Navigating a trough

Didn’t we expect that we would be here at some point?  

With inflation hovering stubbornly near 40-year highs, and with the Federal Reserve on its most aggressive rate increase schedule in recent memory (if ever), three of the major stock market indices have now officially closed in bear market territory. 

It’s easy to give in to the sense of hopelessness to which many investors succumb during periods of lackluster returns, but I would encourage you to look on the bright side.  

Pull the sheets down from your face, pop out of bed with a verve you haven’t shown since the early days of spring, and throw aside the sash to let the sunshine in. Openly scoff at your dour friends who pretend that the markets won’t come back one day and overwhelm their sullen spirits with the unbridled optimism of someone who knows better. 

While you remind yourself that this market rout will likely get worse, maybe drop a needle on that Beatles tune “Getting Better”, and consider the fact that there IS something that you might be able to do to better your financial situation…even in times like these. 

Plan Your Way Out 

When I tell you that I fully expect that the stock (and bond, for that matter) markets will recover, it isn’t with some wanton disregard for the current economic challenges the global economy faces.  

With domestic stock market history as our measuring stick, there has been no economic challenge from which our economy hasn’t recovered, and given that the New York Stock Exchange was founded way back in 1792, that puts my positivity well within “reasonable” territory. 

Sure, this could be the one time that the economy falters and fully fails, but given that economy isn’t in terrible shape these days (take a look at some of the raw economic data, already, and turn off the cable news), no economist or analyst that I rely on is suggesting that the end is nigh. 

This gives all of us the opportunity to take a deep breath, ride the markets where they take us, and effect change in your financial life where you can: by taking advantage of the planning opportunities a down market presents. 


When stock markets plunge, bond markets tend not to, or at least, as is the case this year, they tend not to fall as quickly. The investment strategies investors often employ pair stocks and bonds in various measures in the portfolio to take advantage of this lesser correlation and the protection it can bring to a portfolio in a down market. 

If stocks have lost value and bonds haven’t, then your 60% stock and 40% bond portfolio might look a little off-kilter these days. The steeper the slide in stocks, and the lesser the correlation, the higher the likelihood that your 60/40 is now 50/50.  

In the hands of an adept financial planner, your portfolio will have withstood the market volatility to a degree that the investment balances can still serve your longer-term goals. Still, that planner will likely suggest a shift in the portfolio, if it doesn’t already occur automatically, to sell 10% of the total portfolio’s bond holdings and to buy 10% of the total portfolio’s stock holdings.  

Think about it: aren’t we always told to sell ‘high’ and buy ‘low’? 

If bonds have lost less and if stocks have lost more, then a reallocation to your appropriate risk level, assumed to be 60/40 for this illustration, gives you the benefit of buying stocks that have been devalued, giving you a greater number of shares in those holdings so that your portfolio can supersize its recovery if (but really, can’t we just agree that it is ‘when’?)  the recovery comes.  

ROTH to Death 

And how about that ROTH conversion your friends have been telling you about?  

Given the tax benefits of a ROTH IRA, namely the totally tax-free growth it affords you, most of us should at least consider the benefits of conversions at some point. 

When markets dip, the opportunity presents itself in down markets to convert a devalued Traditional IRA holding to a ROTH IRA, pay income taxes on the lesser conversion amount, and capture the growth of the eventual recovery in a totally tax-free, Required-Minimum-Distribution-free environment. 

Now consider the diminished tax impact of this move if you have already retired and you are receiving a lower income today then when you had been working. Maybe it’s not such a bad deal? 

And did I mention that the ROTH IRA can be an amazing tool for estate planning purposes as well? To repeat, no RMDs! 

Tax Loss Harvesting 

What better time to discuss harvesting than the fall?  

For those portfolios that have lost value in this downturn, if you have assets invested in devalued securities in a taxable account, this may be the year when you consider intentionally selling some holdings at a loss to offset any gains you had taken earlier in the year.  

Don’t assume that just because you are harvesting a loss you are unable to recapture gains in the market when they climb again. An investor might choose to sell one beverage company stock and buy another brand, thus continuing an investment in the industry while still realizing the loss embedded in the shares of the former company. 

Make the Most 

While there is a probability that we haven’t yet seen the worst the markets will throw at us during this economic cycle, there is a likelihood that you haven’t considered all of the planning opportunities downturns can present.  

Now is your chance to consider what you will do to make the most of this market rout. 

Anthony M. Conte is managing partner at Conte Wealth Advisors based in Camp Hill. He can be reached at [email protected] 

Registered Representative Securities offered through Cambridge Investment Research Inc., a broker/dealer, member FINRA/SIPC. Investment Advisor Representative Cambridge Investment Research Advisors Inc., a Registered Investment Advisor. Cambridge and Conte Wealth Advisors LLC are not affiliated. 


