Category

In The Headlines

Zach Abraham Featured on MSN Last Week

By | In The Headlines, News, Stock Market

On Monday, March 22nd, stocks finished higher as the 10-year U.S. Treasury yield was slightly down compared to its recent highs.

Bond yields recently have been rising on investor concern that a stronger economic rebound will lead to higher inflation. However, the Federal Reserve said that, although as pandemic recedes and the economy recovers prices will be pushed up, there was no sign yet that this will deliver unwanted inflation.

In fact, the Fed has said it believes an increase in inflation in 2021 will be temporary given COVID-19’s disruption to the labor market.

Bulwark CIO Zach Abraham watches trends closely, and implements investment strategies to help take advantage of all market conditions. His comments were published by MSN last week:

“The recent rise in rates should continue to compress multiples on high flyers and stocks with rich valuations,” said Zach Abraham, principal and chief investment officer of Bulwark Capital Management. “A rise in inflation should also result in a much more friendly environment for value stocks and dividend payers.

“We’ve had a historic run in growth. But the time for value has come. This rotation has a lot of kegs and should run for a while,” Abraham added.

 

Read the original story on MSN here:

https://www.msn.com/en-us/money/markets/stocks-rise-as-tech-gains-lead-wall-street-higher-nasdaq-up-17percent/ar-BB1eQbSu

The article was also picked up by The Street:

https://www.thestreet.com/markets/stock-market-dow-jones-nasdaq-bond-yields-032221

 

Zach Abraham Featured on Fox News

By | Geopolitical Affairs, In The Headlines, On TV, Social Security

Zach Abraham, Chief Investment Officer and founder of Bulwark Capital Management, recently appeared on Fox News to discuss the recent stock market furor over Reddit retail investors.

Here is a brief summary of some of Zach Abraham’s comments:

Hedge funds have been making money for 20 years by betting on potential stock market losses. Now retail investors—like the recent Reddit investors in GameStop—have the same capability.

Zach encouraged Schwab, TD Ameritrade and the SEC to step away and let the market work itself out. “It will build more faith in the markets,” he said.

 

Watch the segment—Zach starts at 1:53 minutes:

https://www.fox5dc.com/video/894564.amp

Silver Gets the GameStop Treatment: MarketWatch and Morningstar Feature Zach Abraham

By | Geopolitical Affairs, In The Headlines, News, On TV, Stock Market

Silver rallied by as much as 13% on Monday, February 1st to their highest intraday level since 2013, as a buying frenzy attributed to a post on Reddit last week suggesting a short squeeze on the precious and industrial metal continued. Silver futures for March delivery climbed to as high as $30.35 an ounce on Comex.

MarketWatch covered the rally on silver in a story that was also picked up by Morningstar. They spoke with Zach Abraham and several others familiar with what was taking place. Here are Zach’s comments:

 

The moves for the metal are “incredibly unusual — fair to say it’s unprecedented,” Zach Abraham, chief investment officer at Bulwark Capital Management, told MarketWatch.

“But we need to see if it can be done again. Remember, GME [GameStop] was a deeply undervalued and unique situation,” he said.

So far, what’s happened to silver in the last few days is “not even close” to what happened with the Hunt brothers, said Bulwark Capital’s Abraham, referring to the brothers who famously tried to corner the silver market four decades ago. During the Hunt brothers’ accumulation of the silver, prices of silver bullion rose from $11 an ounce in September 1979 to $49.45 an ounce in January 1980.

“In addition, they don’t control anything,” he said, referring to the Reddit crowd. “I think for this reason alone, going after a commodity like silver is futile.”

Still, many analysts had already been touting upbeat prospects for silver even before the Reddit-induced frenzy.

Abraham said his company invested in silver on expectations that a short squeeze in silver would occur, and didn’t take the Reddit WallStreetBets forum into consideration when investing.  

“Silver is still cheap. Not a bad idea to buy some for the long haul,” he said. “Might make sense to buy silver miners as well. Just know both can be extremely volatile.”

He believes that $100 silver prices aren’t out of the question during the next run for the metal. “Silver is horrifically undervalued, on a historical basis, compared to financial assets.”

