Weekly Market Notes – December 18, 2017

Weekly_Market_Notes

For the Week of December 18, 2017

The Markets

The prospect of lower corporate tax rates have helped stocks reach record levels this year. With the passage of the long-awaited tax bill looking likely on Friday, the three major indexes closed at record highs. For the week, the Dow rose 1.34 percent to close at 24,651.74. The S&P gained 0.95 percent to finish at 2,675.81, and the NASDAQ climbed 1.41 percent to end the week at 6,936.58.

Returns Through 12/15/17 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 1.34 27.75 27.19 15.66 16.26
NASDAQ Composite (PR) 1.41 28.86 27.12 14.63 18.48
S&P 500 (TR) 0.95 21.86 20.70 12.73 16.02
Barclays US Agg Bond (TR) 0.29 3.64 4.69 2.29 2.12
MSCI EAFE (TR) 0.14 22.34 23.87 7.96 7.68

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.

 

Ninety Years Old — One out of every four Americans who reach age 65 will live at least another 25 years to age 90 (source: Social Security, BTN Research).

Market Signal? — The difference between the yield of the two-year Treasury note and the 10-year Treasury note fell to 53 basis points last Tuesday, Dec. 5 (i.e., 2.36 percent 10-year note yield less the 1.83 percent two-year note yield), the lowest spread recorded since Oct. 15, 2007, or more than a decade ago. Some economists, but not all, view a flattening yield curve as a sign of future economic weakness (source: Treasury Department, BTN Research).

See a Trend? — The U.S. economy grew by 4.2 percent per year over the 24 years from 1950 through 1973, a period of worldwide economic expansion. The U.S. economy grew by 3.2 percent per year over the 27 years from 1974 through 2000. It has grown by 1.8 percent per year over the last 16 years from 2001 through 2016 (source: Commerce Department, BTN Research).

 

WEEKLY FOCUS – Last Minute Financial Gifts

Looking for a last minute gift? No need to run to the all-night pharmacy for these financial presents.

For younger children or teens: Consider custodial accounts under the Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA). Money from these accounts can be used for things other than their education, but the custodian must be able to show how it will benefit the welfare of the minor account owner. UGMAs and UTMAs could also be considered a child’s version of a brokerage account as they can invest in their favorite products or toy companies like Disney, McDonald’s or Hasbro.

For the older teenager with earned income: It’s never too late to think about the future, and IRAs are a good place to start. They provide for the future and promote patience and delayed gratification. Stocks, U.S. Savings Bonds and CDs also make good gifts. They promote financial literacy in young investors. Plus, they provide a good way to learn the ups and downs of how the market works.

For the college graduate or newlywed: Give a gift of time. Younger adults just starting out may not have enough financial resources for serious investing – but they do need a financial strategy and could benefit from the guidance of financial advisor. Even an older adult child could benefit from a financial tune-up.

For young parents and grandchildren: Contributing to (or establishing) a 529 savings plan will help finance future qualified educational expenses for a loved one. It’s literally the gift that keeps on giving (well, for many years, anyway). Contributions aren’t deductible, but earnings aren’t subject to federal tax. Some states even offer incentives on contributions.

For your favorite charity: If you have a nonprofit on your gift-giving list, consider a present of stock. Giving stock directly to a charity can provide a substantial tax advantage over making a cash donation. If you sell appreciated stock to make a cash donation, you’ll face a capital gain that would offset any benefit you might receive from the cash donation. But if you donate stock – you don’t have to pay capital gains tax. Plus, the cash you would have donated stays put in your bank account.

Call our office today. Whether it’s picking just the right 529 or setting up a custodial account, we can help you wrap up this season’s perfect financial gift.

DWM Plan Well logo

*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 December 2017. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#1973733.1

Weekly Market Notes – December 11, 2017

Weekly_Market_Notes

For the Week of December 11, 2017

The Markets

A positive November jobs report boosted the major indexes Friday. The S&P 500 and the Dow Jones Industrial Average closed at record highs. For the week, the Dow rose 0.46 percent to close at 24,329.16. The S&P gained 0.39 percent to finish at 2,651.50, and the NASDAQ fell 0.11 percent to end the week at 6,840.08.

Returns Through 12/8/17 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 0.46 26.06 27.05 13.71 15.92
NASDAQ Composite (PR) -0.11 27.07 26.26 13.00 18.09
S&P 500 (TR) 0.39 20.72 20.45 11.09 15.74
Barclays US Agg Bond (TR) -0.02 3.34 3.48 2.31 2.04
MSCI EAFE (TR) 0.09 22.17 22.90 6.00 7.90

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.

 

Every Day — An estimated 10,100 Americans will turn 65 each day next year (2018). An estimated 11,500 will turn 65 every day in 2029 (source: Government Accountability Office, BTN Research).

