The Senate just approved the Paycheck Protection Program Flexibility Act. The Bill, which was passed by the House on May 28th, will ease many of the restrictions on how businesses must use PPP funds in order to have their loan forgiven.

In addition to extending the deadline to apply for a PPP loan from June 30th to December 31st, the Flexibility Act made achieving loan forgiveness easier in the following ways:

  • Congress extended the period over which businesses must use loaned funds for qualified expenses, from 8 weeks to 24 weeks. Those who received loans prior to this Bill may keep the current 8-week time period.
  • The Bill removes the requirement that at least 75% of PPP funds be used for payroll costs. Instead, 60% must go to payroll costs, and the remaining 40% of loan funds may be spent on mortgage/rent payments or utilities.
  • Previously, businesses that were forced to lay off employees, or reduce their salary by more than 25%, between February 15th and April 26th had until June 30th to hire them back, or restore their compensation level, to qualify for full loan forgiveness. The Bill now gives employers until December 31, 2020 to restore their workforce without penalty.
  • Businesses that can document their inability to fully restore their workforce by December 31st, or their inability to return to the same level of business activity because they were complying with Federal COVID-19 safety, sanitization or social distancing guidelines.

Other modifications made under this Bill include changing the minimum loan maturity period from 2 years to 5 years, for loans that will not be forgiven. Also, borrowers may defer loan payments (interest and principal) until the amount of their loan forgiveness is paid by the SBA to the lender. Businesses that do not qualify or apply for loan forgiveness may defer payments for 10 months after the program expires.

Another significant provision of the Flexibility Act is that it allows companies that took a PPP loan to be eligible for payroll tax deferral under the CARES Act. This provision allows taxpayers (including the self-employed) to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021 and the other at the end of 2022.

Unfortunately, one issue the Flexibility Act did not address is the deductibility of business expenses paid for with PPP loan funds. It is not clear whether this was an oversight, or whether lawmakers are assuming the eventual passage of the HEROS Act, which provides a fix to this issue.

At Rockbridge we have been helping our small business clients navigate this ever-changing regulatory landscape. Continue to check back in for updated information, or reach out to a Rockbridge advisor for help.

Congress created the Paycheck Protection Program (PPP), to provide liquidity to small businesses dealing with the effects of the economic shutdown.  It was clear from the language in the CARES Act that loans used for covered expenses would not be included in a business’ gross income. However, the Bill was silent on the deductibility of these covered expenses. The IRS recently released guidance taking the position that allowing businesses to deduct expenses paid with tax exempt income (the PPP loan) would provide a “double tax benefit.” Now, after many small businesses have taken loan money in order to continue paying their employees, make rent, or cover utility costs, they face the possibility that they will not be able to deduct these expenses if their PPP loan is ultimately forgiven.

Lawmakers from both sides of the aisle are critical of this position and are proposing legislation that would override the IRS on this issue. Senators John Cornyn, R-Texas, Charles Grassley, R-Iowa, Ron Wyden, D-Ore., Marco Rubio, R-Fla., and Tom Carper, D-Del. proposed the Small Business Expense Protection Act, an amendment to the CARES Act which would allow covered expenses to be deductible.

A separate piece of legislation enacted by The House of Representatives, called the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, also addresses the deductibility issue. In addition to correcting the deductibility issue, the HEROES Act would allow employers receiving loan forgiveness under the PPP to take advantage of the CARES Act’s payroll tax deferral provisions, which was prohibited in the CARES Act.

So where does this leave small business owners who are wondering how to account for these PPP financed expenses? Unless Congress passes or negotiates a fix, they will have to assume that they will not get both loan forgiveness and the ability to deduct the expenses paid for with loan proceeds. This could ultimately mean companies may need to make larger than anticipated estimated tax payments by July 15th. Hopefully Congress will act swiftly to settle this issue so that business owners can turn their attention to safely reopening as soon as they get the green light to do so.

In order to provide the best advice to our clients, we pay close attention to updates and guidance on the various CARES Act provisions, including the PPP. As soon as we know more, we will release a follow-up article with the latest information and impact to small business owners.


In the last quarter of 2018, the market was down 20% from previous highs and we had many clients reaching out concerned about declines and high volatility. But when we examined the market’s movements, we found the volatility to be higher than normal but far from extraordinary. Recently, we have gotten similar questions from clients again on returns and volatility. Here we examine historical daily price movements of the S&P 500 to try and see if the market has really been crazy or if people are overreacting.

The average daily price movement in the last 30 trading days of the quarter was 4.10%. In terms of 30-day stretches, this is the third most volatile period in history, behind the 4.41% seen on November 15, 1929 and the 4.13% on  November 21, 2008. In terms of acute volatility, what we’ve recently seen is not unprecedented, but we’ve never seen anything much higher.

If you look at the entire quarter, which had 62 trading days, the average daily movement was 2.28% which is the eighth most volatile quarter on record. The greatest quarterly volatility was at the end of 2008 (3.34%), and the other six were between 1929 and 1933. Three of those came in 1932 when the average daily movement for the year was 2.59%!

These are only a few ways of looking at volatility, but regardless of how we measure it, the recent volatility in the stock market is very high and very unusual. However, it is important to remember that volatility can be brief. On Friday October 16, 1987 the market dropped 5.2%. The following Monday it dropped 20.5%. The Monday after that it dropped 8.3%. Despite this unprecedented volatility and huge daily drops, the market finished 1987 up 5.3%.

We don’t know how long this type of volatility will last, but we know enduring it is worth it. Investors earn years like 2017 (+21.8%) and 2019 (+31.5%) by sticking it out during times like this.

Rebalancing the allocation among risky assets in your investment portfolio is an important discipline.  It provides a structured way to maintain consistent risk exposure over time and forces us to “buy low and sell high” when it is not always the comfortable thing to do.  This quarter is a good example, in the midst of crashing stock prices, and record volatility in markets, we have been selling bonds to buy stocks in our portfolios.  Buying stocks during all this uncertainty can feel uncomfortable if not downright frightening, but here are a couple of things to keep in mind.

