Friday, January 22, 2016

Oh What Fun These Market Cycles Are!

Wow, what a lousy January so far for the stock market!

I’m writing this January 21 as the stock market “celebrates” its worst start ever.  As often happens when the TV is filled with this type of bad news, some clients are beginning to call us expressing concern about their money.  This is a natural emotional reaction, but a reaction we caution you to be careful of.

Let me emphasize, we do not believe what is happening is a repeat of the 2008 financial crisis, nor something similar.  We do believe we are going through normal cycles, both market and economic.  There are signs the economy is slowing.  We may experience a mild recession later this year.  This is normal; we’ve all been through them in the past.  I won’t get into the economic details in this communique, but call any of us and we’ll be glad to review the trends and data with you.

We’ve had a long 6-year run since the last market bottom in early 2009 so it’s probably long-past time for stocks to back off and regroup.  This is typical, and also expected.  While you will likely see a modest reduction in your portfolio values on your next statement(s), we don’t want anyone to overreact. 

We are confident the money managers we selected on your behalf will do a good job of protecting your money.

Be patient, stay the course and let stock values regain their upward trajectory when the time is right. 

Doug Conoway
 
Securities offered through American Portfolios Financial Services Inc., Member FINRA and SIPC. Investment advisory services offered through Wealth Management Group, LLC and also American Portfolios Advisors Inc., an SEC Registered Investment Advisor. WMG, APA and American Portfolios Financial Services Inc. are independently owned and operated.

Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.
 
 

 

Wednesday, November 11, 2015

Which Came First - The Chicken or the Egg?



I had my first experience using one of the new chip-enabled credit card readers last week.  Interesting.  Instead of swiping the card on the side of the terminal, it had to be inserted into a slot in the bottom.

Several years ago Visa and Mastercard had made October 1st this year the target date to have the new terminals fully in place and implemented nationwide.  Unfortunately, the deadline hasn’t been close to being met.  Target, Walgreens and Walmart have installed the new terminals, but most other retailers haven’t done so due to their high cost.  Each one has a price tag of $600 to $2000 apiece.  The chip cards themselves are 5 – 10 times more expensive for the card issuers.

Implementation has been slow: fewer than half of banks and credit unions have adopted chip enabled cards, and only a quarter of retailers have done so.  So what’s happening is that retailers don’t spend the money to upgrade because there aren’t enough cards, and banks don’t issue the cards because there aren’t enough card readers.

This is important because the chip cards are much more secure than our current magnetic strip-formatted cards.  Europe has been using the chip-type cards since the 1990’s.  The magnetic strip has a single, permanent authentication code which can be copied by hackers and reused.  The chip-enabled cards create a new authentication each time it’s used; that’s why it can’t be swiped, but must remain in the reader for the entire time of the transaction.

It will likely take two to three years more for full implementation.
(Bloomberg Business Week)

-Doug Conoway


Securities offered through American Portfolios Financial Services Inc., Member FINRA and SIPC. Investment advisory services offered through Wealth Management Group, LLC and also American Portfolios Advisors Inc., an SEC Registered Investment Advisor. WMG, APA and American Portfolios Financial Services Inc. are independently owned and operated.

Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.

Monday, October 12, 2015

S&P 500 Weakness Obscured by Megacaps

Some kudos, thoughts and observations as we begin the fourth quarter of 2015:

A New Artist Arrives

Doug’s wife, Marina, began oil painting 3 years ago. She sold her first painting last month, which had been on display in Webster. Please join us in congratulating her! If you’d like to see her other works, they can be viewed at http://www.elegantfineart.com/marinaconoway.htm


S&P 500 Weakness Obscured by Megacaps

Investors fearing that U.S. stock indexes will soon test their August lows should be aware that more than a third of equities are already there. (Bloomberg News)

While the Standard & Poor’s 500 Index is only slightly above its low for 2015, almost 35 percent of the index’s members have slipped back below this year’s bottom. The market heavyweights are doing all the heavy lifting: Apple Inc., Microsoft Corp., Amazon and Exxon Mobil Corp., all among the largest companies by market size. 

These and other megacaps are obscuring weakening breadth in U.S. equities. To some, that’s an ominous sign amid market volatility that has seen the S&P 500 slide significantly within recent weeks.  The index is a stone’s throw from its 10-month low reached Aug. 25.