Financial advisers: Don’t give in to coronavirus panic

Many investors may be feeling ill after volatility on Wall Street blamed largely on concerns over the coronavirus, led to the largest single-day drop since 2018 on Monday.

While markets already seem to be recovering, those remembering the pain of the great recession have expressed concerns of how an ongoing coronavirus outbreak, combined with dropping oil prices due to Saudi Arabia increasing oil output, could drill a hole in their retirement savings.

Investment advisers in the Greater Lehigh Valley said they are hearing from concerned clients, but remain confident that while the market volatility may seem to be at crisis level right now, this isn’t a repeat of 2018 and long-term investors should be able to weather the storm.

Morton – Submitted

Dennis Morton of Morton Brown Family Wealth in Allentown said he’s been trying to keep the market activity in perspective for his clients.

“What we’ve been having is panics,” he said. “Those happen, but they don’t have to turn into a crisis.”

He said the great recession happened because of real underlying weaknesses in the banking industry.

“But sometimes risks show up in places we didn’t expect,” he said. He believes investors’ fear over the long-lasting impact of the coronavirus is the major unexpected factor most impacting the current economic situation.

“Now we have something like an energy crisis laid over it. When these things happen it becomes more interesting. It may take longer to ‘dry out,” he said.

So, yes, it is serious.

“But, the Stock market can have these things happen and your plan can still largely be intact,” Morton said.

Darrell –

At Valley National Financial Advisors in Bethlehem, Connor Darrell, assistant vice president and head of investments, said much the same thing.

“Over the past couple of weeks everyone seems to be becoming amateur epidemiologists so to speak,” Darrell said. “It’s scary, but it’s temporary.”

He said the impact over the coronavirus scare is very real in its financial outcome.

“If people are staying inside and not spending money, what does that mean for economic activity?” he said.

Many industries are hurting, and could be further impacted if the viral outbreak lasts.

However, he noted, that even with the ominous-sounding drops in the stock market, it’s falling from what most consider an artificial high.

“At the end of the year the market was priced to perfection on a high level of optimism,” Darrell said. He said that made a drop of some kind likely at some point.

“We’ve really gotten spoiled with so little volatility over the past decade,” he said. He called such drops scary, but expected.

So, he said, those who have their portfolio set up for the long-term growth should be fine in the long run.

“Our view is, if you’ve got your portfolio right upfront you’re OK,” Darrell said.

Morton said the concern is with those who might not have their portfolio balanced properly for their risk tolerance, and people looking to retire soon.

He recommends asking your adviser these basic questions and reviewing portfolios to ease concerns or correct problems.

  1. How was I positioned before this happened?
  2. What is my safety net?
  3. What steps can I take now, if any?
  4. How does this effect my plan?

No one knows how long the coronavirus will impact the economy, and ultimately the impact it will have on investments hinges a great deal on when the crisis goes away. But, if investors check with their financial adviser and make sure they are positioned properly, it might make you less nervous when watching the evening news.

Stock Market program to inspire Carbon County teens

Pennsylvania Council on Financial Literacy is bringing its Stock Market Challenge to secondary school students in Carbon County.

Imagine what you could do with $100,000 to invest in the stock market. Students in Carbon County high schools and middle schools will get a chance to do just that, albeit with virtual money.

For the first time, the Pennsylvania Council on Financial Literacy is bringing its Stock Market Challenge to secondary school students in Carbon County, so that they can learn about investing and other important financial skills.

With the Stock Market Challenge, which is part of the overall financial literacy program the nonprofit offers to schools in Pennsylvania, students get $100,000 virtual dollars to invest over 10 weeks on a virtual stock market using the educational website, Stock Track.

“They’re buying actual virtual stocks and they’ll develop a virtual portfolio just as if it were real,” said Alan Dakey, president of PennCFL and a retired banker. “They can buy 100 shares of Netflix, just like they would with a real commercial broker, and then buy them and sell them based on how they think they will do over the 10 weeks.”

The students can invest in stocks, bonds, mutual funds and EFTs, Dakey said.

Three top high school performers in the county will receive Amazon gift cards in the amount of $100 for first place, $50 for second place and $25 for third place as a reward for their work as successful stock brokers in training.


While this is the first time the program is being held in Carbon County, Dakey said that it has been run successfully in other parts of Pennsylvania. He noted that he just met with a group of about 40 students in Lackawanna County and received great enthusiasm.

