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.

 

 

 

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