April 2020 - NorthStar Capital Advisors

What lessons will you take from this?

So much is unknown.

Do we reopen or wait?

Are we past the peak? Or just over the first summit of a mountain range?

Are we safe yet?

After weeks of restrictions, it’s easy to feel that we’re swirling in a maelstrom of uncertainty, helpless to make decisions when so much remains unknown and out of our control.

The uncertainty, the personal losses many have experienced, and the everyday challenges of socially distant life can shake our foundation and cause us to lose touch with what’s most important.

I think that’s normal. We’ve traded a trip on the highway for an off-roading adventure. And we don’t know where it’s going to take us this year.

So let’s lean into the uncertainty. Let’s embrace it and use it as a wake-up call to explore and appreciate what really matters.

Our health. Our family, friends, and loved ones. Our home. Our community. Our compassion and creativity. Our resilience as human beings.

As for me, I have some moments of frustration, but I’m staying grounded by playing outside with our kids and working in the yard.

I’m also learning a lot about myself. I’ve learned that I really enjoy sitting face-to-face in the same room with clients, friends, and colleagues. I’ve learned that I’m not “camera ready” for Zoom meetings nor remote TV interviews, but I’m humbly trying to get better.

I’m working on gratitude and enjoying simple things like dinner-time conversations, our weekly visit with my parents, and fresh air.

I’m grateful to have a wonderful family, a comfortable home (aka The Bunker) and deeply meaningful work.

I’m grateful to have you.

On the professional side, I’m focused on what we can control on our clients’ behalf and staying abreast of what might come next. Our mantra right now is: “one day at a time.”

How are you? I’d love to hear how you are coping. What lessons are you learning about yourself? What have you had the courage to try for the first time? Hit “reply” and let me know.

This pandemic is scary. But it’s also a once-in-a-lifetime chance to hit the “reset” button and connect with the creativity, joy, and good old human ingenuity that can flourish within the limitations of pandemic life.

Eventually, we’ll recover from the pandemic. It’s not clear yet what that will look like, and we’ll likely see more hard days before we get there. Businesses will reopen, people will go back to work, the recession will pass, and the country will rebuild.

We will heal. But some marks will remain as reminders of our experience.

The Great Depression taught people to clip coupons and “make do or go without.” 9/11 upended our travel rituals and awareness of terrorism.

Some lessons from the pandemic will stay with us long after the immediate crisis fades. Some will be unconscious; maybe we’ll become a society of dutiful hand washers and social distancers.

Others will be lessons we consciously take with us about our values and ability to adapt to circumstances far beyond our control.

I’m hopeful and excited to see what we learn. Let’s make it good.

How has the pandemic changed your perspective? What new values and priorities will you bring out of your experiences? Email me at chrismullis@nstarcapital.com and let me know.

Be well,
Chris

Chris Mullis, Ph.D.
Founding Partner
NorthStar Capital AdvisorsFinancial Planning.
Wealth Management.
Since 2006

AskNorthStar.com
(704) 350-5028

P.S. Do you know someone who is having a hard time and could use some financial advice? We’re holding a few spots open for folks who could use a professional’s help. If you can think of someone, please reply to this email or call (704) 350-5028 to let me know.

P.P.S. And don’t forget about our special COVID-19 pro bono planning we created to support individuals and families who can’t afford fiduciary advice and financial planning.

V, W, L, or Swoosh? (no, it’s not a meme)

Everyone you and I have ever met has been affected by the coronavirus.

My childhood friends in Charlotte, strongman Kristofer Hivju, and the folks I met in Lesotho, Africa.

And it’s Day #18 in the hospital for my father-in-law fighting the disease. He’s now in a federal field hospital and hopefully coming home very soon.

It’s likely that every human on the planet has been affected by COVID-19.

I’m not sure that this kind of event has ever happened before in human history.

Though it’s sad that it took a disease to bring us together, it reminds me of how deeply connected we all are and how much our daily existence depends not just on our community, but on people we’ll never meet in far-flung corners of the world.

That very interconnectedness is what’s making this pandemic so dangerous to us and the economy.

Economists believe we entered a recession in March, and the latest data continues to show the economic damage:¹

Retail sales dropped 8.7%, the biggest drop since the government started tracking the data in 1992.²
Spending on travel, restaurants, and shopping overall is way down (though grocery sales and delivery are up).³
The number of new unemployment claims skyrocketed to 22 million, erasing the job gains since June 2009.⁴

Despite the ugly economic data, stocks just wrapped their best performance in decades.⁵ What gives?

