Tripp Yates, CFP®, CPA/PFS Eaglestrong Financial

Contact this advisor

About Tripp Yates, CFP®, CPA/PFS

Tripp has extensive experience in financial planning and investment management, and he diligently uses his credentials of CPA and CFP® to benefit his clients. Over the last ten years, he has managed over $100 million in assets for individuals and families.

Tripp’s interest in investments started when he was young and was intrigued by his grandfather’s savvy investment knowledge. When he realized staying in public accounting was not his ultimate goal, he was excited to take his career in this direction.

His passion for financial planning is evident to each and every client he meets with. His desire is to help his clients organize their finances, save taxes, and invest wisely. Tripp strives to work in a humble and transparent way.

When he is not managing his firm and his clients, Tripp enjoys spending time with his family, running, and cheering on the Rebels and the Cubs.

Contact this advisor

Recently Published

Risk on Full Display

October 4, 2022

stock market risk vs company risk...why we diversify

 

Heightened volatility in the stock and bond markets has been ongoing throughout 2022. It became further amplified in the 3rd quarter with new market lows in the stock market and interest rates rising to levels we haven’t seen in quite a while. The US stock market (S&P 500) rallied for 2 months off an initial low of -23% in mid-June to -9% in mid-August. The idea was that inflation was going to come down and the U.S. Federal Reserve was not going to have to raise interest rates as much as initially thought. Then, in mid-August that idea began to change as more economic data was released. A new inflation report released in September showed that while year over year inflation receded from 8.5% in July to 8.3% in August, mostly attributable to lower energy costs, other areas such as food, shelter and medical services rose. Additionally, month over month inflation barely increased instead of expectations of declining. This caused the Federal Reserve to change their tune to more tough talk on raising interest rates and keeping them higher for longer. Interest rate expectations changed dramatically, and another stock market sell-off ensued producing a new low in the U.S. stock market (S&P 500) of -24% on the year through the end of September.

 

The rise in interest rates in such a short period of time is unprecedented. Rising interest rates have led to a reduction in bond values with the U.S. Aggregate Bond Index -15% in 2022. This may be the biggest story of 2022 as diversified investors expect bonds to preserve in a stock market downturn. 

 

The Fed is hiking interest rates further & faster than any time in modern history

 

The 10-year treasury bond yield registered 3.8% at the end of the quarter, up from 1.5% at the beginning of the year. Higher yields are a positive development for bond investors going forward as yields have been extremely low over the last decade. Additionally, some money market funds and cash in online banks are now earning over 2%.  

 

The bottom line is that inflation must come down from the current 8% level. The Fed has repeatedly stated that their mandate is price stability (controlling inflation) over all else. At some point in the future, we will get reports of inflation retreating, such as from 8% to 7% or 6%. This will be positive news that the interest rate increases are working. It is expected the economy will slow down in the process. How much it will slow or have to slow to bring down inflation is the big question. The ultimate goal is 2% inflation but that will most likely take some time to achieve. The markets are looking for a “Fed Pivot” once its interest rate policy shows signs of working by inducing lower inflation. This could come in the form of monthly inflation data releases and/or comments from members of the Federal Reserve. Markets are forward looking so it is likely that they will react positively at hints and indications well before the inflation goal is reached. Much like today the market sell-off and interest rate increases are more influenced by expectations of the next 6-18 months.

 

In times of market turbulence, risk is obvious and apparent. It’s important to zoom out and stay focused on the big picture. Over the last 10 years, the U.S. stock market has still produced 11%+ returns per year on average or 200%+ cumulative despite various downturns such as the current one. This is in line with historical expectations around 10% per year of stock market returns. We must endure the risk or downturns in order to achieve the reward. I often refer to history in speaking about the market. While our economy changes and evolves and every downturn has different catalysts, the driver of long-term stock market returns remains. Human ingenuity that increases company earnings is repeated over and over. Increases in company earnings leads to higher stock values. By owning a diversified portfolio with many companies, we get to participate in this growth. This is called market risk because we are willing to take on risk of periodic downturns in order to get the reward of expected higher rates of return.

 

To contrast, business risk or specific company risk is much different than market risk. Business owners and executives know they have to stay focused on the future so that their business grows, adapts and evolves. Changes in government regulations, technology, competition, etc. can all have direct effects on specific businesses. We have clearly seen this in 2022 as many stocks that were darlings during COVID have been pummeled year-to-date through September because we are no longer in lockdown. These companies, to name just a few below, could not maintain the high level of earnings and growth trajectory they achieved during COVID which caused overly optimistic expectations.