 

Colleges — The Tax Cuts and Jobs Act proposes a 1.4 percent levy on the investment income from the endowments of private colleges, earnings that are currently untaxed. For example, Harvard’s $37.1 billion endowment would have owed $39 million on the $2.8 billion it earned in fiscal year 2017 (source: Harvard University, BTN Research).

Long-term Guess — When President Franklin D. Roosevelt proposed the Social Security retirement program in 1935, FDR’s financial people projected total Social Security expenditures would reach $1.3 billion in 1980 or 45 years into the future. Actual outlays in 1980 were $149 billion. Thus, the analysts’ 1935 estimate represented less than 1 percent of actual 1980 Social Security expenditures (source: Social Security, BTN Research).

 

WEEKLY FOCUS – Aim for a Regret-Free Retirement

We often learn from our mistakes, but it can be hard to recover from mistakes realized in your retirement years. Here are some to avoid before incurring their costly consequences.

Not saving more early on. Many Americans don’t get serious about retirement savings until their 40s and 50s – and miss out on the magic of compounding over time. Imagine you want to have $1 million in assets at age 65. With a 7 percent annual return, Morningstar calculated someone starting at 25 would need to save $381 a month, while a 35-year-old would need to put $820 aside each a month. A 45-year-old and a 55-year-old would need to save $1,920 and $5,778 monthly.

Retiring too young. You may think you can always go back to work later, but mature individuals often find it hard to re-enter the job market, especially at their previous pay. And delaying Social Security benefits really pays off. Begin drawing them at 62 instead of full retirement age, and receive 25 percent less for life. Wait to draw them at 70 and increase your payments by 32 percent.

Not diversifying. If you’re an executive or small business owner, you may be disproportionately invested in your company. But diversification is one of the most common strategies to reduce risk. Most advisors not only recommend investing in different products and companies but also balancing conservative investments with some risk and growth potential. Keep all your money in overly conservative investments, and inflation and taxes may erode your buying power.

Spending too much too soon. Dramatically reducing your portfolio in the early years (when you’re no longer adding to it) decreases its growth potential for years to come.

Underestimating retirement expenses. Even if you have your home paid for, it can require unexpected repairs, and property taxes may continue to grow. Then there’s federal taxes due on pension payments, retirement account distributions and Social Security benefits. Depending on your income, as much as 85 percent of your Social Security could be subject to tax. Many states add their own bills. And while you can tighten your belt in some areas, you should expect to spend more on health costs as you age.

When it comes to retirement, there are no do-overs. With so much at stake, it’s important to get it right. We can review your retirement plan, identify any shortfalls and help you develop a retirement budget to fit your future. Call to schedule an appointment.

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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 December 2017. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 1968428.1

Weekly Market Notes – December 4, 2017

Weekly_Market_Notes

For the Week of December 4, 2017

The Markets

Stocks fell Friday following ABC’s report that former National Security Adviser Michael Flynn would testify he was told to contact Russians during the 2016 presidential campaign. Stocks regained ground after Senator Mitch McConnell told reporters the Senate had enough votes to pass the tax bill. For the week, the Dow rose 3.00 percent to close at 24,231.59. The S&P climbed 1.60 percent to finish at 2,642.22, and the NASDAQ fell 0.60 percent to end the week at 6,847.59.

Returns Through 12/1/17 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 3.00 25.49 29.34 13.73 16.07
NASDAQ Composite (PR) -0.60 27.20 30.40 13.15 17.87
S&P 500 (TR) 1.60 20.25 23.06 11.09 15.70
Barclays US Agg Bond (TR) -0.03 3.36 3.91 2.25 2.04
MSCI EAFE (TR) -0.94 22.06 26.13 5.78 8.06

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.

 

Impacts Just a Few — The House version of the Tax Cuts and Jobs Act would limit the deduction of mortgage interest expense to that created by debt of $500,000 or less. Just seven percent of the 7.7 million home mortgages originated in 2016 were for loans that exceeded $500,000 (source: Inside Mortgage Finance, BTN Research).

The Last Time — The last 10 percent correction for the S&P 500 was a 13.3 percent drop over the three months that ended Feb. 11, 2016. The last 20 percent or more bear for the S&P 500 was a 56.8 percent drop over the 17 months that ended March 9, 2009 (source: BTN Research).

Small Range — For the seven years from 2010 to 2016, the S&P 500 experienced 417 trading days in which the index gained or lost at least 1 percent (total return) for the day, an average of 60 per year. YTD through Friday, Nov. 24, 2017, the S&P 500 has produced just nine trading days of 1 percent up-or-down movement (source: BTN Research).

