Author Archives: Kate Troske

2020 Stock Market: How is this possible?

“None of this makes sense” – Everyone, circa 2020

On the morning of July 30, 2020, the Commerce Department announced that US economic growth declined by 33%, on an annualized basis. That’s a number that far exceeds anything we have ever seen in this country. In other words, April through June of 2020 was the worst quarter for economic growth in US history. It’s worth also noting that unemployment jumped from historic lows of around 3.5% in Q1, to nearly 15% in Q3. Another all-time record. And not the good kind.

So how is it that on that very same morning, the S&P 500 opened just 4% below it’s all-time high, after rallying nearly 50% in only 4 months, including the best 50-day period for US stocks EVER?!

Good question. Let’s talk about a couple of ways something that seems to make no sense at all right now on the surface, could actually make all the sense in the world.


The stock market is not the economy

You may have heard this phrase recently. Maybe even from us. Whether it’s the media or our favorite or most loathed politician, we’re made to believe that the performance of the stock market is an appropriate measure for the health of our economy at any given moment. In reality, it’s just not that simple. 

The stock market is a forecasting mechanism. It is always forward-looking. The reality is that the day-to-day movements of the stock market are based mainly on how investors believe recent news will ultimately impact future earnings of publicly-traded companies. On the other hand, all economic data that is released to the public is based on what has already happened, not what lies ahead.

Since this particular economic crisis is somewhat self-imposed and there is broad consensus that an inevitable vaccine will eventually lead us out of it, investors seem to be looking past the initial uncertainty which caused the crash in stock prices we experienced in March. Although the actual economy is in terrible shape at the moment, investors generally aren’t putting their money to work for an immediate return. True investing is a long-term journey. Many long-term investors have likely seized on the opportunity to put more of their money to work in the market at (somewhat short-lived) lower valuations – generally a pretty good move from our perspective.


“The market” might not be what you think it is

Stating that the S&P 500 is within 4% of its all-time highs can be a bit misleading. What many people don’t realize is that the S&P 500, while widely used as THE benchmark for US Large Cap stocks, is not exactly representative of the whole US stock market. 

To no one’s surprise, there are 500 companies represented by the S&P 500 index. Yet, because it is a market cap weighted index, the 5 largest companies make up more than 20% of the index. In other words, the performance of FaceBook, Amazon, Apple, Microsoft, and Google, account for 20% of the performance of the index as a whole. So while those 5 companies are up over 35% on the year so far, the other 80% of companies represented by the S&P 500 are still negative on the year. 

Not to be a downer, but the investor outlook isn’t as rosey right now for the vast majority of US businesses as this most popular market benchmark might indicate.


What does all of this really mean for long-term investors?

Diversification matters. It’s very easy to fall into the performance-chasing trap of finding a single investment or asset class that has performed well recently relative to your portfolio and shift everything into it. 

Recency bias is the tendency for investors to assume that recent performance will translate into future performance. Unfortunately, succumbing to this bias is one of the most detrimental mistakes long-term investors can make. 

2020 will no doubt be a year that ends up providing numerous examples that reinforce the importance of having a long-term strategy and sticking to that strategy, rather than letting emotions take the wheel. 

At blooom, we believe an appropriate long-term strategy involves broad, global diversification. In the entire history of the stock market, it has never made much sense or been predictable in the short-term. Investors have been searching for a crystal ball, unsuccessfully, since the beginning of time. Even considering the perpetual uncertainty of the stock market, we can’t think of a single year that has ever highlighted the importance of having a personalized investment strategy, more than 2020. 

Here’s to a better second half!


The information is provided for discussion purposes only and should not be considered as advice for your investments. Investors should consider their ability to continue investing through periods of fluctuating market conditions.

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Election 2020: Don’t Mix Politics & Investing

Election years can be extremely nerve-wracking, to say the least. Add to that a heavily politicized health and economic crisis and the fact that most Americans are still adjusting to an entirely new way of life for the foreseeable future, and you have a pretty decent recipe for some unprecedented stress and anxiety. 

But when it comes to investing for a long-term goal like retirement, your personal political views can be a dangerous ingredient to mix into your strategy. History shows us that making decisions to alter your investment strategy based on anticipated election outcomes and/or personal political biases, is just not a good idea, no matter what “side of the aisle” you find yourself on. 