  • Peloton               -81%
  • Roku                    -75%
  • Netflix                 -61%

Looking back to 2008, business risk is evident as many banks have yet to return to their all-time highs achieved before the financial crisis. While the U.S. stock market recovered and advanced, many banks were altered from that point forward as their earnings had to be adjusted since their loan practices were more highly regulated.

 

Business risk can work positively as well in the cases of companies such as Amazon and Apple. However, hindsight is 20/20 and we usually only see the positive result by looking back. These companies have experienced much higher volatility and sharper downturns over the last 20 years that ultimately led to their ascendance as some of the most highly valued companies today. For every Amazon and Apple, there are hundreds of companies that don’t recover from extreme downturns such as Blockbuster and Enron.

 

As we enter the 4th quarter, eyes will continue to be heavily focused on inflation and interest rates. Additionally, the impact on slowing the economy, mid-term elections, and company earnings reports will factor in. There is no shortage of headline news. Based on previous US Fed interest rate hiking cycles, the Fed will most likely not stop raising interest rates until the Fed Funds Rate surpasses inflation. Today, the Fed Funds Rate is 3.25% and inflation (consumer price index) is 8.3%. However, the forward-looking stock market would be expected to act favorably before this happens if data and/or statements from the Federal Reserve start to trend in this direction. Bond values would also benefit if/when we get a “Fed Pivot” at any point in the future. Just this week, the market rallied on news of a decrease in job openings signaling a slower economy and that we are possibly closer to a “Fed Pivot” regarding interest rates. Following mid-term elections in November, more certainty will be provided surrounding the direction of government policies over the next 2 years. Over history, the more clarity provided after mid-term elections has tended to be a boost for stock prices. While we can’t predict the market bottom, keep in mind that bull markets (+20% or more) are made from bear markets (-20% or more). Stay the course. This too shall pass!

 

bull markets after bear markets

    

If you would like to discuss or learn more, schedule a call or meeting with me using the link below:  

Tripp Yates, CPA/PFS, CFP®

901.413.8659  gevcc@rntyrfgebat.pbz

 

Tripp’s passion for financial planning is evident to each and every client he meets with. His desire is to help his clients organize their finances, reduce taxes, and invest wisely. As a fee-only fiduciary advisor, Tripp strives to work in a humble and transparent way.

 

With extensive experience in financial planning and investment management, Tripp diligently uses his credentials of CPA and CFP® to benefit his clients. Over the last ten years, he has managed over $100 million in assets for individuals and families. In 2017, he founded Eaglestrong Financial, specializing in helping dentists and business owners. Outside of work, Tripp enjoys running, spending time with his family, and cheering on his favorite sports teams. He is an active member of Harvest Church. 


 

References

 

3rd quarter 2022 stock and bond market returns: US – Russell 3000 Index, US small companies – Russell 2000, International Developed – MSCI World ex US, Emerging Markets – MSCI Emerging Markets, US total bond market – Barclays US Aggregate Bond Index

 

Investment returns obtained from Kwanti Portfolio Analytics. S&P 500 TR 1/1/2022 to 6/16/2022 = (22.5%). S&P 500 TR 6/17/2022 to 8/16/2022 = +17.68%. S&P 500 TR 1/1/2022 to 8/16/2022 = (8.8%). S&P 500 TR 8/17/2022 to 9/30/2022 = (16.52%). S&P 500 TR 1/1/2022 to 9/30/2022 = (23.87%) Barclays US Aggregate Bond Index 1/1/2022 to 9/30/2022 = (14.61%). PTON 1/1/2022 to 9/30/2022 = (80.62%). ROKU 1/1/2022 to 9/30/200 = (75.28%). NFLX 1/1/2022 to 9/30/2022 = (60.92%). S&P 500 TR 10/1/2012 to 9/30/2022 = +11.7% annualized.

 

https://www.cnbc.com/2022/09/13/inflation-rose-0point1percent-in-august-even-with-sharp-drop-in-gas-prices.html

https://www.investing.com/rates-bonds/u.s.-10-year-bond-yield-historical-data

https://twitter.com/RyanDetrick/status/1572653535959060480?s=20&t=Sx4UxIR07-nSxVcHoDnEGg

https://www.wsj.com/articles/why-interest-rates-are-rising-everywhereexcept-your-savings-account-11664737431

https://twitter.com/SethCL/status/1575817054225326081?s=20&t=Sx4UxIR07-nSxVcHoDnEGg

Dimensional Fund Advisors

 

 

 

Disclaimer

 

Eaglestrong Financial, LLC is a Registered Investment Advisor offering advisory services in the states of TN and MS and in other jurisdictions where exempted. The information contained herein is not intended to be used as a guide to investing or tax advice. This material presented is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. Past performance is no guarantee of future results.

