COVID-19 Update: Western Pennsylvania Statistics and Analysis

    Beginning on Friday, May 15, 2020, Governor Wolf announced that Allegheny County was in the (yellow) reopening phase. There has been 1,912 total positive cases of covid-19 in Allegheny County – over 5% of the total cases tested were positive.  As you can see on the bar chart below, since our spike in March, we have drastically eliminated the amount of cases. Now that it is June, public places are beginning to open and allowing people to even enter without masks. 

At Schenely, We stress that you show support to your favorite local businesses during this time; maybe get a burger from Tessaro’s, or perhaps a breakfast to go from Pamela’s, or even just get a coffee from Crazy Mocha. Look at what Mark Cuban did for not only the funding and supporting of the Pirates and Penguins during this time, but also the Original Hot Dog Shoppe in Oakland.  The “O” originally opened in 1960, during the famous time while the pirates were in the world series.  The “O” has always been a local favorite for University of Pittsburgh students, Alumni, and all Pittsburgh fans in general. After announcing that it would have to close down after 60 long and successful years, Mark Cuban decided to save it from Financial ruin. He also plans to turn the menu to be vegan friendly because he prefers vegan food.

We think that everyone should still remain cautious in Allegheny and Beaver country through at least the end of August. It is going to take effort to keep everyone healthy when all the public places begin to open back up. We are going to have to keep things as calm as possible until the scientists release a proper vaccine, because if we aren’t careful, there is a higher chance that the virus will return, or even mutate into something worse.

Everyone who dies from the virus in our area was at least over the age of 40, and over 80% were over age 70. These statistics show how much more dangerous it is for older people; if you know someone over the age of 70, stress safety precautions, and help them through these times in whatever way you can. After all, 1.8 million U.S. citizens have been infected by the virus, and 6.2 million people worldwide; it is not a gimmick, help us keep our elders protected.

There have been over 100,000 deaths so far in the United States, and over 372,000 deaths worldwide.

2020 has been a very interesting and uncertain time for all of us; it’s the first pandemic since 1918 (the Spanish influenza). Scholars say that anywhere between 50-100 million people were killed from the influenza. The 2nd worst pandemic of all time was in 1796, which was the smallpox disease, killing approximately 300 million people.   The worst pandemic of all time, even though it does not have the most casualties, it has been around the longest and is still affecting us all today with no cure. HIV has killed over 32 million people.

We are encouraged that the virus numbers have slowed down, and businesses are opening across the State and in Pittsburgh.  In times of great uncertainty and market disruption, we at Schenley always find investment opportunities.  We like the health care, technology, electronic funds transfer or fintech sectors.   If you have any questions or concerns during this uncertain time, please do not hesitate to reach out to us at Schenley Capital, Inc.

Written by:
Derek W Green
Associate
info@www.schenleycapital.com
(412)-749-9256
417 Walnut Street Suite 200
Sewickley, PA 15143

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Why should people choose a Roth IRA?

ROTH IRA’s (Individual Retirement Account) are flexible retirement accounts for individuals who are looking for a tax advantage retirement savings vehicle.  There are many ways in which ROTH IRA’s can be more beneficial than traditional IRA’s. One being that the account owner’s money grows tax-free.  Also, there are no minimums to open this type of retirement account. It is like a traditional IRA because the maximum contribution is the same ($6,000 per year).   It differs from other investment accounts because the money in the account grows tax-free, and it can be withdrawn tax-free when you retire.  You may have both a traditional IRA and a ROTH IRA simultaneously, but your total max contribution in both accounts must equate to $6,000 or less each year. 

An overwhelming number of Millennials have been investing in ROTH IRA’s due to their tax-free properties.  ROTH IRA’s target individuals who make less than $124,000 per fiscal year; if you make more, you may not contribute to a ROTH IRA.  If you are married, your combined annual income must be below $196,000, to be able to contribute to a ROTH IRA.  For Millennials, this type of retirement account makes sense because those that are younger tend to be in a lower tax bracket.  The years of compounding tax-free earnings, along with tax-free withdrawals in retirement, far supersede the annual tax deductions from a traditional IRA account.  Additionally, ROTH IRA’s offer more flexibility because individuals can’t take a tax deduction in the same year when contributing to a traditional IRA. 

