the Democrats, if they come back in in a blue wave would like to reinstate. The Republicans took it away because they saw it as sort of a reward to the wealthy people on both coasts that have expensive real estate and expensive taxes.
Mortgage interest, this is a whole separate discussion. It's obviously a deductible item as you're sort of seeing whether or not you can bunch, this is a much longer discussion. I just wanted to bring up the attention here so that if people did want to talk about it, know that we're here to dig into this further.
Doug, the next slide (slide 17). Charitable giving, again, one of the biggest tools people are using. And don't forget, there are lots of ways to get this done. Donor advised funds are a great tool to capture the deduction today and not actually give the money away till the future, lots of people are using this as a tool. Appreciated assets, so if you have stock that has gone up in value you can give that away, that way you don't have to pay tax on the gain but you get a deduction for the full value. That's a great tool. And if you're not itemizing, still giving up to $300 gives you an above the line deduction. It's something that's fallen under the radar for most people. So that's a handy thing to know.
Next slide (slide 18). This is more for wealthier clients, so, we're having these discussions but just be aware that some of the proposed tax changes or changes that are already codified in the law that will happen in 2026 will take away a state and gift benefits. So, making gifts today can be a great way to advance an estate plan.
And of course, everybody's familiar with the annual gifting of the $15,000. It can go much bigger, and the IRS has said that for bigger gifts, even if they do cut the estate tax exclusion in the future, there'll be no claw backs. So, this is something that you should be having a discussion with your estate planning attorney already to see what can be done if we get the blue wave. Because there is precedent for retroactive tax changes. These are things that politicians do when they don't want the citizenry front running their legislation. So, these are big decisions, and you'll want to be thinking about them between now and year end and understanding what steps need to be taken. Again, feel free to give us a call we’ll be happy to talk to you about those things as well. And the other things on the list are other ways to transfer wealth (slide 18).
Obviously, we started off talking about sort of the traditional year-end tax forecast. Everybody should make sure they understand that they're withholding and estimates are in line and that's easy to do.
Doug: Mike, sorry, I think we're right up against time right now. I think we've got one question that we can go over if you're okay.
Mike: Yeah so, I would invite everybody to look at the slides, if you would like to take us up on any of these topics, feel free to contact your advisor, call either Doug or me We'll be happy to have that conversation with you.
Doug: Sure so, the one question I think that we can address here is the concept of being worried about, I guess, a double dip recession. Or the possibility that all of these things that we think are certainly going to happen, like the stimulus bill ends up not happening, COVID gets worse, and lockdowns kind of come back. Is that a concern?
I guess I'll start and say yeah, I think it always has to be a little bit. At the same time, the interesting thing is I think the government has kind of crossed the rubicon so to speak. In terms of saying, hey, we're going to throw money at these problems and that's how we're going to solve this. So, I have a hard time believing that after we've gone all this way with the stimulus that if things actually did get worse, that there would not be some kind of response from both fiscal and monetary policy. Now, will that solve the problem? That remains to be unseen, and is it a sustainable way to deal with these things? I don't know, but I think if things got worse in the COVID front that we would certainly see a response. I think right now you're seeing a little bit of a political game in terms of the latest stimulus. But we have seen cases spike recently, so it'll be interesting to see where that goes.
Mike, do have anything to add?
Mike: Yeah I mean, I have no doubt that there would be a response and I have no doubt that we're going to see trillions of dollars of stimulus even if things continue to improve in the way of therapeutics and vaccines and so forth. I mean, that ship has sailed.
It's just a question of the politics getting out of the way. The only way that I see it happening is if the reality is such that a shut down he has to be reinvoke, where the economy simply cannot progress. And I think that there would be a lot of resistance to that. I think we've learned a lot about how to behave. I mean you can see how we're conducting this meeting, you and I are in different locations when we turn our computers off, we'll put our masks on and, you know, I think we know how to do things a lot better.
But if the economy, ground to a halt, I wouldn't doubt it, but it would be over the feds and Congress's dead bodies that it would happen, is my opinion.
Doug: Okay. I think that's it, Mike, if you want to wrap us up.
Mike: Yeah so, that does do it for today. I want to thank everybody for joining us. Obviously, we are trying to get as much information to you as we can in a limited time.
If things do start to get a little bit crazy, we will pick up the frequency of these. And we're also preparing to have advisors begin to send out some video alerts and things too. So, expect more information as things unfold. And as we get to know some of these things that we're sort of speculating about right now.
And the offer's always there. If you have questions that did not get answered or you think of something after we unplugged today, by all means, reach out to us, we want to answer that. And I think that does it, so thanks everybody. Stay safe and bye-bye. Thank you.