“Irrational exuberance,” to quote Alan Greenspan. Stocks are famous for rallying in the face of bad numbers, and it’s clear that investors are expecting government stimulus to lead to a quick recovery as states emerge from lockdown and business picks up.

Are bullish investors right? Will the economy recover quickly?

It’s impossible to say right now. How long the downturn lasts and how soon the economy recovers depend on answers to some critical questions:

When will widespread testing, tracing, and treatment allow lockdowns to ease? Reopening America too soon and igniting a fresh wave of the pandemic will prolong the pain.
Will employers maintain relationships with their laid-off staff? You can’t just flip a switch and reopen a closed business without skilled workers. The longer the shutdowns continue, the harder it will be for companies to staff up.
How soon will consumer spending return? “Deferred” demand that’s pent up and just waiting for restrictions to ease could cause spending to surge; “destroyed” demand that’s not coming back could cause spending to remain depressed for longer. Here’s a simple example: deferred demand would be rescheduling a canceled vacation. Destroyed demand would be deciding to skip it entirely.

V, W, L, or Swoosh?

The “shape” of the eventual recovery is being hotly debated because it gives us insight into what would need to happen (and how long it could take).⁶

“V-Shaped” Recovery: A short, sharp decline and then a quick rebound is the best-case scenario. In this case, lockdowns lift soon and spending surges, driven by pent-up demand and government stimulus.

“W-Shaped” Recovery: A “double-dip recession” is a worst-case scenario that could happen if the easing of restrictions leads to another wave of infections and lockdowns, or the economic damage causes a second downturn.

“L-Shaped” Recovery: An L represents a sudden plunge and fitful recovery if lockdowns continue through the year and growth is slow to return.

“Swoosh-Shaped” Recovery: A tick or swoosh is a sharp downturn followed by a gradual recovery as lockdowns are eased cautiously across the country.

We can’t predict what the road ahead will hold, but I think it’ll look less like a return to “normal” and more like a way to live with the way COVID-19 has overturned ordinary life.

What do you think? Will your life be back to normal this summer? Will we be riding waves in the warm Atlantic Ocean and romping down the Appalachian Trail relatively soon?

Be well,
Chris

Chris Mullis, Ph.D.
Founding Partner
NorthStar Capital Advisors

Financial Planning.
Wealth Management.
Since 2006

AskNorthStar.com
(704) 350-5028

P.S. Now that stimulus money is going out, the scam artists are slithering out to get their piece. Here’s what you need to know:

Scammers are impersonating the IRS and contacting folks by mail, email, phone, and text to ask for personal information.
The IRS is not contacting taxpayers about stimulus checks. If you receive a call from someone asking for information, hang up. Do not click links in emails or text messages purporting to be from the IRS or the Treasury Department. If someone asks you to pay an upfront fee or to confirm your bank details to receive stimulus money, it’s definitely a scam. Contact your bank or our office at (704) 350-5028 if you’re not sure.
Please share this information with those you love, especially parents, grandparents, and elders who may be at higher risk of being victimized.

¹_{https://www.cnbc.com/2020/04/15/us-retail-sales-march-2020.html}

²_{https://www.msn.com/en-us/money/markets/coronavirus-delivers-record-blow-to-u-s-retail-sales-in-march/ar-BB12FaEi}

³_{https://www.nytimes.com/interactive/2020/04/11/business/economy/coronavirus-us-economy-spending.html}

⁴_{https://finance.yahoo.com/news/coronavirus-covid-weekly-initial-jobless-claims-april-11-192401571.html}

⁵_{https://www.wsj.com/articles/the-stock-market-is-ignoring-the-economy-11587160802}

⁶_{https://www.weforum.org/agenda/2020/04/alphabet-soup-how-will-post-virus-economic-recovery-shape-up/}

Practical advice (and Frodo’s lesson)

Nerd alert ahead. Practical tips to follow.

I think it’s safe to say that 2020 is not turning out like any of us expected or hoped. When difficult times are upon us, it’s the most human thing of all to wish it had all happened differently (or to someone else).

There’s a quote from the last Mullis family movie night that sums up the feeling pretty well.

In Tolkien’s The Lord of the Rings, Frodo (the unlikely hero) must lead a small group to overcome an extraordinary threat to the world (sound familiar?).

When he despairs of the dangerous journey ahead of him, Gandalf (the wise wizard) responds with a valuable lesson:

“I wish it need not have happened in my time,” said Frodo. “So do I,” said Gandalf, “and so do all who live to see such times. But that is not for them to decide. All we have to decide is what to do with the time that is given us.”

