August 2018

Weekly Market Notes – August 27, 2018

August 27, 2018August 27, 2018jpmccarthyLeave a comment

Weekly_Market_Notes

For the Week of August 27, 2018

The Markets

Friday was a record-setting day on Wall Street. The NASDAQ reached an all-time high. The S&P also broke a record and clinched its longest bull market run. Comments by Federal Reserve Chairman Jerome Powell that described the economy as strong and predicted continued gradual rate increases, contributed to the market’s positive performance. For the week, the Dow rose 0.51 percent to close at 25,790.35. The S&P gained 0.88 percent to finish at 2,874.69, and the NASDAQ climbed 1.66 percent to end the week at 7,945.98.

Returns Through 8/24/18	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	0.51	5.90	21.09	20.50	14.16
NASDAQ Composite (PR)	1.66	15.10	26.70	20.63	16.78
S&P 500 (TR)	0.88	8.87	20.16	17.34	13.89
Barclays US Agg Bond (TR)	0.26	-0.84	-0.58	1.53	2.60
MSCI EAFE (TR)	1.56	-2.55	4.73	7.79	4.98

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.

What We Spend — National health expenditures were $3.34 trillion in 2016, projected to grow to $5.70 trillion by 2026. Thirty-seven percent of the $3.34 trillion are Medicare and Medicaid expenditures (source: Centers for Medicare & Medicaid Services, BTN Research).

Increasing Costs — Inflation (using the consumer price index) advanced 2.95 percent on a year-over-year basis ending July 3, inflation’s largest annual increase since Dec. 2011. The consumer price index is a measure of inflation compiled by the U.S. Bureau of Labor Studies (source: Department of Labor, BTN Research).

The Back End — The highest closing value during the year for the S&P 500 has occurred in the final four months of the year (i.e., September-December) in 12 of the last 15 years or 80 percent of the time (source: BTN Research).

WEEKLY FOCUS – Will Aretha Get the “Respect” She Desired?

Throughout her life, Aretha Franklin closely guarded her private life, particularly her finances. In fact, she sometimes asked to be paid in cash. The Queen of Soul’s real estate holdings alone made her a multimillionaire, but her debts and her musical rights make it difficult to estimate the value of her estate.

Although she battled pancreatic cancer, she left no will according to documents filed following her death earlier this month. Twice divorced, Franklin’s four sons are her likeliest heirs. But shirt-tail relatives and long-lost friends may show up looking for a payout. Don Wilson, the attorney who represented the soul legend on entertainment matters for 28 years, said he frequently urged Franklin to establish a trust. A trust, Wilson said, would have expedited settling the estate, kept it out of probate and preserved Franklin’s privacy.

Franklin’s estate planning failure is not an anomaly among famous individuals. Jimi Hendrix, Prince, Bob Marley, Martin Luther King Jr. and Picasso all died without wills. With no direct descendants or immediate family, billionaire Howard Hughes left no will when he died in 1976. This led to a 34-year battle in which fake wills surfaced and supposed wives and children came forward. It was widely known Hughes didn’t want his wealth going to distant relatives and often assumed he wanted it go to the Howard Hughes Medical Institute. In the end, a lot of money did go to the Medical Institute, but a huge chunk also went to around 1,000 people, including 200 distant relatives.

It’s difficult to understand why these extremely wealthy individuals, with so much at stake and ample resources to hire the best legal and financial advisors, didn’t do a better job of safeguarding their estates.

But according to a recent survey from Caring.com, only four in 10 American adults have a will or living trust. Thankfully, 58 percent of baby boomers do, and 82 percent of those 72 or older do. However, 78 percent of millennials and 64 percent of Gen Xers do not have wills. Younger generations also need wills, especially parents who want to ensure their children are provided for financially and cared for by the guardians of their choosing.

Even for ordinary individuals, estate planning can be complex, and it’s crucial to get it right. We would be happy to work with you, your attorney and tax professional to find solutions for your situation.

* 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 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2223718.1

Weekly Market Notes – August 20, 2018

August 20, 2018jpmccarthyLeave a comment

Weekly_Market_Notes

For the Week of August 20, 2018

The Markets

The three major indexes gained Friday following a Wall Street Journal report of planned talks between Beijing and Washington regarding their trade dispute and promising comments from Mexico’s economy minister about resolving outstanding issues on the North American Free Trade Agreement. For the week, the Dow rose 1.48 percent to close at 25,669.32. The S&P climbed 0.66 percent to finish at 2,850.13, and the NASDAQ dropped 0.29 percent to end the week at 7,816.33.

