Archive of Newsletters

THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services
January 2013

The Dow

According to Google Finance, the Dow Jones 30 Industrial Average increased by 7.26% for the year ended December 31, 2012. Market volatility continued throughout the year due to political and economic worries. The concerns that affected the market in 2012 are likely to continue into 2013. Buy and hold strategies that worked well in the 1990’s may be inappropriate for some investors.

Minuscule Unemployment Improvement

Unemployment as of December 2012, as reported by the Bureau of Labor Statistics (BLS) in the U-3 & U-6 reports (seasonally adjusted), declined slightly to 7.6 & 14.4 percent respectively. Unfortunately, improving unemployment statistics can also mean that the number of people looking for work has declined. “Participation Rate” defines the percent of people who are counted as employed or unemployed, as opposed to those not seeking work or not reporting their income. The Participation Rate for December 2012 was 63.6%, which reflects a decline from November 2012. According to ZeroHedge, an analytical firm, the average Participation Rate from 1980 to 2011 was 65.8% making the current “Participation Rate” very poor on a historical basis.


Tax Increases Avoided For Some

At the last minute, our government Representatives avoided the automatic cuts in government spending and tax increases scheduled to occur January 1, 2012. The agreement is permanent in some respects and temporary in others. Since the government has already reached its debt limit, we will now have to endure an extended debate about allowing more government borrowing. Entitlement spending will require continued borrowing and the potential for high interest rates some time in the future.

News reports from the looming debate are likely to destabilize the markets and investment valuations.

Profit Rainbow May Be Red and Blue

Points of view may be affecting money flows. A person would have to be asleep to not know about the political conflict in the United States. Much of this conflict revolves around the Federal Government’s spending, taxing and regulation of “us” and our businesses. The division between points of view has created a deep divide between Democratic and Republican opinions over what should be done. Democrats proclaim that economic recovery and future growth can be achieved with additional Federal spending and the resultant debt. Republicans are pushing for economic prosperity through a reduction in Federal spending and lower taxes. It is my opinion that investors on both sides of this issue are responding to the political back and forth over this debate.

It is my perspective that investors who feel that their political perspective is winning out tend to place their funds into investments. Conversely, the investors who see their ideals failing in the debate are concerned and may be taking their funds out of investments.

In my opinion, the result of this back and forth adds to volatility in all markets and may have caused the massive increases to bank deposits. Whatever the cause and effect of market flows, it seems prudent to pay attention to what is going on in Washington. You can rest assured that I will be actively watching this ongoing debate.

In Closing, Again

Please forgive the repeated message, but this is important. 401(k)’s and other qualified plan investments are often selected without a lot of thought or advice from questionable sources. Considering the potential changes I’ve listed here, you may benefit from some professional advice. Now I am able to provide advice on investments that are not directly with Woods Financial and Insurance Services. If you or someone you know has a retirement account with their employer, give me a call for an analysis.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.


THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services
October2012

The Dow

According to Google Finance, the Dow Jones 30 Industrial AverageYear to Date increased by 7.20% from December 30, 2011 to October 31, 2012. The year to date return of the Dow Jones Industrial Average reflects a one-month decline of 2.7%. A continuation of economic and regulatory policy may perpetuate a lack of growth in “bottom line” corporate profit for many companies. It is my opinion a dearth of profit growth leaves the stock market vulnerable to volatility triggered by domestic and world news.

Unemployment

Unemployment as of October 2012 as reported by the Bureau of Labor Statistics (BLS) in the U-3 & U-6 reports (seasonally adjusted) were 7.5 & 13.9 percent respectively. Unfortunately, improving unemployment statistics can also mean the number of people looking for work has declined. “Participation Rate” defines the percent of people who are counted as employed or unemployed, as opposed to those not seeking work or not reporting their income. The Participation Rate for October 2012 was 63.8% which reflects a decline from October 2011’s Participation Rate of 64.1%. In a recent article published by ZeroHedge, an analytical firm; they stated the average Participation Rate from 1980 to 2011 was 65.8%.