 

Original article links:

https://www.marketwatch.com/story/silver-gets-the-gamestop-treatment-rallies-by-as-much-as-13-11612203674

https://www.morningstar.com/news/marketwatch/20210201476/silver-gets-the-gamestop-treatment-rallies-by-as-much-as-13

Zach Abraham Speaks Out About Robinhood, Reddit and GameStop

By | In The Headlines, News, On TV, Stock Market

Headlines recently exploded on the topic of hedge funds and stock trading, as a group of day traders on the social media platform called “reddit” drove up stock prices for GameStop, Bed Bath & Beyond, AMC, Nokia and other historically-unloved stocks. GameStop gained as much as 1,000% in just two weeks. The volatile market action resulted in massive losses for some hedge funds.

Brokerages, including Robinhood, Interactive Brokers, TD Ameritrade and others, reacted by restricting users’ ability to trade certain stocks on Thursday amid the extreme volatility.

This caused public outrage, especially toward Robinhood, an online brokerage app named after a folk hero who steals from the rich to give to the poor and whose mission is to “democratize finance for all.”

Zach Abraham Comments

In an article titled, “Critics view Robinhood restricting GameStop trades as ‘an absolute travesty’,” featured on several news sites (including CNBC and MSN), Zach Abraham is featured prominently.

“Robinhood’s decision underscores some people’s belief that the deck is stacked against them,” says Zach Abraham, founder and chief investment officer of Bulwark Capital Management, where he advises retail investors.

Abraham characterizes platforms restricting trades for retail investors as “an absolute travesty,” noting that many of the Redditors’ moves weren’t just some “troll,” but calculated based on their own research. The hedge funds made “bad calls,” he says, and retail investors caught them on it.

“This is only going to perpetuate the wealth gap, and that the rich play by different rules,” says Abraham, whose firm sold its positions in GameStop last week. “If the roles were reversed, nobody would be saying a thing.”

Buyer Beware

At the same time, the situation has morphed into a dangerous game for other retail investors who read into the recent hype but don’t understand the risks involved in trading, Abraham says.

The stocks are currently “way over-priced,” says Abraham. Getting in now on the news-making names of the past few days would be akin to gambling.

“I could not emphasize more clearly for retail investors: Take those names off your screen and look elsewhere,” Abraham says. He predicts GameStop and other stocks will “blow up” in the coming days. “You just don’t want to be messing around with these names today.”

Original story links:
https://www.cnbc.com/2021/01/28/critics-call-robinhood-restricting-gamestop-trades-travesty.html
https://www.msn.com/en-my/money/savingandinvesting/critics-view-robinhood-restricting-gamestop-trades-as-an-absolute-travesty/ar-BB1dbINe

 

Watch Zach’s Appearance on Cheddar, a video news website covering Wall Street issues:

“In our view, they’re delivering a shot of democracy to the markets.” – Zach Abraham

The Inauguration’s Effect on the Stock Market: Zach Abraham Featured in Newsweek

By | Geopolitical Affairs, In The Headlines, Investments, On TV

In an article published on January 19th, 2021 in Newsweek, “Stock Market on Best Election Day to Inauguration Run Since World War II,” Bulwark Capital Management Chief Investment Officer, Zach Abraham, gave his insights into the Biden presidency along with the Federal Reserve’s policies and their potential future effect on the stock market.

He was featured along with analysts from Goldman Sachs, the chief investment strategist at CFRA in New York, and the U.S. Chief Economist at S&P Global Ratings.

Here are Zach’s comments:

“I think the stock market will continue to go higher, perhaps much higher.”

“The only two times we’ve had valuations anywhere close to this were in 1929, when the markets dropped 85% over the next two years, and 1999, when the Nasdaq dropped 85% over the next two years,” he said. “I don’t think a selloff that dramatic is going to happen again because of the underwriting by the Fed and the US government.”

Last year, the Fed’s action and stimulus spending approved by Congress injected about $8 trillion into the economy,” Abraham said. “The amount of cash that’s been poured into this market is mind-boggling.”

But to be clear, it’s the Fed that’s driving the market, he said.

“If the Fed continues to do that, stocks will keep going up. If it stops doing that, they won’t,” Abraham said. ” All that money injected into the system last year had to go somewhere. Part of it ran headlong into a stock mania that had been 13 years in the making, since the financial crisis of 2007-2008. It’s just gone ballistic.”

Read the full article here:

https://www.newsweek.com/stock-market-best-election-day-inauguration-run-since-world-war-ii-1562707

Zach Abraham Discusses the Stimulus Package

By | In The Headlines, Legislation

Chief Investment Officer Zach Abraham discusses markets, the economy, and the new coronavirus aid package signed into law in December on Cheddar.com.

