The Last Stage of a Bubble is Acceptance

Tulip bulbs, the Dutch East India Trading Company, Japanese real estate, tech stocks, US housing—what these disparate assets have in common is a history of bubbles. Sovereign bonds are set to join that list soon as their bubble nears its end.

A year ago, the 10-year US Treasury yielded 3.2% and essentially only Japanese bonds yielded less than zero. Today, negative-yielding bonds total over $16 trillion globally, with issuers ranging from Austria to Slovenia. Despite negative interest rates, massive inflows continue.  Think about that.  Sovereign governments are CHARGING investors interest to buy their bonds and yet people are still buying them!  At negative yields, assets perceived to be the safest in the world may actually be among the riskiest.

Denial ain’t just a river in Egypt – In 1999, tech stocks defied all logic and valuations. Champions of the frenzy denied fundamental measures of value, calling it a “new paradigm.” In 2007, housing bulls pushed home prices sky-high, arguing that “housing prices never go down.” And at the height of the 17th-century Tulip Mania, one scholar claims that a single tulip bulb would have fetched enough to “purchase one of the grandest homes on the most fashionable canal in Amsterdam. Today, justification for this sovereign debt bubble includes arguments like “negative rates are normal.” If there was any doubt, one sure sign of a bubble is when people stop questioning whether it’s a bubble.

The contagion effect is real –  When tech stocks deflated, a recession soon followed in 2001. The popping of the housing bubble in 2008 caused the deepest recession since the Great Depression. We can’t say for certain what will cause today’s conditions in government bonds to change, but when it does the outcome is not going to be pretty.

Source: Blackstone Joe Zidle Chief Investment Strategist

 

Given our concern about this bubble, we are using alternative solutions for protection – staying mostly in shorter-term bonds, non-traditional bonds and investments that have the ability to adjust to rising interest rates.

Stay tuned – this could get interesting!

 

 

 

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

Weekly Market Notes – August 19, 2019

Weekly_Market_Notes

For the Week of August 19, 2019

The Markets

Major indexes rallied on the final day of a volatile week on Wall Street. Contributing to the optimism were a rise in bond yields from historic lows on Thursday, a rally in bank stocks and news of a potential economic stimulus in Germany. Still, the three major averages posted their third week of losses. For the week, the Dow fell 1.40 percent to close at 25,886.01. The S&P lost 0.94 percent to finish at 2,888.68, and the NASDAQ dropped 0.79 percent to end the week at 7,895.99.

Returns Through 8/16/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -1.40 12.75 3.74 14.46 11.91
NASDAQ Composite (PR) -0.79 19.00 1.15 14.74 12.08
S&P 500 (TR) -0.94 16.73 3.77 12.10 10.37
Barclays US Agg Bond (TR) 0.95 8.78 10.02 3.07 3.31
MSCI EAFE (TR) -1.45 7.75 -2.92 4.94 1.81

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

I’m All Done With My Work – The average American worker has increased their productivity by 97 percent in the last 35 years, i.e., an average worker can complete in one hour as of Dec. 31, 2018, the same amount of work that it took them two hours to finish as of Dec. 31, 1983 (source: Department of Labor, BTN Research).

Big Numbers — The total net worth of Americans as of March 31, 2019, was $108.6 trillion, including $29.1 trillion (27 percent of the overall net worth total) in retirement accounts (source: Investment Company Institute, BTN Research).

Should We Buy Today — In June, 70 percent of Americans surveyed thought it was a good time to buy a house. That percentage was as high as 83 percent in December 2014 and has been as low as 57 percent in October 2008 (source: University of Michigan Surveys of Consumers, BTN Research).

