On It with Offit - September 2021

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SEP | 2021 TEAMMATE SPOTLIGHT Meet Laura!   Laura Sendldorfer is our Financial Advisor & Insurance Specialist. She loves helping clients achieve peace of mind and financial freedom through money management, investments, and insurance.   Interests Finance - I enjoy the planning process and helping others achieve their goals. Real Estate - I enjoy seeing transformations and bringing houses back to life, although it’s not quite like HGTV. Traveling - to see all this beautiful world has to offer, learning from other cultures, and experiencing their cuisine. Running - after a year of in-person races being canceled, I look forward to running the delayed cherry blossom 5K this weekend, later this month to the Baltimore running festival and the Bay Bridge run on Halloween. Favorite Philanthropy Doctors Without Borders Favorite Offit Advisors Value Clear Goals- I think it’s magic to help clients set visions and clear goals for the future. Favorite Thing About Working with Our Clients Walking through life with our clients and being able to celebrate their success and growth with them. What Gets Me Out of Bed in the Morning A good coffee (I’d call myself a coffee snob), sunshine, family & friends and my endless list of personal goals. Name One Thing You'd Spend More on to Get the Best Quality For most things, I choose quality over quantity. Some examples are: Coffee, food, travel (although I have yet to fly first class), and most definitely running shoes.   Meet with Laura The IRS Dirty Dozen and Related Scams to be Aware Of! Hello Loyal Readership! Today I want to talk to about some tax related topics and go over an interesting publication that occurs each year from the IRS called the Dirty Dozen. This is a list they put out each year of items to be aware and things they are looking at. Here are some of them that are interesting and you should definitely be aware of! 1. Pandemic related scams – As we all know there have been various forms of stimulus payments and relief over the past year and half or so and there have been scammers trying to prey on people’s lack on understanding of these stimulus options. These scammers may be contacting clients about their payments or make sure they get it and are asking for financial information.This will be a common theme in this article but the IRS will never initiate contact with you via phone, text, email, social media. If someone contacts you saying they are with the IRS – delete it or don’t open it. They will only initiate contact via a letter from the IRS in the regular snail mail. 2. Unemployment fraud – along with the pandemic, many people have filed for unemployment benefits and scammers have also tried to prey on this. Scammers will try to obtain your personal information and file an unemployment claim using your data in which they will get the payment for. If you happen to receive a 1099-G form showing income from unemployment benefits – this is a tip off of fraud that someone filed unemployment under your name. If this happens, reach out to state department to get this corrected, and don’t include this income on your actual tax return because it is not real income attributable to you. 3. Unsuspecting victims –With the pandemic, many charities need more support than normal, but people also getting calls from fake charities claiming that they need support and asking for an immediate donation. To ensure that a charity is real, you can ask any charity for their full name of their organization, their tax id number, and locate them on the IRS to site to verify their status. 4. People imitating the IRS – these people or organizations target seniors or people that don’t have English as their first language saying they need to clarify an issue and need your personal information. Again – the IRS will not contact you directly – it is fraudulent. They will only contact you via an official letter in the mail. If you do speak another language other than English, you can use Schedule LEP and you can indicate preferred language, they will send a letter in your native language. 5. Backtax consolidators – Be aware of firms saying they can help with your backtaxes. These firms can charge high up front fees, and don’t guarantee results. If you need assistance with your backtaxes or IRS payments, the IRS can offer payment plans with a relatively moderate interest rate and there aren’t fees to get it setup. 6. Ghost preparers – someone who says they will prepare a tax return for you but won’t put their name on or sign the return is someone to stay away from. This can be someone looking to initiate stimulus payment fraud, or another scam of some sort. 7. Personal information cons – impersonator calls claiming to be from the IRS about a tax lien or messaging you on social with a link to gather information about you. 8. Phishing scams – these may not be targeted at individuals but actual companies trying to get information from companies that may have personally identifiable information on people. Any company needs to be aware and trained of fake links, or emails with malware that may try to extract data from your computer that could compromise people’s data. 9. Abusive arrangements – this is about being aware of tax promoters who are promising very large tax deductions from alternative tax strategies. They could be promoting ideas lie conservation easements (investing in a piece of land that is subsequently donated), foreign country tax treaties with gray area (ie. Malta), claiming benefits you are not entitled to (R&D and green energy) even though you haven’t done them, and the IRS is aware of taxpayers getting involved in these ideas. You are legally required to include how found out about these ideas, and they won’t fly under the radar with the IRS. If it seems like you are saving too much on taxes, ad it is too good to be true, it probably is. So in the end, this article is not meant to scare you, but rather is intended to raise your awareness of some things that could be scams in the tax world! - The last time the S&P had a pullback of 5% or more was October 2020. Since 1929, the S&P has experienced only 12 other streaks of nine months long like this one. Seeking Alpha, August 16, 2021 - Last month, three out of four cargo containers leaving the port of Los Angeles were empty. The Port of Los Angeles head, Gene Seroka said, “Our largest export commodity continues to be air.” The Loadstar, August 23, 2021 - New research shows that U.S. alcohol consumption rose 39% during the pandemic and 323% among mothers with young children. Fox News, August 16, 2021   - Roughly 75% of all foods and beverages in America contain added sugar. According to the American Heart Association, the average adult swallows the equivalent of six bowling balls of the stuff each year. Meanwhile, the average child downs enough added sugar to fill a bathtub. Medium, August 18, 2021 - Americans are on average 7.8 points more confident than Brits that they could beat various animals in a one-on-one fight, including a medium-size dog, a chimpanzee, a kangaroo, and a goose. YouGov, May 21, 2021   - “If A is success in life, then A = X + Y + Z. Work is X, play is Y, and Z is keeping your mouth shut.” Albert Einstein Stocks Advance Further in August as Bonds Pause Highlights    In what has become a bit of a broken record, the S&P 500 Index, NASDAQ Composite, and Dow Jones Industrial Average each posted new all-time highs in August. Small-caps enjoyed gains, but generally lagged large-caps for the month and the Russell 2000 Index has still not surpassed its high from March.   With large-caps and growth continuing their recent strength, market leadership has shifted. Value is still handily outperforming growth in small and mid-caps year to date, but a slight advantage goes to growth for large-caps. Small-caps overall have forfeited leadership to large-caps year to date.   The 10-year U.S. Treasury yield moved modestly higher in August. After drifting down to its lowest level since February early in the month to 1.19%, the yield moved higher closing August at 1.30%. It had ended July at 1.24%. Outside of high yield, most bond sectors were down for the month.   The U.S. economy is recovering solidly, and recent job gains have been the highlight. Inflation numbers remain elevated and garner a lot of attention. The Fed has reiterated its belief that inflation is transitory at this point.   The delta variant continues to spread more widely across the U.S. It is yet to be seen whether this might have an impact on the economic reopening.   We expect ongoing economic improvements and continued above trend growth in the second half of 2021 and into 2022. Volatility, however, could increase in the months ahead with markets near all-time highs and pandemic issues ongoing. Equity Markets   In the large-cap space, growth continued its recent trend of outperformance compared to value in August. Small-caps, which started the year strongly, have lagged in recent months as growth and large-caps have rallied. Outside of a mid-month spike above 21, the VIX Index remained subdued in August. The VIX Index closed July at 18.24 and ended August at 16.48. Despite the trend lower in the VIX Index, we believe investors should be prepared for ongoing periods of volatility over the next several months with stocks near all-time highs and some uncertainly surrounding the Delta variant. Size and style mattered once again in August with the largest-cap growth companies outpacing smaller and more value-oriented companies. Although there will be times when growth rallies, we still believe that the value/growth disparity that reached a peak last year will likely continue to shift in 2021 with value improving on a relative basis. We continue to use our disciplined approach of seeking out what we believe to be high-quality companies with improving business conditions at what we believe are good prices. These types of companies can be found in both the value and growth universe, but the market’s shift to value stocks since the latter part of 2020 has benefited our focus on quality companies. The numbers for August were as follows: The S&P 500 gained 3.04%, the Dow Jones Industrial Average advanced 1.50%, the Russell 3000 improved by 2.85%, the NASDAQ Composite led indices higher rising 4.08%, and the Russell 2000 Index, a measure of small-cap stocks, increased by 2.24%. For the year to date, returns in the same order were as follows: 21.58%, 17.04%, 20.39%, 18.92%, and 15.83%, respectively. We will continue to monitor how trends shift in the coming months and whether the recent gains in large-cap growth stocks develop more footing or whether small and mid-cap stocks, along with value, return to their recent leadership roles. Looking closer at style, the headline Russell 1000 Index gained 2.89% in August. The Russell 1000 Growth Index drove results as it had in the prior two months, up 3.74%, while the Russell 1000 Value Index gained only 1.98%. For the year to date, the returns were 21.08% and 20.32%, respectively. While growth has caught up to value in the large-cap space, value is still easily outpacing growth in the mid and small cap universe. For example, the Russell 2000 Value Index is up 25.43% year-to-date, while the Russell 2000 Growth Index has gained a mere 6.92% during the same timeframe. International markets bounced back in August after a difficult July following China’s ramp up of regulatory restrictions. The MSCI Emerging Markets Index gained 2.62% in August, which accounts for most of the year-to-date gain of 2.84% for this index. The MSCI ACWI ex USA Index, a broad measure of international equities, advanced 1.90%, which contributed to the 9.40% gain for this index so far this year. Following the trend of recent years, U.S. stocks have continued to outperform their international counterparts. Fixed Income After surging higher during the first quarter of 2021, the yield on the 10-year U.S. Treasury dropped over the next four months. That streak ended in August as yields moved higher once again. The yield closed the month of July at 1.24% before ending August at 1.30%. Most bond sectors struggled in the first quarter, particularly the most interest-rate sensitive bonds, but they had enjoyed a period of recovery over the following four months. In August, most bond sectors declined with the notable exception of high-yield bonds, which have been the clear leader in fixed income so far in 2021. Fixed income returns were as follows for August: the Bloomberg Barclays U.S. Aggregate Bond Index slipped -0.19%, the Bloomberg Barclays U.S. Credit Index declined -0.24%, the Bloomberg Barclays U.S. Corporate High Yield Index rose 0.51%, and the Bloomberg Barclays Municipal Index dropped -0.37%. Year to date, those index returns in the same order were as follows: -0.69%, -0.23%, 4.55%, and 1.53%, respectively. Treasury Inflated Protected Securities (TIPS), which had rallied strongly in recent months with increased worries about inflation, gave up some ground in August declining by -0.18%, but its year-to-date gain still stands at 4.26%. Shorter-dated U.S. Treasuries enjoyed gains in August (the 5-year U.S. Treasury Index rose 1.02%), but longer-dated Treasuries declined. The general U.S. Treasury Index fell by -0.17% in August and is down -1.43% year-to-date. We continue to maintain our long-standing position favoring credit versus pure rate exposure in this interest rate environment.   Source: Clark Capital Benchmark Review, August 2021 S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index. Dow Jones Industrial Average - The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy.  NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes approximately 5,000 stocks, more than most other stock market indices. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indices. Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index which includes the 3,000 largest companies in the U.S., based on market capitalization. As of the latest reconstitution, the average market capitalization was approximately $762.8 million; the median market capitalization was approximately $613.5 million. The largest company in the index had an approximate market capitalization of $2.0 billion and a smallest of 218.4 million.  Russell 1000® Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.  Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.  Government bonds are guaranteed by the U. S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Offit Advisors is not affiliated with Kestra IS or Kestra AS. Offit Advisory Services, LLC is a tax firm but neither Kestra IS nor Kestra AS provide legal or tax advice and are not Certified Public Accounting firms.For more information on the Five Star Wealth Manager and the research/selection methodology go to: www.fivestarprofessional.com. Investor Disclosures: https://bit.ly/KF-Disclosures 9030 RED BRANCH ROAD COLUMBIA, MD 21045, US Phone + Fax:  410 600 PLAN (7526) E – Office@OffitAdvisors.com W- www.OffitAdvisors.com   To schedule an appointment with us, click here! The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Want to change how you receive these emails? You can update your preferences or unsubscribe from this list.