Weighted for size, only two of the 10 major groups in the S&P 500, materials and health-care, are trading below the August low. That changes when stocks are weighted equally.  Then six industries, including consumer and energy stocks, have fallen below the level.

Amid a broader flight to safety, what remains to be seen is how this plays out as the market finds its footing.  As always, the question is are we rolling toward a major bear market or is this simply a corrective action?  Thankfully, all of this is a natural part of the rebuilding process necessary to make future moves up.

Securities offered through American Portfolios Financial Services Inc., Member FINRA and SIPC. Investment advisory services offered through Wealth Management Group, LLC and also American Portfolios Advisors Inc., an SEC Registered Investment Advisor. WMG, APA and American Portfolios Financial Services Inc. are independently owned and operated.

Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc.(APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.

Tuesday, August 25, 2015

Market Volatility


Of course we’ve been watching the market volatility for the last several days.  As we write this on Monday we don’t know when a market bottom will occur, but we are fairly sanguine about what’s happening.  Our message: don’t worry, don’t panic and just hold the course.

We think it’s important to put things in perspective while the stock market gyrations are headlining on most news outlets.  It looks to us like this “correction” is long overdue.  While the stock market has been largely “range bound” for about the past year, we’ve actually been in a six year bull market since early 2009.  Many of us have forgotten that the market normally bounces up and down.  We think this current drop will be ultimately healthy for the market and in fact necessary for further upside opportunities.

There seems to be a consensus on what has triggered this recent concern reflected in the market:
  • While interest rates should probably be 1.5 to 2%, the Federal Reserve has held rates down close to zero, fueling at least part of the bull market
  •  The U.S. economy has been OK, but not great, for several years
  • China’s economy is slowing
  • This means sales by U.S. multinational companies (Apple, Exxon Mobil, Caterpillar) will fall
  • China’s stock market collapse has reverberated around the globe, affecting markets everywhere

If we believe you should make changes we will of course let you know.  Should you want to discuss any of this please don’t hesitate to call.  In the meantime, we hope these words of comfort are helpful and you will stay the course.


Securities offered through American Portfolios Financial Services Inc., Member FINRA and SIPC. Investment advisory services offered through Wealth Management Group, LLC and also American Portfolios Advisors Inc., an SEC Registered Investment Advisor. WMG, APA and American Portfolios Financial Services Inc. are independently owned and operated.

Monday, March 23, 2015

Study: Boomerang Children Hurt Boomers Retirement Prospects



This important study shows that the Baby Boomer generation is setting yet another milestone. No other generation in history has spent so much money on its kids – grown kids, that is! At Wealth Management Group, we understand that talking with your children about money may be one of the most difficult conversations you will have with your kids. The other is to say “no” to your child when you simply can’t afford to hand over money. The question many of our clients ask: Where do I draw the line between supporting my adult children and derailing my own financial future? If you are like many Baby Boomers today and feeling like the family bank, talk to us. We understand the family dynamics among today's pre-retirees and retirees. We'll give you insight and financial guidance to help your children be financially independent and give you peace of mind to live the life you’ve always imagined.


Study: Boomerang Children Hurt Boomers Retirement Prospects


                                                                                                                     By Mike Bushnell

Baby Boomers who have yet to cut the financial cord with their adult children are increasingly finding that tether to be more like an anchor keeping them from reaching retirement.

According to a new study of Baby Boomers by Hearts & Wallets, only 21% of Baby Boomers who still support adult children are retired, compared with 52% of Boomer households whose adult children are financially independent.

All told, 65% of Boomers have children, and nearly one-third of them still financially support their children, be they adults or minors. About one-third of the 47.4 million Boomer households in America still supports children, a total that is divided nearly evenly between those over age 18 and those under 18. Not surprisingly, just 17% of Boomers with dependent minor children are retired.

While both retired Boomers and those with minor children worry more about the future, listing “outliving my money” as one of their top life concerns, Boomers with adult dependents have more immediate concerns. More than half of adult-supporting Boomers said “saving enough for retirement” is their top concern, while 38% report moderate-to-high financial anxiety. They also happen to report the lowest levels of financial advice-seeking, with just 24% reporting having ever talked to a financial professional about their future.