Tax Increases & Budget Cuts

A combination of tax increases and forced budget cuts will occur in January of 2013. A variety of agreements all trigger at the end of 2012. The automatic changes are the bi-product of failures to reach tax and spending agreements in 2011 (often called “kicking the can down the road”). If these negotiations fail, the automatic changes to taxation and spending may be as damaging to each of us personally as they are to us collectively. Changes to portfolios, estate planning, health insurance and gifting are just a few factors that may be affected by the negotiations taking place right now. I will be watching as the negotiations move forward. Once we know what the changes are, I will want to meet with you to align your financial planning with whatever changes have been made.

In Closing

401(k)’s and other qualified plan investments are often selected without a lot of thought or advice from questionable sources. Considering the potential changes I’ve listed here, you may benefit from some professional advice. I am now able to provide advice on investments that are not directly with Woods Financial and Insurance Services. If you or someone you know has a retirement account with their employer, give me a call for an analysis.

THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services
September2012
  • According to Google Finance, the Dow Jones 30 Industrial AverageYear to Date increased 9.99% from December 30, 2011 to September 30, 2012. Volatility continues as news reports are continuing to dictate market direction. Inconsistent corporate earnings, concern over excess regulation and the potential for higher taxes may also add to market volatility.
  • Unemployment as of August 2012 as reported by the Bureau of Labor Statistics (BLS) in the U-3 & U-6 reports (seasonally adjusted) was 8.1 & 14.7 percent respectively. Unfortunately, improving unemployment statistics can also mean that the number of people looking for work has declined. “Participation Rate” defines the percent of people who are counted as employed or unemployed, as opposed to those not seeking work or not reporting their income. Here is a chart of the “Participation Rate” provided by BLS August 2012:

Note: Some experts believe that unemployment is actually worse than official data indicates because of the dropping “Participation Rate”:

  • Maureen Featherston, is a fellow LPL Registered Representative and a licensed Medicare Specialist. She is available to provide education & products for Medicare. I have found that Medicare is a rather complex subject and the decisions you make regarding Medicare can have a real impact on your financial condition. Therefore, I suggest meeting with Maureen who can inform you about Medicare. The ANNUAL ENROLLMENT PERIOD is fast approaching. This year, more than ever before, there are more choices in health coverage and cost considerations for Medicare recipients. Maureen’s services include Medicare Supplement, Medicare Advantage Plans, and Prescription Drug Plans. Please call 800-547-0145 for an appointment.
  • We all know that the government spends more than it takes in from taxes, fees, etc. The National debt has now exceeded 16 trillion dollars. The interest only on this debt will exceed 400 billion dollars per year and will go higher quickly, with no end in sight. No amount of taxes on any group will change this. The government must slow spending now or our kids will suffer.

*The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.


THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services
July2012
  • According to Google Finance, the Dow Jones 30 Industrial Average Year to Date increased 5.43% for the six months ended June 30, 2012. Volatility continues. Positive and negative news reports are continuing to dominate market direction. Inconsistent corporate earnings, concern over excess regulation and the potential for higher taxes may also add to market volatility.
  • Unemployment as of June 2012 as reported by the Bureau of Labor Statistics in the U-3 & U-6 reports (seasonally adjusted) was 8.2 & 14.9 percent respectively. In June 2011, these numbers were 9.1 & 16.2 indicating a small improvement over the twelve month period. However, there has been nearly no improvement in these numbers in the last six months.
  • 401(k), 403(b) and 457 retirement accounts often offer choices of investments to their participants. Often, participants make investment choices without knowing what they are choosing. Retirement savings are critical to your future. Don’t guess at investment choices. I can help provide education to plan participants. Retirement funds do not have to leave the plan.
  • Recent news reports indicate home sales may be improving. There is much speculation by experts about the reason for this improvement. Some of these experts suggest homes are being purchased with the intent of renting them. Although I am not in the real estate business, homes seem to be a good, although lagging, economic indicator and worth our attention. It is too early to draw conclusions from this information. I will continue to watch and report as we look for opportunities in other markets.
  • IRS Table 1.1 breaks down the amount of taxes paid by the Adjusted Gross Income of the payer. The latest data published by the IRS is for 2009. In my opinion, this data is rather old since our economy has experienced such a difficult period. What is clear is a very small segment of our society is paying a very large percentage of taxes. It is also clear the increase in National debt will require more taxes to be paid. As investors we must pay close attention to these factors as 2013 approaches. Knowledge and planning can be helpful in reducing the taxes paid by investors. Look for more information in my newsletters as new data comes available.
  • I am always amazed by the vast range of skills and experiences possessed by the people I serve. Pilots, teachers, military veterans and novelists are just a few of the people I know. One of my friends, Charles “Bill” Getz has written two novels. Bill was a decorated pilot in WWII and a successful businessman. Now he is well on his way to his latest adventure as a novelist. Here is how you can get a copy of these two excellent books:Double Eaglesand Gardens of the God; available through Amazon and Smashwords.

THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services
May2012

  • According to Google Finance, the Dow Jones 30 Industrial Average increased 1.44% year-to- date as of May 31, 2012. The substantial drop in the stock market prices seems to support my expectations of higher volatility. As I said in my March newsletter, the lack of stable corporate profits may leave the markets vulnerable to “news events”. The European Union difficulties are apparently the most relevant news effecting the markets in the United States
  • Unemployment as of May 2012 as reported by the Bureau of Labor Statistics in the U-3 & U-6 reports (seasonally adjusted) was 8.2 & 14.8 percent respectively. Since the unemployment rates have not improved in recent months, some people have speculated that the economic recovery has stopped. My concern is that these numbers are also affected by people who have been unemployed so long that they are no longer considered unemployed for these statistics. In other words, the person who has been unemployed for more than a year is considered a person who has given up on becoming employed. This effect is referred to as the “participation rate” or the percentage of our population who are working. According to the BLS, the participation rate has declined from 65.7 percent to 63.8 over the previous 41 months, leading to speculation by some that the unemployment numbers are understating actual unemployment rates.
  • Life Boat Drills are important. We have started the first phases of this project with the winners of our contest. A series of short questionnaires provides us with the information needed. At the end of the process the participants will receive a binder which collects all of the important information their family would need should something happen to them. Call us today if we can tell you more about the “Life Boat Drill”.
  • 401(k), 403(b) and 457 retirement accounts often offer choices of investments to their participants. Often, participants make investment choices without knowing what they are choosing. If you or someone you know needs help selecting investments in their portfolio, I can now help through a new LPL program. Retirement savings is critical to your future. Don’t guess at investment choices. Retirement funds do not have to leave the plan to participate in this program.
  • National Debt nears $16,000,000,000,000 (USDebtClock.org)! Numbers like this often fail to convey emotion since they are just too big to comprehend. So what does it mean to you? Well, it means that every tax payer owes more than $138,000. It also means every person in the United States (legally) owes more than $50,000. The interest payment on this debt provides monthly income for people all over the world. If the United States continues to borrow to pay for what it cannot afford, those who rely on our productivity will be hurt. $16 Trillion dollars may be an abstract concept, but the $50,000 owed by every man, woman and child to our creditors is very real.

THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services
March2012
  • According to Google Finance the Dow Jones 30 Industrial Average increased 8.14% for the quarter ending March 30, 2012. The stock market is indicating a willingness to hit new highs, but is still dependent on the news of the day for its direction. We can expect more volatility as the market struggles toward new highs.
  • Unemployment as of March 2012, as reported by the Bureau of Labor Statistics in the U-3 & U-6 reports, (seasonally adjusted) was 8.2 & 14.5 percent respectively. Unemployment is improving. Hopefully this data will continue long enough to form a trend.
  • Life Boat Drills are important. We have started the first phases of this project with the winners of our contest. A series of short questionnaires provides us with the information needed. At the end of the process the participants will receive a binder which collects all of the important information their family will need should something happen to them. Eventually, we will offer this service to all of our clients. If you want to know more about the Life Boat Drill, contact us to get information.
  • Investments are always changing as investment companies compete with each other for your attention. I am always looking for new quality investments. Contact us for a comparison of your current investments. Why give up potential profit or pay more than you need to? Call for an investment comparison today.
  • National Debt exceeds $15,000,000,000,000 triggering a debate over where the government can get enough money to pay for all this borrowing. My research indicates that higher taxes on the top wage earners (“1 Percent-ers”) and ending the “Bush Tax Cuts” will not pay a fraction of the interest payments on this massive debt; much less the principal. So, the question remains: How will the debt be paid for? Reductions in government spending will be required, but our country’s voters recoil at the thought of taking their benefits away. This situation can trigger higher interest rates and inflation within the next few years. Are your investments ready?