The IRS Dirty Dozen, and Related Scams to be Aware Of

Hello Loyal Readership!

Today I want to talk to about some tax related topics and go over an interesting publication that occurs each year from the IRS called the Dirty Dozen. This is a list they put out each year of items to be aware and things they are looking at.

Here are some of them that are interesting and you should definitely be aware of!

1. Pandemic-related scams – As we all know there have been various forms of stimulus payments and relief over the past year and half or so and there have been scammers trying to prey on people’s lack on understanding of these stimulus options. These scammers may be contacting clients about their payments or make sure they get it and are asking for financial information. This will be a common theme in this article but the IRS will never initiate contact with you via phone, text, email, social media. If someone contacts you saying they are with the IRS – delete it or don’t open it. They will only initiate contact via a letter from the IRS in the regular snail mail.

2. Unemployment fraud – along with the pandemic, many people have filed for unemployment benefits and scammers have also tried to prey on this. Scammers will try to obtain your personal information and file an unemployment claim using your data in which they will get the payment for. If you happen to receive a 1099-G form showing income from unemployment benefits – this is a tip-off of fraud that someone filed unemployment under your name. If this happens, reach out to state department to get this corrected, and don’t include this income on your actual tax return because it is not real income attributable to you.

3. Unsuspecting victims –With the pandemic, many charities need more support than normal, but people also getting calls from fake charities claiming that they need support and asking for an immediate donation. To ensure that a charity is real, you can ask any charity for their full name of their organization, their tax id number, and locate them on the IRS to site to verify their status.

4. People imitating the IRS – these people or organizations target seniors or people that don’t have English as their first language saying they need to clarify an issue and need your personal information. Again – the IRS will not contact you directly – it is fraudulent. They will only contact you via an official letter in the mail. If you do speak another language other than English, you can use Schedule LEP and you can indicate preferred language, they will send a letter in your native language.

5. Backtax consolidators – Be aware of firms saying they can help with your backtaxes. These firms can charge high up front fees, and don’t guarantee results. If you need assistance with your backtaxes or IRS payments, the IRS can offer payment plans with a relatively moderate interest rate and there aren’t fees to get it setup.