ROTH IRAs have several benefits regarding withdrawals and tax penalties. Just like a traditional IRA, one should not withdraw funds before age 60; although, you could in special circumstances because the ROTH has very flexible rules for qualified expenses.  In a ROTH, you can withdrawal any contributions without penalty.  ROTH IRA’s have special circumstances, called qualified distributions, when you can withdraw funds.  For example, if you are looking to purchase a first-time home, you can take up to $10,000 without incurring taxes.  Also, if you are looking to pay off student loans you may withdraw from your ROTH IRA contributions.  ROTH IRAs can give people the flexibility they need to retire, become a first-time homeowner, start a family, or pay off medical bills.  

ROTH IRA’s use after-tax dollars.  For example, income tax is paid on the money after income is earned from a salary, or any other taxable income; that money that has already been taxed goes into the retirement account.  Therefore, you will not pay a tax when you withdraw the funds in retirement – this could potentially be a huge benefit.  All this time your funds are growing, and compounding, tax-free. 

Not only are the withdrawal penalties significantly more lenient than a traditional IRA, but there is also no required minimum distribution.  Typically, in a traditional IRA, once the account owner becomes age 72, he or she is required to receive a distribution from the traditional IRA each year.  If you forget to take the Required Minimum Distribution (RMD), the penalty is very steep; the IRS will tax 50% of the amount of the RMD.  However, in a Roth IRA, the account owner can continue to make annual $6,000 contributions to the ROTH, without being required to receive a distribution at age 72. 

The flexibility of ROTH IRA’s make this type of retirement account ideal for Millennials, or individuals who make less than the salary cap of $124,000 per year.   

If you, or someone you know, has questions or concerns about your retirement account(s), please contact Schenley Capital. 

Written by Ellie Genter 
Schenley Capital, Inc. Associate 
Email: elliegenter@www.schenleycapital.com
Phone: 412-749-9256 

What you Need to Know about Mutual Funds & ETF’s

Mutual Funds

A Mutual fund is a combination of many stocks and bonds. The mutual fund pools cash, giving the investor the ability to purchase small pieces of stocks, bonds, or a collection of assets, and simultaneously providing investors a cheap way to diversify and reap market gains, while still hedging against losses.  Professionals manage the holdings that make up the fund’s portfolio.  Investors buy shares that rise or fall in value based on the performance of the fund’s underlying securities or holdings.  Unlike stocks, mutual fund investors do not have direct ownership or voting rights of the stock; however, mutual fund investors do share equally in the profits or losses of the fund’s total holdings.

Owning a single share of Amazon would cost approx. $2,300 today; however, there are many mutual funds that cost less than $30 per share. The mutual fund owns Amazon, and other stocks such as Apple, Johnson and Johnson, Ford, etc. So, the investor can still own a diversified group of these expensive stocks for a much cheaper rate, concurrently reducing even more risk through diversification.  Some mutual fund companies focus mainly on small cap companies, or just fixed income; knowing your asset classes are still a very important factor in the investment portfolio.

Since all mutual funds are professionally managed, it cost money to buy shares of mutual funds.  At Schenley, we give our clients the institutional share class expense ratio, which gives us the ability to pass on a lower cost to our clients when purchasing mutual funds with us. Mutual funds are priced once a day after the market closes at 4:00 P.M.

ETF’s

Exchange Traded Funds (ETF’s) have the ease of trading exactly like a stock, meaning the price of the ETF changes by the minute, and changes within the trading day.   ETF’s also have the diversification benefits of mutual funds, usually with lower costs.  The underlying goal of an ETF is to track the current index and follow it based on the pool of selections, including stocks and bonds.  It’s not a stock, not a bond, and not a mutual fund, but its own fund that can be traded on an exchange.  There are different types of ETF’s, but the main one being index exchange traded funds.  ETFs give you a way to buy and sell a basket of assets without having to buy all the components individually.