Returns Through 8/17/18	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	1.48	5.36	20.71	16.37	13.95
NASDAQ Composite (PR)	-0.29	13.22	25.63	15.36	16.75
S&P 500 (TR)	0.66	7.92	19.57	13.00	13.80
Barclays US Agg Bond (TR)	-0.02	-1.10	-0.78	1.62	2.56
MSCI EAFE (TR)	-1.10	-4.05	2.80	4.38	4.55

Not as Optimistic — Sixty-five percent of Americans surveyed in July 2018 think it’s a good time to buy a house. That percentage was as high as 83 percent in December 2014 and hasn’t been as low as 65 percent since December 2008 (source: University of Michigan Surveys of Consumers, BTN Research).

The American Dream — Twice as many American homeowners were created in the last year as had been created in the previous 10 years. The number of U.S. homeowners grew by 1.8 million (to 77.9 million) over the 12 months ending June 30, 2018, double the 0.9 million new homeowners that were added over the decade ending June 30, 2017 (source: Census Bureau, BTN Research).

Up This Year — Of the 15 stocks in the S&P 500 index that lost at least 30 percent in calendar year 2017, 12 have a positive return YTD through July 31. Four of the 12 up stocks have gained at least 28 percent YTD in 2018 (source: BTN Research).

WEEKLY FOCUS – Estate Planning for Family Member With Special Needs

Estate planning is important to any family. But if your family includes a loved one with special needs, it’s even more critical to have a detailed plan that covers issues, such as housing, medical care, services for your disabled family member and how these necessities will be paid for. The first step to ensuring you have an estate plan that will meet the needs of a family member with an emotional, behavioral or physical disability or impairment is to hire an estate planning attorney with expertise in government regulations and health care. In addition to having a qualified attorney in your corner, your estate plan should include:

A letter of intent. This document makes caregivers aware of details, such as preferences, routines and abilities.
A special needs trust. This specialized trust allows you to pass along assets without disqualifying your loved one from government programs.
A trustee. This individual or corporate entity will ensure the details of your special needs trust are executed to your wishes.

Establishing a special needs trust and naming someone to oversee it are just the first steps toward an effective estate plan. It’s also vital to ensure other pieces of your plan, such as powers of attorney, work in conjunction with the trust.

An ABLE account may be another option to help meet your loved one’s need. An ABLE account is similar to a Roth IRA or a 529 college savings plan in that it is funded by after-tax money but income earnings aren’t taxed when used for qualified disability-related expenses. Eligibility is limited to individuals who were disabled before age 26. Anyone who meets this age criteria and receives SSI or Social Security Disability (SSDI) benefits is automatically eligible for an ABLE account. An individual who does not receive SSI or SSDI but meets the age requirement may still be eligible for an ABLE account if they meet Social Security’s criteria for limitations and receive a letter of certification from a physician. Anyone can contribute to an ABLE account, but contributions are limited to $15,000 per year and must be made using post-taxed dollars. Contributions are not federally tax deductible, but some states allow them to be used for state-level tax deductions.

To learn more ways to prepare an estate plan that will benefit a loved one with special needs, call our office today. We will work with you and your estate planning attorney to develop a plan that’s right for your family.

Weekly Market Notes – August 13, 2018

August 13, 2018jpmccarthyLeave a comment

Weekly_Market_Notes

For the Week of August 13, 2018

The Markets

The three major indexes fell Friday amid Turkey’s accelerated currency volatility, which is starting to impact global markets. The day’s losses knocked the S&P 500 and the NASDAQ down from near-record levels. For the week, the Dow fell 0.44 percent to close at 25,313.14. The S&P lost 0.18 percent to finish at 2,833.28, and the NASDAQ rose 0.35 percent to end the week at 7,839.11.

Returns Through 8/10/18	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	-0.44	3.82	18.52	15.69	13.13
NASDAQ Composite (PR)	0.35	13.55	26.09	15.39	16.45
S&P 500 (TR)	-0.18	7.21	18.47	12.75	13.18
Barclays US Agg Bond (TR)	0.42	-1.08	-0.62	1.74	2.32
MSCI EAFE (TR)	-1.46	-2.98	3.95	4.01	4.76

Significant — Nineteen percent of the U.S. population receives a monthly benefit payment from Social Security, i.e., 62 million beneficiaries out of 328 million Americans (source: Social Security, BTN Research).

Pretty Good Number — The U.S. economy grew by 4.1 percent in the second quarter 2018, i.e., a quarter-over-quarter increase expressed as an annualized result. In the last dozen years (48 quarters), there have been just four quarters that reported a higher growth rate (source: Commerce Department, BTN Research).

Home Price — The median sales price of existing homes sold in the U.S. in June 2018 was $276,900, a record price. However, the median sales price of existing homes sold in July 2006 ($230,200) is equal to $285,051 in today’s dollars, the record high price on an inflation-adjusted basis (source: National Association of Realtors, BTN Research).

WEEKLY FOCUS – Are You or Could You Become a Solo Ager?