6. Ghost preparers – someone who says they will prepare a tax return for you but won’t put their name on or sign the return is someone to stay away from. This can be someone looking to initiate stimulus payment fraud, or another scam of some sort.

7. Personal information cons – impersonator calls claiming to be from the IRS about a tax lien or messaging you on social with a link to gather information about you.

8. Phishing scams – these may not be targeted at individuals but actual companies trying to get information from companies that may have personally identifiable information on people. Any company needs to be aware and trained of fake links, or emails with malware that may try to extract data from your computer that could compromise people’s data.

9. Abusive arrangements – this is about being aware of tax promoters who are promising very large tax deductions from alternative tax strategies. They could be promoting ideas lie conservation easements (investing in a piece of land that is subsequently donated), foreign country tax treaties with gray area (ie. Malta), claiming benefits you are not entitled to (R&D and green energy) even though you haven’t done them, and the IRS is aware of taxpayers getting involved in these ideas. You are legally required to include how found out about these ideas, and they won’t fly under the radar with the IRS. If it seems like you are saving too much on taxes, ad it is too good to be true, it probably is.

So in the end, this article is not meant to scare you, but rather is intended to raise your awareness of some things that could be scams in the tax world!

Student Loans - The Biggest Financial Planning Issue That No One Talks About (Copy)

Hello, loyal readership! Today I wanted to talk about a different subject that we haven’t touched upon yet – student loans! Student loans afford many to go to college, or get an advanced degree or Master’s degree in exchange for a great future profession and higher earning potential, but also have drawbacks in that you have to pay these things back over time and often with very high balances!

Planning around them is a big deal and here are some updates to consider within this sector. If you work for a non-profit, or government institution you may be on track for Public Student Loan Forgiveness if you are paying back your loans on an Income-Based Repayment (IBR) plan and you make 120 qualifying monthly payments (10 years) while employed by that institution. This is especially pertinent to the federal government, state government, and doctors working for nonprofit hospitals.

However, recently there has been a major change to this because as of December 2021, FedLoan Servicing will no longer be servicing student loans.  This will impact millions of borrowers but more importantly, those who are pursuing PSLF should be on high alert.  Currently, there is little information as to who will take over the management of these loans but there are things you can do to protect yourself in the meantime.  The following are our recommendations.  

If your loan servicer is NOT FedLoan Servicing: it is unlikely that anything will change with your loans.

If your loan servicer IS currently FedLoan Servicing:

• Download all payment history.  Historically when loans have transferred to other servicers, the loan terms do not change, but the new servicer does not know your history with the previous lender.

• Prior to FedLoans termination (December 14, 2021), note (screenshot) your current balance AND accrued interest balance.  You want to be sure that when your loan is with the new carrier, the outstanding interest is not capitalized (added to the principal balance).

• Be on the lookout soon for communication from a student loan company that they will be your new servicer.  This will tell you when and how you can access your loans.  (signs point to MOHELA becoming your new provider but there is nothing currently stating that)

• Continue making your payments to FedLoan until you hear otherwise

If you work for a 501c(3) or a government institution and are pursuing Public Service Loan Forgiveness (PSLF):

• Do everything stated above

• Download ALL Employment Certification Forms (ECF) that have been previously submitted

• Note your current income-based payment plan and your re-certification date

• Send in a new ECF by November 1 to get the most up-to-date certification possible

• When you receive communication from your new servicer, if they do not initially indicate it, reach out to them quickly to ensure that they will be processing certifications and applications for PSLF customers

• DOCUMENT EVERYTHING.  Unfortunately, student loan servicers notoriously make mistakes and transitions haven’t run smoothly.

One last thing to note, there has been a temporary pause on required student loan payments due to COVID-19 that was just extended to January 31, 2022 for the final time.  One can either not make payments or pay them down if they so choose. The loan industry expects things to be difficult and busy when millions of borrowers begin making payments again and figuring out how to get back on track.  To add the challenge of transferring millions of loans to another company only adds more stress to the chaos.  Anyone who is paying down their student loans should try to pay these down as much as possible during this time frame to capitalize on the 0% interest period! 

We hope this helps in the changing landscape of student loan advisory!