Click to viewI feel like Frodo some days. Wishing I didn’t live in such times. Do you?

But here we are. All we can do is decide what to do with what we can control.

We are in uncharted waters and it’s increasingly clear that this is an economic downturn that could rival the Great Recession in its severity.

I don’t say this to be alarmist, but to share the information we’re using to plan for our clients and help you use it effectively. The labor market is giving us a near real-time view of how the coronavirus is affecting the economy, and we can see that more disruption is likely as businesses lay off workers.

Behind each point in this chart are actual people who have lost their jobs or seen their income cut dramatically. Like the folks at The Crunkleton who make the best Old Fashioned in Charlotte, and the owner of the lovely hotel we stay at in Honolulu when we visit old friends in Hawai’i, and the workers on the production line at Carrier Corp. manufacturing heating and air conditioning equipment here in Charlotte.

They’re all real people facing income shortfalls and dreams deferred. While the shutdown is necessary to stem the tide of infection, it’s really going to hurt.

Fortunately, there are signs that coronavirus-related legislation (like the CARES Act) will help blunt the worst effects by giving support where it’s needed. And I think it’s likely that further aid will follow once policymakers see the depth and breadth of the economic damage.¹

Now on to the practical advice you can use (and share) right now.

More layoffs and furloughs are coming. If you think you might lose your job or face a reduction in income in your family, let’s plan ahead for it and revisit your emergency funds and cash flow. The CARES Act opened up some additional options that we can discuss together.

RMDs have been waived for 2020. If you don’t need the cash this year, consider skipping the distribution or turning it into a Roth Conversion. If you already took some or all of your 2020 RMD after February 1st, you may be able to return it to your account as a rollover through July 15th (as long as you didn’t complete another rollover within the last 12 months).² There’s some fine print to this, so please reach out if you’d like guidance.

Tax and IRA contribution deadlines have been extended to July 15th. The IRS extended the 2019 tax filing deadline for any taxpayer who had to file by April 15th. The extension also covers 2019 IRA contributions.³ Very important: if you’ll be making a last-minute 2019 contribution on your own, make sure the check or deposit is clearly marked 2019 to avoid an administrative error.

Stimulus checks will start arriving soon. If you had direct deposit information on your last tax filing, the IRS should send your check to your account. If you didn’t (or the account is closed), the check would go to the address the IRS has on file for you.

Small business owners should act fast on loans. The Paycheck Protection Program is offering forgivable, collateral-free loans through June 30, but the money is going quickly. SBA Express Loans and Economic Injury Disaster Loans are also options to consider.⁴ Though it’s not yet clear how long it will take to actually receive the loan funds, it’s smart to get your paperwork together and file quickly. Please reach out if you need help reviewing your options.

Some student loans can be deferred. Under the CARES Act, no payments are due on federally held loans through September 30th, and no interest will accrue. Unfortunately, private student loans (or those held by a lender other than the Department of Education) are not currently eligible.⁵ Very important: we’re seeing mixed information on whether payments will pause automatically, so check in with your servicer.

You could get more from Medicare. Medicare has made some important updates to its coverage due to the crisis. Telehealth benefits are expanded, so you may be able to see your doctors over the phone or online. Many plans have relaxed their definition of “in-network” providers, so it’s worth checking with your plan. Part D recipients can now request 90-day supplies of medication instead of the usual 30-day supply to help avoid trips to the pharmacy.⁶

We can’t control what happens next, but we can control some things: our choices, our behavior, and our mindset.

I’m no Gandalf, but I hope we can help lighten your load in these troubling times. I don’t know what the coming weeks and months will bring, but I do know this: we’re in it together. And we’ll get through it together.

If you’d like help acting on any of the tips above, or just want to talk through some strategic moves, please reach out. We’re here.

Be well,
Chris

Chris Mullis, Ph.D.
Founding Partner
NorthStar Capital Advisors

Financial Planning.
Wealth Management.
Since 2006

AskNorthStar.com
(704) 350-5028

¹_{https://www.foxbusiness.com/economy/coronavirus-stimulus-cares-act-economic-impact}

²_{https://www.financial-planning.com/news/cares-act-tax-relief-as-irs-says-some-rmds-can-be-undone}

³_{https://www.schwab.com/resource-center/insights/content/tax-deadlines-extended-due-to-coronavirus}

⁴_{https://www.sba.gov/funding-programs/loans/coronavirus-relief-options}

⁵_{https://www.natlawreview.com/article/cares-act-relief-borrowers-eligible-federal-student-loans}

⁶_{https://www.nytimes.com/2020/03/24/business/coronavirus-medicare-elderly.html}

_{Chart source: https://www.cnbc.com/2020/04/03/this-chart-shows-which-industries-saw-big-job-losses-in-march-2020.html

https://www.epi.org/blog/nearly-20-million-jobs-lost-by-july-due-to-the-coronavirus/}

This is why I’m an optimist

“The toilet paper had armed guards.”

