A recent article by Mike Piper at Oblivious Investor illustrates this well. He received a phishing email designed to look like a Vanguard statement notification. On desktop, the red flags were immediate — the sender’s email address was nonsense, and hovering over the links revealed they pointed to a scam site rather than Vanguard. On his phone, none of that was visible without going out of his way to look for it.

Here’s why mobile is the more vulnerable environment:

• Most mobile mail apps show only the sender’s name, not the email address. You’d have to tap through to reveal it — and most people don’t.
• Similarly, you can’t hover over a link on a phone to preview where it actually goes. You either tap it or you don’t.
• Once you’re on a page, your mobile browser may only show a fragment of the URL — enough to see “vanguard” at the beginning without realizing the actual domain is something like “com-payments-us-vanguard.com,” which any fraudster can buy.

The good news is that the most effective protection is simple: don’t interact with inbound communications that ask for anything.

• No clicking on links
• No replying
• No providing information
• If an email looks like it might be legitimate and require a response, close it and go directly to the company’s website by typing the address yourself, or call the number on the back of your card.

This is especially worth keeping in mind for anything related to your financial accounts. The stakes are high, and the effort required to be cautious is low.

Just so you know, I used AI to help come up with the base content here, and then I tweaked it.

The post More Electronic Fraud Prevention Tips appeared first on Strategence Capital.

The New York Times recently published the story, “Want to Know Where the Market Is Going? Don’t Trust This, or Any, Forecast.” It’s behind a paywall, but if you have a subscription, you can access it here. It has some great takeaways, and I have used an AI tool to summarize those for me and which I have edited. 

Wall Street forecasts are worthless: Since December 31, 2000, Wall Street analysts have predicted gains every year, but the market fell in 7 of 25 years (28% of the time). The 2022 forecast illustrates this perfectly—strategists predicted a 3.9% gain, but the S&P 500 fell 19.4%, a miss of 23.3 percentage points. The 2008 crash saw a 38.5% decline that forecasters failed to predict. Average forecast error: 14.1 percentage points annually—more than 50% larger than the forecast itself.

Misleading averages: While the average annual forecast of 8.9% price gains seems close to the actual 7.7% annual performance, this masks terrible accuracy. The forecasters were positive in all down years and consistently underestimated the good years, making their predictions essentially useless.

Why forecasters are always bullish: Negative predictions hurt business. If brokers told clients the market would decline, people wouldn’t trade stocks and bonds. The firms make elaborate and compelling presentations that create an illusion of clairvoyance.

The author’s forecast: The author of the article, Jeff Sommer, who writes on markets and the economy, for fun, predicts a 16% decline in 2026 but with “no pretense of accuracy whatsoever.” Not a single strategist is predicting a decline in 2026.

Reasons for both optimism and pessimism: The article notes legitimate concerns including tariffs, high share valuations, and AI euphoria. But there are also positive factors like market momentum and strong corporate earnings. The point: no one knows which will dominate.

Historical precedent from famous forecasters: Byron Wien and Laszlo Birinyi, both prominent strategists who died in 2023, completely missed the 2008 crash. When questioned, Wien admitted he had no ability to foresee the future—he just wanted to be “interesting.” Birinyi said his predictions were merely “arguments” for people to evaluate themselves, not actual forecasts.

Here is the author’s advice: 

• Ignore all forecasts completely, but invest anyway for the long term 
• Use low-cost, well-diversified index funds 
• Hold appropriate high-quality bonds for safety 
• The economy typically grows over the long run, rewarding patient investors in profitable companies 
• If retired or with a short time horizon, emphasize bonds and drastically reduce or eliminate stock exposure 

Bottom line: The author compares Wall Street forecasts to his tennis serve—sometimes too long, sometimes too short, technically “perfect on average” but actually terrible. Market predictions are theater designed to generate trading activity, not useful investment guidance.

The post It’s Time for the Annual Forecasting Folly appeared first on Strategence Capital.

The gap that Morningstar wants you to mind is the gap between fund returns and investor returns. The gap arises when investors take action in their investment portfolios.

