Broker Check

December Newsletter

“The Good News Is…And the Bad News Is…”

I hope that your Thanksgiving celebration was as joyful as ours! Much like our Pilgrim ancestors, we gathered in the Brost’s backyard for a chilly, outdoor turkey dinner with all the trimmings and gave thanks for our blessings and shared our reasons for being thankful. Our eleven-year old granddaughter, Kyla, had a very long and mostly meaningful list!

As a bit of Wheeldon trivia, I am reminded of my direct family ties to the Pilgrims who landed at Plymouth Rock in 1620 as evidenced by the marker which bears our name  at the landing location.  My four-year old grandson, Keagan, and I both enjoyed the tradition of devouring a big turkey drumstick during dinner! Kyla then proudly presented the scrumptious, gluten-free apple pie she had baked for the occasion. Jeannie and I were fortunate enough to bring home a generous helping of leftovers and we celebrated a second time the next day. All-in-all, it was a joyous occasion.  New family memories were created and we all got a much-needed escape from the realities that surround us.

You may have noticed that our equity markets have also been celebrating the end of the election and the announcement of several Virus vaccines that should be available in the near-term. This November is certainly a NOVEMBER TO REMEMBER as our aggregate managed equity portfolio returned 11.43 percent and our income portfolio returned 4.51 percent for the month!  In fact, the S&P 500 had its best November EVER on the back of the Virus vaccine news!  Let us all savor those results as we move into the final month of 2020.

For other meaningful periods, here is what our aggregate managed portfolio returned:

One-year period: November 30, 2019 through November 30, 2020

Equities  8.16%

Income  6.48%

Five-year period: November 30, 2015 through November 30, 2020

Equities  61.52%

Income  30.11%


Your individual overall results will be a function of the allocation between equity and income categories, as agreed to in your individual Investment Policy Statement, reflecting your propensity for  risk and cash flow needs. To the point of cash flows from the portfolio, the projected cash flows (yields) from the portfolio indicate an aggregate current annualized yield of 4.9 percent. The breakdown by category is:

  • Domestic Equities 5%
  • International Equities 3.6%
  • Alternative Equities  5.2%
  • Global Allocation Equities 3.8%
  • CD/bond Ladder 2.6%
  • Alternative Income 7.8%


From these results, you can see why many, more conservative clients and those approaching retirement have chosen to “over-weight” the Alternative Equity and Alternative Income categories to achieve the cash flow needs for their regular distributions. The emphasis being on the yield and not-so-much on growth. Although the yield is very important, we continue to advise equity allocations to the Domestic, International and Global Allocation categories to provide a continued upside (albeit volatile) for inflation protection purposes.

That upside potential is clearly illustrated in the one-year outsized equity results: Domestic Equities 19.34 percent; Global Allocation 18.44 percent. Now that some of the uncertainty in the world has diminished, we will once again add to those two categories in accounts where those categories were reduced to “protect” account principal pending the election results and Virus activity. Overall, we will remain in a “defensive” mode as we monitor all the events that will impact long-term portfolio results.


Now, the Good News:

  • The recent election is completed; with a continued divided government (which the markets clearly like). However, we are still awaiting the outcome of the Georgia Senate election which will not be finalized until early January.


  • Several effective vaccines will be delivered as early as mid-December; with projections that by next spring anyone who wants the vaccine can get it (for free).


  • Our markets reflect the good news; with the economy projected to grow at over four percent in the fourth quarter (after growing at over 30 % in the third quarter).


  • Once again, Congress is working on another stimulus package to keep us afloat. We should know soon.


And the Bad News:

  • The impact of the current wave of increased infections continues to weigh heavily on economic data. Consumer confidence pulled back in November and initial jobless claims continued to grow for the second straight week.


  • Personal income contracted by 0.7 percent in October, reflecting the fading boost from federal aid programs. Meanwhile, personal spending slowed to its slowest pace of gain since May. That spending pattern may have been broken as we spent a record $9 Billion on Black Friday purchases and Cyber Monday buying is projected to reach new highs.


  • It appears that all governments will “lock down” the economy in a response to the increased Virus infections. That will clearly dampen holiday cheer as we stay at home; putting many American households at risk of facing additional duress as we approach the holiday season.