“Providing financial support to anyone, but especially to an adult child, can have tremendous consequences for retirement and estate planning,” said Chris Brown, a principal at Hearts & Wallets. “Financial services firms would be wise to examine their client bases for this trait and adjust product and service offerings to meet the needs of the nearly [48] million Boomer households.”

The survey, “Dissecting the Baby Boomers: How a Parental and Financial Support Status Segmentation Reveals Key Differences in Finances, Attitudes and Behaviors,” was conducted using data from the Hearts & Wallets Investor Quant Database, which is comprised of more than 30,000 household interviews conducted over the past five years.



The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

Tuesday, January 13, 2015

When Must Taxes Be Paid on IRA and Employer-Sponsored Retirement Funds?

“The start of a new year is a good time to review the tax impact of the varied retirement savings vehicles you may choose to invest in this year.  How and when taxes are paid is an important part of this choice.  (And remember to check with your tax professional regarding the specific impact on your tax return).”

When Must Taxes Be Paid on IRA and Employer-Sponsored Retirement Funds?

Traditional IRAs and most employer-sponsored retirement plans are tax-deferred accounts, which means they are typically funded with pre-tax or tax-deductible dollars. As a result, taxes are not payable until funds are withdrawn, generally in retirement.
Withdrawals from tax-deferred accounts are subject to income tax at your current tax rate. In addition, withdrawals taken prior to age 59½ may be subject to a 10% federal income tax penalty.
If you made nondeductible contributions to a traditional IRA, you have what is called a “cost basis” in the IRA. Your cost basis is the total of the nondeductible contributions to the IRA minus any previous withdrawals or distributions of nondeductible contributions. The recovery of this basis is not seen as taxable income.
Exceptions are the Roth IRA and the Roth 401(k) and Roth 403(b). Roth accounts are funded with after-tax dollars; thus, qualified distributions (after age 59½ and the five-year holding requirement has been met) are free of federal income tax.
Traditional IRAs, most employer-sponsored retirement plans, and Roth 401(k) and 403(b) plans are subject to annual required minimum distributions (RMDs) that must begin after the account owner reaches age 70½. (The first RMD must be taken no later than April 1 of the year after the year in which the owner reaches age 70½.) Failure to take an RMD triggers a 50% federal income tax penalty on the amount that should have been withdrawn. Roth IRA owners never have to take RMDs; however, the designated beneficiaries of IRAs and employer-sponsored retirement plans do have to take RMDs.
When you begin taking distributions from your retirement accounts, make sure to pay attention to any required beginning dates and the appropriate distribution amount in order to avoid unnecessary penalties.

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2015 Emerald Connect, LLC

Friday, October 3, 2014

How Can I Keep My Money from Slipping Away?


As with virtually all financial matters, the easiest way to be successful with a cash management program is to develop a systematic and disciplined approach.
By spending a few minutes each week to maintain your cash management program, you not only have the opportunity to enhance your current financial position, but you can save yourself some money in tax preparation, time, and fees.
Any good cash management system revolves around the four As — Accounting, Analysis, Allocation, and Adjustment.
Accounting quite simply involves gathering all your relevant financial information together and keeping it close at hand for future reference. Gathering all your financial information — such as mortgage payments, credit card statements, and auto loans — and listing it systematically will give you a clear picture of your overall situation.
Analysis boils down to reviewing the situation once you have accounted for all your income and expenses. You will almost invariably find yourself with either a shortfall or a surplus. One of the key elements in analyzing your financial situation is to look for ways to reduce your expenses. This can help to free up cash that can either be invested for the long term or used to pay off fixed debt.
For example, if you were to reduce restaurant expenses or spending on non-essential personal items by $100 per month, you could use this extra money to prepay the principal on your mortgage. On a $130,000 30-year mortgage, this extra $100 per month could enable you to pay it off 10 years early and save you thousands of dollars in interest payments.
Allocation involves determining your financial commitments and priorities and distributing your income accordingly. One of the most important factors in allocation is to distinguish between your real needs and your wants. For example, you may want a new home entertainment center, but your real need may be to reduce outstanding credit card debt.
Adjustment involves reviewing your income and expenses periodically and making the changes that your situation demands. For example, as a new parent, you might be wise to shift some assets in order to start a college education fund for your child.
Using the four As is an excellent way to help you monitor your financial situation to ensure that you are on the right track to meet your long-term goals.

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2014 Emerald Connect, LLC