For example, take an investor in one of the more–if not most–popular technology-heavy funds, the Invesco QQQ Trust, which tracks the performance of the NASDAQ 100 index, pictured below. The fund return is the return of the fund, based on an investment at the beginning of a time period. The investor return, on the other hand, reflects the investor’s investment decisions in the fund, like freaking out over the Tariff Tantrum in April, bailing out, and getting back in later.

The good news about the study is that the gap has narrowed over the time that Morningstar has been doing the study. Based on 2024 data, the gap was 1.2%. Over 2019-2021, the gap was 1.5%+.

The report looks at the gap across different types of funds, from municipal bond funds to international funds to sector (i.e. non-diversified funds.) Not surprising to this author, the biggest gap is in the Sector Equity funds, where it averaged 1.5%. These are common used by market-timing stock jockeys. On the other end of the spectrum are the Allocation and Alternative funds; both at 0.1%.

1.2%…as Ted Lasso might say, “big whoop!” Compound that 1.2% over ten years or longer and pretty soon it’s real money–assuming the gap doesn’t revert to its wider levels, as shown below.

Invested over ten years with a 10% return per year, $100,000 grows to $259,000

Earn 1.2% less each year, and $100,000 grows to $232,000, 10.4% less

Invested over 20 years with a 10% return per year, $100,000 grows to $673,000

Earn 1.2% less each year, and $100,000 grows to just $540,000, 19.8% less

This fits well with our investment philosophy of long-term asset allocation along with periodic rebalancing, ignoring noise along the way. In a formula, it’s…

Strategic Allocation + Rebalancing – Noise

We’d love to talk with you about it. You can contact us at info@strategencecapital.com.

The post Morningstar’s 2025 “Mind the Gap” Study appeared first on Strategence Capital.

A QCD is a qualified charitable distribution.

It’s a basically an otherwise taxable distribution from an IRA that is paid directly to a qualified charity. Importantly, it can be used to satisfy your required minimum distribution if you’re required to take them and don’t need the income.

You will need to talk to your tax professional, but if the Venn diagram here describes you, consider making a QCD. In addition, we have included below a flowchart to help you determine if a QCD might make sense for you.  As always, our team is just a phone call away if you are after more advice or insight about your specific situation.

The post If This Is You, Consider a QCD appeared first on Strategence Capital.

This is finally an article that investors can read and be rid of their bad investment habits. This article lists 12 lessons, and I will highlight several, but here they all are.

• Lesson 1: No One Is Very Good at Consistently Getting Market Forecasts Right
• Lesson 2: Perhaps the Magnificent Seven Should Be Called the Magnificent Three
• Lesson 3: Valuations Cannot be Used to Time Markets
• Lesson 4: It Takes Discipline to Stay the Course Through Periods of Poor Performance, as All Risk Assets Go Through Them
• Lesson 5: Assets With Poor Performance Have Self-Healing Mechanisms
• Lesson 6: Even With a Clear Crystal Ball, Markets Are Unpredictable
• Lesson 7: Don’t Let Politics Influence Investment Decisions
• Lesson 8: Most Returns Were Earned Over Short Periods
• Lesson 9: Last Year’s Winners Are Just as Likely to Be This Year’s Dogs
• Lesson 10: Active Management Is a Loser’s Game in Bull or Bear Markets
• Lesson 11: Diversification Is Always Working; Sometimes You Like the Results, and Sometimes You Don’t
• Lesson 12: Great Innovations Are Not Always Great Investments

Let’s now take a careful rant look at a few of these.

Lesson 1: No One Is Very Good at Consistently Getting Market Forecasts Right

It has been said that market forecasters exist to make weather forecasting look respectable. Still, every year, the investment houses and the talking heads on television—I heard it once called Bubblevision for all the bubbles it inflates—insist on providing their market forecasts. Some do it with humility; most don’t. Almost all get it wrong, forgetting the maxim to not mix a forecast with a date: it’s okay to say the Dow Jones Industrial Average will rise to 40,000; it’s a bad idea to say when it will happen. There is a beautiful bar chart along with this lesson in the article. It shows the dispersion between the mediate estimate and what actually happens. Why do you care what the forecasters say?

