September 2020
Each month, Wellspring's wealth strategist and advisors will share news and articles to shed light on the current economy, financial markets, and common tasks for maintaining a well-rounded and resilient personal financial plan.

Click on the links below to learn more.
The Stock Market Keeps Rallying Higher. Why?
Stock markets are entering a new cycle lifted by positive sentiment ahead. Top investment bank Goldman Sachs revised its estimates for the S&P 500 to close out 2020 at 3,600. First quarter of 2020 marked the beginning of a recession when the economies around the world contracted, and financial markets globally experienced a sharp albeit short bear market with the deepest declines in March. Since then some parts of the world's markets recovered, and in the U.S. stocks surged despite two successive quarters, 1Q20 and 2Q20, of falling GDP. Currently, the U.S. economy finds itself still in the middle of a recession, unemployment rate remains in the double digits with no signs of letting up, and there is no relief with COVID-19 that is the very cause of financial and economic distress for millions of Americans. It begs to question even against an uncertain economic backdrop why stocks continue to rise. The financial markets never did quite mirror the underlying economy exactly. At times referred to as the real economy, financial markets in contrast do not dwell on reported data such as quarterly GDP or unemployment rate that reflected what happened in the past. Rather, stocks markets are forward-looking. Furthermore, with the expiration of the CARES Act on July 31 intended to support economic activity and a failed compromise in August by Congress on a second stimulus package only added to the angst of many. A second stimulus check for Americans is not for certain. Between what is happening in the economy and stock markets, investors exercising prudence now find themselves in a precarious situation.

What is Supporting the Bull Market Rally?
  1. Monetary policy - $3 trillion in the financial system due to QE as well as near zero interest rates for years to come means corporations in America are benefiting hugely with excess and cheap capital.
  2. Moreover, though bonds help diversify, low interest rates mean investors are considering elsewhere for yield. The propensity to invest into stocks increases.
  3. There is growing optimism for a vaccine soon. The New York Times' tracker includes current clinical trials on humans.
  4. FOMO (fear of missing out), investors on the sidelines are jumping in.
  5. Reflexivity 

Wild Cards

How Can Investors Stay Engaged and Participate in the Capital Markets While Mindful of the Downside?
  • Reexamine investment objectives, risk tolerance and capacity, and investment mix and allocation.
  • Determine and distinguish between short and long-term goals, avoid focusing on the short term too much.
  • Identify a reasonable expected rate of return (the industry pinned the next decade at 6% annual return).
  • "Time in the market versus timing the market"
  • A bucket approach
  • Core portfolio with satellites; or
  • Core portfolio with allocation to meet various objectives
A Bucket Approach to Retirement Allocation






Continue to stay healthy, practice social distancing, wash your hands often, and wear a mask when in public settings.
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