 

WEEKLY FOCUS – When It’s Time to Review Your Estate Plans

Estate plans aren’t static documents. You don’t just write them, tuck them away in your important papers file and forget about them. Life is filled with unforeseen changes and challenges. Think of your estate plan like you would your car. Both need periodic check-ups and tune-ups. The difference is that your car manual clearly lays out when they’re needed. But what about your estate plan? Here are some events that may call for a review and revision:

  • Entering a New Relationship. For example, in many areas, marriage cancels any will prepared by either spouse prior to the union, unless the will is made in contemplation of marriage. Even if you aren’t formalizing the union with marriage vows, you may want to name a common-law partner beneficiary of your estate.
  • Changes in State and Federal Laws. Has the state you live in enacted new laws that could impact your will and finances? Have you moved to another state? It’s not just personal life changes that may affect your estate plans.
  • Major Life Events. The birth of a child or grandchild, an adoption, marriage, divorce or death all affect your will and estate.
  • Disability of a Beneficiary or Dependent. In addition to events in your own life, consider events in the lives of your heirs, representatives, trustees or executors. Have your relationships with the people named in your will changed? Their circumstances may have changed, which could also impact your estate planning and will.
  • Starting, Buying or Selling a Business. If you sell a business included in your will, you need to update it. The same goes if you are buying or starting a business.
  • Mid-Life, Peak Earning Years or Changes to Your Financial Situation. Mid-life is a good time to revisit your estate plan. Think about how your family would carry on financially if you suddenly passed away. If you’ve changed your financial position, the same goes for your estate.

Even if you haven’t experienced any major life or financial challenges, the passage of time itself can impact your estate plans. A periodic review of every 3-5 years is a good rule of thumb to follow. Call our office today. We can review your plans with you and your estate planner to ensure they are up-to-date and encompass any changes that need to be made. Securities America and its representatives do not provide tax advice; coordinate with your tax advisor regarding your specific situation.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright August 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2692905.1

Weekly Market Notes – August 12, 2019

Weekly_Market_Notes

For the Week of August 12, 2019

The Markets

Wall Street closed a volatile week with stocks dropping Friday. A contributing factor was a remark made by President Trump that diminished hopes of a U.S. – China trade deal in the near future. The President indicated talks scheduled for September may not take place. For the week, the Dow fell 0.61 percent to close at 26,287.44. The S&P lost 0.40 percent to finish at 2,918.65, and the NASDAQ dropped 0.56 percent to end the week at 7,959.14.

Returns Through 8/09/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -0.61 14.35 5.53 15.10 12.40
NASDAQ Composite (PR) -0.56 19.95 0.85 15.07 12.74
S&P 500 (TR) -0.40 17.84 4.38 12.44 10.86
Barclays US Agg Bond (TR) 0.57 7.75 9.32 2.71 3.21
MSCI EAFE (TR) -1.14 9.34 -4.62 5.70 2.46

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

Buying From America — The top five countries purchasing American exports in 2018 were Canada, Mexico, China, Japan and the United Kingdom (source: Commerce Department, BTN Research).

Not Now — The last year when the highest close during the year for the S&P 500 occurred during August was in 1987. Since 1987, the high close for the index has occurred in December 17 times (source: BTN Research).

Bonds — The bond market was up 6.3 percent YTD (total return) through July 31. The last time the bond market had a calendar year performance better than 6.3 percent was in 2011 when bonds gained 7.8 percent. The Bloomberg Barclays Aggregate bond index, calculated using 6,000 publicly traded government and corporate bonds with an average maturity of five years, was used as the bond measurement (source: BTN Research).

 

WEEKLY FOCUS – When You Are the Beneficiary of an IRA

Immediately after the loss of a family member, deciding what to do with the deceased’s IRA may not seem important. Still, if you’re the beneficiary, it’s imperative to make a good decision to avoid paying penalties and extra taxes. As a beneficiary of an IRA or employer-sponsored plan, you can open an inherited IRA account after the original owner dies. If you want the funds to keep growing tax-deferred, your options vary depending on your relationship to the deceased.