Cash never “goes to the sidelines.”  If you listen to the talking heads of financial news-media, it can sound like all investors are reducing their exposure to stocks, and hoarding cash to buy back in when prices are lower.  But that’s not the way markets work!  Whenever a share of stock is sold, another investor buys it.  When there are more sellers than buyers, prices fall to clear the market.  Warren Buffet’s famous saying bears repeating now, “Be fearful when others are greedy, and be greedy only when others are fearful.”  Another famous quote strikes a chord as well, “In bear markets, stocks return to their rightful owners.”  Long-term investors want to be the owners of stocks and down markets are an opportune time to buy.

When stock prices drop, expected returns increase.  It may at first seem counterintuitive, but the math is fairly straightforward.  The value of a stock, or any other asset, can be described as the discounted present value of all future cash flows.  There are two factors that influence the value of a stock:  future cash flows and the discount rate.  When cash flows become more uncertain, we apply a higher discount rate.  Logically, a rational investor would pay less for an uncertain stream of cash flows than a stream with greater certainty.  The discount rate is a reflection of expected returns.  When risk and uncertainty increase, investors demand a higher expected return.  Over the past two months many stocks have decreased in value by 30% or more.  Some of the decrease in value is driven by an expectation of lost revenue and profits (future cash flows) resulting from Coronavirus’ shutdown of the global economy.  However, some of the decline is due to fear and uncertainty, which translates to a higher discount rate.  Both of which have a negative impact on stock valuations.  In turn, buying stocks at today’s prices comes with the expectation of higher rates as compared to two months ago.

Rebalancing is a valuable and important discipline.  If you still have questions about rebalancing, or worry about the appropriateness of your target allocation, talk to your advisor.

With much of the country in self-isolation, perhaps you’ve got time to read the entire H.R. 748 Coronavirus Aid, Relief, and Economic Security Act, or CARES Act. If you’d prefer, here is a summary of many of the key provisions we expect to be discussing with you in person (virtually), depending on which ones apply to you. Questions? Please be in touch!

In General

  • Direct payments/recovery rebates: Most Americans can expect to receive rebates from Uncle Sam. Depending on your household income, expect up to $1,200 per adult and $500 per dependent child. To calculate your payment, the Federal government will look at your 2019 Adjusted Gross Income (AGI) if it’s available, or your 2018 AGI if it’s not. However, you’ll receive an extra 2020 tax credit if your 2020 AGI ends up lower than the figure used to calculate your rebate. This Nerd’s Eye View illustration offers a great overview:

  • Retirement account distributions for coronavirus-related needs: You can tap into your retirement account ahead of time in 2020 for a coronavirus-related distribution of up to $100,000, without incurring the usual 10% penalty or mandatory 20% Federal withholding. You’ll still owe income tax on the distributions, but you can prorate the payment across 3 years. You also can repay distributions to your account within 3 years to avoid paying income taxes, or to claim a refund on taxes paid.
  • Various healthcare-related incentives: For example, certain over-the-counter medical expenses previously disallowed under some healthcare plans now qualify for coverage. Also, Medicare restrictions have been relaxed for covering tele-health and other services (such as COVID-19 vaccinations, once they’re available). Other details apply.

For Retirees (and Retirement Account Beneficiaries)

  • RMD relief: Required Minimum Distributions (RMDs) go on a holiday in 2020 for retirees, as well as beneficiaries with inherited retirement accounts. If you’ve not yet taken your 2020 RMD, don’t! If you have, please be in touch with us to explore potential remedies.

For Charitable Donors

  • “Above-the-line” charitable deductions: Deduct up to $300 in 2020 qualified charitable contributions (excluding Donor Advised Funds), even if you are taking a standard deduction.
  • Donate all of your 2020 AGI: You can effectively eliminate 2020 taxes owed, and then some, by donating up to, or beyond your AGI. If you donate more than your AGI, you can carry forward the excess up to 5 years. Donor Advised Fund contributions are excluded.

For Business Owners (and Certain Not-for-Profits)

  • Paycheck Protection Program loans (potentially forgivable): The Small Business Administration (SBA) Paycheck Protection Program (PPP) is making loans available for qualified businesses and not-for-profits (typically under 500 employees), sole proprietors, and independent contractors. Loans for up to 2.5x monthly payroll, up to $10 million, 2-year maturity, interest rate 1%. Payments are deferred and, if certain employment retention and other requirements are met, the loan may be forgiven.
  • Economic Injury Disaster Loans (with forgivable advance): In coordination with your state, SBA disaster assistance also offers Economic Injury Disaster Loans (EIDLs) of up to $2 million to qualified small businesses and non-profits, “to help overcome the temporary loss of revenue they are experiencing.” Interest rates are under 4%, with potential repayment terms of up to 30 years. Applicants also are eligible for an advance on the loan of up to $10,000. The advance will not need to be repaid, even if the loan is denied.
  • Payroll tax credits and deferrals: For qualified businesses who are not taking a loan.
  • Employee retention credit: An additional employee retention credit (as a payroll tax credit), “equal to 50 percent of the qualified wages with respect to each employee of such employer for such calendar quarter.” Excludes businesses receiving PPP loans, and may exclude those who have taken the EIDL loans
  • Net Operating Loss rules relaxed: Carry back 2018–2020losses up to five years, on up to 100% of taxable income from these same years.
  • Immediate expensing for qualified improvements: Section 168 of the Internal Revenue Code of 1986 is amended to allow immediate expensing rather than multi-year depreciation.
  • Dollars set aside for industry-specific relief: Please be in touch for a more detailed discussion if your entity may be eligible for industry-specific relief (e.g., airlines, hospitals and state/local governments).

For Employees/Plan Participants

  • Retirement plan loans and distributions: Maximum amount increased to $100,000 on up to the entire vested amount for coronavirus-related loans. Delay repayment up to a year for loans taken from March 27–year-end 2020. Distributions described above in In General.
  • Paid sick leave: Paid sick leave benefits for COVID-19 victims are described in the separate, March 18 R. 6201 Families First Coronavirus Response Act, and are above and beyond any benefits received through the CARES Act. Whether in your role as an employer or an employee, we’re happy to discuss the details with you upon request.