The fund provider owns the underlying assets, designs a fund to track their performance and then sells shares in that ETF to investors.  Like mutual funds, the shareholders own a portion of an ETF, but they don’t own the underlying assets in the fund.  Investors in an ETF that track a stock index get dividend payments, or reinvestments, for the stocks that made up the index.

An example of an index ETF would be to purchase the S&P500.  You would have 500 large cap companies in your portfolio, which essentially gives you a sizable reward with the least amount of risk.  An investment in the S&P 500 ETF earned 28.8% last year but lost 6.24% in the prior year.  ETF’s are an extremely low-cost way to invest in a group of stocks or bonds, which will diversify your portfolio and reduce risk.

If you have any questions or concerns about stocks, bonds, mutual funds, or ETF’s, or if you want to get started investing, please do not hesitate to reach out to one of our advisors at Schenley.  We look forward to hearing from you.

Written By: Derek W Green Schenley Capital Inc. Associate

Click the link below to view “What you need to know about Stocks & Bonds”

What you Need to Know about Stocks & Bonds

Stocks

A stock is an investment; when you purchase a company’s stock, you’re purchasing a small piece of that company.  The piece that you purchase is called a share.  When you own stock in a company, you are a shareholder because you share in the company’s profits or losses.  As a shareholder, you technically are part-owner of the company; therefore, you receive certain voting rights within the company.  When shareholders purchase stock, it benefits the company by raising capital.  Companies, such as UPS, Apple, Pepsi, Ford, or any other public company in the world, grow and invest this capital into products for the company’s growth.  As the company grows and prospers, the shareholders participate in the growth of the company either in the form of a higher stock price, or as a quarterly dividend.  For investors, stocks are a way to grow their money over the long-term and provide a hedge against inflation. 

Investors purchase stocks in companies they think will go up in value; if that happens, the company’s stock price per share rises in value as well. The stock can then be sold for a profit.  Purchasing a stock can be riskier than purchasing a bond, mutual fund, or ETF, but the reward can be greater as well.  Stock prices change by the minute during the day.  Typically, stocks are known to be bullish over a longer duration; or in layman’s terms, stocks tend to rise over a longer time period.  When the stock goes up overtime, and the investor sells the stock at a higher price than what he paid for the stock, there is a capital gain.  A rise in the stock price is the most common way to make money in a stock, but you can also make money through dividend income.  Dividends are the cash payments made to the shareholders for sharing in the profits of the company.  A dividend is typically paid quarterly to shareholders.  Mature companies with a long history of paying consistent dividends, like Pepsi, will typically raise their dividend over time.  Pepsi is a value company stock.  Growth stock companies do not usually pay a dividend; although, growth companies typically have higher gains, or rising prices.  Growth companies focus on ploughing all its cash back into the company, to grow the company (hence the word growth stock).  A good investment should earn an average of approximately 7%-10% per year.

Bonds

Think of a bond as a loan. When you buy a bond, you’re purchasing a loan to a company or government that pays back a fixed rate of return. It is a safer investment than stocks, but still has risk.  Bonds generally require minimum investments, typically bought in $1,000 increments. The investor or lender receives semi-annual income, or a coupon, in return for buying the bond.  Unlike a stock that typically pays quarterly dividends, bond funds usually pay interest income to you on a monthly basis.  Bonds are inversely correlated to interest rates; when interest rates go up, bond prices go down.  A good bond investment should earn an average of approximately 2%-5% per year. 