If you’re a surviving spouse, you’ll have the most options. You can treat the funds as your own, even adding them to an IRA you already have. However, if your deceased spouse was 70½ or older, their annual required minimum distribution (RMD) must be subtracted – if it hasn’t been – before rolling the assets into your account. A transfer made within 60 days of your spouse’s death is not taxed as a distribution, so the money can continue to grow tax-deferred. But you won’t be able to use the money transferred without paying a penalty if you have not reached 59½.

If you open an inherited IRA, you can take distributions over five years OR choose lifetime distributions. Lifetime distributions from an inherited IRA must begin by Dec. 31st of the year your spouse would have turned 70½ or Dec. 31st of the year following their death – whichever is later.

If you’re not a spouse, you will need to create a new inherited IRA account and transfer the funds. You won’t be allowed to make new contributions to the account. You will have a few choices for distributions without an early withdrawal penalty.  You can withdraw the money within five years or take annual distributions over your lifetime. Lifetime withdrawals must start by Dec. 31st of the year following the account holder’s death. This will change if the SECURE Act (a retirement bill currently in the Senate) passes; non-spouse beneficiaries will need to withdraw money from an inherited IRA within 10 years.

There are many more things to consider with inherited IRAs, with different focuses for post-tax traditional IRAs and Roth IRAs. We can work with you, your attorney and your accountant to guide you through the important rules about required minimum distributions and how they’re taxed. Call our office to schedule an appointment with us and your other trusted advisors. Consult your tax advisor regarding your own unique situation.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright August 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2678539.1

Weekly Market Notes – August 5, 2019

Weekly_Market_Notes

For the Week of August 5, 2019

The Markets

Stocks dropped Friday amid renewed trade fears. On Thursday, President Trump announced he would impose a 10 percent tariff on $300 billion worth of Chinese imports not currently subject to duties beginning Sept. 1. The S&P 500 and the NASDAQ saw their biggest weekly drops for the year, and the Dow had its second-worst week of 2019. For the week, the Dow fell 2.59 percent to close at 26,485.01. The S&P lost 3.07 percent to finish at 2,932.05, and the NASDAQ dropped 3.92 percent to end the week at 8,004.07.

Returns Through 8/02/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -2.59 15.05 7.06 15.81 12.64
NASDAQ Composite (PR) -3.92 20.63 2.58 15.93 12.96
S&P 500 (TR) -3.07 18.32 5.83 13.03 11.04
Barclays US Agg Bond (TR) 0.98 7.14 9.00 2.57 3.15
MSCI EAFE (TR) -2.65 10.61 -2.89 6.62 2.18

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

Home Price — The median sales price of existing homes sold in the U.S. in June 2019 was $285,700, a record price. However, the median sales price of existing homes sold in July 2006 ($230,200) is equal to $289,750 in today’s dollars, a record price on an inflation-adjusted basis (source: National Association of Realtors, BTN Research).

Very Different Periods — In the last 25 years, the U.S. suffered just two recessions. In the 25 years before that, the country suffered five recessions (source: National Bureau of Economic Research, BTN Research).

World’s Biggest — As of March 31, the U.S. economy was $21 trillion in size. Fifty years ago, on March 31, 1969, the U.S. economy was $1 trillion in size (source: Commerce Department, BTN Research).

 

WEEKLY FOCUS – Communicate and Plan to Protect Financial Legacy

If you’re like many parents and grandparents, you want to leave a financial legacy to your children and grandchildren. It’s estimated about $30 trillion in assets will be transferred from baby boomers to the next generations over the upcoming decades. Unfortunately, research suggests 70 percent of family fortunes will be gone after just three generations. To help ensure your assets live on, there are several steps you should take long before your wealth changes hands.

Communicate carefully: It’s never too early to talk to children and grandchildren about wise spending and saving habits. It’s good to pay kids an allowance, teach them to save a portion of their earnings and let them spend some of what they earn. But make sure they understand the difference between wants and needs and the importance of saving for a big purchase.