“We spent about an hour and 10 minutes explaining investing to them and they just jumped right in on the computers and became very engaged,” Dakey said. “If we had just spent that time lecturing them on the principles of investing, we wouldn’t have had that kind of energy.”

He said making a competition out of the investing also helps lift student excitement and engagement. Participants all want to see their stock portfolio do better than their peers.

Dakey said it was his years in banking that got him involved in the financial literacy effort.

“When students graduate from high school, they don’t really understand finances from balancing a checkbook to student debt,” he said. “We’d see a lot of young people coming to us because they were in trouble. They were in debt because they couldn’t keep a budget.”

Programs like this, he said, help more students learn how to manage money.

Mauch Chunk Trust Co. of Jim Thorpe is sponsoring the challenge.

“We believe it’s important to support area residents through financial literacy initiatives that help improve their confidence about managing money and planning towards future goals,” said
Marty McGuire, marketing director for Mauch Chunk Trust Co. “Programs like our current Stock Market Challenge, offered to area schools throughout Carbon County and the Tamaqua area, is a fun and engaging way to involve kids in focusing on one of many aspects of financial education.”

The spring game begins on Feb 10.

Advisers urge caution for retirees hoping to bet on stocks

Retirement can be that much sweeter for people playing the stock market.

But even if they feel they have money to spare, retirees need to think about what they stand to lose in this high-stakes game.

“Retirees should only invest in the stock market when they need to or only when they can afford to,” said Gene Dickison, founder and president of MTM Financial Group LLC in Lower Nazareth Township. “They should do it when all your expenses are paid for and they are just doing it for fun … It’s like going to the Sands Casino but with less alcohol.”

Dickison and other retirement planners said a conservative approach is better in most situations that involve investments by people of retirement age.

They should figure out their nondiscretionary expenses and their spending money, and treat the stock market as more of a hobby and less of an obsession. In addition, it is important that seniors put in the research and carefully watch for swings and dips in the market.

Gut check

According to financial adviser Michael Waterhouse of Independence Planning Group in South Whitehall Township, wealth managers and financial planners should work with clients to access their experience regarding investing in the stock market and how much volatility they are willing to accept as they enter their retirement years.

“I always ask how much guaranteed monthly income do they already have coming in versus their monthly expenses,” Waterhouse said. “How much they should invest in the stock market depends on their appetite for risk, what other assets they have in place and how much is already invested in the stock market.”

Waterhouse said that he does not recommend that retirees invest a large percentage of their portfolio in the stock market, but their purchases should include equities, bonds, guarantees and a predictable legacy for their loved ones.

“The allocation depends on the clients’ tolerance for risk, their specific financial situation and if there is a significant gap between what they need and what they already have coming in,” the financial adviser said.

Dave Rowan, president and founder of Rowan Financial LLC in Bethlehem, said investing in the stock market can be good for retirees. However, he warned, what starts as a hobby can quickly turn into an obsession.

If your stock market activity is keeping you up at night, or you are checking stocks several times a day, then you need to learn to back out a bit. Walk away if too much time and money is invested, Rowan said.

Set limits

Retirees must evaluate their financial standing before putting their money in the stock market, he added, and they should not feel compelled to risk more than they are willing to in the market.

“If you are financially stable, investing 10 to 20 percent in the stock market is reasonable,” Rowan said.

On the flip side, there are those who are not where they need to be financially by the time they have reached retirement age, he added. Stocks are less a hobby and potentially more of a necessity.

“These people may need to put 50 percent to 60 percent of their savings (into the stock market) to get themselves in a better position,” Rowan said. “People with a boatload of money have more to play with.”

Thomas J. Scalici, co-founder and CEO of CornerstoneAdvisors Asset Management LLC in Bethlehem, is wary of retirees trading individual stocks on their own.

“Individual stocks are about three times as volatile as stock funds are and most people cannot stomach that type of volatility,” Scalici said. “As a result, they tend to get in and out of stocks at the wrong time.”

Dickison at MTM advises that retirees seek the assistance of a wealth management expert or be prepared to do the homework and research involved in making the best investments in a stock market that can go downhill fast.

If one is unwilling to pay a financial planning expert, Dickison said there are some reputable financial organizations available to work with those interested in playing the stock market. Some services charge monthly fees for financial advice at an affordable price, and there also some good magazines and literature available on the stock market and safe investment choices.

David Markle, owner of Markle Wealth Management in Danielsville, said he has one wealthier client that invests pretty heavily in the stock market – $700,000 to $800,000 of his savings and income.

Markle said that this particular client manages these investments, which include shares of big companies like Google and Apple.

“One piece of advice I give is that once stocks are mentioned in a magazine, they have reached a price that you should not buy anyway,” Markle said.