For Employers/Plan Sponsors

  • Relief for funding defined benefit plans: Due date for 2020 funding is extended to Jan. 1, 2021. Also, the funding percentage (AFTAP) can be calculated based on your 2019 status.
  • Relief for facilitating pre-retirement plan distributions and expanded loans: As described above for Employees/Plan Participants, employers “may rely on an employee’s certification that the employee satisfies the conditions” to be eligible for relief. The participant is required to self-certify in writing that they or a direct dependent have been diagnosed, or they have been financially impacted by the pandemic. No additional evidence (such as a doctor’s release) is required.
  • Potential extension for filing Form 5500: While the Dept. of Labor (DOL) has not yet granted an extension, the CARES Act permits the DOL to postpone this filing deadline.
  • Exclude student loan pay-down compensation: Through year-end, employers can help employees pay off current educational expenses and/or student loan balances, and exclude up to $5,250 of either kind of payment from their income.

For Unemployed/Laid Off Americans

  • Increased unemployment compensation: Federal funding increases standard unemployment compensation by $600/week, and coverage is extended 13 weeks.
  • Federal funding covers first week of unemployment: The one-week waiting period to start collecting benefits is waived.
  • Pandemic unemployment assistance: Unemployment coverage is extended to self-employed individuals for up to 39 weeks. Plus, the Act offers incentives for states to establish “short-time compensation programs” for semi-employed individuals.

For Students

  • Student loan payments deferred to Sept. 30, 2020: No interest will accrue either. Important: Voluntary payments will continue unless you explicitly pause them. Plus, the deferral period will still count toward any loan forgiveness program you’re in. So, be sure to pause payments if this applies to you, lest you pay on debt that will ultimately be forgiven.
  • Delinquent debt collection suspended through Sept. 30, 2020: Including wage, tax refund, and other Federal benefit garnishments.
  • Employer-paid student loan repayments excluded from 2020 income: From the date of the CARES Act enactment through year-end, your employer can pay up to $5,250 toward your student debt or your current education without it counting as taxable income to you.
  • Pell Grant relief: There are several clauses that ease Pell Grant limits, while not eliminating them. It would be best if we go over these with you in person if they may apply to you.

For Estates/Beneficiaries

  • A break for “non-designated” beneficiaries: 2020 can be ignored when applying the 5-year rule for “non-designated” beneficiaries with inherited retirement accounts. The 5-Year Rule effectively ends up becoming a 6-Year Rule for current non-designated beneficiaries.

There. You’re now familiar with much of the critical content of the CARES Act! That said, given the complexities involved and unprecedented current conditions, there will undoubtedly be updates, clarifications, additions, system glitches, and other adjustments to these summary points. The results could leave a wide gap between intention and reality.

As such, before proceeding, please consult with us and other appropriate professionals, such as your accountant, and/or estate planning attorney on any details specific to you. Please don’t hesitate to reach out to us with your questions and comments. It’s what we’re here for.

Reference Materials:

U.S. Small Business Administration, Paycheck Protection Program and Disaster Assistance

The CARES Act establishes a new loan program through the Small Business Association (SBA), to aide small businesses who have had to lay off employees, and or, suspend their operations. To be eligible for a loan under this section an entity must have less than 500 employees, which includes full time and part-time workers.

Eligible businesses include:

  • Sole proprietors, and certain self-employed individuals
  • Independent contractors
  • Nonprofit organizations under section 501(c)(3)
  • food service industry businesses with less than 500 employees per physical location

Loans will be administered by SBA-approved lenders, and are limited to the lesser of:

  • 2.5 times the average total monthly payroll costs incurred during the 1-year period before the date on which the loan is made. Seasonal employers, and employers not in business between February 15, 2019 and July 30, 2019, will use an alternative calculation period.
  • $10,000,000.

Payroll costs for determining the eligible loan amount include:

  • Salaries, wages, commissions
  • Payment of cash tips
  • Payment for vacation, parental, family, medical, or sick leave
  • Payment required for group health care benefits, including insurance premiums
  • Payment of any retirement benefit
  • Payment of State or local tax assessed on employee compensation

Payroll costs do not include annual compensation in excess of $100,000 per person, or compensation of an employee whose principal residence is outside of the United States. They also do not include Federal employment taxes imposed or withheld. Qualified family or sick leave wages for which a credit is allowed under the Families First Coronavirus Response Act, will also not count as payroll costs.

Proceeds from a loan under this program may only be used for the following purposes:

  • Payroll costs
  • Costs related to continuation of group health care benefits and insurance premiums
  • Employee salary/compensation
  • Rent and utilities
  • Interest on other debt incurred before February 15, 2020

Loans taken under this program are eligible for full or partial forgiveness. The forgiven amount will be equal to the amount actually paid for payroll costs (not including salary amounts over $100K), benefits, rent, utilities and mortgage interest during the eight weeks following disbursement of the loan. Additionally, amounts forgiven will not be included in gross income as cancelation of indebtedness income.

The amount forgiven will decrease ratably if the employer does not retain an equivalent number of employees between February 15, 2020 and June 30, 2020, as it employed between either February 15, 2019 and June 30, 2019, or January 1, 2020 and February 15, 2020. Further reductions to the forgiveness amount will be incurred if the employer cuts an employee’s compensation by more than 25% (for employees making less than $100K), as compared to the previous quarter.

Any amounts not forgiven will have a maximum maturity of 10 years from the date the borrower applies for loan forgiveness, and maximum interest rate of 4%. Payments on these loans will be deferred for 6 to 12 months.

In response to the COVID-19 pandemic, Congress has passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This legislation is the third round of federal funding aimed at providing economic support for individuals and businesses. Below are some of the key provisions relating to small businesses and companies.

  • Paycheck Protection Program (PPP) – The CARES Act establishes a new loan program through the Small Business Association (SBA), to provide financing for businesses with less than 500 employees, including sole proprietors and independent contractors. Eligible businesses may borrow up to the lesser of $10,000,000, or 2.5 times their prior year’s average total monthly payroll costs (subject to some limitations). Loan proceeds that are used to cover certain costs over an 8-week period, may be eligible for complete or partial forgiveness. Amounts not forgiven must be paid back over a 10-year period and have a maximum interest rate of 4%.
  • Economic Injury Disaster Loans (EIDLs) – These disaster relief loans administered by the SBA have been around for a long time, providing working capital loans to small businesses. EIDLs offer 30-year loans up to $2,000,000, with interest rates of 3.75% and 2.75% for small businesses and nonprofits respectively. The CARES Act provides for an advanced payment of up to $10,000 for those businesses applying for this type of loan. The $10,000 advance will be paid within three days of the request, and may be used to maintain payroll, provide sick leave to employees, make rent/mortgage payments, meet increased production costs due to supply chain disruptions, or pay other business obligations. The $10,000 advance is not required to be repaid under any circumstances.
  • Small Business Debt Relief Program – The SBA will cover all loan payments for six months, for small businesses who have new or existing SBA loans, that are not EIDLs or PPP loans. Payments covered include interest, principal, and fees.
  • Employee Retention Credit for Employers Subject to Closure Due to COVID-19 – This provision of the CARES Act provides a refundable tax credit for businesses and nonprofits meeting at least one of the two criteria:
    1. A business whose operations have been fully or partially shut down due to governmental authority limiting commerce, travel, or group meetings due to COVID-19.
    2. A Business whose revenue (not profit) in 2020 is at least 50% less than revenue from the same quarter in 2019.