  • Interest rates will remain lower, for longer; with anyone relying on meager interest rates feeling the continued pinch.


It looks likely that the new administration will move to increase taxes to pay for its plans to increase social programs and rebuild our infrastructure. We will all feel the impact of increased taxes, either directly or indirectly. And our securities markets will be impacted through decreased earnings by both individuals and corporations.  As financial advisors,

we need to delve deeper into the impending tax increases. James has been monitoring the proposals:


  • Although it has been said that only higher-income taxpayers will pay more income taxes, those with incomes over $300,000 will be pushed into higher brackets next year. The planning result being a reversal from most prior years’ counsel to defer income into the following year. One example would be to consider making a Roth Conversion before yearend 2020 to reduce the tax cost of the conversion. You will need to review this strategy soon with your CPA or other tax advisor to determine if and how much to convert before yearend. We will need instructions from you no later than December 21st to accommodate your decision to convert.


  • Of much greater impact to you (and your family’s future inheritance) are the plans to significantly reduce tax-free transfers (by lifetime gift or at death) available under the transfer tax laws that are currently in place. Note that changes to these laws can be made in 2021 which can be retroactive to December 31, 2020. If you have a few million dollars or more in your estate, you need to contact your estate planner, CPA and attorney, NOW to act before yearend. Tax-free gifts before yearend can most likely be made in amounts that would create a transfer tax if made in 2021 or later. If new investment accounts need to be established to accommodate the 2020 transfers, we need to get involved ASAP.


Well, that is all for now. As usual, we will be very busy this month as we continue to work remotely to protect our clients, staff and community. Please contact Laura ASAP if you need our help with the suggested tax strategies for 2020 and she will get James or myself involved to handle your individual needs. In the meantime, all of us at Intelligent Investment Management wish you and yours a Safe, Healthy and Joyous Holiday Season!



Intelligent Investment Management, LLP

Stephen Wheeldon



Securities Regulations Disclosures

The opinions communicated herein are for general information only and are not intended to provide any specific advice or recommendation.  Please contact us directly to determine which investments may be appropriate for you in relation to your individual investment policy statement and needs.

As defined by the Private Securities Litigation Reform Act of 1995, information contained within this letter constitutes forward-looking statements (i.e. - expectations of future results).  Although Intelligent Investment Management, LLP believes its expectations are based on reasonable assumptions, the actual results could differ materially from its expectations. Equity and Bond investments are not insured by the FDIC and involve risk of losing value. Factors which could cause actual results to differ from expectations include world crisis, changes in the stock markets in general, or changes in interest rates as well as other unforeseen events.

The reporting of our performance is intended to be in compliance with the rules of the Investment Advisers Act of 1940, as monitored by the SEC and State Regulatory Agencies.  Accordingly, our performance results do reflect the effects of material market or economic conditions; dividends and other earnings are generally reinvested in each client’s model portfolio; we may compare our results to several broad market indices, however, our long-term globally diversified strategy is not meant to track any one, or combination of indices (see below); each client’s account is managed to a predetermined and mutually agreed upon objective as documented in each client’s Investment Policy Statement; most equity investments are made in exchange traded closed end mutual funds; performance is shown after the deduction of advisory fees and brokerage commissions and any open end mutual fund fees; Intelligent Investment Management employees and related party accounts included in the performance results pay either a reduced fee or no fee at all.

Dow Jones Industrial Average is an index that shows how 30 large, publicly owned companies based in the United State have traded during a standard trading session in the stock market. S&P 500 is an index of US large-cap stocks selected by Standard & Poor’s based on market size, liquidity and industry grouping among other factors.

Closed-End Funds: There is no guarantee that a closed-end fund will achieve its investment objective(s).  Past performance does not guarantee future results.  The value of any closed-end fund will fluctuate with the value of the underlying securities as well as the supply and demand for the fund in the secondary market.  Closed-end funds may trade at a premium or discount to their net asset value.

Preferred Securities: Preferred Securities are subject to market value fluctuations, given changes in the level of interest rates.  For example, if interest rates rise, the value of these securities may decline.  Preferred securities prices and yields may vary.  Adverse changes in the credit quality of the issuer can negatively affect the market value of the securities.  Preferred stocks are also subject to other risks, including illiquidity and certain special redemption provisions.