November, 2022
A "Spook-Tacular" Week
Some mega-cap technology companies were under pressure last week on weak earnings and tepid fourth-quarter guidance. They reported multiple headwinds, including declining advertising revenues, loose expense control, and a slowdown in cloud growth.
Meanwhile, positive earnings surprises from “old economy” companies powered markets higher. This market bifurcation was evident in the divergence in the performance of the Dow Industrials and the Nasdaq. The S&P 500 posted a substantial gain despite its disproportionate weighting of mega-cap stocks, which helped illustrate the power of the rally. Momentum accelerated into Friday, aided by an easing in inflation and a solid third-quarter Gross Domestic Product (GDP) report.
Economic Growth Exceeds Expectations
After two straight quarters of negative economic growth, the initial estimate of the third quarter’s GDP came in at a solid 2.6%, exceeding economists’ 2.3% estimate. The surprising economic performance was largely attributable to an increase in exports, which narrowed the trade deficit, a development that may not repeat going forward.1
Particularly encouraging was the personal consumption expenditure price index, a report used by the Fed to track inflation. It increased 4.2%, well below the 7.3% jump from a quarter ago.2
The Fed Raises Again
The Federal Reserve continued to aggressively push up interest rates this week, with a fourth-straight 0.75 percentage point rate rise. Speaking at a news conference following the release of the policy statement, Fed chairman Jerome Powell walked a fine line. He opened the door for the possibility that the Fed could moderate the size of interest rate increases down the line, but tried to be careful not to signal to markets that the Fed is backing off its inflation fight. "It's premature to discuss pausing [interest rate increases]. It's not something that we're thinking about and that's really not a conversation to be had now. We have a ways to go," Powell told reporters. Financial markets were not pleased with this sentiment and fell off toward the end of the trading day.3
Housing Slump
One area of the economy that continues to suffer is housing. Sales of new homes fell 10.9% in September, as surging mortgage rates pushed would-be buyers out of the market. US mortgage rates topped 7% for the first time in more than two decades, extending a string of steep increases that have stymied housing demand, according to data released last week by the Mortgage Bankers Association.
A Split Congress?
The outcome of next week's election is unclear with some forecasting a split Congress and others' a republican sweep. Historically speaking, the S&P 500 performs better when Congress is split as you can see in the chart below. Of course, past performance doesn't indicate future results and any one statistic doesn't tell the whole story.
Keep Your Umbrella Handy
Personal injury claims - from auto accidents and slip and falls to dog bites - are filed every day. In fact, over 400,000 personal injury claims are filed each year in the United States.4
Individuals with high net worth, or even those who are perceived to be wealthy, may be more at risk of being sued. What can you do to put an extra layer of protection between your assets and a potential lawsuit?
Umbrella liability insurance provides coverage over and above existing automobile and homeowner insurance limits.
For example, imagine your teenage son borrows your car and gets in an accident, seriously injuring the other driver. The accident results in a lawsuit and a $1 million judgment against you. If your car insurance policy has a liability limit of $500,000, that much should be covered. If you have additional umbrella liability coverage, your policy can be designed to kick in and cover the rest. Without umbrella coverage, you may be responsible for paying out of pocket for the other $500,000, which could mean liquidating assets, losing the equity in your home, or even having your wages garnished.
Read on for answers to all your umbrella liability insurance questions.
Do I Need an Umbrella Policy?
Deciding whether liability coverage is right for you may be a question of lifestyle. You might consider buying a policy if you:
- Drive a lot of miles or have teenage drivers
- Entertain frequently and serve your guests alcohol
- Have large animals like horses or a dog, especially if the breed is known to be aggressive
- Own jet skis, a boat, pool, trampoline, motorcycles, or snowmobiles
- Operate a business out of your home, or employ household staff
- Have a high public profile and give interviews that may be published
- Live in a manner that gives the appearance of wealth
Even if you don't yet have a tent in the millionaire camp, you may want to consider the benefits of liability insurance. You don't have to be a millionaire to be sued for a million dollars. Anyone who is carefully building a financial portfolio may want to limit their exposure to risk.
What Does Umbrella Insurance Cover?
Not only does an umbrella policy provide funds beyond the limits of your home and auto polcies, it can provide liability coverage for problems such as:
- Bodily injury to others
- Property damage
- The legal costs to defend you in lawsuits related to bodily injury or property damage
- Lawsuits not covered by other insurances, such as defamation of character, libel, or slander
- Incidents that happen outside the U.S.
- Incidents that involve household members such as your spouse or children
As one could probably expect, your umbrella policy would not cover criminal acts, intentional harm done to others, or business losses.5
How Much Coverage Do I Need?
When determining the right amount of coverage for you, consider your net worth. An umbrella policy should at least cover the value of your assets, as this is generally what you stand to lose in a lawsuit.5
How Much Does Umbrella Insurance Cost?