“The Market” doesn’t have a political party

Investors tend to give far too much credit AND blame to elected officials for stock market performance. This is especially true of Presidents. Much of this has to do with investors always searching for something simple to cling to that confirms their own biases, which then may help justify investment decisions. 

No matter which side you’re on, you probably feel strongly that the person or party you vote for will have a positive impact on the country, the economy, the stock market, your personal finances, etc. You also probably feel strongly that if their opponent wins, the opposite will occur. But a simple look at history shows that the market simply does not care which political party is in power. 

Source: Capital Group

This chart shows us that the long-term trend has been up, regardless of political partisanship. And neither party is clearly better or worse for stocks. If only it were that simple. What the chart ignores is all of the other factors that contribute to market performance and have nothing to do with who the President happens to be at the time. Wars, scandals, global crises, economic shocks, you name it. All are unpredictable and happened to every President on this chart. And yet, with exactly seven Republicans and seven Democrats included, we have yet to see a single event in our history that has broken the long-term uptrend of our stock market and economy.


Remember when…

You may remember that prior to President Trump being elected, the stock market (and much of the world for that matter) had seemingly priced-in and fully expected a Hillary Clinton Presidency. The night of the election in 2016, as the results began to indicate a Trump victory instead, stock market futures began to tank as many had predicted a Trump victory would be terrible news for the stock market. And yet, once the market had time to take in the results, we saw stocks rally significantly immediately after the election and in President Trump’s first and third years in office. And more importantly, the economy continued its historic decade-long expansion, until this year’s COVID-19 pandemic. It was the sudden shock of an unanticipated result and the newfound uncertainty of what that result meant, that ultimately spooked the market for that short time in 2016. It was not the political result itself that the market ultimately cared about, as it had been doing relatively well on year at that point, while expecting the opposite result just prior to election night.

You may also remember that prior to President Obama’s election in 2008, and reelection in 2012, his opponents argued strongly that his policies would destroy capitalism and the American economy, and lead to further declines in the stock market. Yet, President Obama ended up presiding over the longest period of economic expansion in US history, alongside the longest period of uninterrupted gains (longest bull market) for major US stock indexes like the Dow, S&P 500, and Nasdaq, in US history.

We can go on and on with these false narratives that didn’t play out as predicted, following nearly every election, but the fact of the matter is that Presidents (and their political party) generally do not deserve anywhere near the amount of credit OR blame they receive when it comes to stock market returns. Investing is unfortunately just not that simple.


The next election is always around the corner

When the dust settles and the campaign rhetoric ends, whether we have a new President or not, we will move on and the narrative will then shift to real policy, actual geopolitical events, and ultimately, the next election. This cycle never ends in a Democracy. So why should your investment strategy change due to what you think may happen as the result of any single election? 

Fear is a powerful weapon that skilled politicians know how to use very well. Uncertainty is the ammo most harmful to the stock market in any short-term period. And nearly every Presidential election cycle generally involves a series of warnings from all candidates that if their opponent should somehow win, the country will ultimately lose.

We’re all made to feel that every election is the most important in our lifetime largely because of this fear of the unknown and the perpetual “what if?”. Yet, the fact remains that these politically polarizing narratives have not played out well following any election in quite some time, if ever. And there simply is no real long-term correlation between the political party in office and economic growth or stock market performance, despite what political pundits and politicians themselves will probably continue to claim from now until eternity.

Despite all of this, we know that many have, and will continue to try, to jump in and out of the market based on their political ideology and election results that may either confirm or conflict with those beliefs. But we often reiterate with our clients during times like these that time IN the market is far more important than timING the market. Don’t believe us? Just take a look at how harmful a politically motivated investment strategy (on either side) would have been for long-term investors, dating all the way back to 1896…

This election is important, as all elections are. Voting is a right none of us should take for granted and we all know that elections do have consequences, whether you like the results personally or not. But as you enter the ballot box this November (or mail in your ballot from a safe, socially distant location), our hope is that the Dow, S&P 500, and the entirely unpredictable future returns of your retirement accounts are the farthest things from your mind.

Still feeling uneasy or need a better understanding of your own investment strategy? Reach out to a blooom advisor. We’re here to help!