The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Bruce Woods is a LPL Registered Representative with, and securities offered through LPL Financial, Member FINRA/SIPC

THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services
February2012


  • According to Google Finance the Dow Jones 30 Industrial Average increased 6.01% for the year-to-date period ended February 29, 2012. The relatively low volume of trades allowed the few optimistic traders to push the market up after a year of volatility. In my opinion, the market may continue to improve as the bond market gives up some of its recent gains. Volatility will probably continue since investor’s faith in the economy is still tenuous, so investments may have dramatic response to the news of the day.
  • Unemployment as of January 2012 as reported by the Bureau of Labor Statistics in the U-3 & U-6 reports (seasonally adjusted) was 8.3 & 15.1 percent respectively. Unemployment seems to continue moving within an established range. The government stimulus effectiveness is in question and this is causing investors to wonder if the recovery is fully underway.
  • Life Boat Drills are important. Congratulations to the clients that were chosen to participate in our Life Boat Drill Program. Due to the overwhelming response we received, we have decided to have a drawing at the end of each quarter. Please give us a call today to get more information and put your name in for the next drawing.
  • Higher taxes seem inevitable, but you may be able to manage how much you have to pay through better planning. I urge you to meet with your tax advisor to begin planning now. Then meet with me to help you implement your plan.
  • Bond values fluctuate as interest rates change. Some experts are concerned bond prices may drop if the stock market moves higher. Do you have the right balance between bonds and stocks? Call me so we can review your mix and discuss alternatives.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Stock investing involves risk including loss of principal.


THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services
December 2011
  • LIFE BOAT Drill like all emergency planning makes sense for people who could be affected by a disaster at sea. We have seen the news about the cruise ship which ran aground and what happens when people are unprepared. The loss of a loved one is a different type of disaster but some preplanning can help the survivors during a difficult time. I have seen families faced with sorting out an estate who didn’t know where important documents were located. Trusts, Wills, ownership documents are all needed to deal with an estate, but what happens if they can’t be found? Emergency planning is often put off, but here is an offer you can’t beat! For five families, I am going to orchestrate a planning meeting where estate holders and beneficiaries can learn important information about the estate transfer process and I am going to do this for you without charge. I’m calling these meetings the “Life Boat Drill” and it is a chance to do something important with professional guidance. To make this free offer even more valuable, I will create a binder which will contain a list of all the important documents, where they are and what the estate holder wishes to happen. This binder will be helpful to the beneficiaries if something happens. Woods Financial will hold a drawing on March 1, 2012 to select five families to receive this offer. To be entered in the drawing, submit a request to my staff by February 29, 2012. There is no cost or obligation for those meetings and they are being offered to gauge my client’ interest in this type of program. Winners will be asked for their comments regarding the “Life Boat Drill” planning session.
  • THE STOCK MARKET continues to fluctuate with the headline news creating huge swings from one day to the next. According to Google Finance, the Dow Jones Industrial Average, which tracks 30 large companies, ended December 2011 up 5.5 percent for the year. Interestingly, the Standards and Poor’s 500, used to track more of the stock market, produced nearly 0 percent for 2011. The difference between these two indexes is a good example of why many investors had dramatically different returns in 2011. Because of the volatile market, investments that create dividends may be preferred by investors.
  • UNEMPLOYMENT as reported by the Bureau of Labor Statistics improved slightly to 15.1% (U6) report and 8.5% (U3) report. However, some credible economists estimate national unemployment at 21.6%. These three different numbers are intended to illustrate that depending on the source and the data included or excluded in the reports the results can vary significantly.
  • WHAT IS THE BIG deal about debt? Sure the debt at 15 trillion is a little more than the whole of the United States produces each year, but most of us owe more than we make in one year anyway. Except we, as a nation, have committed to continue increasing the debtnumber at a rapid pace; far faster than our productive effort can increase. Anyone who has borrowed money knows how difficult the interest payments are, much less payments against principal. We also know that if we continue to borrow without making any more money we will certainly lose all we have worked so hard for. But what happens to a country the size of the United States when it can’t pay all of its debt? Well, the fact is that no one knows! Greece is used as a recent example of what happens when a small country can’t pay its debt. Now consider that the state of Washington has a higher GDP than Greece. One thing is sure, the United States is paying out too much and the debt is rising too quickly. As individuals and families, most of us have had to face times when we had to deal with tough financial situations. For those who corrected their financial problems, most of us cut our spending until we got our debt under control. The solution is the same for the U. S. Government. Any increase in taxes on any combination of income levels will provide little respite for a very short time. The single solution is to spend less at all levels of government. No one likes to cut spending but just as with our personal finances it’s the right thing to do.
  • NEW INVESTMENTS are being created all the time.Investments that can protect against losses, investments that charge no fee and investment that guarantee payments for life are all available now. The list of investments features is almost endless. If you have not talked to me about these new investments, you may be missing out on features that can really help you. Give me a call and I’ll bring you up to speed on these incredible investments.