Retirement advice is often geared toward married couples. But what about the growing number of single retirees? According to the Census Bureau, around 40 percent of women and 35 percent of men ages 45 to 64 are unmarried. Those who are aging solo may face special challenges – without a built-in caregiver to lean on and no one to share the costs of housing, food and other expenses. And elder orphans, as childless singles are sometimes called, may experience additional issues. That’s why thoughtful planning in the following areas is crucial for seasoned singles.

Make connections now. It’s important to build a thriving social network. Friends improve seniors’ emotional well-being, encourage them to stay active physically and mentally, check in on one another and help out when needed. Senior-friendly “congregate living” arrangements offer a variety of services and lessen isolation. Retirees looking for a suitable roommate to share expenses, experiences and chores can turn to matching services like Silvernest.com. There are even online communities like the Elder Orphan Facebook Group, where aging childless singles ask questions and share helpful resources and strategies.

Plan to sustain independence. Those flying solo who are still employed should acquire adequate emergency savings and long-term disability coverage. They may want to relocate to a home where they can age in place in a community with helpful resources for seniors, convenient public transportation or everything they need daily within walking distance. More ride-hailing and home-delivered services, including healthy meals, are also available. And technology provides options to make life easier and safer for seniors, including video chat, motion sensing lights, medication reminders and automated home controls. One service, EyeOn App, signals three friends if a senior doesn’t reply to a scheduled cell phone alert.

Build a micro board. Those entering the golden years alone need a group of people to look out for them financially and medically when necessary. This may include an elder law attorney, health care and financial agents who have power of attorney, clergy, an accountant and a geriatric care manager. While a medical agent should live nearby so they can respond quickly in an emergency, a financial agent can serve from a distance.

Whether you or someone you know is approaching retirement single or wants to prepare for the possibility of singlehood, it’s important to explore all options to preserve assets and independence. Call our office; we’re ready to help.

Weekly Market Notes -August 6, 2018

August 6, 2018jpmccarthyLeave a comment

Weekly_Market_Notes

For the Week of August 6, 2018

The Markets

Stocks closed higher Friday thanks to a not-too-hot, not-too-cold jobs report that supported the likelihood of the Federal Reserve keeping interest-rate increases gradual. China’s latest move in the trade war was offset by reports of recent high-level talks with China from White House officials. For the week, the Dow rose 0.05 percent to close at 25,462.58. The S&P gained 0.80 percent to finish at 2,840.35 and the NASDAQ climbed 0.96 percent to end the week at 7,812.01.

Returns Through 8/03/18	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	0.05	4.28	18.23	15.95	12.92
NASDAQ Composite (PR)	0.96	13.16	23.21	15.16	16.19
S&P 500 (TR)	0.80	7.40	17.13	12.95	13.00
Barclays US Agg Bond (TR)	0.14	-1.50	-1.07	1.44	2.27
MSCI EAFE (TR)	-1.45	-1.54	4.10	4.66	5.14

Bank Takeover — Lenders foreclosed on 133,290 homes in the first six months of 2018, down 21.2 percent from 169,124 foreclosures in the first half of 2017. The peak of bank repossessions in the last decade was in 2010 when more than 1 million homes (1,050,500) were taken back by lenders (source: Attom Data Solutions, BTN Research).

That’s All? — Trust fund assets ($2.89 trillion) supporting both Social Security retirement benefits and Social Security disability benefits earned interest of 3.0 percent in 2017 (source: 2018 Social Security Trustees Report, BTN Research).

Time in the Stock Market — If you selected any single month at random to invest in the S&P 500 (at the close of the prior month) during the 25 years ending June 30, 2018, you achieved a positive total return 66 percent of the time. If you extend your investment time horizon to just one year, you achieved a positive total return 81 percent of the time. If your time horizon was two years, you achieved a positive total return 80 percent of the time (source: BTN Research).

WEEKLY FOCUS – Social Security Alone Won’t Be Enough for Retirement Needs

If your retirement plan relies heavily on income from Social Security payments, there are two hard facts you should know – those benefits alone won’t be enough to live on, and their buying power isn’t what it used to be. As of March 2018, the average Social Security recipient received about $16,919 a year. The poverty level in the United States for a single-person household is $12,060 and $16,240 for a two-person household. At this level of income, an unexpected medical expense or an unplanned home repair could prove disastrous for a retiree.

Not only are Social Security benefits not enough to provide a reliable income during retirement, reports show their buying power is dwindling. A report from the Senior Citizens League reveals the collective cost of many common goods and services needed by retirees has outpaced the annual cost of living adjustment Social Security recipients receive. As a result, the buying power of monthly benefits has plummeted by 34 percent since 2000.

