Third Quarter 2020 Market Letter

“May you live in interesting times” – old Chinese curse

I was glad to see Labor Day. I was ready for a long weekend and a couple of days to clear my head after the relentless beat of summer 2020 on the Outer Banks that based on anecdotal information from local real estate companies is nowhere near over. We are apparently 100% booked through September and already 70% booked for October.
A lot of exciting news in the works around the office: New financial planning software that includes a client portal for entering data and robust reporting capabilities, an updated in the works, a move towards using Docusign paperless signature technology on more firm documents, and a new initiative to use speech to text software for writing Market Letters. The 2020 theme of “Forward Looking” is certainly playing out as the year goes on. How has your summer been?

Chart Watch

Large Cap Index

It has been a good summer in general in the US equity markets and a very good summer for owners of large-capitalization growth stocks. Here is the Vanguard S&P 500 ETF symbol VOO for a two-year (left) and six-year (right) time period as of Monday 9/07/2020. In the left chart we see the February and March selloff and the resulting return all the way back and even above February’s highs (black line, top left). The line of the previous highs at $310 on VOO, roughly 3400 on the S&P 500 index itself will be an area to watch these next several weeks.
There are several points I’d like to make about the left chart. First, look at the extreme volume during the Feb-March selloff. It’s a safe bet that some of these sellers are still not back in the market and thus have missed the entire move up since the March 23rd lows. Also note the relative strength line at the bottom of the chart, it reflects steady buying interest but is not yet overbought.

The chart on the right shows the current uptrend going back to 2014 and is emphasized by the black line I added. Think about all the short-term drama that has gone on since 2014 and then consider where we are despite whatever apparent headwinds existed at any given time.
Also look at the Feb-March selling volume. The extreme level of selling now provides us some support as the market has been tempered by that level of disruption. In other words, the tree got shaken pretty well. A gentle reminder, though, that September and early October are notorious periods for market volatility due to a relative lack of news until October earnings reports in any year, much less a presidential election year.


Here is a two-year (left) and six-year (right) chart of Apple as of Monday 9/7/2020. Both charts show the technology and consumer products giant in a very strong uptrend due to recurrent demand for Apple products and the acceleration of digitization implementation in homes and workplaces around the world due to COVID-19. (Apple split its stock 4-1 on September 1st)
On the left chart we can see that the medium-term uptrend line is at roughly $100-105. How close Apple comes to this line and the volume that AAPL trades will tell investors whether the next move will be up or down in the stock. The right chart shows in a nutshell just why we are equity investors. The opportunity for gains such as displayed here by well-managed companies at the forefront of innovation is what makes investing a worthwhile pursuit.

US Government Bond Yield Curve

US Government Long Dated Treasury ETF (price)

Here is a snapshot of the US Treasury bond yield curve (previous page) and weekly (left) and monthly (right) charts of the US Government long term Treasury bond price ETF symbol TLT. The yield curve shows that interest rates are still extremely low though they have risen slightly since my last letter.
An investor buying $1 Million of US 10-year maturity government bonds notes Friday 9/04/2020 at the closing price would be paid fully taxable annual interest of $7,210.
The lines I have added to the right chart shows the multiyear uptrend for interest rate prices (and a multi-year downtrend in interest rate yields), though not as steep an uptrend as existed earlier in the year. The left chart shows a pennant pattern which may indicate a continuation of higher prices/lower yields and may signal an upcoming change of tone to lower prices/higher yields.

Tea Leaves

2020 is a year that will be remembered forever and for a variety of reasons. The Collaborative Fund’s Morgan Housel just penned an emotionally intelligent end of summer 2020 piece titled “Alternative Forms of Wealth”- link at

Alternative Forms of Wealth by Morgan Housel 8/27/2020

Covid has forced many of us to spend unprecedented amounts of time with a few people (spouses, kids, roommates). You’re wealthy if you still enjoy their company after six months of unbroken socialization.
You have a level of independence that goes beyond money. You can cook for yourself, do your own laundry, change a flat tire, and be alone without getting bored.
You can make small mistakes without crippling embarrassment.
You could leave your job if it got bad and find a better one.
You have emotional stability, accepting reality without it driving you crazy.
You can lead a productive conversation with a stranger from any background.
You don’t have to pretend to look busy to justify your salary.
You have enough time to prioritize eight hours of sleep with stress levels low enough to allow sleep.
You can say, “I have no idea” when you have no idea.

You have the patience to put up with petty hassle, annoyance, and delay. So many rich people don’t, and the stress it causes is a unique form of poverty.
You can speak non-offensive truths about your industry or company without fear of repercussions.
Your expectations grow slower than your income. It’s the only way you’ll feel wealthy regardless of how much money you have.
As Warren Buffett says, the people who you want to love you do love you. It doesn’t get any richer than that, does it?


Congress passed the SECURE Act and it was signed into law on December 20, 2019. The SECURE Act makes significant changes to retirement account planning and administration, perhaps most notably by eliminating Stretch IRA distributions for almost all but spousal beneficiaries. The SECURE act also raises the age at which Required Minimum Distributions must be taken from 70 1⁄2 to 72. I’ve enclosed several reviews of SECURE Act provisions, but please note that legislation this complex is sure to be analyzed and re-analyzed in the coming months by the planning community.

SECURE Act Resource Links:

IRA educator Ed Slott has compiled a handy summary of the SECURE Act-

Here’s a Vanguard Institutional article written just after the bill’s passage-

TD Ameritrade ‘Ticker Tape’ Newsletter

(Note: On November 20, 2019 Charles Schwab Co. announced plans to acquire TD Ameritrade in an all-stock transaction. The transaction is expected to close late in 2020. As of now it is business as usual at TD Ameritrade Institutional, my firm’s custodian partner, and it is anticipated that the deal will be a win-win for Schwab and Ameritrade clients and shareholders-stay tuned.)

TD Ameritrade Institutional is my firm’s custodian partner and Ameritrade common stock is a top holding. TD Ameritrade offers a timely and thoughtful weekly newsletter called Ticker Tape. To sign up for the Ticker Tape newsletter visit

Signing off from Nags Head,
Will W. Woodard, III, CFP®

Please note that the above commentary is presented for informational purposes only.