The 2020 Voter Registration deadlines for many states are coming up.
Go to
to register to vote or check your current registration.

The information is provided for discussion purposes only and should not be considered as advice for your investments. Past performance is no guarantee of future results. Please consult an investment advisor before you invest.

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Davin Gordon | Senior Business Development Officer at AltCap

Welcome back to our Blooom Brain Pickers series!  We’re picking the brains of the best in the biz to inform, entertain, and most of all, educate you when it comes to making personal finance decisions. Today we are honored to feature David Gordon of AltCap. AltCap exists to increase the flow of capital to communities and businesses not adequately served by mainstream financial institutions.

From the very beginning, blooom’s mission has been focused on bridging the gap of financial inequality by giving the average American worker access to affordable investment advice and retirement account management, regardless of account balance.

As a disruptor in our industry, we know that the problems of economic inequality in our country, while very complex, are long overdue for greater focus on a national level. And we know that successfully solving these complex problems will involve far more than a single, unique product or service. 

Blooom is committed to amplifying the voices of individuals and organizations doing big things to help tackle financial inequality across the country and in their own communities, with new ideas and bold approaches that can improve economic and social inequities and help move ALL of us forward.


Meet Davin Gordon, Senior Business Development Officer at AltCap

Davin is responsible for identifying and implementing strategies that build awareness and opportunities to support AltCap’s alternative, nontraditional financing products. He coordinates the organization’s programs, as well as administers AltCap’s annual “AltCap Your Biz Competition” and AltCap’s newest loan program Growth Loan. 

His previous work experience includes being a Staff Accountant at the Guadalupe Centers, Inc. (GCI) where he was responsible for all accounts payable and purchasing for their Guadalupe Centers Charter School District.  

Davin was recently recognized as a Kansas City Business Journal NextGen Leader 2019. He is currently on the Board of Directors of Startland, and a 2nd year Centurion through the Greater Kansas City Chamber. He received his B.S. in Business Administration focusing on finance/accounting from Rockhurst University in 2013.


Tell us a bit about AltCap and the main problems you are addressing for small businesses and underserved communities in the current economic crisis.

AltCap is a Community Development Financial Institution (CDFI) that invest in small businesses, particularly those in mostly black and brown communities. AltCap’s role is to increase the flow of capital to communities and business not adequately served by mainstream financial services industry. AltCap has 12 years of experience deploying high-impact, community-focused capital to underinvested communities and entrepreneurs. Since 2008, AltCap has deployed nearly $250 million in New Market Tax Credits and nearly $15 million in small business financing. When large parts of the local economy closed down due to stay at home orders, AltCap stepped up. We administered the KC COVID-19 Small Business Relief + Recovery Loan Fund, an effort backed by local philanthropies like the Ewing Kauffman Foundation and leading business institutions Civic Council of Greater Kansas City and the Greater Kansas City Chamber of Commerce. This loan fund targets businesses that often don’t have relationships with banks and traditional lenders.


Can you explain the concept of microloans and how alternative forms of capital can play a major role in economic development in communities across the country?

According to the Small Business Administration (SBA) a microloan is defined as a business loan of up to $50,000 to startups and small businesses. Many of our main street and microenterprises don’t need a huge SBA loan (more than $250,000) to run a profitable and successful business. Sometimes, they just need a $20,000 equipment loan for a new piece of equipment which can create a new revenue stream for their business. Others might need $10,000 to hire additional support because the demand for their product has outpaced their capacity with the current staff they have. Microloans can serve as the fuel that a business needs to take their growth to a new level. Microloans can also serve as a bridge between one project to the next. Small businesses are the lifeblood of our country, city and communities so it’s important they have access to the resources they need to be successful. As a CDFI, AltCap understands that access to capital is a huge barrier for many business owners. In addition, we also want to ensure they have access to technical resources to help them cover blind spots and plan for any scenario. Kansas City is one of the greatest cities to start a small business because of all of the amazing resources providers (KCSourceLink, SBDCs, WBCs, etc.)


The financial services industry has an unfortunate history of largely excluding individuals and communities that need access to resources like capital, advisory services, and general financial support the most. What do you feel consumers and local business leaders can do that will help support economic development of underserved communities the most?