There are many different types of bonds which you can buy; the safest bond would be a US Treasury bond, because it is backed by the guarantee of the U.S. Federal government.  Frequently, the Treasury Bond is pegged to a 30-year loan payback.  Other types of bonds investors buy are mortgage backed bonds, corporate bonds, or bonds issued by companies such as municipal bonds, or global bonds issued by other governments.  All governments and corporations need bonds in order to borrow money.  It’s commonly used for governments to fund roads, schools, bridges, dams, buildings, or other infrastructure.  Here is an example to help grasp the concept of a bond: If the investor purchases a bond for $1,000; at the end of the one-year term the investor receives the $1,000 back, but also receives the interest along with it.

While it’s possible to buy individual bonds, many people choose to purchase them through bond mutual funds, which offer lower-cost access to a diversified group of bonds.  The quality and safety of bonds help balance the risk associated with stock-based investments.

Written By: Derek W Green
Schenley Capital, Inc. Associate

Click the link below to view What you need to know about Mutual Funds & ETF’s!

Keep Calm (COVID-19) –

Coaching Our Clients Through a Crisis

On behalf of Schenley Capital we wanted to reach out to make sure you and your family are safe and productive as we search for answers in uncertain times as these.

We want to ensure you all that we are carefully reviewing all client portfolios and keepin a close eye on all accounts.

Today was an “up” day – the market was up +1,841 or 11%, the largest one day gain since 2008!! Congress is on the brink of passing a Corona Virus $500 B Stimilous package to assist distressed businesses – the “bailout with No strings attached”. This package is to help businesses from the economic damage of the work stoppage because of the Corona Virus. We are still using the disorderly market to make timely purchases of quality investments at low prices!

Schenley appreciates the support of all of our clients. Thank you for sticking by us during this unusual time.

Please contact us if you have questions or concerns!

(412)-749-9256
Written on March 24, 2020

A week’s worth of Volatility: Coronavirus

     The updated reports of the coronavirus have monopolized headlines and greatly impacted the public markets this week.

The disease’s bearing on the global economy is very difficult to quantify, we have already seen the negative ramifications for the global communities and slowing markets for goods and services.  We believe that the influence on economies is likely to be more protracted than expected.  The foreign health agencies have warned of the continued spread of the disease, they are working hard on the containment of the virus. 

     From a financial market perspective, the recent week’s downturn has erased the gains in the stock market over the past 12 months.  Some return of gains was inevitable, in our view, as the market had reached historic high valuations.  Notably, the losses demonstrated in the past week pales in comparison to the market gains in the past 10 years.  Since early 2009 to late 2019 the S & P has expanded approximately 340%.  We believe this broad perspective may help to suppress any impulsive knee-jerk reaction to sell or make a poor short-term decision.  The swift losses in the market are never ideal, we are not sellers in this market.  The rapid shift of market sentiment lead to a surprise 50 BP (1/2) point cut by the Fed to boost confidence on March 3rd.

We were putting cash to work this week, buying at lower prices.

    The market has traded with great speed and volume in addition to the precipitous drop this week.  It is important to know that we have positioned our client portfolios with care, and we have created diverse portfolios purposefully.  This tactful approach to financial market exposure helps us prepare for such market volatility.  Our goal is to invest in the market by selecting investments that have price upside and protect holdings on the downside.  We are not momentum based traders, although we are engaged in the markets on a daily basis.

Recent market moves are creating buying opportunities, as the market is moving to an oversold position.

Beth Genter
President
ehgenter@www.schenleycapital.com

1000 Point Drop – Feb. 2020 Market

By: Elizabeth Genter

Markets are Volatile – Prepare don’t predict 

The market dropped yesterday -1,032 all headlines are about the Coronavirus. The previously steady market took a dramatic decline due to the ongoing news about the spread of the virus.  This subtle shift implies the market concern about supply chains and how businesses will continue to function as the virus spreads. The news of the Coronavirus cases spread outside of China particularly to Japan, South Korea, and Northern Italy.  The borders of Japan and South Korea were shut down, creating additional fear.  All countries are calling for heightened protection and plans, such as the strategic plan being created in the US.