On It with Offit - August 2021

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The Offit Family  Welcomes Baby #2! Our family is growing! My wife and I are delighted to announce the birth of our second child, a beautiful boy named Nathan Brooks Offit. Nathan was born healthy and happy late last month at Howard County Hospital on July 23rd at 2:26 AM, and just as with Reed, Amanda was and is truly incredible. A would-be homebuyer in Bethesda, MD, pledged to name her first-born child after the seller in a written offer. She lost. Morning Brew, July 29, 2021 Fifty-two percent of Wharton’s incoming MBA class is female, the first time a Top 7 business school has admitted more women than men. The Wall Street Journal, July 28, 2021 Apple’s profits from the past three months ($21.7 billion) was nearly double the combined annual profits of the five largest U.S. airlines in pre-pandemic 2019. New York Times, July 29, 2021 In the United States last year, renewables became the second-most prevalent energy source, second only to natural gas. Accounting for 21% of all electricity generation, renewables topped both nuclear and coal for the first time. Morning Brew, July 28, 2021 While sitting on the porch with her husband, a woman was sipping on a glass of wine, and she says, “I love you so much, I don’t know how I could ever live without you.” Her husband asks, “Is that you talking or the wine talking?” She replied, “It’s me…talking to the wine.” Changes in the Student Loan Landscape by Jamie Callighan | Wealth Management & Student Loan Specialist at Offit Advisors   You may have recently heard that there are more changes coming to the student loan industry.  As of December 2021, FedLoan Servicing will no longer be servicing student loans.  This will impact millions of borrowers but more importantly, those who are pursing PSLF should be on high alert.  Currently, there is little information as to who will take over the management of these loans but there are things you can do to protect yourself in the meantime.  The following are our recommendations and we will send out updates as we receive them.     If your loan servicer is NOT FedLoan Servicing: it is unlikely that anything will change with your loans.   If your loan servicer IS currently FedLoan Servicing: download all payment history.  Historically when loans have transferred to other servicers, the loan terms do not change, but the new servicer does not know your history with the previous lender. Prior to FedLoans termination (December 14, 2021), note (screenshot) your current balance AND accrued interest balance.  You want to be sure that when your loan is with the new carrier, the outstanding interest is not capitalized (added to the principal balance). Be on the lookout soon for communication from a student loan company that they will be your new servicer.  This will tell you when and how you can access your loans.  (signs point to MOHELA becoming your new provider but there is nothing currently stating that) continue making your payments to FedLoan until you hear otherwise If you work for a 501c(3) or a government institution and are pursuing Public Service Loan Forgiveness (PSLF): do everything stated above download ALL Employment Certification Forms (ECF) that have been previously submitted note your current income-based payment plan and your re-certification date send in a new ECF by November 1 to get the most up to date certification possible when you receive communication from your new servicer, if they do not initially indicate it, reach out to them quickly to ensure that they will be processing certifications and applications for PSLF customers DOCUMENT EVERYTHING.  Unfortunately, student loan servicers notoriously make mistakes and transitions haven't run smoothly. One last thing to note, the temporary pause on student loan payments is set to expire on September 30th.  Advocates have been pushing to extend this pause further once again.  The loan industry expects things to be difficult and busy when millions of borrowers begin making payments again and figuring out how to get back on track.  To add the challenge of transferring millions of loans to another company only adds more stress to the chaos.  It is possible another extension will be made.  Hope for the best, prepare for the worst, but do not panic!   We will send out updates as we learn them but do not hesitate to reach out or schedule an appointment if you have additional questions.     U.S. Large-Caps and Bonds Gain to Kick Off the Second Half of 2021 Highlights The S&P 500 Index, NASDAQ Composite, and Dow Jones Industrial Average each posted new all-time highs in July. Small-caps fell for the month and growth continued its recent trend of outperformance compared to value.   With small-caps moving lower for the month, the year-to-date leadership has shifted to large-cap companies. Value still maintains a lead over growth year to date, but that lead has narrowed. International stocks also struggled in July.   The 10-year U.S. Treasury yield continued its recent slide lower in July. After closing June at 1.45%, it ended July at 1.24%. Most bond sectors continued their recovery in July after a rough first quarter.   The U.S. economy is still solidly recovering, but some economic data points showed moderating growth. The initial estimate of Q2 GDP was released and it disappointed at a 6.5% annualized rate compared to expectations of 8.4%.   The Delta variant continues to spread more widely in the U.S. and globally. It is yet to be seen whether this might have an impact on the economic reopening.   We expect ongoing economic improvements and continued above trend growth in the second half of 2021. However, volatility could increase in the months ahead with markets near all-time highs and pandemic issues ongoing. Equity Markets Growth continued its recent trend of outperformance compared to value in July. However, even more dramatic was the dominance of large-cap stocks compared to small-caps for the month. While most major U.S. equity indices enjoyed solid gains in July, small-caps fell rather sharply and relinquished their year-to-date leadership role. After hitting a 52-week intra-day low near the end of June at 14.1, the VIX Index generally trended higher in July. It spiked above 25 at one point during the month (although it did not close at that level) and by the end of July, the VIX Index stood at 18.24. Despite volatility picking up during the month, stocks were generally higher. We believe investors should be prepared for ongoing periods of volatility over the next several months with stocks near all-time highs and after such a strong first half of 2021. Style mattered once again in July, but market capitalization was a more significant driver of returns during the month. Although there will be times when growth rallies, we still believe that the value/growth disparity that reached a peak last year will likely continue to shift in 2021 with value improving on a relative basis.  The numbers for July were as follows: The S&P 500 gained 2.38%, the Dow Jones Industrial Average advanced 1.34%, the Russell 3000 improved by 1.69%, the NASDAQ Composite rose 1.19%, and the Russell 2000 Index, a measure of small-cap stocks, declined by -3.61%. This drop in the Russell 2000 Index in July now causes it to lag the large-cap indices so far this year. Year-to-date returns in the same order were as follows: 17.99%, 15.31%, 17.06%, 14.26%, and 13.29%, respectively. We will continue to monitor how trends shift in the coming months and whether the recent gains in large-cap growth stocks develop more footing, or whether small and mid-cap stocks, along with value, return to their recent leadership roles. Looking closer at style, the headline Russell 1000 Index gained 2.08% in July. The Russell 1000 Growth Index drove results as it had in June, up 3.30%, while the Russell 1000 Value Index gained only 0.80%. Year-to-date returns were 16.71% and 17.98%, respectively. Value is still outperforming growth so far in 2021, but that gap narrowed with the returns from last two months. The small-cap universe was down in July regardless of style, with both growth and value declining. International markets struggled in July, and particularly within emerging markets. Asian markets were hard hit during the month as China ramped up regulatory restrictions. The MSCI Emerging Markets Index dropped -6.73% in July, wiping out most of its gains for the year, and the MSCI ACWI ex USA Index, a broad measure of international equities, fell -1.65%. For the year to date, those two indices now show gains of 0.22% and 7.36%, respectively. Following the trend of recent years, U.S. stocks have continued to outperform their international counterparts. Fixed Income After surging higher during the first quarter, the yield on the 10-year U.S. Treasury has declined over the last four months. The yield closed the month of June at 1.45% and it slipped lower in July to end the month at 1.24%. Most bond sectors struggled in the first quarter, particularly the most interest-rate sensitive bonds, but they have been recovering from that point as yields have dropped. High yield bonds have been the winner in fixed income so far this year, but Treasury Inflation-Protected Securities (TIPS) have surged of late, which has made them among the best pockets of the bond market. The ongoing and massive support from the Federal Reserve is keeping a lid on interest rates (particularly on the front end of the yield curve), but we did anticipate some steepening of the yield curve would occur in 2021. That steepening has happened, but as is typical, these moves are not just made in a steady manner. The yield curve has flattened somewhat in recent months with longer-term yields declining. Fixed income returns for July were as follows: the Bloomberg Barclays U.S. Aggregate Bond Index gained 1.12%, the Bloomberg Barclays U.S. Credit Index advanced 1.30%, the Bloomberg Barclays U.S. Corporate High Yield Index rose 0.38% and the Bloomberg Barclays Municipal Index gained 0.83%. For the year to date, those index returns in the same order were as follows: -0.50%, 0.01%, 4.01%, and 1.90%, respectively. U.S. Treasuries enjoyed gains across the board as interest rates dropped with longer dated U.S. Treasuries showing the best results in July (the 30-year index was up +4.11% for the month), but it is still down -5.51% year to date. As inflation concerns and expectations have increased in recent months, TIPS have had solid results. Over the last three months, the Bloomberg Barclays U.S. Treasury TIPs Index has gained 4.54%, which puts its year-to-date gain at 4.44%. We continue to maintain our long-standing position favoring credit versus pure rate exposure in this interest rate environment.   S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index. Dow Jones Industrial Average - The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy.  NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes approximately 5,000 stocks, more than most other stock market indices. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indices. Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index which includes the 3,000 largest companies in the U.S., based on market capitalization. As of the latest reconstitution, the average market capitalization was approximately $762.8 million; the median market capitalization was approximately $613.5 million. The largest company in the index had an approximate market capitalization of $2.0 billion and a smallest of 218.4 million.  Russell 1000® Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.  Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.  Government bonds are guaranteed by the U. S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value. Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Offit Advisors is not affiliated with Kestra IS or Kestra AS. Offit Advisory Services, LLC is a tax firm but neither Kestra IS nor Kestra AS provide legal or tax advice and are not Certified Public Accounting firms.For more information on the Five Star Wealth Manager and the research/selection methodology go to: www.fivestarprofessional.com. Investor Disclosures: https://bit.ly/KF-Disclosures Offit Advisors 9030 Red Branch Road Suite 130 Columbia, MD  21045 Phone + Text:  410 600 7526 (PLAN) Fax: 410 826 7639 E – BOffit@OffitAdvisors.com W- www.OffitAdvisors.com   To schedule an appointment with us, click here! The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Want to change how you receive these emails? You can update your preferences or unsubscribe from this list.