The credit is equal to 50% of wages paid to each employee, up to a maximum of $10,000 of wages per employee. The calculation of wages for purposes of determining the credit vary by business, employee, and payment type. Any business who believes they are eligible for this credit should consult with their tax advisor. Employers receiving assistance through the Paycheck Protection Program are not eligible for this credit.

  • Deferral of Payment of Payroll Taxes – This provision allows taxpayers (including the self-employed) to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021 and the other at the end of 2022. Payroll taxes that can be deferred include the employer portion of FICA taxes, the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer FICA rate), and half of SECA tax liability. Employers receiving assistance through the Paycheck Protection Program are not eligible for this deferral.

Stay tuned for more in depth analysis on these, and other, provisions affecting small businesses.


Recovery Rebates for Individuals:

One the most talked about provisions of the CARES Act is the Recovery Rebates for Individuals. The Act creates a refundable tax credit (called the Recovery Rebate) for eligible taxpayers against income on your 2020 tax return. The refundable credit will be paid in the coming weeks, and eligibility will be initially determined based on the taxpayer’s 2019 or 2018 tax return.

The Act defines eligible individuals as “any individual other than a nonresident alien individual, an individual claimed as a dependent on another taxpayer’s return, or an estate or trust.” The amount of the Recovery Rebate is up to $1,200 for single filers, $2,400 for joint filers, and up to $500 for each qualified child. Among other things, a qualified child must be under the age of 17 and claimed as a dependent on the taxpayer’s return.

The amount of the Recovery Rebate will be reduced, and ultimately phased out, once a taxpayer’s adjusted gross income (AGI) reaches certain threshold amounts.

  • Married filing jointly – the credit gets reduced once AGI exceeds $150,000 and phases out completely when AGI exceeds $198,000.
  • Head-of-household – the credit gets reduced once AGI exceeds $112,500 and phases out completely when AGI exceeds $146,500.
  • Single filers – the credit gets reduced once AGI exceeds $75,000 and phases out completely when AGI exceeds $99,000.

For example, a married couple filing a joint return that had an AGI of $140,000 and two qualifying children on their 2019 tax return, would be eligible for a Recovery Rebate of $3,400. However, if that same couple had a 2019 AGI of $180,000, then their credit would be reduced by $1,500, and they would receive a Recovery Rebate of $1,900.

A taxpayer who receives a reduced credit, or is phased out completely, based on their 2019 tax return, but whose income in 2020 is below the AGI threshold will get this lost amount back when they file their 2020 tax return. Assume the couple from the above example whose AGI in 2019 was $180,000, then reports income of $140,000 in 2020. In this situation the couple would receive a refundable credit of $1,500 on their 2020 tax return.

The Act does not “claw back” rebates received by a taxpayer who is eligible based on their 2019 AGI, and then subsequently reports income above the AGI threshold on their 2020 return. It does appear that a taxpayer would be required to repay any rebate received based on their 2018 AGI, if their income in 2019 made them ineligible for the credit.

Suspension of Required Minimum Distributions (RMDs):

Another notable provision of the CARES Act is the suspension of Required Minimum Distributions (RMDs) for 2020. This applies to both account owners and beneficiaries of Traditional IRAs (including SEP and SIMPLE accounts), 401(k), 403(b), and 457(b) accounts. For those people who turned 70 ½ in 2019 but did not take their first RMD in 2019, they will not have to take the 2019 or the 2020 distribution. People who have already taken RMDs in 2020 may be able to return the distribution back to their account. Prior to the SECURE Act, certain beneficiaries of retirement accounts were required to withdraw the entire account balance by the end of the 5th year after the original account owner died. The CARES Act allows these beneficiaries to not count 2020 as one of these 5 years.

Penalty Free Access to Retirement Plan Funds:

For those impacted by the Coronavirus, the Act permits distributions from IRAs and employer-sponsored retirement plans of up to $100,000, to qualify as “Coronavirus-Related Distributions.” If a distribution is a Coronavirus-Related Distribution, then a number of potential benefits apply including:

  • Exemption from the 10% penalty for people under 59 ½.
  • The distribution is still considered taxable income but is split evenly over the next 3 years. A taxpayer may elect to include all of the income from the distribution on their 2020 return.
  • The distribution is eligible to be put back into a retirement account within 3 years of the date of the distribution. This can be done as a lump sum rollover, or as multiple partial rollovers.
  • Exemption from mandatory Federal withholding of 20% on distributions from employer-sponsored retirement plans.
  • Increasing the amount an individual may borrow from their employer-sponsored retirement plan to $100,000, or 100% of their vested balance. Payments on loans taken in 2020 may be delayed for up to one year.

To be considered a Coronavirus-Related Distribution a person must either have been diagnosed with COVID-19, have a spouse or dependent who has been diagnosed, or who has suffered some type of financial hardship because of the virus.


In response to the COVID-19 pandemic, Congress has passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This legislation is the third round of federal funding aimed at providing economic support for individuals and businesses. Below are some of the key provisions relating to individuals.

