Our Blog

Quality Independent, Unbiased, Financial Advice and Wealth Management

-Family Owned Since 1985


Monthly Archives: December 2008

After a Turbulent 2008, Make Some New Year’s Resolutions for a Financially Healthy 2009

Money worries are the most common cause of holiday stress, according to Mental Health America. The 2006 study showed that parents are more stressed than all other demographic groups by finances and females are more likely than men to feel stressed by finances.

Money isn’t everyone’s No. 1 worry, but if it’s yours, why not consider the following New Year’s resolutions to improve your financial life?


Giving the Gift of a Financial Planner

The holiday season should be about giving, but at the end of the season, most people can’t help but think it’s all about spending and money out the door. What would happen if you and other family members considered a different gift this holiday season – the chance to build your financial awareness with a trained expert?


Absolutely No Madoff Exposure

We have had some clients ask if we had put any money into any Bernard Madoff managed accounts and the answer is no. This was a situation that many should have seen coming, and in fact, many were wisely very skeptical of the returns being shown investors.  LPL Financial reported this week that the only exposure among approved products were slices of hedge fund of funds which we did not use. Here are some of the things that you should know distinguish what we do from what they did.


Working through the Recession

The economy is now officially in a recession, and will continue to produce dismal statistics for some time.  In my opinion, we were done in by the combination of oil prices that went way too high last spring and summer and by some absolutely irresponsible risk taking on Wall Street. That said, there are some lights at the end of this dark tunnel.

On Tuesday, the Federal Reserve (Fed) released a highly unusual monetary policy report. First, they announced that the fed funds interest rate target would be cut to a range of 0 to 0.25 percent.  Both the fact that the Fed set such a low level and the fact that they indicated a range rather than an exact target are unprecedented.  And the Fed made it clear that this interest rate would stay low “for some time”—in my opinion an extraordinary commitment.  Second, they said that inflationary price pressures have diminished—an understatement, in my opinion, when the CPI has been falling sharply lately and is soon headed for zero or negative 12-month rates of change.  Third, the Fed said they “will employ all available tools” to fight this recession.  And, again in my opinion, they have been.  The Fed is fully engaged in dealing with the collapse of the financial system and the ensuing recession using a wide array of programs and a huge expansion of money.


Is Diversification Dead?

One of the most disappointing aspects of the financial crisis, recession, and bear market of 2008 where stocks posted a peak-to-trough decline of just over 50%, was the fact that nearly all investments declined similarly. Diversification failed when it was most needed.

Correlation, the measure of how coordinated the movements among investments are, usually rises during downturns. Performance is often driven more by unique, asset-specific factors during upwardly sloping markets, but during a downturn investments are more likely to be driven by a sudden change in "big picture" factors common to all of them. The 2008 markets took this rise in correlation to a new extreme.

To see the rest of this article, please click on the link below:


Economy Continues to the Downside in Q4, Any Glimmers of Hope?

With a sizeable portion of the November economic data now in hand, we can say with confidence that the economy didnt stop getting worse in November. Looking ahead to the December data on the U.S. economy (largely due out over the month of January), the anectdotal evidence, as well as the early December readings on weekly jobless claims, suggests that the economy continued to decelerate to the downside in December. The big jolts this past week came with the release of the October trade data, which implied that the massive slowdown in global economic growth stopped U.S. exports in their tracks in October, and the weekly jobless claims data for the week ending December 6, which revealed a dramatic deterioration in the labor market in early December, even after the ecnomy experienced the worst monthly job loss since 1974 in November. This week, markets are bracing for key policy announcements from the Federal Reserve and the Organization of Petroleum Exporting Countries (OPEC), as well as data on housing, consumer inflation, manufacturing, and jobless claims.

To see the rest of the article please click on the link below:


As Medical Expenses Rise, Don’t Miss Key Deductions

There are plenty of horror stories about uncovered medical expenses these days, and the truly horrifying part is that many of them belong to people who actually have health insurance.  But anytime you or a family member is facing a health crisis or an unusual medical-related expense, it’s best to check to see if you might get a break from Uncle Sam. 

A tax professional and a financial planner should be consulted to determine whether there are any tax issues or any ways to defer cost or save money at any part of the process.  The Internal Revenue Service lets you deduct medical costs as long as they are more than 7.5 percent of your adjusted gross income (AGI). That means if your AGI is $50,000, you can deduct only those unreimbursed expenses that exceed $3,750.


It’s Still Getting Worse

We were again disappointed by last week’s batch of economic data, which revealed that the U.S. economy didn’t stop getting worse in November. In fact, the economy probably got a lot worse in November than it was in October. For the second consecutive week, virtually every piece of economic data released referencing the month of November was either weaker than expected or worse than October, further solidifying the thesis that the U.S. economy contracted sharply in the current (fourth) quarter of 2008. We currently expect fourth quarter GDP to contract by at least 4.0%, which would be the weakest reading on GDP since the 1981-82 recession. The Q4 GDP data are due out in late January.

To see the rest of this article, please click on the link below:


Bottoming Process Underway, but End Not Yet in Sight.

While market bottoms happen on a day, they are not made in a day. Stock market bottoms are defined by a process of price discovery that often takes place over the months surrounding the actual low point. Further evidence in the market’s behavior last week suggests a bottoming process is underway, but it does not shed much light on when it may be over.

Friday’s stock market gain despite the release of the November employment report, which showed the worst monthly job loss in decades, reflects the degree to which a severe recession has already been priced into the markets.

To see the rest of this article, please click on the link below:


Holiday Recipe for a Better TARP

I want to wish you happy holidays and offer my best wishes for you and your family.  This Thanksgiving, many of us took some time to think about what we have to be thankful for over the last year.  My list was certainly shorter than last year, with all the economic turmoil and financial losses. We all know it has been a very troubled time for the economy and financial markets, so I am fervently hoping to add their recovery to my list next year.