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09Nov
Election Results
Economy

flickr-donkeyhotey-democratic-republican-partyNow that the election results are clear, this is what we expect to happen.

Until President-Elect Trump begins to reveal who he will select as Cabinet members and close advisors, the market may react negatively.  This is because the market typically does not like uncertainty.  This uncertainty extends from domestic policy to global trade and how other world leaders will respond to our election results.

Of course, no one knows how long this may last.

Hopefully, like the response to the unexpected Brexit vote, this, too, will be short-lived.

What we have done in anticipation of this:

For those of you who take cash distributions for living expenses, we already have between 6 and 12 months of your cash need escrowed.  Therefore, we will not be selling positions to raise cash in the near term.

Our investment philosophy is that we stay invested for the long term; we do not try to time the market based on daily events.

With that said, please remember that we have diversified your portfolio and that no Resonate client is 100% invested in the U.S. stock market at this time. Most Resonate clients are closer to a 60-70% equity position.  While we expect to see a drop in share price, there is no indication that any large U.S. companies will stop paying dividends due to election results.

Some of you will see this as an opportunity to buy quality companies “on sale”.

Also remember that many of you own annuities with guaranteed protected values which convert into guaranteed lifetime income.

Summary:

In the near term, expect volatility; if you find it agitating, listen to as little of the news as possible.

As always, reach out to us if you want to talk.

Until next time, live your purpose!

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.

(513) 605-2500

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20Sep
And the Scams Continue
Economy

Wells Fargo  is the latest recipient of a massive fine ($185 million) for fraudulent activity impacting thousands of their customers.  The employees who opened thousands of accounts without the knowledge of their clients, say that the corporate imposed sales quotas were simply impossible to reach consistently.  So they chose to break the law to reach their goals. (The source for this information is the Wall Street Journal September 14. “Wells Boss Says Staff At Fault For Scams” and “Wells Fargo Isn’t Sorry Enough”)

Quotas and sale goals are common throughout the entire banking and large wire-house industry.  Conflicts of interest can be a natural outcome any time there are shareholders to satisfy.

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30Aug
Retirement Accounts Made Easy! – Part 3
Economy

Retirement Eggs

Welcome to the final in the three part series on “Retirement Accounts Made Easy!”

If you missed Parts One and/or Two, you may read the blogs posted on August 18th with Part 2 posted on August 24th.

I look forward to hearing your thoughts and questions.

 


*** PART THREE ***

Inherited Accounts

Contributions: Generally, you can’t contribute to an account you inherit.  The exception is an account owned by the spouse of the deceased, if that spouse retitles the account in her or his own name.

RMDs: The rules can get complicated, depending on whether you were the spouse of the deceased and whether the deceased was in the process of taking required minimum distributions before he or she died.  But generally, beneficiaries of inherited retirement accounts have three options:

  1. Transfer the assets to their own IRA: This option is only available to the spouse of the deceased.  Once the assets are in the spouse’s account, RMDs and early withdrawal penalties (if any) will be determined by the spouse’s age.
  2. Empty the account within five years: No withdrawals are required in any given year as long as all the assets are distributed within five years of the benefactor’s death.  The distributions will be exempt from the 10% early withdrawal penalty normally applied to distributions made before age 59 1/2.
  3. Stretch the account over the beneficiary’s lifetime: Take RMDs each and every year, starting the year after the benefactor’s death.  While this option would require the beneficiary to begin taking money sooner than the five-year option, the rest of the account can be left to grow for decades.  But it does mean that any beneficiary, of any age, must take an annual RMD.  Even a 1-year-old baby who inherited an IRA from her grandmother would need to take a required distribution each year the account has money in it.  This would be the case even if it’s a Roth IRA.  Fortunately, these RMDs are also exempt from the 10% early withdrawal penalty.

Note that the third option is available only to named beneficiaries of an account.  If the account didn’t have named beneficiaries, or they had already passed away, the account then goes into the overall estate.  Anyone who then inherits the account must liquidate it within five years, which could result in a large tax bill and the loss of future tax-advantaged growth; the option to “stretch” the account over a beneficiary’s life has been lost.  This is why it’s important to name specific people as the primary and backup beneficiaries of your retirement accounts, and to keep that information updated.

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25Jul
Why Housing Affordability Matters and Where We Are Now
Economy

I recently read some research on the housing market written by Stephen Leeb in the July issue of The Complete Investor.

In it, he notes that homes are the largest U.S. household asset.  Homes are far more widely distributed than stocks, on which we tend to focus much of our attention.

The January 2000-March 2016 S&P/Case-Shiller Composite Home Price Index brings us some good news.

Housing affordability is higher than at any time before 2009.  The reason this is so important is that a decline in home affordability can reduce consumer spending which negatively impacts certain corporate profits.