 

Some points discussed:

  • The Fed has already told Congress that they literally can’t put too much money into stimulus aid relief in order to help the economy.

 

  • The $900 billion stimulus package is not big enough, a full economic recovery will require much more; Congress will need to do another round, plus investment in infrastructure.

 

  • The pandemic was a Black Swan event. These bills are much more than just a stimulus; this is like government paying damages after a major disaster in order for our nation to recover.

 

  • No matter which side of the aisle you’re on, depending on what happens in the Senate runoff in Georgia we will see more economic relief happen more quickly or more slowly, based simply upon who is in power. This will dictate our 2021 investment strategy for our clients. As one small example, if Democrats win the majority in the Senate, we could expect the clean energy sector to take off based on Biden’s platform moving forward.

 

Watch the whole show:

Zach Abraham Wall Street Journal

Zach Abraham Discusses Options for Cash in the Wall Street Journal

By | Financial Planning, In The Headlines, News

With interest rates so low, many consumers wonder where to find the best place for their savings. High-yield savings accounts are now paying around 0.6%, while the national average for traditional savings accounts is a meager 0.05% according to the FDIC.

Other options that offer more yield, however, often mean taking on more risk and sacrificing liquidity.

“If you think you see something higher than 2%, with liquidity, be very careful—there’s no silver bullet here,” says Zach Abraham, Chief Investment Officer at Bulwark Capital Management.

Zach told the Wall Street Journal that he’s seen people think outside the traditional options, looking instead at accounts with transactional requirements such as balance thresholds or debit-card usage. He has spoken to some clients about moving cash to CDs that fit their timeline. As of October 2020, the national average for 2-year CDs is 0.23% according to the FDIC.

 

 

Read the whole article here:   (subscription to Wall Street Journal required) https://www.wsj.com/articles/stashing-cash-in-a-low-interest-world-11602149402 

Or Download the PDF.

 

 

UPDATE:

The Wall Street Journal article quickly went viral around the globe, reaching millions of readers:

 

QQ China 57,048,000 https://new.qq.com/omn/20201014/20201014A01EAY00.html

ADVFN – US USA 8,067,000 https://www.advfn.com/stock-market/stock-news/83450961/u-s-stocks-drop-as-earnings-season-begins

Morningstar USA 8,024,000 https://www.morningstar.com/news/dow-jones/202010138472/us-stocks-drop-as-earnings-season-begins

La Republica Colombia 2,092,000 https://www.larepublica.co/globoeconomia/las-acciones-estadounidenses-caen-a-medida-que-comienza-la-temporada-de-ganancias-3073156

Marketscreener USA 2,081,000 https://www.marketscreener.com/news/latest/U-S-Stocks-Drop-as-Earnings-Season-Begins–31533030/

ADVFN – UK UK 2,084,000 https://uk.advfn.com/stock-market/stock-news/83452201/u-s-stocks-end-lower-as-earnings-season-begins

Beursduivel Belgium 1,054,000 https://www.beursduivel.be/Beursnieuws/601995/Wall-Street-op-verlies.aspx

Beursgorilla Netherland 729,038 https://www.beursgorilla.nl/beursnieuws/601995/Wall-Street-op-verlies.aspx

Beleggen Netherlands 455,046 https://www.beleggen.nl/financieel_nieuws/602011/Wall-Street-sluit-lager.aspx

ADVFN – Australia Australia 1,879 https://au.advfn.com/p.php?pid=nmona&article=83452201

How a Furlough (or Layoff) Affects Your Finances…and Retirement

By | Financial Planning, In The Headlines

Here are six things you need to know if you or a family member has been furloughed—or laid off—from their job

 

A furlough is an unpaid leave of absence. You don’t report to work, you don’t get paid, and you may lose some of your benefits. Getting fired or laid off is different because it is permanent; whereas, being furloughed means your employer wants you back as soon as things get back to normal, typically at the same position and income level as before the furlough. Here are six things you should know:

 

  1. Filing for unemployment

Whether furloughed or laid off, you should file for unemployment as soon as possible because the CARES Act adds to the amount your state provides weekly, but only through July 31. For instance, the average benefit among the 50 states is $215 per week—the CARES Act adds an additional $600 per week through the end of July. Self-employed, independent contractors and gig economy workers, who typically are not allowed to file for unemployment, can also apply. Learn more here.