Lesson 6: Even With a Clear Crystal Ball, Markets Are Unpredictable

I’m just going to copy and paste from the article. Rewind to the end of 2022—or the beginning of 2020—and imagine knowing all that would transpire in the year ahead…

Imagine that on Jan. 1, 2023, you were provided with a crystal ball that would enable you to see the major geopolitical and economic events of the coming year. Given what happened, it’s hard to imagine that any investor would have predicted that the S&P 500 would rise 26.4%. And it is likely that many investors would have sold equities given the negative news that was coming. 

The lesson is that even if you could accurately predict events, you should not try to time markets based on forecasts.

Lesson 7: Don’t Let Politics Influence Investment Decisions

This is my favorite. No matter what you tell them, investors think the decisions of President of the United States determine what happens with markets. They.Do.Not. Here’s a quote from the article:

The 2012 study, “Political Climate, Optimism, and Investment Decisions,” by Yosef Bonaparte, Alok Kumar, and Jeremy Page, showed that people’s optimism toward both the financial markets and the economy is dynamically influenced by their political affiliation and the existing political climate.

Now, imagine the nervous investor (and I have had discussions with many of them, all of whom were Republicans) who reduced their allocation to equities (or even eliminated them) based on views about the Joe Biden presidency, Democratic control of the Senate, and the exploding budget deficits (among other concerns). While investors who stayed disciplined benefited from the market’s very strong performance, those who panicked and sold not only missed out on that strong performance but persistently faced (and continue to face) the incredibly difficult task of figuring out when it would be safe to invest again. Similarly, I know of many investors with Democratic leanings who were underinvested after President Donald Trump was elected.

Is this you? Stop it! Just stop!

Lesson 8: Most Returns Were Earned Over Short Periods

If you get out of the market for even a short period of time, your long-term results could be terrible. Again, from the article… There were 1,067 months between 1927-2023. The best 97 months returned 100x (times!) the other months. Stay invested!

Lesson 9: Last Year’s Winners Are Just as Likely to Be This Year’s Dogs

Don’t chase winners. Period.

Lesson 10: Active Management Is a Loser’s Game in Bull or Bear Markets

Active management is like the proverbial broken clock that’s right twice a day. Active management’s triumphal return is always just around the corner, always waiting to shine during the next bull market.

To outperform, all an active manager had to do was overweight those big winners. On the other hand, 10 stocks lost at least 32.4% (underperforming the S&P 500 by almost 59 percentage points). To outperform, all an active manager had to do was underweight or avoid these dogs.

This wide dispersion of returns is not at all unusual. Yet, despite the opportunity, year after year in aggregate, active managers persistently fail to outperform.

There, I needed that! Now, get off my porch, you kids!

The aforesaid should not be considered investment advice, but rather the ranting of an investment guy who has seen too many mistakes made because of the unlearned lessons above.

The post Have Investors Learned the “12 Lessons?” I doubt it. appeared first on Strategence Capital.

But what if we or you did have a crystal ball and we knew what was going to happen?

Fantastic, right? Vacation home, here I come!

Or maybe not.

This seems to be an investor’s process:

1. Here is an event
2. This will be the outcome

Even if we get the event right, we have to get the therefore right, too.

Here’s a case in point (whatever that phrase means) from Bespoke Investment Group, a service to which we subscribe.

Let’s go back in a time machine to January 11, 1963.

On that day, the US Surgeon General issued a report on smoking that was thought to be so damaging to the tobacco industry that he waited until a Saturday when markets were closed to release it to limit the potential stock market chaos.  The day after the report was released it was front page top of the fold news in the New York Times with a headline reading “Cigarettes Peril Health” and the sub-headlines “Cancer Link Cited” and “Smoking Is Also Found Important Cause of Bronchitis”.  Besides the front-page headlines, the Sunday edition was rife with stories on the ‘revelation’ that smoking wasn’t good for you.