The first step is understanding our history of exclusion and intentionally leaving certain communities out of the mainstream financial services industry. Next, we must elevate the voices and perspectives of those individuals and communities that have been excluded and bring them to the decision making table. This is the time that we recreate the way we make decisions and leverage the experience of the end-user to inform us how to best serve and support their communities. We also have to hold our local officials accountable and demand transparency.


What personal or professional experiences have helped shape your passion for community development?

While working at the Guadalupe Center as a Staff Accountant, I had the opportunity to participate in a leadership fellowship for future Latino Leaders organized by National Association for Latino Community Asset Builders (NALCAB). This program inspired me to want to do more for my community. I didn’t feel like I was making the impact I wanted to have on my City by crunching numbers and reconciling spreadsheets all day. This fellowship opened my eyes to the possibilities and potential inside of me to leverage my creativity and entrepreneurial mindset to change the way we look at community development.


What is the best and/or worst financial advice you have ever received personally?
The best financial advice I’ve received is it’s never too late to start planning for your financial goals.


The information is provided for discussion purposes only and should not be considered as advice for your investments. While the data from third parties is believed to be reliable, we cannot ensure the accuracy or completeness of the data provided.

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Q2 2020 PastCast: Eye of the Storm

Here’s all you need to know. (If you’re in a rush.)

  • The markets are rebounding at a record pace – Following a broad market crash of about 30% in just 31 days to end Q1, US stocks have nearly regained all of those losses since the lows on March 23rd. In fact, April ended as the best April for stocks in 32 years.
  • Re-open for business – As COVID-19 hospitalizations and the rate of new positive cases began to decline in many of the hardest hit US cities, states and municipalities implemented their own localized reopening plans, leading to new optimism in the stock market. But the latest data suggests that this optimism could be short-lived as new shutdowns may soon be necessary in some areas of the country.
  • Recession confirmed – To no one’s surprise, economists confirmed that the US did in fact enter into a recession in February. Unemployment claims continued to rise, though the pace has begun to slow significantly.
  • Further relief in limbo – The Federal Reserve continued to provide monetary stimulus to stock and bond markets, instilling greater confidence for investors. But Congress is still fighting over further fiscal relief for workers, the unemployed, and businesses.
  • Here we go again? While optimism from new COVID-19 treatments and reopening of businesses across the country fueled markets for much of the quarter, June began to show a resurgence of COVID-19 across the country.
  • Staying the course paid off…yet again – There may be no better case study in history when it comes to our message to our clients to fight the urge to make big adjustments in times of panic, than what just happened in Q2 of 2020. Intrigued? Keep reading. 


And now for the long(er) version… 

Hurricane season is officially upon us. According to the world of meteorology, the season of the hurricane for North America begins June 1st every year, and lasts through the month of November. In the world of investing, the 2020 hurricane season got off to a very early start, with an economic storm unlike any other. 

If the first quarter of 2020 was defined by the catastrophic storm-of-the-century that missed all forecasts, the relative calm of the market in the second quarter could easily be seen as the eye of the storm for the investing world. As businesses began to reopen, widespread optimism grew, and a stock market recovery unlike anything we’ve ever seen began rather quickly and unexpectedly.

From March 23rd through the month of May, US stocks staged their single most impressive rebound in history, rallying nearly 40% in just 50 trading days. This included the best April for stocks since 1987! 

And yet, anyone paying attention to both economic and public health indicators across the country (and much of the world) would likely say this rebound makes no sense whatsoever. In many ways, we would tend to agree, given just how uncertain things remain right now when it comes to this Pandemic. But let’s see if we can answer a few key questions many of you are probably asking right now…


How can the stock market and the actual economy be so disconnected?

As we stated in our last PastCast, during times of economic crisis, the stock market often recovers well ahead of the actual economy. And often in a robust fashion that is entirely unpredictable. But that statement was never intended to be a prediction of what was to come in the very next quarter. We have no crystal ball. And we certainly didn’t expect the stock market to be where it is today.

In the midst of an economic crisis that’s been compared to the Great Depression by many measures, we are surprisingly now looking at major market indexes that are essentially flat or have actually managed to move higher on the year so far – to new all-time highs (as of 6/23) in the case of the Nasdaq

The overall economy, and the data we rely on to assess its state at any given moment, is mainly backward-looking. Recessions have even been officially identified by economic data months after they may have already ended. Measures like inflation and employment numbers are based on things that have already occurred and may not necessarily represent conditions today or going forward. 