Umbrella liability can be a fairly inexpensive way to help shelter current assets and future income from the unexpected. Generally speaking, it is sold in increments of $1 million and on average costs about $383 per year.5
When getting an umbrella policy quote, your insurer will likely base the rate on factors such as:
- Where you live
- Your credit history
- Your driving record
- Your risk of filing an umbrella insurance claim
If you are uncertain on the next steps to take or want to discuss your insurance coverage, remember GTS Financial is only a call away. While we do not sell insurance, we are always happy to connect you with trustworthy resources for all your financial planning needs.
We Are Grateful for You!
Last newsletter, we shared about how all of us at GTS Financial were prioritizing wellness to kick off October and asked you to send photos of how you have been caring for your own physical, emotional, or spiritual well-being as well.
We were overwhelmed by all of your positive responses and just wanted to take a moment to say how thankful we are to work with you.
We greatly appreciate our clients. GTS Financial exists because of you, and we show up excited to do our work each day because of the wonderful people you are.
Please enjoy some of YOUR photos (below) shared from our wellness challenge last month, and keep on engaging in those things that make you and the people around you feel at their best. We promise to do the same!
5 Stretches You Can Do (In Bed!) To Start Your Day Right
Feeling a little stiff as you get out of bed in the morning? Looking for a reason to spend just 5 more minutes in the warmth of your sleep cocoon before you begin your day?
Regardless of your reason, stretching before you get up releases the body's 'feel good' chemicals, can help lubricate your joints and maintain your range of motion, and may also prevent falls.6
Follow the instructions below try a stretch routine you will be sure to say is a great way to start your day.
Warm Up
It is generally recommended that you warm up before you stretch to get your blood flowing and make your muscles more pliable. Thankfully, you should already be on the warmer side from being tucked into your bed all night, so it won't take much to warm up!
Follow these two steps to prep yourself for a good stretch:6
- While you’re still lying down, flex your lower limbs: put your knees and feet in the air; with your knees in the air, raise and lower your feet; roll your ankles and move them back and forth.
- Next, sit up in bed. Slowly look left and then right. Roll your shoulders a few times; work your elbows by holding both arms in front of you and doing biceps curls; flex your wrists up and down; open and close your hands several times.
Stretch Routine
Aim to hold each of these five stretches for 60-90 seconds, and try not to bounce, which can cause damage to the muscle tissue.6
- Full Body Stretch - Start laying flat on your back. Reach your arms up over your head, palms facing up and fingers intertwined. At the same time, point your toes and stretch the entire length of your body by reaching your hands up and your feet down towards the end of your bed.7
- Knees-To-Chest Stretch - From a flat position, pull your knees up towards your chest and hold, being sure to continue breathing regularly. It is a simple movement that will help stretch your lower back.
- Supine Twist - Moving straight from your Knees-To-Chest stretch, gently release your knees to one side, turning your head in the opposite direction if it is comfortable to do so. Hold, and then bring your knees back to center before releasing once again to the opposite side.
- Seated Forward Bend - Sit yourself up with your legs stretched out in front of you. Give your feet and toes a little wiggle, then reach forward. Bend only as far as is comfortable for you, placing your hands around your heels, on your shins, or knees.
- Spinal Reach - While you're still seated, bring yourself into a cross-legged position or any other seated position that is comfortable for you. Keeping your spine straight, reach your arms up overhead, again with your fingers intertwined like they were for your first full body stretch. With your arms outstretched, gently bend to one side, hold for a moment, and then switch to the opposite side.
Conquer Your F-E-A-R's
Halloween may have recently passed, but fears can certainly still be pressing on your mind.
Have you ever heard the notion that most fears are nothing more than False Expectations Appearing Real? Oftentimes, when we are afraid of something, we are simply expecting a false (oftentimes negative) outcome that may or may not occur.
Our brains are so powerful that fears, whether founded or not, can produce all the physical signs of being faced with an actual threat in our body - anxiety, heart palpitations, and tension.8
Read on to learn 4 steps you and your powerful brain can employ to overcome F.E.A.R.8
- Assess the threat - What is truly the worst that could happen? If the worst thing actually happened, what would you do?
- Ask yourself: Is the expectation that's scaring me the only possible outcome? - Be honest with yourself; sometimes we create self-fulfilling prophecies where our actions influence the outcome in the expected way. What would happen if you expected a desired, positive outcome?
- Brainstorm all the possible positive outcomes. - Make a list and keep it handy. Refer to this list when you start feeling F.E.A.R.
- Imagine the results of a positive outcome. - Remember you will feel great about yourself because you moved through your fear and took action. Do this a few times, and you will begin to feel a new confidence in yourself and your abilities.
It may take some practice, but by using this strategy just as soon as those false expectations creep into your mind, you should be able to better manage those fearful experiences and perhaps achieve even more positive outcomes than you ever expected!
"Stop being afraid of what could go wrong, and start being excited about what could go right"
- Tony Robbins