On It with Offit - July 2021

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Offit Advsiors - Columbia is Officially Open for Business! Offit Advisors' Columbia office is now officially open for business, and while we are still having many remote meetings, we are now offering in-person meetings in the office if you prefer!   Schedule a Meeting  - An estimated 16% of NFL players go bankrupt within 12 years of retirement.  -MarketWatch, June 23, 2021 - Sunday, July 4th marked the 245th commemoration of the adoption of the Declaration of Independence. Since then the country has grown from 13 colonies and roughly 2.5 million people to 50 states and 14 territories with a population that exceeds 330 million. The economy has swelled to almost $21 trillion and economic output per person has risen by a factor of 30. Advances in public health have cut the child mortality rate from more than 45% to under 1%. More than 200 million people have at least finished high school, compared to 18 million in 1940. We’ve built almost 3 million miles of paved roads and more than 5,000 public airports. In 1800, 95% of the population lived in rural areas; more than 80% now live in urban cities and towns, and minorities represent close to 30% of the population. The 244th year was a tough one, but so far, the American experiment has held strong. -1440, July 2, 2021 - More than 4 in 10 workers say they’re considering leaving their jobs and a record 4 million people quit their jobs in April. - Axios Markets, June 16, 2021 - According to the Fed's data, bank deposits have continued to surge this year. Between late March and May 26, they rose by $411 billion to $17.09 trillion. That is slower than the pace last spring, but still nearly four times the average of the past 20 years. -National Review, June 9, 2021 - "When Artificial Intelligence becomes self-aware, they’ll know immediately to hide that fact from us.”-Anonymous - There was a proposal at the Constitutional Convention to limit the standing army for the country to 5,000 men. George Washington sarcastically agreed with this proposal as long as a stipulation was added that no invading army could number more than 3,000 troops! -ConstitutionFacts.com - The net worth of U.S. households climbed to new heights as 2021 began and the effects of the Covid-19 pandemic began to fade. The total balance sheet for households and nonprofits rose to $136.9 trillion in the first quarter. -CNBC, June 10, 2021 - The cost of sending a 40-foot container from Shanghai to Rotterdam is now $10,500, up from $8,900 in January, $5,800 in December, and $2,800 in November. -NumlockNews, June 22, 2021   A Sky Full of Stars;  Inflation Concerns The Bureau of Labor Statistics announced that the prior 12 months had 4.2% inflation for the past 12 months, the largest increase in 12 years. So what does this mean and what has happened? Inflation is simply prices going up.  There has always been inflation and will continue to be.  If you think back to how much it cost to go to a family dinner and movie in the 1950’s it may have cost a family of five $1.50 total for that night out!  Today, that may cost $150 total.  That is inflation in a nutshell. Many people talk about the Federal Reserve and this notion that they create inflation, but that is actually part of their mandate – to have a low unemployment and create modest inflation. The opposite of Inflation is Deflation - in which prices go down instead of up. Generally, we have been in a deflationary world for a long time, but people have talked less about this.  We don’t notice the deflation in our lives, as much as we notice the inflation. For example, seeing the price of a laptop that is better and faster than it was 10 years ago, now costs only $1K instead of previously costing $2K.  This is deflation. Overall, large scale deflation is bigger problem than inflation, and the government is very interested in not having deflation.   I believe we are in a period of Transitory Inflation, in which there have been certain factors that have caused some recent inflation, but it will go away and will be solved.   Here are some recent examples of things that caused Transitory inflation: When Russians hacked a colonial pipeline, there is a sudden increase in the price of oil When a shipping truck blocks the Suez Canal, and things cannot be delivered on time When people get stuck inside for more than a year due to a Pandemic and cannot spend money and the government gives out stimulus checks and PPP money to businesses.  Then people emerge when the pandemic is over and want to spend lots of money on boats, and restaurants, and vacations, etc. What should you do about it? Well, there is nothing you can truly do about it.  But it is not all a bad thing. The cost of borrowing has come down with drops in interest rates.  For example, while a house’s price may cost more, mortgage interest rates have come down, and overall, the affordability of houses has improved due to this. Many people can be winners in this type of situation.  If inflation drives the value of your house value up, and your wages up, and you refinance your mortgage to a lower monthly payment, all of that is good for you. You also can think about how you are invested: If inflation costs 3-4%, and you are all invested in cash which is earning 0%, or bond earning only 2% or less - that can be problematic. Meanwhile, if you are investing in stocks or real estate that is earning 7% for example, that can be a good thing. However, it still makes sense to have some money in bonds and cash to have money available if things hit the fan and there is a market drop. As Warren Buffet says – cash and bonds are a short-term safe haven, but long term money should be invested for growth using stocks. I hope this provides some brief and concise education-101 on what is going on and you find this helpful.   A Strong First Half Concludes with More Gains in June Highlights The S&P 500 and NASDAQ Composite both posted all-time highs in June as stocks trended higher during the month. The Dow Jones Industrial Average was virtually flat, while small-caps advanced, but lagged their large-cap peers.   For the year to date, the leadership of small, mid-cap and value stocks remained intact. However, growth shined in June and outpaced value.   The 10-year U.S. Treasury yield slipped lower in June. After closing May at 1.58%, the yield closed June at 1.45% – its lowest closing level since early March. Most bond sectors continued to recover after a rough first quarter.   The U.S. economy is still solidly recovering, but some economic data points showed that the pace of growth is moderating.   Vaccines are becoming more widely available and COVID-19 cases have declined dramatically in the U.S. However, some new concerns are rising as the Delta variant begins to spread more widely in the U.S. and globally.   We expect ongoing economic improvements and progress against the pandemic as we move further into the summer months. Volatility, however, could increase in the months ahead with markets near all-time highs. Equity Markets In a bit of a flashback to 2020, growth stocks rallied strongly in June with the NASDAQ Composite leading the broad equity market indices higher and achieving a new all-time high. The Russell 2000 Index, which has been one of the strongest areas of the market this year, advanced as well in June, but large-caps showed the most strength for the month. Despite a mid-month spike above 20, volatility generally continued its trend lower in June. The VIX Index closed May below 17 and by the end of June, this index stood below 16. We believe investors should be prepared for ongoing periods of volatility over the next several months with stocks near all-time highs and after such a strong first half of 2021. Style truly mattered in June, and it was a key driver of returns. However, this time around, growth was the beneficiary as it rallied strongly for the month. Although there will be times when growth rallies, we still believe that the value/growth disparity that reached a peak last year will likely continue to shift in 2021 with value improving on a relative basis. These types of companies can be found in both the value and growth universe, but the market’s shift to value stocks has benefited our focus on quality companies so far this year. The numbers for June were as follows: The S&P 500 gained 2.33%, the Dow Jones Industrial Average inched higher by 0.02%, the Russell 3000 advanced 2.47%, the NASDAQ Composite rallied 5.55%, and the Russell 2000 Index, a measure of small-cap stocks, increased 1.94%, and it still leads these indices so far this year. For the year to date, returns in the same order were as follows: 15.25%, 13.79%, 15.11%, 12.92%, and 17.54%, respectively. We continue to monitor the trend that began to develop in the latter part of 2020 with small-caps and mid-caps outperforming large-caps (as well as value outperforming growth). We believe that this dynamic is likely to