When age-appropriate, introduce them to financial literacy classes and materials that will teach them the importance of saving and investing. Remember, the best financial lessons go beyond wise use of money. They also include talks about the family values, such as giving to charity, that you would like to continue.

Develop a long-term plan: When your kids or grandkids are old enough, introduce them to your financial advisor and have your advisor assess their financial literacy level. If they uncover concerns, you’ll still have time to address them before your heirs take control of your assets.

To further protect your assets once they’ve changed hands, consider developing a trust with detailed provisions outlining how and when the funds will be distributed and what they can be used for. You can also use a trust to delay the transfer of funds until the recipient reaches a specified age or for specified needs, such as health and education. Even if you don’t establish a trust, it’s important to put your intentions down on paper, so your heirs will have a detailed plan to stick to after you’re gone.

Make sure all your estate planning documents are complete and up-to-date. If you pass away with inaccurate or out-of-date estate documents, your plan may not come to fruition. You’ve worked hard to build a financial legacy that you can share with your children and grandchildren. To start building a plan that fits your family, give us a call today.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright August 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2669317.1

August 2019 Monthly Outlook – Uncertainty

There is always uncertainty – whether we are talking about weather, financial markets, or sporting events, it doesn’t matter. Anticipating future events comes with the unknown. Predict the daily weather one year from now, highly uncertain. Predict the weather tomorrow and the likelihood of a successful prediction increases, but it is still far from exact. The same can be said for sports. Have a five-run lead in the 9th inning? It’s probably safe to say that your team will win but it isn’t certain.

Financial markets are a bit of an odd duck. In the prior two examples, shortening the prediction time, one year to one day for the weather, and one game to one inning for the baseball game, increased our certainty. With financial markets, longer is generally easier because most things that matter to financial markets tend to trend around an average over long periods of time. When markets deviate, assuming they will return to rend over the long run is usually a safe bet. However, when we are predicting the short-term for financial markets, there is heightened degree of uncertainty.

Case in point:  Since April 2019, I have been writing that I was concerned about the divergence between what I was seeing in economic indicators and what the financial markets were doing.  Since April the stock market (basis S&P 500) kept creeping higher, achieving several new all-time highs culminating in a record close of 3025.86 on July 26, 2019.  As I am writing this note at 11am EST on 8/2/19, the S&P 500 has fallen 3.6% over the last 4 days.

Here’s the irony – the economic indicators I follow have actually been improving over the last several weeks.  GDP for the 2nd quarter came is slightly better than expected, with consumer spending being very strong.  The job market remains robust, while inflation remains below 2%.  Corporate profits for the 2nd quarter are coming in much better than I expected. Despite the improving data the Federal Reserve cut interest rates on July 31st for the first time in 10 years.

While indicators in the US are solid and improving, the same is not true globally. The International Monetary Fund (IMF) reduced their forecast for global economic growth to 3.2% (down from 3.5% at the beginning of the year), stating the “ risks to the forecast are mainly to the downside”.  The two biggest factors they cited were the US-China trade war and Brexit (UK leaving the EU).

The near-term uncertainties I am monitoring are:

  1. The US-China trade war – which shows no sign of resolution given the President’s decision on 8/1/19 to impose additional tariffs on China starting 9/1/19.
  2. Brexit – The UK has a new Prime Minister who needs to negotiate a deal to leave the EU by October 31, 2019.  Until that is resolved I expect European economies to be on hold.

Investing seasonality – the chart below shows the average monthly performance of the S&P 500 since 1954.  As you can see August through October is historically the weakest period during the year.

8.2.2019_MONTHLY_OUTLOOK_CHART_1

Given all factors I remain cautious and neutrally positioned in investment portfolios with heightened risk monitoring. Feel free to call us with any questions or concerns.

 

August 2019 Calendar of Events   (comments and suggestions always welcome)

August 2nd          International Beer Day

August  8th        My birthday!