As much as the tobacco companies tried for decades to convince consumers otherwise, anyone with a minimal amount of intelligence who had ever smoked a cigarette probably already knew that it wasn’t something you did in order to get yourself into shape or good health. As far back as the 1940s, scientists had already made the link between smoking and lung cancer. Smoking was considered a vice for a reason!  Even as many (or most) Americans already knew of the dangers of smoking, an official statement from the Federal government was a big deal, though, and would pave the way for more regulation of the sector.  If you owned tobacco stocks heading into that weekend, you probably weren’t looking forward to Monday’s opening bell.

https://www.bespokepremium.com/interactive/

When the bell rang Monday morning, tobacco stocks opened lower, but by the end of the trading day, their performance was a surprise to most.  Of the five major tobacco companies at the time, Reynolds American actually finished the day higher, and American Tobacco was unchanged on the day.  Of the remaining three major tobacco stocks, none of them even finished the day down 2%.  Perhaps the most amusing aspect of the New York Times market recap the following morning was that cigar stocks traded higher on the day as “cigar smoking received a relatively clean bill of health”.  It looks like at least one part of the industry had effective lobbyists!

The performance of the cigarette stocks on the first trading day after the Federal Government first officially recognized the dangers of smoking illustrates once again how the market can defy consensus expectations.  While the Surgeon General’s report on the dangers of smoking should have been a blow to cigarette stocks, the initial reaction to the report was muted.  When everyone is zigging, the market often zags.

I continue to insist that one of the key factors to investor success is humility.

First, recognize that you know very little about the future, other than it is uncertain. Second, recognize that you don’t how a future event will produce a certain outcome. Instead, create a sound investment plan and stick to it.

The post Finally, a Crystal Ball! appeared first on Strategence Capital.

#1

The first one, procrastinating, might not apply to you if you already have a will. If you don’t, stop procrastinating, and until you stop procrastinating, look both ways before crossing the street–and read our blog post above for the implications of not having a will.

#2

Be careful about giving everything, outright to heirs. Instead, if you have enough assets, such that the sudden receipt of them could cause your heirs to make bad decisions, consider setting up a trust that gives out the funds at certain ages, as well as providing other estate planning benefits.

#3

This will probably apply more and more, but don’t forget about digital assets, such as cryptocurrency and non-fungible tokens (NTFs.) The article suggests using a device known as a hardware wallet (think how-powered flash drive.) Here is a link to an article that discusses them.

#4

Not regularly updating your will is the fourth mistake cited. It suggests an review/update every 5-10 years. Some of things it mentions that could change in that are guardians, charitable intentions, and people named who have since passed away.

#5

While not really a will mistake, the fifth item has to do with not updating beneficiaries elsewhere, such as in retirement plans and transfer-on-death accounts, which supercede–maybe better, precede–one’s will.

#6

Not allowing for flexibility. A good attorney should be able to take care of this when drafting the will, but allocating dollar amounts might not provide the flexibility of allocating by percentage.  Drum roll… (not really)

#7

In fact, this may have merited a drum roll. The article suggests that you be upfront with your heirs about your intentions, especially if you specify unequal bequests to heirs…for good reason. If you don’t, you could leave a child wondering for the rest of his or her life if his or her parents really loved them.

I’m guessing the disclosure we’ll be required to add below is that this doesn’t constitute legal advice, and it really doesn’t, but maybe it’ll inspire you to go and seek legal advice if any of the mistakes mentioned above apply to you.

Storen Financial and LPL Financial do not provide legal advice or services. Please consult your legal advisor regarding your specific situation.

The post Willful Mistakes appeared first on Strategence Capital.

You’re excused for wondering if you should just give up on this whole investment thing. There’s evidence of others doing that or the equivalent. Recently, participants in the options markets purchased twice as many contracts to protect against losses compared to contracts that would benefit from the market going up. In the history of this indicator (~1997), this has never happened before.

We consider this a contrary indicator, sort of like everyone getting on the same side of the boat; it usually doesn’t work out for those folks. In his 1841 book, Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay said, “Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.” This would suggest the market is due for a bounce.

Still, whether that bounce is a permanent one or just the sort a cat makes when it gets dropped, you may be thinking about sitting on the sidelines for a while.

A common sentiment we hear is some version of I’ll get out and wait until things look better. If this is your line, be forewarned that it will guts of steel since the news will–almost by definition–look worse at lower prices and only look better at higher prices.

That’s a good recipe for this outcome…

What’s more, big market moves tend to happen over very short periods of time. Miss a couple of those, and you may need to delay retirement. The chart below shows that if you missed the five best days of the last 25 years, your $1,000 investment would only have grown to $2,295 instead of the $3,631 you would have had by staying invested.