  • Recovery Rebate for Individuals – This widely anticipated provision will provide cash payments of up to $1,200 to individuals ($2,400 if you file a joint tax return). Taxpayers will receive an additional $500 for each child under the age of 17 that are claimed as a dependent on the taxpayer’s return. While those eligible will begin receiving this money in the coming weeks or months, taxpayers whose income is above a certain threshold will not receive payments.
  • Suspension of Required Minimum Distributions (RMDs) – The bill also waives required minimum distributions in 2020 for most retirement account owners and beneficiaries. This applies only to those taking RMDs under the rules in place prior to the SECURE Act.
  • Penalty Free Access to Retirement Plan Funds – People who are facing Coronavirus related hardships can take distributions from their retirement accounts and have certain benefits apply. Benefits include:
    • No 10% penalty for people under age 59 ½.
    • Distributions are still taxable, but income can be spread out evenly over three years.
    • Funds withdrawn in 2020 may be put back into a retirement account within three years. This may be done in a lump sum or with multiple rollovers.
  • $300 Above-the Line Deduction for Charitable Contributions – Taxpayers who make charitable contributions in 2020 but do not itemize their Federal deductions because of the increased standard deduction, will now receive a tax benefit for up to $300 worth of these contributions. Contributions must be made in cash and cannot be made to donor-advised funds.
  • Healthcare Benefits – The Act health insurance issuers, including Medicare, to cover any Coronavirus preventative service. This means that people will be eligible to receive the COVID-19 vaccine at no cost (once available). Additionally, over-the-counter medications and menstrual care products, are now considered qualified medical expenses for purposes of HSA distributions.
  • Deferral of Student Loan Payments – The bill suspends student loan payments through September 30, 2020. During this time interest will not accrue on the loans, and each month will count as a qualifying payment under any loan forgiveness program.
  • Increased Unemployment Benefits – Unemployment compensation is increase by $600 a week for up to four months. The Act also extends the amount of time someone can receive benefits for by 13 weeks. Assistance is also extended to those who are self-employed, or otherwise ineligible for unemployment benefits under normal circumstances.

In addition to the provisions effecting individuals, the CARES Act provides benefits to businesses and their employees. Stay tuned for future posts which will discuss these, and other, provisions in more detail. As always, if you have any questions on how the CARES Act may affect you, please reach out to your Rockbridge advisor.

Federal IRS Tax Payments:

On March 20th, in response to the ongoing COVID-19 pandemic, the IRS released Notice 2020-18, which postpones the Federal filing and payment deadline from April 15, 2020, to July 15, 2020. This relief applies to all individual returns, trusts, and corporations. This relief is automatic, taxpayers do not need to file any additional forms or call the IRS to qualify.

This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020.

Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. You will automatically avoid interest and penalties on the taxes paid by July 15.

Individual taxpayers who need additional time to file beyond the July 15 deadline can request a filing extension by filing Form 4868 through their tax professional, tax software or using the Free File link on Businesses who need additional time must file Form 7004.

Here are a few things to note in regard to the notice:

  • There is no extension form to file for this three-month postponement.
  • There is no limitation on the amount of payment that may be postponed.
  • This Notice does not address the postponement of 2020 2nd quarter Federal estimated income taxes. These payments are still due June 15, 2020.
  • Interest, penalties, and additions to tax for the Federal income taxes postponed will begin to accrue on July 16, 2020, on any unpaid balance.

NYS Tax Payments and Filing:

The NYS tax filing and tax payment deadline has also been extended from April 15th to July 15th, 2020 to match the Federal tax return guidelines.

IRA and HSA Contributions:

The Internal Revenue Service today has clarified that the deadline for making Individual Retirement Account and Health Savings Account contributions for the 2019 tax year has been extended to July 15, 2020.

The maximum amount you can contribute to an IRA for the 2019 tax year is $6,000 (plus a $1,000 catch-up contribution if you are age 50 or older). The maximum amount you can contribute to an HSA is $3,500 for individual coverage or $7,000 for family coverage (plus a $1,000 catch-up contribution per account). You have to have a qualifying high deductible health plan to open one of these triple tax-advantaged accounts.

Selecting an investment advisor is a significant decision. And choosing the right brokerage firm to custody your assets is an important decision for you and your advisor to make together. When you place your assets at Schwab, you are choosing a custodian experienced in serving the unique needs of independent advisors and their clients. Learn more about Schwab and our policies, services, and protections by reviewing the information below.

You, your advisor, and Schwab

Your advisor’s expertise and Schwab’s custody services come together to help protect your assets and support your investment goals.

You can learn much more about how Schwab works with your advisor to serve you in A winning relationship: You, your advisor, and Schwab Advisor Services™. This brochure provides an overview of how Schwab’s products and services support your advisor’s management of your investments, as well as how we handle our key role as your custodian: safeguarding your assets. You’ll also find information about Schwab, our procedures, and the support we offer.


A winning relationship: You, your advisor, and Schwab Advisor Services™


How Schwab protects your assets

Schwab is committed to staying financially strong, and we have confidence in our ongoing financial health. We run our business with a sound capital structure and position our company for long-term strength and stability. We take appropriate actions to give our clients confidence in the security of their accounts.

Our brochure How client assets are protected at Schwab provides an overview of our asset safety and insurance policies. To learn more about our stability, review additional information about the Schwab Corporation.


How client assets are protected at Schwab

Claim: Stock market volatility has been crazy this month.

Our Ruling: True! This past month has been shockingly volatile. On average, there are 21 trading days in a month. Looking back on the previous 21 trading days ending 3/23/2020, we see an average daily move of 4.56%. There were more days with a 9% or greater movement (3) than days which moved less than 1% (2). The only time we saw more volatility in a month was in November of 1929. What we are seeing now is slightly more volatile than what we saw during the height of the financial crisis in 2008.

Takeaway: If the markets seem wild to you that is understandable and rational. Feeling uneasy because of this is normal.


Claim: Because volatility is so high, we will experience a market drop like we saw in 2008 or the Great Depression.

Our Ruling: False! While that claim is possible, believing it to be certain is wrong. No one knows where the stock market will be in a day, week, month, year or decade. The logic of high volatility could have been applied to the stock market in 1987, when in just 4 trading days, the market declined 28.5%. But selling stocks then would have been a mistake. Over the ensuing 10 years, the market did little besides rise, appreciating at an annualized 18.7%.

Takeaway: Timing the market is a zero-sum game, it’s not investing. Every trade has two people on either side of it. If you are selling, someone else is buying. If you sell now thinking you’ll get back in when the market calms down, you’re counting on someone wanting to sell out when the market calms down. You may find markets can rise as quickly as they fall. Investing means enduring the ups and downs and being compensated for it. And you are compensated for it! Even with this month’s move, stocks have returned 9.75% annualized over the last 94 years.