August 13th       International Left-Handers Day

August 16th      National Tell a Joke day

August 26th       Women’s Equality Day – as the son of a single mom and the father of 3 wonder young women, I support improving equality for women in all areas.

P.S. Thank you for your referrals. They are making a big difference in my practice. Feel free to share my name with your friends on Facebook or LinkedIn. Thank you to Ben G., Michele M. and Melanie M. for introductions to friends and family this month.

Sources:  Raymond James & Associates, Nottingham Advisors, CNBC.com

 

 

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

Weekly Market Notes – July 29, 2019

Weekly_Market_Notes

For the Week of July 29, 2019

The Markets

The S&P 500 and the NASDAQ hit all-time highs Friday following a quarterly report showing U.S. economic growth slowed less than expected. Strong earnings from tech giants like Alphabet and Intel also boosted the S&P.  For the week, the Dow rose 0.14 percent to close at 27,192.45. The S&P climbed 1.66 percent to finish at 3,025.86, and the NASDAQ gained 2.26 percent to end the week at 8,330.21.

Returns Through 7/26/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 0.14 18.11 9.06 16.49 12.61
NASDAQ Composite (PR) 2.26 25.54 6.09 17.69 13.36
S&P 500 (TR) 1.66 22.06 8.81 14.01 11.13
Barclays US Agg Bond (TR) -0.03 6.09 7.97 2.27 2.92
MSCI EAFE (TR) -0.20 13.61 -1.51 7.92 2.29

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

Up and Up and Up — U.S. oil production for all of 2019 is projected to be 12.36 million barrels a day, then rising to 13.26 million barrels a day in 2020. Actual oil production for the U.S. in 2009 was 5.35 million barrels a day (source: International Energy Agency, BTN Research).

Have Started Saving for Retirement — 58 percent of 5,000 Americans surveyed currently participate in an employer-sponsored retirement plan or have begun making pretax contributions to an IRA (source: Financial Health Network, BTN Research).

Higher Risk, Higher Return — The stock market has produced a total return of 14.7 percent per year over the last 10 years through June 30, 2019. The worst quarter over the last decade was a drop of 13.9 percent in the 3rd quarter of 2011. The S&P 500 was used as the stock measurement for this statistic (source: BTN Research).

 

WEEKLY FOCUS – One of the Fastest Growing Crimes

According to the Identity Theft Resource Center, 27 percent of data breaches in 2017 were medical or health related. This is unfortunate news on several fronts. Medical identity theft can be difficult to detect, be hard to correct and create potential health risks.

Why it’s growing: Medical identity theft is becoming more common for several reasons. Medical providers’ security is often weak. For example, hospitals may allow a wide variety of employees – from doctors to techs and admins – to access patients’ information. One dishonest employee could sell thousands of dollars’ worth of electronic health records. (Because medical records contain so much personal information, a medical record can sell for $100 on the dark web.)

Why it’s dangerous: Imagine the ramifications if a thief’s health records get mixed with yours. You could be given the wrong blood type or a drug you’re highly allergic to. You could even be turned down by future insurers because of a serious illness or condition you never had. If an insurance company or the government pays the bills, unsuspecting victims may not notice something is amiss. Getting records corrected can be complicated. Medical insurers may be reluctant to remove inaccurate information if an action was taken based on the information.

Although federal law limits fraudulent credit charges to $50, it doesn’t offer the same protection for medical identity theft. According to a survey by cybersecurity research firm, the Ponemon Institute, medical identity victims who lost money spent $13,500, on average, to resolve their problem.

What you can do to prevent it: Watch your Explanation of Benefits statements for incorrect information. Ask your health care provider for a copy of your current file and correct anything that’s wrong. Monitor your credit report for unpaid medical bills. Ask medical providers how they protect your information. Don’t provide your Social Security number unless absolutely required to do so. Never give out medical or personal information over the phone or by email – unless you started the communication and are sure who you are dealing with. Be wary of offers for free health services or products. Shred outdated health insurance forms, statements and prescription labels.

