Quote of the Week

“The beautiful thing about learning is that nobody can take it away from you” – BB King

Tech Corner

 Last week was a quiet week for the markets. The Dow and the S&P 500 were basically flat and the Nasdaq was up +2.2%. So far this week as of Tuesday the S&P 500 is down -1.2%. It is interesting that so far this month the S&P 500 has only had one up day as of Tuesday.

The big news last week was that the nonfarm payroll employment report rose by 528,000 jobs in July which was much higher than expected. The unemployment rate edged down to 3.5%. On the surface this report looks great. The Administration was touting the report saying it looks like we are going avoid a recession. The fly in the ointment is that the number of persons employed part time for economic reasons increased by 303,000 to 3.9 million. Not a good sign. The jobs market indicator is the most lagging indicator if we are going into a recession. In other words, when a recession has started to take hold, employment is the last to suffer. Many of the other indicators are showing we are already in a recession.

I’ve tried to say in more ways than I can try to communicate at this point, Phase 2 of the Bear Market is going to be more about real GDP and profit growth slowing into their respective recessions for the next four quarters.

We have had a nice rally over the last few weeks. Jim Cramer on CNBC says we have already hit the bottom. Of course he has to say that. If he were to say “run for the hills and go to cash” he would surely lose all his sponsors. Wall Street and CNBC “needs” to be bullish to sell investments.

But let’s look at history. The last two recessions in 2008 and 2001 we had huge rallies, much bigger than the ones we’ve had now. You could’ve got sucked in because every chart looks like it does now. Markets are designed to suck the most amount of people in at the most inopportune time. We are big believers in studying market history as an input into our investment conclusions. So let’s look at market history, more specifically, previous Fed hiking cycles and how that impacts the equity markets.

We now have the Fed raising interest rates into a declining economy. In two-thirds of historical examples Fed rate hikes have ended long before the bottom in market prices or said differently, markets continued to decline long after the Fed finished tightening.

Specifically, the average market price trough came a full 21 months after the last rate hike, with a minimum of 10 months afterwards and a maximum of 41 months.

What does this mean for the equity markets in the current tightening cycle?  Assuming the Fed continues another pair of half point rate hikes in their next two meetings in September and October, this would imply that the likely earliest bottom in prices would be in October-January of 2023-2024. But more likely (based on history) the bottom in prices would not occur for a full year or more after the Fed’s final rate hike of this cycle.

So what do we do going forward? Just what we are doing now, playing it safe.


Lisa’s Thoughts

 Should You Buy Long-Term Care Insurance?

The longer you live, the greater the chances you’ll need some form of long-term care. If you’re concerned about protecting your assets and maintaining your financial independence in your later years, long-term care insurance (LTCI) may be for you.

Who needs it?

As we age, the odds increase that we’ll need some form of long-term care at some point during our lives. And with life expectancies increasing at a steady rate, the likelihood of needing long-term care can be expected to grow in the years to come.

But won’t the government look out for me?

Medicare pays nothing for nursing home care unless you’ve first been in the hospital for 3 consecutive days. After that, it will pay only if you enter a certified nursing home within 30 days of your discharge from the hospital. For the first 20 days, Medicare pays 100 percent of your nursing home care costs. After that, you’ll pay $185.50 in 2021 per day for your care through day 100, and Medicare will pick up the balance. Beyond day 100 in a nursing home, you’re on your own–Medicare doesn’t pay anything.

If you’re at home, Medicare provides minimal short-term coverage for intermediate care (e.g., intravenous feeding or the treatment of dressings), but only if you’re confined to your home and the treatments are ordered by a doctor. Medicare provides nothing for custodial care, such as help with feeding, bathing, or preparing meals.

Medicaid covers long-term nursing home costs (including both intermediate and custodial care costs) but only for individuals who have low income and few assets (eligibility guidelines vary from state to state). You will have to use up most of your savings before you qualify for Medicaid, and aside from a small personal needs allowance, you will have to use all of your retirement income, including Social Security and pension payments, to pay for your care before Medicaid pays anything. And once you qualify for Medicaid, you’ll have little or no choice regarding where you receive care. Only facilities with Medicaid-approved beds can accept you, and your chances of staying in your own home are slimmer, because currently most states’ Medicaid programs only cover limited home health care services.

Looking out for yourself

If you want to retain your independence, protect your assets, and maintain your standard of living while at the same time guaranteeing your access to a range of long-term care options, you may want to purchase LTCI. This insurance might be right for you if you meet the following criteria:

  • You’re between the ages of 40 and 84
  • You have significant assets that you would want to preserve as an inheritance for others or gift to charity
  • You have an income from employment or investments in addition to Social Security
  • You can afford LTCI premiums (now and in the future) without changing your lifestyle

Once you purchase an LTCI policy, your premiums can go up over time, but the rates can only rise for an entire class of policyholders in your state (i.e., all policyholders who bought a particular policy series, or who were within certain age groups when they bought the policy). Any increase must be justified and approved by your state’s insurance division.

Several factors affect the cost of your long-term care policy. The most significant factors are your age, your health, the amount of benefit, and the benefit period. The younger and healthier you are when you buy LTCI, the less your premium rate will be each year. The greater your daily benefit (choices typically range from $50 to $350) and the longer the benefit period (generally 1 to 6 years, with some policies offering a lifetime benefit), the greater the premium.


If you have friends or family in need of financial life planning services,

It would be the honor of Laurence Lof Financial Advisors to assist them.

We value your referrals!


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These are Larry Lof’s opinions and not necessarily those of Cambridge, are for informational purposes only and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.

The S&P 500 index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The Index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly.

Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.

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