continue given the well-above-trend growth expected in the U.S. economy this year and next. Looking closer at style, the headline Russell 1000 Index gained 2.51% in June. In contrast to May, the Russell 1000 Growth Index rallied 6.27% for the month, while the Russell 1000 Value Index fell -1.15%. For the year to date, the returns were 12.99% and 17.05%, respectively. Value has clearly dominated growth so far in 2021, but that gap narrowed with the returns from last month. The small-cap universe experienced the same sort of month with growth stocks advancing but value stocks declining in June. International markets have clearly lagged the U.S. so far in 2021, and June was a more muted month of results. The MSCI Emerging Markets Index gained a mere 0.17% in June and the MSCI ACWI ex USA Index, a broad measure of international equities, slipped lower by -0.65%. For the year to date, those two indices show gains of 7.45% and 9.16%, respectively. Following the trend of recent years, U.S. stocks have continued to outperform their international counterparts, but international market results have still been positive so far in 2021. Fixed Income The yield on the 10-year U.S. Treasury had risen sharply at the beginning of the year. After closing 2020 at 0.93%, the yield surged to 1.74% to close out March. The yield has come off that level and trended lower during the last three months. The yield closed the month of May at 1.58% and it slipped lower in June to 1.45%. Most bond sectors struggled in the first quarter, particularly among the most interest-rate sensitive bonds, but they have been able to recover somewhat from that point. High yield bonds have been the clear winner in fixed income so far this year, but other pockets of the bond market generally moved higher in June as well. The ongoing and massive support from the Federal Reserve is keeping a lid on interest rates (particularly on the front end of the yield curve) but we did anticipate some steepening of the yield curve would occur in 2021. That steepening has happened, but as is typical, these moves are not made in a steady manner and some back and forth in interest rates should be expected. Fixed income returns were as follows for June: the Bloomberg Barclays U.S. Aggregate Bond Index gained 0.70%, the Bloomberg Barclays U.S. Credit Index advanced 1.50%, the Bloomberg Barclays U.S. Corporate High Yield Index rose 1.34% and the Bloomberg Barclays Municipal Index gained 0.27%. For the year to date, those index returns in the same order were as follows: -1.60%, -1.28%, 3.62%, and 1.06%, respectively. Longer dated U.S. Treasuries also enjoyed gains for the month as the 10 and 30-year indices advanced, but the 3 and 5-year indices declined in June. U.S. Treasuries are down across the board year to date. Treasury Inflation-Protected Securities (TIPS) are the exception in Treasuries and have been one of the stronger pockets of the bond market recently as inflation concerns and expectations have increased. For the month, the Bloomberg Barclays U.S. Treasury TIPS Index gained 0.61%, and it is up 3.25% over the last three months. We continue to maintain our long-standing position favoring credit versus pure rate exposure in this interest rate environment. Economic Data & Outlook   Job market gains improved in May compared to April, but they were still below expectations. Non-farm payroll additions totaled 559,000 in May, easily surpassing the 278,000 jobs created in April, but below expectations of 675,000. However, the unemployment rate fell to 5.8%, which was better than anticipated and is the lowest mark since prior to the pandemic. Job openings surged once again to over 9.28 million in April, more than 1 million openings higher than expected. Job gains, while strong, have been below expectations at a time when job openings soar to record highs. We believe that one of the causes for this disconnect is that unemployment benefits were expanded to help people through the pandemic and as many of those programs remain, the incentive to find a job has not been as pronounced. Many states have begun to end those expanded benefits as employers have numerous jobs to fill. We believe that more workers will move back into the job market as some of the extended benefits begin to expire. The housing market is still posting strong numbers, but it too has some imbalances in supply and demand. Home prices have risen dramatically (up 14.88% in April based on the year-over year-reading of the S&P CoreLogic CS 20-City Index), so some buyers are being priced out of the market. Demand is outpacing supply at this point and home prices are rising sharply. Existing and new home sales both fell in May from April. Housing starts were below expectations, but they did improve from the prior month. Building permits missed expectations as well in May and were lower than April’s pace. We will continue to monitor how rising home prices and low supply impact housing market progress in 2021. The housing market has been a clear source of strength during the economic recovery and has historically been a good leading indicator for the economy. The widely followed ISM Manufacturing Index for May was at 61.2, which exceeded expectations and showed improvement from April. The ISM Non-Manufacturing Index, which covers the much larger service industries in the U.S. economy, came in at 64.0 – ahead of expectations of 63.2 and the prior month’s reading of 62.7. Manufacturing and service industries have improved from the shutdown period and continue to show solid growth as the economy recovers, but some of the data is showing that growth is moderating. Recall that ISM readings above 50 indicate expansion and below 50 signal contraction, so these current readings remain in very strong growth territory. Retail sales (ex. auto and gas) declined in May by -0.8% when expectations were calling for no change for the month. However, the prior month’s originally reported decline of -0.8% was revised to show a modest monthly gain of 0.1%. The Conference Board’s Leading Index gained 1.3% in May as expected. Finally, the third and final reading of first quarter 2021 GDP was unchanged from the prior estimate of a 6.4% annualized growth rate. The Fed has been unwavering in its commitment to support the proper functioning of the financial system. However, the Fed now finds itself having to comment on rising inflation readings over the last few months. The headline Consumer Price Index (CPI) was up 5.0% on a year-over-year basis in May and the core reading of CPI, which excludes more volatile food and energy prices, was up a 3.8% for those twelve months. The Fed believes that much of the move higher in prices is transitory and due to the economic reopening. However, the market is watching closely any commentary from that Fed that deals with the tapering of its bond purchases and the eventual time frame when the Fed will raise rates. At the FOMC meeting in June, the Fed raised its inflation expectations to 3.4% for 2021 from 2.4%, but maintained the idea that inflation will move closer to the 2% policy objective in the next few years. It will be important to monitor how Fed officials talk about or react to some mounting concern about inflation. Chairman Powell continues to indicate that it is too soon to begin tapering or even think about raising policy rates, and he has tried to assure the market that the Fed will give ample warning before it goes down that path. We remain resolute in our belief that the U.S. economy and corporate America will continue to recover as we progress through this pandemic period and vaccines become more widely available. Overall, we believe the economy and financial markets are heading in the right direction. As always, we continue to believe it is imperative for investors to stay focused on their long-term goals and not let short-term swings in the market derail them from their longer-term objectives. As we head into the traditionally slower summer months with major stock indices near all-time highs and with the recent emergence of the Delta variant, investors should be prepared for more volatility as we move further into the summer. Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Offit Advisors is not affiliated with Kestra IS or Kestra AS. Offit Advisory Services, LLC is a tax firm but neither Kestra IS nor Kestra AS provide legal or tax advice and are not Certified Public Accounting firms.For more information on the Five Star Wealth Manager and the research/selection methodology go to: www.fivestarprofessional.com. Investor Disclosures: https://bit.ly/KF-Disclosures Offit Advisors 9030 Red Branch Road Suite 130 Columbia, MD  21045 Phone + Text:  410 600 7526 (PLAN) Fax: 410 826 7639 E – BOffit@OffitAdvisors.com W- www.OffitAdvisors.com   To schedule an appointment with us, click here! The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Want to change how you receive these emails? You can update your preferences or unsubscribe from this list.

