Newsletters

What really drives our financial decisions? – November 2013 Newsletter

All of us like to think we are rational beings, weighing the pros and cons of a situation and then making a well-informed decision.  What we sometimes don’t realize is there are forces at work in our subconscious which can sway us toward irrationality at precisely the wrong time.  However, if we take the time to examine what those forces are and how they affect our decision-making, we should be able to recognize and avoid some of the misdirection in our lives. Behavioral finance is a study in both finance and human behavior and seeks to understand how people make financial decisions, what factors influence them, and how to help them make better decisions.  These forces, or biases can skew our decision-making and act in such subtle ways that we may not even know they are at work.  Biases in the financial realm are particularly fascinating, as they can move entire markets or simply prevent one individual from taking the next critical step in securing their financial future.  These may be deep-rooted in our family history, cultural or religious based, Read on! →

MARKET-VIEW 3RD QUARTER 2013 – October 2013 Newsletter

While fears over Federal Reserve (the Fed) tapering and some uneven economic data hurt stocks earlier in the quarter, September was a surprisingly strong month for equities. The Fed’s decision to keep its quantitative easing program going, combined with moderating tensions in Syria, helped stocks to easily outperform bonds for the third quarter.  Three other market themes emerged during 3rd Quarter 2013:  cyclical stocks outperformed defensive stocks, the equity market rally widened its focus to include international stocks and emerging markets, and corporate and municipal bonds outperformed Treasuries.  Despite a mediocre jobs market, retailers and other consumer discretionary stocks continued to outperform. US Economic Outlook As we enter the fourth quarter, the debate over funding for the federal government and the need to increase the debt ceiling are leading to risks in US credibility on the fiscal front.  Just two years after Congress led America to a fiscal cliff that prompted Standard & Poor to downgrade the United States’ long-term credit rating; we now appear poised to repeat the same fiasco. Despite the political dysfunction in Washington, the private sector Read on! →

Taxing Times – September 2013 Newsletter

While you may not want to begin thinking about it in September, there are some “taxing” issues that you need to be aware of for 2013 and on the horizon for 2014.  As you may recall from early January, the Fiscal Cliff law resulted in a number of federal income tax changes, some permanent and others just extended for one year. Medicare Surtax Net Investment Income Tax (NIIT) Tax Rate Changes for High Income Earners Roth Conversion Opportunities Expanded Temporary Tax-related Extensions for 2013 A 2014 Tax Preview for North Carolina Residents Medicare surtax For high earning individuals, you may already have noticed a slight decline in your take home pay, for as you surpassed $200,000 in wages, your employer was required to begin deducting an additional 0.9% on your Medicare-eligible wages.  This is in addition to the 1.45% you are already paying in Medicare taxes. While this new surtax will result in automatic additional withholding for an individual with earnings above $200,000, the tax can also be triggered by combined earnings of spouses, or the combination of wage earnings Read on! →

Market-View 2nd Quarter 2013

After some hair-raising summers over the past several years, calm, almost boring, trading has settled in on Wall Street – at least for the time being.  2nd Quarter 2013 earnings season has passed its peak and results have largely been better than expected on the bottom line (earnings), while top-line results (revenues) have been less impressive, but good enough for the drifting stock market to maintain an upward bias. Perhaps the best takeaway has been the positive view of the domestic side of the ledger, while international results have largely disappointed. US Economic Outlook Mixed economic data has been good enough to help corporate earnings, yet weak enough to prevent the Fed from acting aggressively.  We have had a domestic bias for some time now, and we believe the US continues to be an attractive place for investors with sustainable slow GDP growth, low interest rates and inflation, and improving unemployment.  Although the gains in equities seen in the first half of the year shouldn’t be expected in the second half, we remain positive on the potential for further upside. Read on! →

Retirement Realities – July 2013 Newsletter

We read every day that the average consumer is not adequately preparing for their eventual retirement.  Maybe that comment hits home when you read it or maybe you think they are talking about the guy down the street.  Whatever your reaction, it may be time to consider the realities of retirement and what you can do to protect your future. In the days of Franklin Roosevelt, there was a philosophy called the “community society” where an American worker had a hypothetical three-legged stool to rest upon in retirement.  The three legs consisted of a government Social Security benefit, an employer pension benefit, and an employee’s personal savings.  These three legs were viewed as entirely adequate to fund a retiree’s remaining years, which incidentally lasted only 5-10 years.  As an aside, the third leg, the employee’s personal savings, was really viewed as “gravy” for the extras that might be desired in retirement. Over the last fifty years, times certainly have changed.  Consider the following items which have thrown this philosophy on its ear. Life expectancy has increased dramatically.  The chart below Read on! →