Claim: Some investors are irrational.

Our Ruling: True! We have noticed two funny examples in the last month of irrational behavior. The first involved a hot stock and the second an unfortunate trade.

Zoom Video Communications (ZM), the video conferencing company from San Jose, is up 134% this year as their remote conferencing services are growing rapidly. Zoom Technologies (ZOOM), a defunct company from Beijing that hasn’t filed a 10-K in six years, was up 1,890% on the year as of Friday, March 20th. It has no reason to be up other than people confusing it with ZM.

State Street’s Mortgage-Backed Securities ETF, SPMB, had an interesting day on Thursday, March 12th. The fund which holds AAA-rated debt guaranteed by Fannie Mae and Freddie Mac was trading close to flat before plunging 12% in the last half hour of trading. The next day, it rallied to close little changed from where it opened the day before. The reason was a single trader placed a market order, rather than a limit order to sell 500,000 shares or $13 million worth of the ETF. When volatility is high, markets can be thin, especially near the end of the day. The order blasted through the bid, costing the seller roughly $1,000,000.

Takeaway: The market isn’t perfect, and some investors are irrational at times. Be wary of trying this at home on your own!


Claim: I should try to profit off other people’s foolishness.

Our Ruling: False! While the capital markets aren’t perfect, it’s the best system there is. Anomalies happen, but they can’t be predicted or modeled, and they vanish quickly.

Trying to profit off the movement in ZOOM is a risky endeavor. You could have bought early hoping for a greater fool to come and pay more in the future. This is a dangerous game; after peaking on Friday, the stock dropped 60% yesterday. You might think you could buy put options or short the stock. Unfortunately, you’d find no options market exists on ZOOM, and good luck finding someone long ZOOM willing to lend you the shares so you can short it. What happened with ZOOM is entertaining but profiting off it isn’t practical and it’s not investing.

There was a quick 10% to be made with SPMB if you bought right at the close on March 12th. To ensure you don’t miss the next opportunity you only need to create a system that monitors the 2,000 ETFs that trade in the United States, have several million in capital ready to put to work, and have the gumption to buy a plummeting ETF on a day the stock market is down 10% and bond liquidity is extremely low. In addition to all that you need another dummy to come along and place the foolish trade. Again, it’s not practical.

Takeaway: Profiting from irrational investor behavior is like betting on a game. In hindsight, it may seem obvious what was happening, but in the moment it’s challenging. You’re only going to make money if the person on the other side of the trade is losing money.

This is separate from investing where you give companies capital, the companies in turn provide goods and services, and wealth is created. You should expect a return from investing, but not from playing a game. At Rockbridge, we try to ensure you are investing.


That concludes this edition of Stock Market Fact Checker. Please reach out to Ethan directly if you have any claims you’d like a ruling on!

New York Gov. Andrew Cuomo announced Friday all non-essential businesses must close or have employees work from home.

Cuomo’s latest directive followed orders for businesses to reduce the in-person workforce by 25 to 75% in recent days. The 100% workforce reduction goes into effect on Sunday at 8 p.m.

The order has many asking: What’s considered essential work and what’s not?

The state is asking all businesses that are not on the list to close or have employees work from home beginning Sunday. Business owners who believe their in-person services are essential can ask to be added by contacting Empire State Development.

Businesses allowed to remain open are asked to implement social distancing rules of at least six feet.

The state is updating the list as circumstances change during the coronavirus pandemic, so check back for the most up-to-date information. is keeping track. Check back for up-to-date information.

(See further below for a list of businesses that have been explicitly ordered to close.)

List of essential businesses (allowed to remain open):


  • Research and laboratory services
  • Hospitals
  • Walk-in care health facilities
  • Emergency veterinary and livestock services
  • Elder care
  • Medical wholesale and distribution
  • Home health care workers and aides for the elderly
  • Doctor and emergency dental services
  • Nursing homes, residential health care facilities, congregate care facilities
  • Medical supplies and equipment manufacturers and providers

Infrastructure / Transportation

  • Utilities (power generation, fuel supply and transmission)
  • Public water and wastewater
  • Telecommunications and data centers
  • Airports and airlines
  • Bus, rail, for-hire vehicles, garages
  • Hotels and accommodations


  • Food processing and manufacturing (food and beverage)
  • Chemicals
  • Medical equipment and instruments
  • Pharmaceuticals
  • Safety and sanitary products
  • Telecommunications
  • Microelectronics and semiconductors
  • Agriculture and farms
  • Household paper products


  • Grocery stores (all food and beverage stores)
  • Pharmacies
  • Convenience stores
  • Farmer’s markets
  • Gas stations
  • Restaurants and bars (take-out / delivery only)
  • Food delivery services
  • Hardware and building material stores


  • Trash and recycling collection, processing and disposal
  • Mail and shipping
  • Laundromats
  • Building cleaning and maintenance
  • Child care
  • Automotive repair
  • Warehouse (distribution and fulfillment)
  • Funeral homes, crematoriums and cemeteries (no ceremonies)
  • Storage (for essential businesses)
  • Animal shelters

Finance & Technology

  • Banks
  • Insurance
  • Payroll
  • Accounting
  • Finance markets services
  • Logistics
  • Technology support


  • Electricians
  • Plumbers
  • Emergency repair
  • Construction related to essential infrastructure and safety


  • Law enforcement
  • Fire prevention and response
  • Building code enforcement
  • Security
  • Emergency management and response
  • Defense and national security (U.S. government and contractors)


  • Building cleaners and janitors
  • General maintenance
  • Disinfection


  • News media
  • Homeless shelters
  • Human services providers, basic needs providers and others serving economically disadvantaged populations
  • Congregate care facilities
  • Food banks
  • Residential facilities
  • Doormen
  • Essential government services
  • Government-owned or leased buildings

Non-essential businesses (not eligible for “essential” designation)

  • Barbershops and hair salons
  • Tattoo and piercing salons
  • Nail salons
  • Other personal care service such as hair removal businesses
  • Casinos
  • Gyms and fitness centers
  • Movie theaters
  • Auditoriums, concerts
  • Conferences
  • Retail shopping malls
  • Amusement parks
  • Bowling alleys
  • Sporting events and stadiums
  • Worship services (places of worship are not ordered closed but are asked to uphold social distancing rules and to not hold gatherings)

Given the volatility in the financial markets beginning the week of February 20th, it’s helpful to
review the state of the U.S. economy entering into this stressful period, what’s happened since,
and some of the potential economic impacts. Here is my take on those topics.