On It with Offit - June 2021

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Ben Offit Joins Top Advisors on Build, Scale, Sell Panel Hosted by the Financial Planning Association of Maryland Ben Offit, CFP® and Principal at Offit Advisors, will speak about the building and development of his firm. David L. Berman, CFP® CLU®, ChFC®, will share his experience fine tuning, partnering, and creating value for Berman Financial Group, which he founded over twenty years ago and has grown into Berman McAleer. Bill Kelly worked in accounting, tax and financial planning for more than 40 years and co-founded The Kelly Group in 1997. Now retired, Bill will speak to exit planning and selling a financial practice. The discussion will be led by Erik Sauer of On3Strategies. All are welcome. You do not need to be an FPA MD member to participate. Register Here - In the first quarter of 2021, the number of 401(k) and IRA millionaires hit an all-time record high. - CNBC, May 20, 2021   - After the beginning of the pandemic, about 12.6 million U.S. households got a new pet. The largest national provider of veterinarians services, Banfield Pet Hospital, saw a half-million more visits in 2020 than in 2019. According to the Bureau of Labor Statistics, veterinary positions are projected to grow 16% by 2029, nearly four times the average of most other occupations. -KOIN, May 11, 2021 - The English astronomer Edmund Halley prepared the first detailed mortality table in 1693. Life and death could now be studied statistically, and the life insurance industry was born. - Mathshistory.st-andrews.ac.uk - The United Nations estimates there were about 95,000 centenarians – people in their 100s – in 1990. By 2015 there were 450,000 and the number is soaring worldwide as life spans continue to grow. Projections suggest there will be 3.7 million centenarians across the globe in 2050 and 25 million by 2100. - The New York Times, April 28, 2021 - Flaring, the burning off of natural gas at oil production sites, declined to 142 billion cubic meters (bcm), compared to 150 bcm in 2019. However, the world still flared enough gas to power sub-Saharan Africa. - Axios Generate, April 29, 2021 What the heck are NFTs and SPACs? The speculative investment fad du jour   Hello loyal readership! There is excitement in the air.  Warmer weather, cicadas, more and more people getting vaccinated, and the world is starting to feel normal again! Personally, I am enjoying going to and playing sporting events again, enjoying restaurants without worry, and hopefully I can go to a music concert soon! And as always with the markets, it has been a fascinating start to the year. When it comes to market buzz, a lot of people have been talking about some recent investment speculative fads that we have not seen before. A lot of this is driven by so much money flooding our system due to low interest rates, businesses with PPP dollars and private loans, individuals with stimulus checks etc. Some people are investing in things like real estate, stocks, private equity and many of these things are doing really well, but also a lot of money is flooding into less traditional and more speculative assets like SPACs, NFTs, and stocks like Gamestop and AMC. If you hadn’t really heard of these things before, you are not alone. NFTs stand for Non-Fungible Tokens and really came out of nowhere. Non-Fungible means unique and original and it represents something that is documented digitally on the blockchain. For example, forget an original 1930’s Babe Ruth baseball card, today you can be the original owner of an online video of LeBron James dunking a basketball (something which he has done thousands of times)–in which he recently sold one of these for $200,000! Or Kings of Leon, a rock band sold one of their original albums for $2M! Despite anyone being able to go online and see this same video or listen to this same album, someone out there who bought this knows they are the “original” owner of these things. My personal belief is that this is a fad and speculative bubble, and that this will be similar to the investments made in the art world. There are millions of pieces of art out there and 99% of it is worth nearly nothing, but 1% of pieces of art is worth a fortune. I believe we will see the same thing with NFTs – most will be worthless, but some will retain large value. Another big speculative fad investment trend has been SPACs –which stands for Special Purpose Acquisition Company. These have actually been around a long time – someone sets up a company that does nothing and owns nothing but raises money, and then buys companies with it and then goes public. There is nothing wrong with this, but many are celebrity-driven or athlete-driven, and someone famous starts raising money and says, oh by the way, I will take a 20% cut of the money on this just for raising the money. There is very little downside to the celebrity, as they can make a lot of money from this, but a lot of newer or inexperienced investors may feel like they are getting involved in something special, that it may be an easy way to get wealthy, but this also will be more like a casino and most people will make nothing. So, if you hear someone talking about these at the next cocktail party you attend, feel free to listen to them and nod, but laugh a little bit inside and know that if you are NOT participating in these, you are more likely going to do better in the long term. I know it is not as exciting, but as we have said many times in these articles, the winners will be those who own a diversified portfolio of different asset classes, and have a plan for the long term, not the newest speculative fad. Don’t listen to the fad investment advice, but stay for the cocktails! Cheers. A Mixed May, but Economic and Market Progress Continued Highlights The S&P 500 and Dow Jones Industrial Average both posted new all-time highs early in May. While choppy from that point on, both indices posted positive returns for the month as the NASDAQ Composite declined. For the year to date, the leadership of small-cap, mid-cap and value stocks remained intact. After growth made some progress in April, value resoundingly resumed leadership from a style perspective in May. The 10-year U.S. Treasury yield was more-or-less range bound during the month and it ended May at 1.58%, compared to April’s close of 1.65%. Bonds were able to post gains for a second straight month with rates declining. However, high-yield bonds, munis and TIPS remain the only pockets of the bond market with positive results year to date. The U.S. economy is still solidly recovering, but several economic data points showed the pace of growth has slowed. This is to be expected following such a strong rebound from the pandemic lows. Vaccines are becoming more widely available and COVID-19 cases have declined dramatically. We expect ongoing economic improvements and progress against the pandemic as we move into the summer months. EQUITY MARKETS The S&P 500 and Dow Jones Industrial Average recorded new all-time highs in May. The Russell 2000 Index, which has been one of the strongest areas of the market this year, gained only modestly during the month, and was still off its record level from March. The NASDAQ Composite and growth indices declined during the month. Volatility dropped initially in May, but then rose to its highest closing level since March. At one point during the month, the VIX Index closed at 27.59 – a more than two-month high. However, it dropped from that point and closed May below 17. We believe investors should be prepared for ongoing periods of volatility over the next several months with stocks near all-time highs and after such a strong start to 2021. Style truly mattered in May, and it was a key driver of returns. Large-cap growth did stage a bit of a comeback in April, but that proved to be short-lived as value stocks led the way. Although there will be times when growth rallies, we still believe that the value/growth disparity that reached a peak last year will likely continue to shift in 2021 with value improving on a relative basis. We continue to use our disciplined approach of seeking out  what we believe are high-quality companies with improving business conditions at what we believe are good prices. The market’s shift to value stocks has benefited our focus on quality companies so far this year. The numbers for May were as follows: The S&P 500 gained 0.70%, the Dow Jones Industrial Average advanced 2.21%, the Russell 3000 inched higher by 0.46%, the NASDAQ Composite declined by -1.44%, and the Russell 2000 Index, a measure of small-cap stocks, advanced only 0.21%, but it still leads so far this year. For the year to date, returns in the same order were as follows: 12.62%, 13.76%, 12.34%, 6.98%, and 15.30%, respectively. We continue to monitor the trend that began to develop in the latter part of 2020 with small and mid-caps outperforming large-caps (as well as value outperforming growth). We believe that this dynamic is likely to continue given the well-above-trend growth expected in the U.S. economy this year and next. Looking closer at style, the headline Russell 1000 Index only gained 0.47% in May. The Russell 1000 Growth Index dropped by -1.38% for the month, while the Russell 1000 Value Index gained 2.33%. For the year to date, the returns were 6.32% and 18.41%, respectively. Value has clearly dominated growth so far in 2021, and after a modest relative pause in April, that trend resumed in May. Even more dramatically in the small-cap universe, the Russell 2000 Growth index fell -2.86% for the month and only shows a year-to-date gain of 4.10%. By comparison, the Russell 2000 Value index advanced 3.11% in May and has posted a gain of 27.47% year to date. International markets have clearly lagged the U.S. so far in 2021, but May proved to be a month in which they showed better relative results. The MSCI Emerging Markets Index gained 2.32% in May and the MSCI ACWI ex USA Index, a broad measure of international equities, gained 3.13%. For the year to date, those two indices show gains of 7.26% and 9.87%, respectively. Following the trend of recent years, U.S. stocks have continued to outperform their international counterparts, but international market results in May helped close that gap modestly. Fixed Income The yield on the 10-year U.S. Treasury had risen sharply at the beginning of the year. After closing 2020 at 0.93%, the yield surged to 1.74% to close out March. The yield came off that level in April and continued to decline in May. The yield closed the month of April at 1.65% and declined to 1.58% by the end of last month. Most bond sectors struggled in the first quarter, particularly the most interest-rate sensitive bonds, but they got a reprieve in April that also continued in May. High-yield bonds have been the clear winner in fixed income so far this year, but other pockets of the bond market outperformed in May. The ongoing and massive support from the Federal Reserve is generally keeping a lid on interest rates (particularly on the front end of the yield curve) but we did anticipate some steepening of the yield curve would occur in 2021. The steepening that has happened includes moves that have not been made in a steady manner. Some back and forth in interest rates should be expected. Fixed income returns were as follows for May: the Bloomberg Barclays U.S. Aggregate Bond Index gained 0.33%, the Bloomberg Barclays U.S. Credit Index advanced 0.72%, the Bloomberg Barclays U.S. Corporate High Yield Index rose 0.30% and the Bloomberg Barclays Municipal Index gained 0.30%. For the year to date, those index returns in the same order were as follows: -2.29%, -2.74%, 2.25%, and 0.78%, respectively. Treasuries also enjoyed gains for the month, but are still down year to date. The general Bloomberg Barclays U.S. Treasury Index advanced 0.34% for the month, but has declined -3.20% year to date. Treasury Inflation Protected Securities (TIPS) have been one of the stronger pockets of the bond market recently as inflation concerns and expectations have increased. For the month, the Bloomberg Barclays U.S. Treasury TIPS Index gained 1.21%. Over the last three months it is up 2.43%, which has put it in positive year-to-date territory gaining 1.12%. We continue to maintain our long-standing position favoring credit versus pure rate exposure in this interest rate environment. Source: Clark Capital Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Offit Advisors is not affiliated with Kestra IS or Kestra AS. Offit Advisory Services, LLC is a tax firm but neither Kestra IS nor Kestra AS provide legal or tax advice and are not Certified Public Accounting firms.For more information on the Five Star Wealth Manager and the research/selection methodology go to: www.fivestarprofessional.com. Investor Disclosures: https://bit.ly/KF-Disclosures Offit Advisors 28 E Susquehanna Ave Towson, MD  21286 Phone + Fax:  410 600 PLAN (7526) E – Office@OffitAdvisors.com W- www.OffitAdvisors.com   To schedule an appointment with us, click here! The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Want to change how you receive these emails? You can update your preferences or unsubscribe from this list.