“We celebrated my birthday with a dinner party over Zoom.”

“My officemate jumped on my desk and drooled on my keyboard during a meeting.”

One day, we’ll look back on these strange days and tell stories about the COVID-19 pandemic of 2020.

But right now, we’re getting through it. One day at a time.

How are you doing? What stories can you share with me about your life right now? Email me at chrismullis@nstarcapital.com and tell me. I’d love to hear about them.

In difficult times, it’s easy to think we are alone. Especially when our loved ones and support system are far away or reduced to virtual connections.

We are all learning how to adjust to a new world and stay grounded when headlines are blaring and our very health and well-being are under threat.

I’m working on being grateful for the great things in this life.

I’m grateful for my wife.

I’m grateful for our children.

I’m grateful for our family, friends, and neighbors.

I’m grateful for work that allows me to help people in my community get through times like these.

I’m grateful for you.

What are you grateful for?

Like WWII and 9/11, we’re living through days that will define future generations and change the very fabric of our society.

I don’t envy the policymakers making grim trade-offs between life, death, and the economy. How long do we socially distance? What about the 10 million+ who have lost jobs?¹ Or the businesses that have been forced to close?

I hope with all my heart that each one of them has a financial plan and someone they can go to for advice. But my head knows better. I know that most Americans can’t survive a $1,000 emergency and only 17% have a financial adviser to help them.²

What trade-offs are we willing to make to protect those at greatest risk from the disease? We can’t put a dollar figure on human life. But we can put a dollar figure on the human cost of jobs lost and businesses closed.

The next few weeks are going to be tough for all of us. And I want you to know that I’m here for you.

Layoffs and furloughs are happening and I’m helping affected clients create a game plan to get through the next few months. If this happens to you or someone you love, please let me know immediately so I can help you determine if you’re eligible for special assistance. And, also please remember our COVID-19 pro bono program that we’ve launched to serve people who don’t normally have access to fiduciary advice.

How do we make good decisions with so much uncertainty and mixed information?

We make a choice:

We can choose to crumble under the weight of fear and uncertainty…

We can choose to simply hunker down and endure…

We can choose to grow, flourish, and come out stronger on the other side. We can be grateful for our blessings and focus on what’s within our control: our mindset, our behavior, and the actions we take.

I am fundamentally optimistic about humankind’s ability to weather this crisis and use it to grow.

I’m optimistic about how our society will adapt and change due to this crisis. Some of the greatest changes and innovations in history grew out of frightening, pessimistic times.

I’m optimistic about the heroes fighting the disease on the front lines.

I’m optimistic about the people helping friends, neighbors, and strangers stay safe and comfortable.

I’m optimistic that those with jobs will continue working to keep this country going while we wait and heal.

I’m optimistic about the innovators staying up late in labs, workshops, factories, and offices around the world to create vaccines, treatments, and tools to beat the virus.

I’m optimistic about the new inventions and technologies that will grow out of necessity.

I don’t know what challenges the world will throw at us in the coming days and weeks. I do know that I am grateful to be surrounded by smart, motivated people who push me to do better.

How can you show up for the people around you? How can you be your best self in these times?

How can I help you do it? Email or call and let me know.

Be safe and be well,
Chris

Chris Mullis, Ph.D.
Founding Partner
NorthStar Capital AdvisorsFinancial Planning.
Wealth Management.
Since 2006

AskNorthStar.com
(704) 350-5028

¹_{https://www.marketwatch.com/story/the-us-officially-lost-701000-jobs-in-march-but-in-reality-millions-vanished-2020-04-03}

²_{https://www.bankrate.com/banking/savings/financial-security-january-2019/}
_{https://www.cnbc.com/2019/04/01/when-it-comes-to-their-financial-future-most-americans-are-winging-it.html}

What lessons will you take from this?

V, W, L, or Swoosh? (no, it’s not a meme)

Practical advice (and Frodo’s lesson)

This is why I’m an optimist

Recent Posts

Archives

Categories