That Was The Week That Was-1st Week November

You should start your year-end investment tax planning right about now. In their ‘Improving Your Finances’, column Morningstar’s Christine Benz outlined what investors should be doing.

• Consider selling if you planned to do so anyway.
• Don’t sell without considering your tax position.
• Look for tax-loss candidates.You can use those losses to offset capital gains.
• If you’re 70 1/2 tie in your RMD with your tax-portfolio maintenance.
• Don’t spend any RMDs you don’t need.

There’s a potential problem brewing. I think. Recently the Treasury Department released guidelines for 401k plan sponsors on how to expand the use of deferred-income annuities; and the use of target date funds that include annuities in their assets. The government and regulators are concerned that employees contributing to 401k plans will not have sufficient income at retirement. In that regard they have expanded the use of annuities that provide ‘guaranteed’ income. Mark Iwry, deputy Treasury secretary said that by encouraging the use of income annuities (inside 401k plans) can help retirees protect themselves from ‘outliving’ their savings. The problems,as I see it, are three-fold. The long-range potential lower returns that historically annuities provide. The extraordinary expenses that annuities charge. The long-term individual retirement income planning that often makes annuity income more sensitive to inflation. Participants in retirement plans always have had the option to purchase a fixed immediate income annuity upon retirement. Offering a systematic approach to an annuity purchase during the accumulation phase has the potential problem of reducing returns, increasing the cost of retirement saving and limiting choices at retirement. Questions regarding your 401k or retirement plan please either call or email me.

 

‘I Was Wrong!’, said Dennis Gartman, author of the Gartman Letter. On October 16th Gartman told CNBC that the selloff in global markets was the start of the Bear Market. The problem is that markets up 8% from that date the 16th to October 31st. When re-interviewed Gartman said it’s still a bull market. He also said he wants to own things that if dropped on his foot would hurt- like metals, railroads and ships. CNBC 11/03/2014

There is a difference between an investor and a trader. The former is a long-term holder of investments while the latter speculates on the value over a very short period of time. Jack Bogle in a radio interview MoneyLife with Chuck Jaffee offered advice to fretful investors was simple to close one’s eyes to all the ‘current noise’. Traders, according to Bogle, do very poorly while investors over the long-run do well.

According to Experts in WSJ, Barrons.com, MarketWatch.com and others, the big winner after the mid-term election will be stocks! Since 1942 mid-terms have ushered in a consistent bullish market. The odds are 100%, according to ‘Up and Down Wall Street’, author Randall W. Forsyth. The returns are also eye popping with an average annualized return of 15.6%. Stocks also perform well in the third year of a presidential term. Since 1950 on average the stock market is up over 18%.  WSJ, MarketWatch.com, Barrons 11/4/2014.

 Mr. Market liked the  election results and Wednesday the DJIA was up +100, The S&P +12 and Naz-3. Still Michael Sincere, in an Opinion, wrote that the recent rally was for suckers pointing out certain indicators were missing including no participation by the transports and failure to see institutional trading. MarketWatch.com 11/5/2014 The market continued its upward slog through Thursday posting modest gains.

WSJ announced Friday 11/7 the SEC approved a new type of fund structure that doesn’t disclose its holdings. In the world of private placement this is called ‘a blind pool’. It generally means that the investor has an ‘inkling’ of the general type of investment but not the specifics. ETFs are structured like mutual funds but trade like stocks. The complaint in the ETF industry has been transparency of holdings, allowing competitors to see their trades. The SEC has turned down previous requests by other investment firms for similar designs.

Investor optimism is usually the harbinger of souring markets. From a recent market correction the results indicate the highest level of individual optimism since 12/26/2013 and the lowest pessimism in nine years. The rules is to buy when everyone is worried and sell on ‘happy’ news. The wonder is if the ‘bullish’ opportunity is over was questioned in the 11/7/ 2014 MarketWatch that published the above results from The American Association of Individual Investors.

What do you want to know about estate planning? Wills? Trusts? How to organize what you own in an orderly and uncomplicated manner to leave to those you love? Do you have questions about a parent or relative’s estate? At my 2015 Annual Meeting Larry E. Powe, attorney with Keller Thoma, PC, will present the answers to your questions. Send them to me via e-mail or call me.

Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

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