On the other hand, the stock market is a forward-looking mechanism that is always looking toward the future. Investors evaluate a stock’s value primarily based on the company’s potential to grow future earnings and/or revenue (among other measures). And since the market is made up of individual stocks, stock market performance should be seen as a predictor of what investors are expecting of the business and economic environment in the future.

While current events certainly move the stock market up or down every single day, it isn’t the events themselves that cause investors to panic necessarily. It is the sudden uncertainty caused by many of those events that causes a moment of panic. That sudden panic often lasts as long as it takes for investors to take in new information and gain a clearer picture of what lies ahead, even if the time frame remains uncertain.

The COVID-19 outbreak in the US was the greatest of all catalysts for a market crash. Our country was not prepared, on many fronts, for what was to come. And that lack of preparedness, along with the threat of a brand new virus that we are still learning more about every day, created the perfect recipe for what was to follow – complete global panic.

There is not one single explanation for the rebound we’ve seen in stock prices after they crashed nearly 40% from all-time highs in February.  There are many reasons to consider. Too many to cover here. But regardless of the many possible contributing factors, optimism was on the rise throughout the second quarter and the rebound happened so quickly that many investors didn’t even have time to react until the rebound was well underway. We think that was a great thing for the majority of retirement investors. And especially for blooom clients.


What has blooom’s overall strategy been for clients during this crisis?

Anyone that’s been with blooom for some time now should have a pretty good understanding that we do not let short-term unpredictable market movements, media frenzies, or general panic get in the way of what’s truly the best advice for our clients – staying focused on the long-term and keeping emotions out of the equation.

By far, the most common question we receive from our clients during any market crash is some form of the following:

“With the stock market not looking so great at the moment, shouldn’t I be moving my money out of stocks and into something safer, at least until things start to calm down?”

Our answer (in short):
Don’t let your emotions get in the way of your long-term strategy. Moments like this are not the times to be making investment decisions that can drastically alter your ability to reach your goals later on. Stay the course, as painful as it may be right now, as disciplined investors with a strategy in place have historically been rewarded for patience in times of panic. Hindsight is the only way to truly see peaks and troughs in the market. History has shown us that time IN the market is far more important than timING the market perfectly. Market timing simply is not a winning strategy for long-term investors. Patience and discipline are. 

Please reach out to us before making a change to your investments on your own. This is why we’re here.”

Our advice, and our answer to this question, can be extremely frustrating for some to hear in the moment. We understand that. Especially in the midst of what we are currently going through as a country. But what we hope many of you have learned in your experience with blooom so far, is that our job is not to answer your questions with what you necessarily WANT to hear or what you expect to hear. Our job as your advisor, and a fiduciary, is to give you the answers you NEED to hear, when you need to hear them the most. 

We are very proud of the fact that in the month of March, as the sky was falling in the stock market, our own data indicated that less than 3% of blooom clients actually made an adjustment to make their blooom investment strategy more conservative. While we understand the desire to do so and our system allows clients to make these changes as they wish, doing so in the midst of an historic market crash is something we generally want people to avoid, if possible.

But we also know that there were others who made adjustments to their accounts on their own, without having a chance to talk through their concerns with us. Some ended up selling their stock investments completely to bonds or cash to avoid further pain after the market had already declined over 30%, effectively locking in those losses and making them permanent at the worst possible time – just before the market began to rebound days later.

If you happen to be someone that did just that, know that we don’t say this to shame you or anyone else. There are very few investors, or even advisors or asset managers with decades of experience, that can honestly say they haven’t made this exact same mistake on their own a handful of times. We simply hope to make it more clear to our clients that they hired blooom for a reason. And in order to do what we do best, we want you to remember we’re here to talk through these things with you in times when you’re doubting your strategy or you’re just feeling uneasy about the market. Know that we always have your back and online access to an advisor is part of your blooom membership. 


The eye of the storm?

What we’ve gone through so far this year, along with what recent public health and economic data indicates may lie ahead in the coming months, certainly feels a lot like a category 5 hurricane. In fact, it actually makes a lot of sense to think of this moment we’re in this summer, as the eye of the storm – a somewhat deceptive sense of calm.