Our advice remains the same, so long as your investment mix is appropriate for your circumstances, we recommend sitting tight. If you have additional funds, now may be the time to nibble on more investments, since they’re on sale.

The post Enough Already! appeared first on Strategence Capital.

Other common questions include:

• How much life insurance should I carry? I’ve heard different recommendations, but I don’t know what to believe.
• I have this policy from years back. Is it still adequate? Is the price I’m paying fair compared to today’s marketplace?
• My group disability policy through my employer only covers 60% of my income. Should I own an individual policy to cover the gap?
• Should I be considering long-term care coverage? At what age should someone start looking into the matter?

These what-ifs aren’t anyone’s favorite subject matter, but being proactive in this area is much better than being reactive. So, if any of these questions sound familiar or if you have other concerns related to this topic, don’t hesitate to contact us for a conversation. Matt Dorweiler joined our team October of 2021, and he brings over 15 years of experience in helping individuals and small businesses with risk management.

The post It Doesn’t Matter Until it Does appeared first on Strategence Capital.

Recently, the Standard & Poor’s 500 (S&P 500) had declined  13.9% from the January peak ¹. Stocks are not the only asset class getting beated down. Year to date, through April, core bond funds were down 9.5%, which, if the year ended in April, would be the worst year ever for core bonds (previous worst was –2.9% in 1994) ². Pair all of this with a swelling inflation rate of 8.5 (Consumer Price Index; March 2022), and an investor can’t be blamed for wondering what to do.

It may be a good time to make lemonade out of lemons by considering a Roth conversion.

Huh?

Roth conversions are when an individual takes a portion of a retirement account that has not yet been taxed (I.e., traditional IRAs) and moves it to a retirement account that is post tax (I.e., Roth IRA). Some qualified retirement plans, such as a 401(k), may allow this, too.

Here are reasons why I believe that Roth conversions can make sense right now:

1. The stock market is on sale. When I go to the store, and I see a special sale on that exact thing I’m looking for, why would I wait for that item to go back up in price before I buy it? When completing a conversion to Roth when the market is down, you get to swap out your investments at a lower tax basis. I’ll provide an example later in this article.
2. Taxes are on sale.³ We are experiencing an extremely favorable tax environment right now. With the Tax Cuts and Jobs Act that is set to expire in 2026, this is could be a good time to realize income.
3. There are no required minimum distributions in Roth IRAs. That is not the case for traditional IRAs. Every year, starting at age 72, investors are forced to take money out of their IRAs, no matter if they need the money or not.

Let’s look at an example to give you a better understanding of a Roth conversion. If an Indiana resident (home state bias on display, here) in the 22% federal tax bracket, and with a state tax rate of 3% (rounded down), converts $50,000 of a traditional IRA to a Roth IRA, their taxable income for the year will increase by $50,000. Assuming they stay in the same 22% bracket* with the $50,000 of additional income from the conversion, the tax liability is approximately $12,500 in federal and state taxes at the time of conversion. Hopefully you are tracking with me so far. The next part of the Roth conversion scenario is where investors can really benefit from this strategy.

It’s important to consider one’s tax bracket. A jump from the 22% tax bracket to the 24% tax bracket, the next one, isn’t a big one, but jumps from the 12% and 24% brackets are big moves.

If a market correction reduces the investment account by 15% and the Roth conversion is completed at $42,500 in value, the federal income tax liability from the conversion would fall to $10,625 yielding a $1,875 tax savings upfront. The caveat is once the funds are held inside a Roth IRA, any future market rebound and appreciation will be free of tax ⁴. The S&P 500 has never not rebounded over some time frame.

Other Considerations

The decision to convert all or a portion of your pre-tax IRA accounts depends upon an individual’s own facts and circumstances. Taxpayers are advised to speak with their tax and financial advisers prior to undertaking a Roth conversion. Some of the additional considerations include:

Sources:

1. LPL Research 

2. LPL Research

3. “Low Tax Rates and What to Do” , Strategence Capital Blog

4. “Everyone is Talking about Roth IRA Conversions and Here’s Why” , Kiplinger

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.

The post An Opportunity in the Making appeared first on Strategence Capital.