 At the beginning of 2020, the U.S. economy was in very strong shape, with
unemployment falling and the labour force participation rate and wages rising.

 Compared to 2008-09, this is not a financial crisis but rather a health crisis, which
tends to be much shorter in duration (typically several months) and which should
lessen in magnitude as the Northern Hemisphere approaches spring and
summer. Banks are in the strongest capital positions ever, and strong banks with
the ability to lend are obviously important to the sustainability and health of the
economy during times of crisis. Further, the ratio of consumer debt to gross
domestic product (GDP) is about 75 percent, its lowest since 2002, down from
almost 100 percent in 2008.

 Lower interest rates will help governments, consumers and corporations
refinance debt, leading to lower debt burdens within those sectors of the
economy. However, lower interest rates, along with lower stock prices, will put
further stress on state and local pension plans, many of which are already
severely underfunded. In order to minimise risk, we have been avoiding buying
bonds from a significant number of these states. A sustained period of low rates
will also impact savers, increasing the need for other parts of the portfolio to
generate the returns needed to fund retirement and other goals. We also expect
that we will see yields on short-term fixed income, such as money market funds,
drop substantially as well, increasing the “cost” of cash.

 While bad for energy companies, their stockholders and potentially their
bondholders, collapsing energy prices are effectively a big “tax cut” for
consumers. Also, companies that are heavy energy users (e.g., airlines) will
benefit, to some degree offsetting the losses associated with lower energy prices
in other sectors of the economy.  However, there is significant risk to the high-
yield corporate bond market, as there is $85 billion of high-yield debt issued by
energy companies, and with oil prices below $40 a barrel, many of these
companies will struggle to generate profits. Much of that debt matures in the next
four years. In this type of environment, one can expect the high-yield corporate
bond market to be highly correlated with the stock market, which is one of the

reasons we generally do not recommend high-yield bonds as part of client fixed-
income portfolios. High-yield bonds do not provide effective diversification within
a portfolio that already owns stocks.

 The U.S. has the lowest percentage of trade relative to GDP, at about 12 percent
(country trade-to-GDP ratios). In comparison, most of Europe varies from around
50 percent (Germany) to the high 80s (Belgium, Netherlands). Japan is about 16
percent and the UK is about 30 percent. So, if there is a prolonged deterioration
in trade, the U.S. should be less impacted than most countries.

 If the economic disruption associated with the coronavirus worsens, governments
are likely to take action to address issues, such as coming out with loan
programs to bail out specific industries (as the government did during the 2008-
09 crisis for General Motors and the banking industry) and enact fiscal stimulus
(tax cuts or other programs to more directly help those financially impacted by
the coronavirus) [1] . Given possibilities like this, one must also keep in mind that
markets are forward-looking, recovering well before the economy does, just as
they tend to fall before the economy is materially disrupted.

 Markets generally do a good job of incorporating both good and bad news and
anticipating potential impacts on the economy. When we see markets change, it
is almost always because of new information that couldn’t have been reliably
forecast in advance. However, markets can also fall for noneconomic reasons
due to a cascade of sellers who reach their get-me-out point, have margin calls,
or are covering short put options positions that are held by sellers of volatility
insurance and sellers of structured notes (which limit downside equity risks); or
market participants who are trading with the trend. In addition, banks and
investment firms using value at risk (VaR) metrics to assess possible losses on
their books for any single day may have to sell off risks as volatility
increases. Market participants can sometimes exacerbate downward trends in
markets, but we still believe it’s best not to try to predict these occurrences but
rather to be aware they are possible. Further, if you sell, you have no way of
knowing when to get back in or when trends like the above could reverse.

 While stocks and risky fixed-income assets or pseudo fixed-income strategies,
such as dividend paying stocks, REITs (real estate investment trusts), etc., are
falling in value, safe bonds are rising in value, demonstrating their value as
dampeners of portfolio volatility, which is why we include them in portfolios.
Some “true” alternative strategies, such as marketplace lending, reinsurance and
trend-following, have held up very well and have generally generated positive
returns on a year-to-date basis.

 Finally, remember that bear markets are periods when stocks are transferred
from weak to strong hands, as does wealth when recoveries occur. We have
recovered from every past crisis, which we tend to experience with great
frequency, about every two or three years. Further, we recovered quickly in the
past from the health crises of SARS, MERS and Ebola.

[1] On Sunday night, March 15 th , the Federal Reserve announced that it cut the Fed funds rate to
effectively zero, a drop of a full 1 percent. In addition, it announced a massive $700 billion
bond-buying program. These actions will provide cover for other central banks to cut rates
without fear of their currencies collapsing. Congress is also working on a massive stimulus bill,
on top of the $8.3 billion approved last week by the Senate. Governments around the world are
certain to follow with packages of their own.

In the 1960s, sociology professor James Henslin spent time with a group of cab drivers in St. Louis to understand their gambling habits. When the drivers finished their shifts for the night they would play craps into the wee hours of
the morning, typically from 3 am to 7 am. Henslin sat in on nearly 20 of the dice games to determine how the drivers’ thoughts and actions dictated how they played.

In his paper Craps and Magic, Henslin writes about how he discovered many of the players were operating under a sense of magic over the dice:

It became evident to me that these players were convinced that they could control the dice, that is, as shown by their behavior (by their statements, gestures, and betting practices), they were not playing solely under the assumption of probability or odds, but, rather, they also moved within the framework of a system of magical beliefs.

The players would routinely throw the dice harder when they wanted a high number and throw it softer when they wanted a low number. This is also why you so often see players blow on the dice before a throw at the casino. These practices have no bearing on the outcome but they give the gamblers an illusion of control.

When stock market volatility erupts, investors are always in search of their own illusion of control. We crave predictability and control when it comes to our money but the stock market provides neither.

When stocks are rising, investing is often boring, methodical and the opposite of newsworthy. When stocks are falling, investing is often exciting fast, and scary.


Investors often look to find some modicum of control through the answers of gurus. We just want someone to tell us what’s going to happen next so we can either buy or sell to relieve the fear and anxiety.

In all my years of doing this, I’ve never come across a single person who has all of the answers. That person doesn’t exist.