  1. Healthcare insurance

If you are furloughed, you may still be able to keep your healthcare insurance. Be sure to check with your employer about how to arrange to pay your contribution amount, if any. If you are laid off, you can continue benefits through COBRA, or you may find a cheaper option through the exchange http://healthcare.gov website—if your state has chosen to open up enrollment due to the pandemic.

  1. Bills and debts

There is a provision for mortgage forbearance if you have a single-family residence mortgage loan backed by the federal government, and renters can avoid eviction for more than 120 days if their landlord has a government loan on the property rented. Learn more here. Student loans held by the federal government will not require payment and will not accrue interest through September 30.

In any case, it is recommended that you call creditors to discuss your situation. Ask them what they have to offer people who are experiencing a temporary reduction in income, and take notes and ask about any fees, additional interest, and whether they report any postponed payments to credit bureaus.

  1. 401(k) or similar retirement plan – contributions

If you are furloughed, your 401(k) accounts should remain in place, but your contributions and matching contributions won’t happen during the furlough unless your employer chooses to make a discretionary contribution. If you are not yet fully vested, there is a scenario that could happen if you are furloughed for an extended amount of time or ultimately laid off. If an employer terminates 20% or more of its workforce, a “partial plan termination” could be triggered, in which case the IRS could decide that all affected employees would become 100% vested.

If you are let go, you can leave your money in the company’s 401(k) plan if you have more than $5,000 in it, although you can’t add additional money to the account. If you have $5,000 or less, your employer has the option of removing you and distributing the funds, so be sure to ask what they intend to do. See some of your other options below.

  1. 401(k) – loans

If you are furloughed, or laid off but leaving your 401(k) with the company, you may be able to take a loan or withdrawal from your 401(k) due to the coronavirus outbreak, depending upon your company plan rules—be sure to check with your plan administrator.

If so, the CARES Act allows up to $100,000 to be taken without penalty, although you will have to either repay the money or pay taxes on the amount withdrawn over the next three years. NOTE: You can do this even if you are under the age of 59-1/2, there will be no 10% penalty, and there will be no mandated 20% withheld by the 401(k) administrator for taxes. In order to meet the eligibility provisions of the CARES Act, you, your spouse or dependent/s must have contracted COVID-19, or must have experienced adverse financial consequences as a result of quarantine, furlough, lack of childcare or closed or reduced hours of business.

If you already have an outstanding 401(k) loan, your repayments will stop while you are furloughed, since those are typically held out from your paycheck. Ask your employer about how you can make repayments or get the loan repayments suspended temporarily.

Taking 401(k) loans or cashing out should be a last option for most people since it can jeopardize your retirement nest egg and your future. After the 2008 financial crisis, most people who stayed in the market experienced financial recovery from their losses.

  1. 401(k) – rollovers

If you are laid off, you do have the option of rolling over your 401(k) money into your own self-directed IRA account. This offers many options, since an IRA can be a mutual fund, annuity, ETF, CD or almost any other type of financial instrument.

You need to choose between a tax-deferred traditional IRA, or pay taxes on the money you roll over and start a Roth IRA. With a traditional IRA, you will have to begin withdrawing a certain amount out every year starting at age 72 and pay ordinary income taxes on the money withdrawn. (These are called Required Minimum Distributions (RMDs)—which are not due in 2020 per the CARES Act.)

With a Roth IRA, you pay taxes up front. You don’t have to withdraw money during retirement, but if you do, it is usually tax- and penalty-free after you’ve owned the account for five years. Your kids can inherit the money tax-free as well.

It’s usually best to work with a financial advisor who can outline some of the tax ramifications, rules and timing requirements so you don’t miss any rollover deadlines or get hit with any penalties or taxes you weren’t expecting. They can fill you in on other options, such as, if you are age 59-1/2 and still working, you may be able to do an “in-service rollover” with part of your 401(k), moving that portion into your own IRA, potentially helping you avoid market risk as you get closer to retirement.

 

If you have any questions, please call us. Contact Bulwark Capital Management in Tacoma, Washington at 253.509.0395. We look forward to speaking with you!

 

This article is provided for informational purposes only, and is not intended to provide any financial, legal or tax advice. Before making any financial decisions, you are strongly advised to consult with proper legal or tax professionals to determine any tax or other potential consequences you might encounter related to your specific situation.