 

WEEKLY FOCUS – Tips to Keep Your Finances Safe While Shopping Online

Has online shopping become part of your holiday norm? You’re not alone. The National Retail Federation predicts online retail will grow 8-12 percent in 2017. That’s up to three times higher than the growth rate of total retail sales. It’s a safe bet to say that where the money is, so are the criminals.

Chances are if you’re a frequent online shopper, you don’t remember from which site you bought a particular gift. Keep records of all transactions. Write down what you bought, when and from what website. If you shop from your computer, make sure it’s secure with up-to-date software (operating system, browsers and any apps). Use a good antivirus. Connect to the internet using a secure connection.

It can be tempting to get some shopping in while you’re waiting in the coffee shop or hotel lobby. But you should never use free public WiFi to buy online.

Using apps can help ensure online safety, but you should download or buy apps only from legitimate retail or app stores. Verify the source before you download.

Only shop at sites that take secure payment methods, such as credit cards or PayPal. Look for the lock icon in your browser address window and for URLs with https rather than http. The “s” stands for secure.

Use a credit card, not a debit card. Credit cards carry securities that debit cards don’t. When possible, use payment technologies like Apple Pay, Samsung Pay or Android Pay. The seller receives a one-use token, not your actual credit card number.

When deals pop up through social media or email, don’t open attachments or click through links. Phishers want you to click on links to gain information or introduce malware. If you receive spam email, don’t use the Unsubscribe button. A click is still a click. Just mark it as Spam and delete.

Finally, keep as little information on your smart phone and tablet as possible. These devices are far more than just about calling home or reading a book. Unfortunately most of us don’t take the time to secure them. Faux online shops and cybercriminals can infect your smart phone or mobile device to access phone numbers, notes and even app contents.

Cybercrime can compromise not only your shopping but also your long-term financial plans. Call our office today. We can help you protect your finances from cybercriminals.

DWM Plan Well logo

*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 December 2017. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 1962611.1

December 2017 Monthly Outlook – ‘Most of the Surprises’

‘ In a bull market most of the surprises happen on the upside’.  This is an old stock market axiom that seems to be coming true this year.

Coming into November 2017, I was positive but cautious based on my read of the markets and investor sentiment.  My cautious stanch looked right until 2 of the last 3 trading days of the month (11/28 & 11/30) when the stock market had an upside surprise of 1.77% in the last week of the month.   The global synchronized economic expansion appears to be accelerating as can be seen in the charts below showing the Citi Economic Surprise Index. This fueled the upside move in stocks.

12.5.2017_MONTHLY_OUTLOOK_CHART1

Source: Bespoke Investment Group

The US economy continues to show strength, with the second estimate of 3rd quarter 2017 GDP above 3%.

12.5.2017_MONTHLY_OUTLOOK_CHART2

December has traditionally been a positive month for stocks, with the S&P 500 only having 2 down  years of the last 100 years with an average gain of 1.55%

12.5.2017_MONTHLY_OUTLOOK_CHART3

Source: Bespoke Investment Group

While all of the above is quite positive, I am concerned about a near-term political risk – that being that the US Government will run out of money on December 8th, unless Congress raises the federal debt ceiling and funds the government going forward. It was originally due back on September 8th but was extended for 3 months due to the natural disasters in Texas and Florida.  Another short-term extension is a possibility, but so is a government shutdown if the parties (Republicans and Democrats) can’t reach an agreement.

The other change I am seeing is a rotation out of growth oriented industries like technology, and into more value oriented industries like financials.  I am adjusting portfolios accordingly.

As always, please call me if you have any questions or concerns. lease pass this note on to anyone you feel will benefit from the information.

Special thanks: the best compliment I can receive is a referral from a client or colleague.

I want to extend a special thanks to clients & colleagues who have recently referred me to family and friends:

Marianne H.      Eloise B.

 

December Calendar of Events   (comments and additions for future months are always welcome)

  • December is Universal Human Rights Day.  Let’s pray that all people, regardless of race, religion, gender, or nationality  can learn to treat others as we all wish to be treated.

 

December 10th            Human Rights Day   –  I have cherished the ideal  of a democratic and free society… it is an ideal for which I am prepared to die. – Nelson Mandela

December 12 – 20th    Happy Hanukkah  –    May it also be a festival of love, happiness, success, and health in your world now and always.

December 15th            Healthcare open enrollment – for coverage starting Jan 1, 2017 – ENDS!   

December 19th            Christian’s birthday

December 21st                  Winter Solstice    –       The shortest day of the year and the start of winter

December 25th            Merry Christmas – have a wonderful holiday.  Let’s all remember the true significance of this day – the birth of Christ. 

 

Sources: Bespoke Investment Group, Raymond James & Associates, 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.