When stocks go down in a big way I find it’s more helpful to seek out the right questions as opposed to trying to find all of the answers.

Here are some questions you can ask yourself when trying to work through how to handle stock market volatility:

 If I sell my stocks now what is the plan for getting back in?

 Has my time horizon, risk profile or circumstances meaningfully changed enough to warrant a portfolio change?

 Will my lifestyle be impacted in a meaningful way if stocks continue to fall?

 Did I build my portfolio with the understanding that stocks can and will fall on occasion?

 Have I overestimated my appetite for risk assets?

 Do I need to use the money I have invested in stocks for spending purposes in the next 3-5 years?

 Does my portfolio match my willingness, need, and ability to take risk?

 Do I fully understand the potential range of outcomes when investing in stocks?

 Is my portfolio durable and diversified enough to withstand severe dislocations in the stock market?

 Does my investment strategy fit with my personality?

 How did I react to market carnage in the past?

 How much volatility am I willing to accept in order to earn higher expected returns over time?

 What are my core investment beliefs?

 What do I own and why do I own it?

 What will cause me to buy or sell securities, funds, or asset classes in my portfolio?

There are no right or wrong answers here because it all depends on your

These questions work in every market environment but more so when volatility rears its ugly head because that’s when we want to take the wheel to make something happen to give us the illusion of control. Most of this stuff boils down to having a comprehensive investment plan in place to guide your actions and set realistic expectations.

But the act of creating an investment plan is the easy part. The hard part is implementing that plan during periods of heightened stress in the financial markets or your own personal life.

Even the most rock-solid of investment plans won’t give you the same illusion of control as your favorite talking head who pretends to know what’s going to happen next in the stock market.

What happens next in the market is completely out of our hands which is why the most important reason for creating an investment plan is that it forces you to focus on what you can control.

The IRS is extending the federal income tax filing deadline to July 15 as part of a growing effort to stem the financial pain from the coronavirus pandemic, Treasury Secretary Steven Mnuchin announced Friday.

The move gives Americans three months more than they normally would have to file their income tax returns for the 2019 tax year, without incurring interest or penalties.

President Donald Trump later Friday said that “hopefully” by the time the new deadline arrives “people will be getting back to their lives.”

“At @realDonaldTrump’s direction, we are moving Tax Day from April 15 to July 15,” Mnuchin wrote in a tweet about the extension.

“All taxpayers and businesses will have this additional time to file and make payments without interest or penalties,” he wrote.

Trump echoed that suggestion during a White House press conference.

Most Americans are entitled to refunds when they file their federal tax returns.

As of March 13, the Internal Revenue Service had issued 59.2 million refunds out of the 76.2 million million individual income tax returns it had received, or 77.7% of the total number of returns filed by that date.

The average refund check was $2,973, according to IRS data.

Many individual states already had extended their own tax filing deadlines to various dates to give people relief from the financial fallout of the coronavirus outbreak, which has shuttered businesses nationwide and led to large-scale layoffs.

The IRS move will increase pressure on states to align their deadlines with the new one for federal income tax returns.

New York Gov. Andrew Cuomo, asked at a press conference if state residents should pay their state income taxes by the New York deadline of April 15, said the new federal guideline should be followed.

The IRS did not immediately return a call for comment from CNBC. It is not clear if the deadline extension also will include the deadline for funding Individual Retirement Accounts for the 2019 tax year.

A proposal to extend the federal filing deadline to July was included in the Senate’s coronavirus economic stimulus bill, which was released Thursday by Majority Leader Mitch McConnell, R-Ky.

That proposed relief package calls for new federal spending that could top $1 trillion.

Earlier this week, the Treasury Department released guidance that would have pushed back only the deadline for making federal tax payments — not for filing tax returns —  to July 15.

That 90-day reprieve on payments would have applied to 2019 income taxes owed, plus first-quarter tax payments that would have been due on April 15.

Federal lawmakers and members of the tax preparation community had criticized the proposal to have different dates for filing tax returns and making payments. Mnuchin’s announcement ends that debate by having returns and payments each due by July 15.

The White House declined to comment on Mnuchin’s announcement.

Recently, several markets, including in the US and Brazil, have hit circuit breakers, where trading is paused for a period after a specified percentage decline in the market. In all cases, trading resumed as planned. Circuit breakers can serve a useful function: they mandate a short halt during which participants can assess new information and calibrate their trading activity.

While market volatility has triggered these rarely used rules, markets have been functioning as expected, given the recent news. Both the bond and equity markets have had increased trading volumes, bid-offer spreads, and volatility. Despite this, Dimensional has continued to manage strategies efficiently and in a manner consistent with their investment guidelines.

Our investment process is designed to function robustly and account for changes in security prices, changes in available liquidity, and sharp market movements. During a trading day, it has long been part of our trading process to allow for flexibility in the timing of when to trade. For example, Dimensional may choose to pause trading around an event that could result in unusual volume or volatility, like a company earnings announcement, an index reconstitution, the release of economic data, or a development in the news.

This longstanding flexibility can be valuable when volatility is high. If needed, we can sit out the early moments after the stock markets open and overnight news is being priced in. We can also use this flexibility to plan for circuit breakers.

As we approach each trading day in each market, we consider news releases, activity in other markets, the performance of overnight stock futures, and other factors. Those evaluations may lead Dimensional to anticipate that index performance will result in a circuit breaker being triggered, which can lead to higher bid-offer spreads and other potential implicit trading costs. This information is available to portfolio managers and traders before a market opens and can be used to implement strategies as efficiently as possible. In such instances, our research1 has shown that a flexible trading approach tended to add more value when compared to an approach that requires immediacy.

Dimensional will continue to monitor markets closely. Our investment approach allows us to remain consistent in how we manage our clients’ assets through the market’s ups and downs.


  1. 1Dave Twardowski and Ryan J. Wiley, “Global Trading Advantages of Flexible Equity Portfolios” (white paper, Dimensional Fund Advisors, 2014).


Sudden market downturns can be unsettling. Sticking with your plan helps put you in the best position to capture a recovery.

A broad market index tracking data since 1926 in the US shows that stocks have generally delivered strong returns over one-year, three-year, and five-year periods following steep declines.

Fama/French Total US Market Research Index Returns

July 1926-December 2019

Past performance is no guarantee of future results.