 

Sources:
https://www.fool.com/investing/2020/04/23/how-a-furlough-affects-your-401k.aspx
https://www.immediateannuities.com/roll-over-ira-or-401k/
https://www.washingtonpost.com/business/2020/04/03/unemployed-coronavirus-faq/?arc404=true
https://www.cbsnews.com/news/furlough-versus-layoff-unemployment-aid-coronavirus/
https://money.usnews.com/money/retirement/401ks/articles/what-to-do-with-your-401-k-if-you-get-laid-off
https://www.businessinsider.com/what-you-need-from-your-job-get-laid-off-furloughed-2020-4#if-you-have-no-other-choice-but-to-withdraw-from-your-retirement-funds-know-the-new-cares-act-updates-8
https://www.thestreet.com/how-to/how-to-roll-your-401k-into-an-ira-while-you-re-still-working-14379206
https://www.investopedia.com/articles/personal-finance/092214/guide-401k-and-ira-rollovers.asp

Zach Abraham On April 17: ‘We’re Seeing a Bear Market Rally’

By | In The Headlines, Market Risk, News, Stock Market

Zach Abraham, Chief Investment Officer and Principal at Bulwark Capital Management, appeared on Cheddar.com again on Friday, April 17, live from the New York Stock Exchange, to discuss the effect that the coronavirus outbreak was having on stock markets. At that time, markets were at their highest point since March 10.

“Right now, the market is trading based on coronavirus news, which we think is a mistake. We equate it to focusing on a hurricane—nobody’s obsessed about when the hurricane will be over, the question is, what damage is left will be left in its wake?”

Zach went on to make the point that the market being up is, of course, a good thing, as is news of a potential vaccine being announced by Gideon, “We’re all cheering for that.” Also, he doesn’t have a crystal ball—no one does. But he urges caution since a vaccine could take 11 months or longer, and he encourages investors to start looking more closely at underlying market fundamentals being exacerbated by the coronavirus. “They’re bad, they’re really bad. You’ve got the S&P at a 22 price-to-earnings (PE) ratio going into the most severe economic shock in history. I’m just going to bet that doesn’t last; it’s not warranted.” Zach said he expects some potentially shocking earnings reports in the upcoming year from companies who simply cannot forecast sales accurately at this time, or what may happen with some of their divisions due to unpredictable future economic fallout.

Watch the full episode here: https://cheddar.com/media/stocks-close-higher-dow-hits-for-first-time-since-march

 

###

ABOUT CHEDDAR.COM

Cheddar is a streaming digital video service that broadcasts live from the floor of the New York Stock Exchange (NYSE) daily. Focused on business-minded millennials, the service highlights tech and consumer stocks while also covering the intersection of tech, media, news and culture.

 

Follow this link to the Cheddar.com web page: https://cheddar.com/media/stocks-close-higher-dow-hits-for-first-time-since-march

Zach Abraham Appears on Yahoo! Finance

By | In The Headlines, Investments, Stock Market

Zach Abraham, Principal and Chief Investment Officer of Bulwark Capital Management, appeared on Yahoo! Finance on March 13 to discuss the coronavirus outbreak and its impact on stock markets.

 

Back on March 13, the date of this interview, Seattle was the area of the United States hit first by the coronavirus—it was right on the front line with the COVID-19 outbreak. (Seattle is located about 34 miles from Bulwark Capital Management’s headquarters in Tacoma, Washington.) During the interview, Zach Abraham predicted at the time that people “might not be taking [the virus] seriously enough,” though the stock market certainly already was.

That afternoon, the government was expected to announce measures to help the economy, and Zach said that government intervention might stem the market sell off and help move markets to the positive. “We have a market that’s been fueled by the central banks’ intervention for the last decade, so there is a ‘Pavlovian’ psychological response built-in for that.”

But he warned about the long-term. “No one has a crystal ball, but one of the things we’ve been talking about for the last several years is that eventually the world is going to have to face some issues—something that more debt and printed money won’t fix.” For example, the drop in oil demand is just one example of how the corporate high-yield debt market could become a future negative factor for markets.

But with any economic crisis, It’s never just one thing or one issue at play. “I personally think that it will be at least a six- to eight-month timeline or longer to see the full effects of this market—to get economic clarity in terms of what the real backdrop is.”

 

Watch the full episode at this link:

https://ca.finance.yahoo.com/video/more-government-injects-more-movement-164456333.html