Protecting your personal information is important to us. For more information on obtaining and monitoring your accounts and credit history and for tips on protecting your identity, please give our office a call.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright July 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2660119.1

Weekly Market Notes – July 22, 2019

Weekly_Market_Notes

For the Week of July 22, 2019

The Markets

After breaking records earlier in the week, stocks dropped Friday and posted weekly losses. Contributing factors included growing tension in the Middle East, mixed corporate earnings reports, unsettled trade talks between China and the U.S. and concern over the Federal Reserve’s next move. For the week, the Dow fell 0.61 percent to close at 27,154.20. The S&P lost 1.21 percent to finish at 2,976.61, and the NASDAQ dropped 1.18 percent to end the week at 8,146.49.

Returns Through 7/19/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -0.61 17.95 10.92 16.27 12.39
NASDAQ Composite (PR) -1.18 22.78 4.10 17.39 12.95
S&P 500 (TR) -1.21 20.06 8.30 13.48 10.77
Barclays US Agg Bond (TR) 0.38 6.13 7.46 2.25 2.95
MSCI EAFE (TR) -0.14 13.84 0.28 8.26 2.42

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

The Very Richest — The top 1 percent of wage earners in the U.S. reported at least $480,804 of pretax income in 2016 and owned an estimated 29 percent of the total wealth in the country (source: Survey of Consumer Finances, BTN Research).

Going, Going, Gone — 7,037 American retail stores have closed YTD through June 30, 2019, already exceeding the 5,864 closures that occurred during all of calendar year 2018. This year’s store closures are on pace to exceed the all-time record of 8,139 from 2017 (source: Coresight Research, BTN Research).

From Lowest to Now — The yield on the 10-year Treasury note closed at 1.36 percent on July 8, 2016, its lowest closing yield ever. 10-year notes have been traded in the U.S. since 1790. The yield on the 10-year note closed Friday, July 5, 2019, at 2.04 percent (source: Treasury Department, BTN Research).

 

WEEKLY FOCUS – The Importance of a Good Withdrawal Plan

So, you’ve developed a financial plan for your future. You know how you’re going to accumulate the savings and investments needed to provide a comfortable retirement. But do you have a plan for withdrawing savings during retirement? If you don’t create a well-thought out plan for accessing funds from your accounts, you could lose savings to taxes or even run out of money.

Here are some things to keep in mind when developing your budget and withdrawal plan.

Budget for your future lifestyle. Your budget is a good place to begin in determining your monthly retirement withdrawals. Will you continue your current financial lifestyle? Adopt a more conservative approach? Or do you have goals that will require a higher budget? In addition to living expenses, include travel, entertainment and the possibility of life-changing events like marriage or health issues.

Know how taxes will affect your assets. Having assets in accounts that vary in terms of their tax treatment could be wise. Your assets likely fall into tax-deferred, taxable or tax-free categories. Knowing how your savings will be taxed is important when developing your withdrawal plan. For example, depending upon your circumstances and goals, it might be best to use the profits from taxable investment accounts first and later look to your tax-deferred accounts, such as a traditional IRA or 401(k). Most experts agree Roth IRAs should be the last account to tap, giving them as much time as possible to grow tax-free.

Know your required minimum distributions (RMDs). When you reach 70½, certain types of accounts require you begin withdrawing savings. If you don’t, the tax penalty could be as high as 50 percent of the required distribution. The rules for RMDs can be confusing. Your financial professional can help you understand them and avoid fees.

Just as it’s never too early to start saving for retirement, it’s never too soon to think about how you’ll withdraw from those savings in retirement. There are many approaches to withdrawal plans, but the best plan is based on your future goals and the kind of investment accounts you have. Call our office today. We can help you create a well-thought out withdrawal plan designed to provide peace of mind, protect your retirement assets and reduce your tax burden. Securities America and its representatives do not provide tax advice; coordinate with your tax advisor regarding your specific situation.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright July 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2651517.1