 

 

#eaglestrong #eaglestrongfinancial

 

 

Share with others:

Read the full post →

The Price of Admission

July 7, 2022

The price of admission to the stock market: volatility

The first half of 2022 has been a challenge for both stocks and bonds alike. The stock market is not the economy and tends to be forward looking or months ahead of the actual economy. It usually falls before the economy contracts and in the same way it usually starts rebounding before the economy starts expanding again. That is why it is impossible to time the market. A surprise of good or bad news can swing the market in a short period of time.

 

With inflation readings higher than we have seen in the last 40 years, the U.S. Federal Reserve started raising interest rates in March. As we moved to the 2nd quarter, inflation still remained high which adjusted expectations for the Fed to have to act more aggressively than was anticipated. Expectation of higher interest rates lowered bond values and also caused repricing in stock values. The logical thought is higher interest rates eventually slow the economy which reduce corporate profits. Higher interest rates also reduce current bond values because new bonds pay higher interest.

 

What lies ahead for the 2nd half of 2022? Will higher interest rates slow the economy enough to cause a recession? Will we start seeing inflation fall signaling that the Fed’s strategy is working? My guess is that what will happen is probably not the worst or best expected outcome but somewhere in between.

 

In his book “The Psychology of Money,” Morgan Housel tells us that market downturns are the price of admission to ultimately achieving long-term investment returns.

 

“Like everything else worthwhile, successful investing demands a price. But its currency is not dollars and cents. It’s volatility, fear, doubt, uncertainty, and regret – all of which are easy to overlook until you’re dealing with them in real time.”

 

If we can accept market volatility as the price of admission to successful investing, then we can expect downturns periodically. That does not mean we like them but recognize they are part of the process. Based on the history of the U.S. stock market we should expect a selloff of:

 

               -5%        Three times a year

 

               -10%      Once a year

 

               -20%      Every few years

 

               -50%      A few times in our lives

 

It is clear that the biggest problem our economy faces right now is 40-year high inflation. Admitting that no one can predict the future, here are some thoughts on the current environment.

  • U.S. stock market valuations are looking more attractive after crossing into a bear market (20% decline from previous high) sell-off the first half of this year. As of June 30th, the forward price to earnings ratio on the S&P 500 (U.S. market) is 15.94 vs. the 25-year average of 16.85. Price has fallen but earnings have held up so far. Some earnings contraction in the 2nd half of this year is to be expected.
  • Mid-Term election years are historically challenging in the stock market with an average drawdown of 17% since 1931. 2022 fits this narrative with mid-term elections coming up in November.
  • There have been nine quarterly drops of 15%+ or more in the S&P 500 since 1946 including our most recent quarter. All previous periods except December 2008 posted positive returns in the following quarter. (via bespokeinvest - @carlquintanilla)
15% or more stock market drops since World War 2 and the quarters that follow

 

  • There are already some signs of falling prices in commodities which may indicate reduced inflation. Corn, wheat, and soybeans are all down over 25% from their highs and below where they were before Russia invaded Ukraine. (via @charliebilello) If we start to see falling inflation this could indicate that the U.S. Fed may be able to halt raising interest rates to slow the economy.
  •  If we are experiencing an economic recession, it is a unique one. The employment picture is still strong with 5.5 million more open positions than unemployed people. The unemployment rate was 3.6% in May vs. 14.7% at the height of the pandemic in April 2020 and a 50-year average of 6.2%.
  • The last time inflation was 10% was in February of 1979. Investor anxiety was high as it is today. What many thought as “safer” choices such as bonds, gold, and cash provided temporary relief but substantially trailed equity and balanced investors over the long-term. 
Five reactions to 10% Inflation in 1979

 

Expect more surprises in the 2nd half of 2022. With consumer sentiment at an all-time low a small amount of positive news would be welcomed. The current market environment is not an anomaly, it is expected. Every downturn is different given the circumstances, but nonetheless a part of the cycle to achieve positive long-term investment returns. Stay the course.  

 

    

If you would like to discuss or learn more, schedule a call or meeting with me using the link below:  

Tripp Yates, CPA/PFS, CFP®

901.413.8659  gevcc@rntyrfgebat.pbz

 

Tripp’s passion for financial planning is evident to each and every client he meets with. His desire is to help his clients organize their finances, reduce taxes, and invest wisely. As a fee-only fiduciary advisor, Tripp strives to work in a humble and transparent way.