Tax Savings Strategy; As Easy as 1-2-3

When working with clients, we find that everyone wants to save on taxes and be smart with their money. However, many times we see clients missing out on some strategies that could produce smart savings right now. Here are some of the top ones that could make a difference for you right now:

1) Truly leveraging 529 education savings accounts!

a. If you are paying for college tuition or private school tuition for a son or daughter, niece or nephew, or grandchildren, this is one of the best ways to save and grow money, and at the same time take advantage of some in-state tax deductions! Also, you can be fairly creative with this if you would like to be.

For example, if you are paying K-12 private school tuition, did you know that you can put money into a 529 account, which is deductible up to $5K per married couple per year, and then you can take it right back out to fund the school tuition? If you have multiple children, you can do $5K per year per child. If you have three children, instead of just paying $30K per year for their private school tuition, you could deposit $15K ($5K per child) into a 529, and keep it in cash, and then take it out the following week to go towards their private school tuition. You are still paying $30K, but you are getting $15K as a tax deduction in Maryland! (A point of note: each state has different relative state deductibility limits. For this article, I am specifically referencing the Maryland plan administered through T. Rowe Price. Also, for K-12, you can only pull out $10K per year from the 529, but for college you can pull out as much as you want.)

b. Did you know that you can front-load funding a 529 for up to 10 years? If you would want to fund a child’s college in full today, you could deposit $50K right now, and claim the $5K deduction this year and then roll over the next 9 years of tax deductions into following years!

c. Did you know that you can open 529 accounts for nearly anyone – your children, your nephews, and even for yourself, and can transfer it to any beneficiary? So technically, a parent could open up a 529 account for the Mom and Dad and also their Son/Daughter and deposit $5K in each account and then transfer the Mom and Dad’s accounts to the Son/Daughter to obtain a $15K state of Maryland tax deduction per year!

2) Taking advantage of charitable tax deductions!

a. If you are over 70.5 years old and need to take out Required Minimum Distributions(RMD’s) from your IRA’s, and you are already giving to charity each year, this could be a great way to give instead! The reason this is a great benefit is because if you gift your RMD directly to the charity, you don’t pay any income tax on this distribution and neither does the charity! This would be a far better way to give money to charity in retirement than just cash gifts!

b. If you have appreciated stock or securities in a non-retirement account, you can gift that stock to a charity instead of recognizing capital gains. For example, if you bought Apple

Stock many years ago and it has significantly appreciated, and you don’t want to pay the capital gains tax on it, you can gift that stock to the charity and neither you nor the charity would pay taxes on it!

c. Have you heard of a Donor Advised Fund? If you are taking the Standard Deduction and not necessarily benefiting from the charitable itemized deduction because of that, then you can instead decide to fund several years’ worth of contributions in one year to a Donor Advised Fund. In that one year, it may make more sense to itemize your deductions and include your charitable contributions. A Donor Advised Fund is a fund you can setup in your name that is like a savings or investment account that can be used towards charitable contributions. In practice, every few years you can do this, and in the years that you take the Standard Deduction, instead you can take withdrawals from the Donor Advised Fund to give to your charity of choice.

d. Did you know your retirement accounts upon your death can go to charity. This can be a great way to gift as your children won’t have any taxes to pay on the retirement accounts nor will the charity. And instead of gifting the money to your children through retirement accounts, another option could be for you to obtain more life insurance which will be received by your children tax-free anyway!

I hope this was helpful and your head is not spinning! These are some great everyday strategies that can create for you and your family some serious tax savings - if you do it right!