But what we know about both weather and the stock market forecasts, is that neither is as reliable as we’d hope, when we need or want them to be. The virus seems to be making a comeback and a highly contentious presidential election is just months away.

What’s important as an investor in this particular moment is not your ability to know for certain what lies ahead (not possible), but instead to digest what this market has experienced in recent months and how you either did or didn’t react to it. Take advantage of this relative calm to remind yourself of the “Why?” behind the strategy you have in place and the reason you signed up for a service like blooom. And if you don’t know the answer or you happen to question if it’s the right approach for you, reach out to us for a conversation. 

Even the greatest of storms cannot last forever. And there are some things you can only learn in a storm.


The information is provided for discussion purposes only and should not be considered as advice for your investments. Past performance is no guarantee of future results. Please consult an investment advisor before you invest.

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3 Reasons to Manage Your Finances Online

As our world becomes increasingly digital, it’s only natural that financial management follows suit. With the world seemingly grinding to a halt during the last several months, many people were left reconsidering their traditional banking and investment institutions. Due to the growth of technology and its many benefits, online financial management has never been easier. Keep reading to learn how online options set themselves apart from traditional financial management, and the many benefits of making the switch.

Ease of Accessibility

 Perhaps the most stark contrast between traditional and online financial services is the ease of accessibility. No longer is there a need to meet with a banker or financial advisor in person in order to service your needs. Many traditional offerings have tried to keep up with the push for greater technology, but in some cases they still lag behind.

In fact, many Americans live in geographic areas that don’t even have reasonable access to traditional financial services. A banking desert is an area that doesn’t have a single bank location with 10 miles—and they’re only becoming more common year after year in America, especially in rural areas. Yet, with access to the internet through a smartphone or computer, people can now access online banking, retirement, and investment services from anywhere.

Rather than having to set up appointments to meet in person and deal with long waiting periods for financial moves to take effect, digital services allow you to make investment decisions and move money around in a matter of minutes. For example, just by answering a few questions about your finances, you can get retirement plan recommendations without even meeting an advisor.


Save Money

For a multitude of reasons, online financial management can be much cheaper than traditional offerings. And when it comes to managing your money, the last thing you want to do is spend more of it than you need to.

Take, for example, the rise of challenger banking in the United States. Because completely online financial institutions don’t have to pay for the associated costs of brick and mortar locations, they can usually offer banking with no hidden fees or better interest rates. Unfortunately, Americans are charged hundreds of dollars every year in banking fees such as overdrafts, monthly service charges, and foreign transaction fees by traditional options.

Investment and retirement plans, on the other hand, work in a similar way. Financial advisors can charge for their services in several ways—sometimes as an hourly rate or as a percentage of the total investment cost. Another way they make money is by a commission on your investment. Either way, it can put serious doubt into the decision-making progress and whether or not you’re getting advised on truly the best options.

Online investment services could offer you better pricing. By choosing an option (like blooom) that charges a low flat fee and is held to a fiduciary standard you can be sure that your recommendations are in your best interest. You won’t be pushed to make choices that will benefit an advisor and you won’t be gouged for more money down the line. Those that are not fiduciaries are not legally required to act in the user’s best interest.


Personalized Options

Finally, one of the best benefits of online financial management is that you can customize your experience to be extremely personal. Many softwares allow you to create a custom view of your finances, which lets you get a broad overview of your portfolio, as well as access to chat with a financial advisor.

And with all of this personalization, it’s important to make sure that your personal information is kept safe and secured. Many online financial services offer the same amount of protection as traditional services, but some even go above and beyond. Some digital banks and retirement services offer instant notifications for unusual activity. Whereas you may not notice fraudulent activity until you receive a traditional statement in the mail, online institutions can send you a text message right away when something seems wrong.

In closing, there’s a multitude of reasons why you may opt for online financial management. The ease of accessibility for your online accounts, the ability to save more money, and a completely personalized plan are just three reasons out of many. Make sure to take a hard look at your current financial situation, and then consider these options when looking for room to improve.

DISCLAIMER: The information is provided for discussion purposes only and should not be considered as advice for your investments. Investing involves risk. Your investments are subject to loss of principal and are not guaranteed.

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