The economy has been priced to perfection, as we have experienced a steep run-up in the market. The values of many companies have been stretched and the prices have climbed to a lofty level.  In late 2019 we witnessed the absurd valuations and high prices for Beyond Meat and the blow-up of the WeWork IPO, which never came to market as an initial stock offering. The valuations for the few market leaders:  Google, Amazon, Apple, Microsoft, and Facebook have been leading the market and have had a meteoric runup in the past six months. For example, Apple has gained $110 points in the last six months.

 This has created a very narrow market consisting of a few stocks leading the entire market. 

 We have been waiting for some sort of sell-off, in our view, this is an opportunity to purchase equities at a lower price point. 

Over the past few weeks, we have seen signs of the market’s crazy trading to historic highs, the market seemed to go up despite negative news.  There are two short-term certainties, one, the virus is having a global impact, secondly, the virus will eventually go away.  

Volatility is the friend of the buyer, using the volatility to purchase desired stocks on down days.  It is the same experience or euphoria of buying an item on “SALE”!    

 
This is not the time to sell– it is a time for patience.  

An equity investor or saver is a long-term thinker with a longer time horizon.  The Coronavirus is a short-term event with short term consequences.  When we think of a company’s earning power, we think in terms of four to five years, not just the current quarter.  Consumer stocks in the short-term pull-back or drop in price with a pullback or market event, creating an opportunity for you own or buy at a lower price.

This greed & fear cycle leads an investor to buy high and sell low or the thought of reaching for more risk to receive little reward.   

If an investor has a longer time horizon this leads to a smoother ride and better long-term results.   

Our thoughts would be to not sell in times of volatility, although in a slow shift to higher-quality stocks with dividends versus the high-flying growth stocks.  These are not necessarily energy stocks, although stocks with steady growth and a dividend.  Our client portfolios are protected, as they are diversified into many different asset classes and across global economies. It is wise to have a percentage in bonds which creates stability in a portfolio and income.  The music doesn’t play forever…. 

August 2019 Volatility

What happened in August? 

August was a rough month, as the volatility continues.

     August was head spinning, marked by many measures to be the most volatile month in 2019.  Even with a strong finish in the last week of the month, the market finished down 2%.

     The top performing sectors in the S&P were technology +29%, Real Estate +28%, and consumer discretionary +21%.  (Non-essential goods) The bottom sectors were energy, health care and materials.  The S&P year to date is +18.3% amidst the August volatility.

     Although the sparing between Washington and Beijing continues to dominate the headlines and influence short-term moves in the market.  Investors grappled with as lack of clarity on the trade issues, global growth and a Brexit showdown.  The fears about escalating U.S. and China Trade tensions sent the stock market index tumbling down 2.3% three occasions in August. 

     September is proving to be a different month!  Today stocks surged and Treasuries are tumbling after news of the trade tensions have eased.   We have experienced an up-market gain in five of the last six market sessions.  We are very cautious about the prospects of a trade deal coming to fruition, although some trade concessions would be very positive for the economy and the market.  This President likes to “win”, even though he does not have international support all countries will benefit from the U.S. leading these negotiations with China.

     Even though corporate earnings growth has slowed down, the economy remains strong and unemployment is at an historic low.   We realize that it is very tempting for people to want to adjust their portfolios to match the daily headlines, we find this activity to be very counterproductive to portfolios.  Schenley has been advising clients to stick to their long-term asset allocations.

Recession and The FED

“We’ve asked the regions top wealth managers to respond to two questions.”

1. “If the current economic expansion lasts past July, it will be the longest in U.S. history. When do you expect the U.S. economy to enter into a recession?”

2. “After raising interest rates steadily for more than a year, the Federal Reserve suddenly made a dramatic U-turn, and equity markets responded favorably. Is the Fed making a mistake by pausing in its tightening efforts?”

Pittsburgh Quarterly Featuring Schenley Capital, Inc.

“If Pittsburgh were an investable security, would you advise your clients to invest?”

For questions and concerns regarding any investments, please contact us at Schenley Capital, Inc.

(412)-749-9256
417 Walnut Street Suite 200
Sewickley, PA 15143