Worse case there can be mass foreclosures as we have also seen.

So the current housing indicators are very positive for the U.S. economy.

If you would like investment ideas based on this, let’s have a conversation to be sure that any recommendations are suitable for you.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500
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28Jun
Brexit – Observations from Leeb
Economy

To our Resonate family, your families and friends,

It is during times like these that your Resonate team chooses to stay especially close to you.  We filter through much of the “noise” and attempt to distill out the “news.”   I thought these observations from Stephen Leeb were of interest and hope you do as well.

Global markets are scrambling after the Brits voted to leave the European Union by a 52-to-48 margin.  Interestingly, more than 3.7 million British citizens and U.K. residents have signed a petition calling for a second EU referendum.  Clearly, many people did not understand the ramifications of Brexit.

Whether the U.K. now regrets Brexit or not, it seems the votes will count, and global investors must now deal with the fallout.  Not surprisingly, as we noted last week, in the event of a Brexit stocks would likely dive for a few days.  Indeed, the S&P 500 logged its worst day of the year on Friday; it fell 3.6 percent.  Those hardest hit, of course are the companies who do the most business in Europe.

On June 27, the S&P was again firmly in the red, and shed another 1.8 percent.  The drop in the U.K. market has been small, about in line with that in the U.S., but it’s partially masked by the fall of the British pound to a 31-year low against the dollar.

The U.K. must now negotiate with the EU for terms of breakup, though the “leave” campaign leaders state they will wait until summer vacations have ended despite the insistence of some within the EU that negotiations begin immediately.  It’s possible the U.K. could enter a recession within a year as the uncertainty of the situation, among other ramifications, reduces business investments, tightens financial conditions, and levies possible negative impacts on trade.

Leeb urges investors not to read too much into the initial market reaction, but to pay close attention to how political leaders manage the fallout, which will have far more long-lasting ramifications.  An orderly exit and dedication of EU leaders to keep the union and euro zone intact would help to minimize disruptions; if the European leaders allow the situation to get out of hand, however, which could lead to the breakup union, all bets are off.

Although the stock market volatility since the Brexit vote may appear reminiscent of the dark days of the Financial Crisis of 2008, this time there are no financial bubbles waiting to pop on the scale of that U.S. housing bubble.  A full-blown financial crisis is unlikely, but due to the unprecedented exit and the uncertainty over what comes next, it is not surprising that the referendum has thrown global markets into turmoil.

Fortunately for U.S. investors, Brexit’s direct impact on the American economy should be, tangible, but small, perhaps shaving off a quarter of a percentage point from 2016 GDP growth.  But again, the full scope of the Brexit fallout won’t be known for years, and the actions of the political leaders in the months ahead should provide telling clues.  At this time, investors should not panic, but remain vigilant.

Easy as it may be to let Brexit and the associated drama distract us, it’s important that investors remember that the current drama will not materially affect the issues.  Over the long term, the world must address many problems: specifically, resource scarcity, cyber security, and the transfer of power from the West to the East.

Not to mention a presidential election…

Until next time, live with purpose and remember who and what is most important in your life.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500
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24Jun
Brexit Commentary
Economy

As you probably know by now, history was made as England voted to leave the European Union (euro) and re-establish the pound as its currency.

We are pleased to share with you an insightful commentary from the Chief Investment Officer at ValMark.  TOPS – BREXIT Message – June 2016

We will continue to write frequently as more information becomes available.  We urge you to stay calm and positive.

Until next time, stay focused on your purpose!

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500
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23Jun
Observing Secondary Stocks
Economy

To our Resonate family, your families and friends,

Recently, I have been receiving emails from clients worried about the U.S. and global stock markets.

I thought that Stephen Leeb’s comments in the June 13, 2016 Complete Investor Hotline were interesting.

Leeb writes:

“One number we continue to watch:  the relative performance of so-called secondary stocks, stocks too small to qualify as making an individual difference in the big-cap averages such as the S&P 500, as compared to the S&P, itself.  We have reported on this number before because it is a simple way to note the vulnerability of the market.  In no case for more than 40 years has a major market setback occurred when this indicator averaged above 1.”

“For example, during the 20 percent decline in 2011 the average of the indicator was about .19.  On the other hand, from May through December 2008—the heart of the last bear market—the indicator’s average fell deep into negative territory.”

“Over the past three months our trusty measure of underlying market strength has averaged about 4, a number wholly consistent with a bull market, one that suggests the market will likely make a new high in the not-too-distant future.  In a worst case, under these conditions, we would be surprised at anything more than a 7 percent correction.”

If anyone reading this is not currently a Resonate client, we offer a complimentary second opinion on your existing portfolio.  We’d love to hear from you!

Until next time, live your purpose every day!

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500
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15Jan
Market Updates
Economy
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15Jan
Articles / Links
Economy
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