In most cases, the problem isn’t with the cost of living adjustments, which have continued to match inflation for the past 18 years. Instead, it lies with the expenses accrued by the average retiree, which have grown by 96.3 percent during that same period. The Senior Citizens League report analyzed 39 costs and found 26 grew faster than the cost of living allowance. A prime example – Medicare Part B monthly premiums, which have skyrocketed 195 percent, from $45.50 in 2000 to $134 today.

While expenses are climbing, there is also a chance your Social Security payments could decrease. Some cuts are made for reasons outside your control, but there are steps you can take to keep your Social Security benefits from being dinged if you haven’t started receiving them yet.

Don’t claim retirement benefits early
Be sure to get your full retirement age correct
Don’t miss the Medicare application window
Be careful about earning too much in retirement
Be sure your wage information is correct
Don’t get behind on taxes and child support

To learn more about how you can maximize your Social Security benefits, call our office today. We can work with you to review your retirement goals and develop a financial plan that addresses life’s expected, and unexpected, challenges.

August 2018 Monthly Outlook – Expanding the Horizon

August 2, 2018jpmccarthyLeave a comment

Before I jump into this month’s outlook I want to share some exciting news about our staff at Directional Wealth Management.

Christian has recently earned the Behavioral Financial Advisor™ designation. The BFA™ designation integrates the concepts of traditional finance, psychology and neuroscience with the goal helping clients improve their emotional competency and decision-making behaviors as it relates to their personal financial situation. This is so important as we are seeing more market volatility, political turmoil, increasing interest rates, and higher personal financial stress in general.

Colleen is studying for her Securities Industry Essentials (SIE) exam and her Series 6 license. These will provide Colleen with the knowledge to perform critical functions in our operation. Richard is studying for his General Securities Representative (GSRE) exam/Series 7 license. This is the first step towards becoming a fully licensed financial services practitioner. All told, this will allow the staff to provide a higher level of services to you. Please join me in supporting congratulating Christian and supporting Colleen and Richard in their studies.

Turning the outlook, July saw increased volatility across financial markets, with the S&P 500 moving 5.52% from low to high during the month, only to fade at the end due to poor results from Facebook. Despite this, the S&P 500 gained 3.48% for July, the best month since January 2018. Interest rates creeped higher as well during July with the US 10yr Treasury rising from 2.85% to 2.96%.

While the financial markets were impacted by the brewing trade/tariff battle in Washington and poor corporate earnings from some companies, the economy appears to be expanding it’s horizon. For the 2^nd quarter of 2018, the preliminary reading on US Gross Domestic Product (GDP) was 4.1%, the best reading since Q2 and Q3 of 2014. Consumer spending, which accounts for roughly 70% of the economy, remained strong. There was also an increase in exports, likely fueled by manufacturers shipping goods ahead of the pending tariffs. Inflation remains near the Federal Reserves stated target of 2%. Overall, the US economy continues to be solid with the potential for more growth on the horizon.

8.2.2018_MONTHLY_OUTLOOK_CHART_1

On the investment front, I still believe the equity market is in a good spot. There is an interesting dichotomy going on. A thoughtful analysis of the fundamentals says the market is going “up” but investor emotions and observations say “down.” Rest assured, if the market does head lower, I believe it is a normal temporary symptom of usual summer volatility. More importantly, I think it creates an opportunity to buy.

Let’s just look at earnings for a moment as we are in the throes of earnings season. Despite the gloom from Facebook’s disappointing reports which sank the stock as much as -20%, the overall earnings environment is great. According to FactSet’s Earnings Insight, 53% of the S&P 500 has reported Q2 2018 earnings thus far. 83% of those reported a positive surprise and 77% beat sales. If the number should remain there, it’ll be the highest on record for FactSet since they began tracking in 2008. The blended earnings growth rate is +21.3% which would be the second highest on record.

8.2.2018_MONTHLY_OUTLOOK_CHART_2

So, the yin/yang of solid fundamentals likely continues to battle with negative emotions and observations leading to more ups/downs in the markets. I anticipate the general trend remains positive and that markets will grow slowly through the balance of the year.

I hope you find this information useful. Please pass it on to anyone who you feel would benefit from it.

Please call us if you have any questions or concerns.

August 2018 Calendar of Events (comments and suggestions always welcome)

August the “What will be your legacy” month. Are you a good cook, do you love gardening or are you an animal lover. These are all part of your “legacy”. Take some time during August to think about and write down things you are passionate about and want to pass on to the next generation.

August 3^rd International Beer Day

August 8^th My birthday!

August 13^th International Left-Handers Day

August 14^th Social Security Act signed in 1935 by Pres. Franklin D Roosevelt

August 26^th National Dog Day – raise awareness of the thousands of dogs that need to be rescued. We will be celebrating Buddy & Coco, our rescues.

doggos

Sources: Wisdom Tree Investments, Raymond James and Assoc., Bespoke Investment Group

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.