 

With extensive experience in financial planning and investment management, Tripp diligently uses his credentials of CPA and CFP® to benefit his clients. Over the last ten years, he has managed over $100 million in assets for individuals and families. In 2017, he founded Eaglestrong Financial, specializing in helping dentists and business owners. Outside of work, Tripp enjoys running, spending time with his family, and cheering on his favorite sports teams. He is an active member of Harvest Church. 


 

References

 

J.P. Morgan Asset Management Guide to the Markets 3Q 2022 – U.S. Data are as of June 30, 2022.

https://twitter.com/SethCL/status/1543583841692041221

https://twitter.com/jaykaeppel/status/1542655238011756547

https://twitter.com/charliebilello/status/1544518115681255424

https://twitter.com/BullandBaird/status/1542181932817063937

 

 

 

Disclaimer

 

Eaglestrong Financial, LLC is a Registered Investment Advisor offering advisory services in the states of TN and MS and in other jurisdictions where exempted. The information contained herein is not intended to be used as a guide to investing or tax advice. This material presented is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. Past performance is no guarantee of future results.

 

 

#eaglestrong #eaglestrongfinancial

 

 

Share with others:

Read the full post →

5 Year Review

June 1, 2022

Celebrating 5 years in business!

  

Tripp Yates, CPA/PFS, CFP®

901.413.8659  gevcc@rntyrfgebat.pbz

 

Tripp’s passion for financial planning is evident to each and every client he meets with. His desire is to help his clients organize their finances, reduce taxes, and invest wisely. As a fee-only fiduciary advisor, Tripp strives to work in a humble and transparent way.

 

With extensive experience in financial planning and investment management, Tripp diligently uses his credentials of CPA and CFP® to benefit his clients. Over the last ten years, he has managed over $100 million in assets for individuals and families. In 2017, he founded Eaglestrong Financial, specializing in helping dentists and business owners. Outside of work, Tripp enjoys running, spending time with his family, and cheering on his favorite sports teams. He is an active member of Harvest Church. 


Doty Yates, CPA, CFP®

901.619.3599  qbgl@rntyrfgebat.pbz

 

Doty Yates considers it a privilege to help her clients with their finances since it is so deeply personal. She combines her technical knowledge with her creative side to bring a unique perspective to client meetings. She listens to the underlying emotions about money while talking with individuals and couples.

 

Doty is a CERTIFIED FINANCIAL PLANNER™ professional focused on helping dentists and business owners. Even though she didn’t follow her grandfather and father into a dental career, she is now using her background as a CPA to help dental practice owners with their personal and practice finances. Doty also advises other like-minded business owners, individuals and families with retirement plans and tax planning.

 

Doty enjoys spending time with her husband and their three girls, being an active member at Harvest Church, and walking their energetic golden retriever.


 

 

Disclaimer

Eaglestrong Financial, LLC is a Registered Investment Advisor offering advisory services in the states of TN and MS and in other jurisdictions where exempted. The information contained herein is not intended to be used as a guide to investing or tax advice. This material presented is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities. Past performance is no guarantee of future results.

 

 

#eaglestrong #eaglestrongfinancial

 

 

Share with others:

Read the full post →

Visit the blog →

Disclosure

The annual XYPN membership fee paid by this firm is in consideration of a variety of services and benefits provided by XYPN to its advisor members - including the ability to be listed in this Directory. For a complete description of current XYPN member benefits, please refer to the Membership Benefits section of this website. For current membership pricing, please refer to the Pricing section.

XYPN, due to the compensation it receives from advisors in the form of the annual membership fee, has an incentive to list only these such advisors in the Directory. This creates a material conflict of interest.

Ideal Clients

  • Business Owners
  • Dentists
  • Gen X

Ways Advisor Charges

  • Monthly Fee
  • Flat Fee
  • Assets Under Management

Fee Options

  • Monthly Fee: $200+/month
  • Flat Fee: $500+ one-time packages
  • AUM: 1%

SEC Records

Disclosure

The annual XYPN membership fee paid by this firm is in consideration of a variety of services and benefits provided by XYPN to its advisor members - including the ability to be listed in this Directory. For a complete description of current XYPN member benefits, please refer to the Membership Benefits section of this website. For current membership pricing, please refer to the Pricing section.

XYPN, due to the compensation it receives from advisors in the form of the annual membership fee, has an incentive to list only these such advisors in the Directory. This creates a material conflict of interest.

Loading...