You cannot be invested into directly. Past performance is no guarantee of future results.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services
November 2011
  • Getting your car’s oil changed is as much fun as reviewing life insurance. You know you need to do it, but almost everything is more interesting. Unfortunately, the people you care most about will benefit or suffer from the planning you do now. Insurance programs are always changing so the policy you purchased years ago may be over priced and lacking modern features. As a financial advisor, I can review your life or long term care policy to ensure you are getting what you want for yourfamily. So, you have my permission to put off the oil change; that way you will have time to take care of some really important stuff…Your life insurance review.
  • THE STOCK MARKET continues to move with the news creating huge swings from one day to the next. The Dow Jones Industrial Average ended November with 4.04 % year to date return. Investments that create dividends may be preferred by investors during these volatile times.
  • UNEMPLOYMENT as reported by the Bureau of Labor Statistics improved slightly to 15.6% (U6) report and 8.6% (U3) report for October 2011.
  • WINTER may cool the “occupy” protests in the United States but the cooler weather may heat up protests, riots and general hostilities in the Middle East. If this should occur, the negative news coming from the Middle East could hurt our equity markets.
  • If you are 70 ½ years old or older, you are required to make regular withdrawals from your IRA and other “qualified” accounts. In most cases, the withdrawals must be made before the end of the calendar year. Please contact us right away if you have not made arrangements to have these withdrawals taken out of your IRA.
  • Using raw materials to make something creates value. Repairing a road, bridge or building is an expense. The United States needs to focus on industries that create value first and infrastructure expenses second. Otherwise, the jobs created will only last as long as the repair project.


THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services
September 2011
  • CLEANING BATHROOMS and rain gutters are as much fun as reviewing life insurance. You know you need to do it, but almost everything else is more interesting. Unfortunately, the people you care most about will benefit or suffer from the planning you do now. Insurance programs are always changing so the policy you purchased years ago may be over priced and lacking modern features. As a financial advisor, I can review your life or long term care policy to ensure you are getting what you want for a reasonable price. So you have my permission to put off the bathrooms and rain gutters; that way you will have time to take care of some really important stuff…Your life insurance review.
  • THE STOCK MARKET continues to move with the news creating huge swings from one day to the next. The Dow Jones Industrial Average ended August with .3 percent year-to-date return. Investments that create dividends may be preferred by investors during these volatile times.
  • UNEMPLOYMENT, as reported by the Bureau of Labor Statistics, worsened slightly to 16.1% (U6) report and 9.1% (U3) report. Interesting to me is Nevada and California have the worst unemployment rates in the BLS reports (U6) with 23.8 and 21.8 percent unemployment respectively. Fears of a continued recession are causing many investors to reduce their stock positions, placing more and more money in “side line” investments like bank savings. Some economists have speculated that there may be 18 or more trillion dollars that have been placed into investments considered safer by the investor.
  • GOVERNMENT SERVES MANY IMPORTANT FUNCTIONS, but history teaches that governments grow at the expense of society. The United States has many difficult social situations and our government is offering to cure them all. Unfortunately, our government is probably unable to correct many, if any, of our challenges. The reality is our government’s actions are likely to make our social challenges much worse as we suffer from over regulation. Our investments may continue to languish until government over regulation is brought under control.



THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services

June 2011

  • The Stock Market recovered some of the losses that occurred in April and May. The Dow Jones Industrial average increased to 5.9 percent, year to date. All investors wonder if a summer stock market rally can be a reality.
  • As previously reported Wells Fargo is closing the Classic Value Fund. This is the fund that your SIFE assets were merged into from the Specialized Financial Services Fund at Wells Fargo. Wells Fargo has decided to close the Classic Value Fund and these assets will be moved to the Equity Fund. It is important that we talk about what your options are.
  • Unemployment as reported by the Bureau of Labor Statistics worsened slightly to 17.1% (U6) report and 8.7% (U3) report. This report tends to beg the question of what happened to the billions of dollars spent to stimulate the economy. The lack of improvement in the unemployment rate may encourage the efforts to hold interest rates low for the near term.
  • Unfunded Entitlement Programs are like all promises made to people by governments, unions or private employers except the group making the promise has no funds available to fulfill the promise. What each group hopes is that there will be enough money coming from new people that they will be able to fulfill the promises made. Of course, this process can’t be sustained and eventually fails:
    • When private individuals or companies do this it is considered fraud and the people involved can be placed in jail; Bernard Madoff is one recent example.
    • When a union does this they can only hope for government bail outs or more union dues, which just puts off the inevitable failure.
    • When the government does this the whole of society is placed in jeopardy since the failure of the Entitlement Program will damage the society. Greece is just one example of this.
  • Government over Regulation is now blamed by many as the main reason for our inability to compete throughout the world.



THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services

April 2011

  • U.S.Credit Rating Outlook lowered by “Standard and Poor’s”credit rating service. For some time, I have tried to raise the public’s awareness of excessive government spending. Now an important credit rating organization is lowering the credit of the United States debt. You probably know that if your credit rating is lowered you may pay more for any debt you have and the United States is no different. This is a serious situation because we are likely to see higher interest rates unless major changes are made to U.S. debt.
  • The Dow Jones 30 Industrial Average (The Dow) ended the first quarter with an increase of 6.48% as reported by Google Finance.
  • Bureau of Labor Statistics (BLS) reported that unemployment improved slightly to 15.7 %. Average wages also increased by 1.7% to $22.87 per hour for all jobs in the U.S. (non-farm). The BLS also listed 239 million people in the U.S. and 153 million of those people are working. Government employees at all levels of government make up 22 million people or 15% of the work force. It is worth noting that these numbers are direct employees of government agencies and not the people working for the government through contracts. Some researchers have speculated that the Federal Government may employ 15 million or more people as contractors but this data cannot be confirmed through official sources.
  • Federal Reserve has been printing money that is then used to buy U.S. debt. These programs have been called Quantitative Easing and there have been two of these programs. The second of the two is scheduled to end in June of 2011. If the “Fed” does end this program it may have a significant negative effect on all markets as the economy goes through “withdrawal” symptoms. Putting off real correction of over spending may create a much more difficult set of problems in our future.
  • Unfunded entitlement programs and excessive regulation are the hurdles that we must overcome to return this great nation to prosperity. The public’s reluctance to allow reductions in these programs may seal our fate. Social Security, Medicare and various government retirement programs, all cannibalize our savings and lead to more and more borrowing. Politicians may blame one party or another but all are simply responding to the people that put them in office. Year after year goes by without any change, and in doing nothing we ensure that future generations will have to do what we could not.


THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services

March 2011

  • Japan’s earthquake, tsunami and nuclear disaster have certainly grabbed the world’s attention. The scope of this catastrophe will take some time to fully understand. However, the line of “experts” willing to cast their opinions into the void of real information seems endless. The very nature of the news media will certainly paint a direr picture than the reality of the terrible event would dictate. The various financial markets have responded to the massive flow of bad news creating high levels of volatility in all markets. The Japanese people have proven they can recover from adversity and flourish in the future. Regardless of what news should jump out at us in the next weeks or months, I have faith this nation and its people will recover faster than the “experts” predict. Investment opportunities may already be the “silver lining” on this terrible black cloud.
  • U. S. Treasury Bonds are used to fund our nation. As long as other countries and individuals are willing to buy them, we don’t have to deal with our own financial realities. Now we may be seeing a real drop in demand for our Treasuries. As demand drops for these bonds so does the price paid for these debt instruments. It is clear that gold and food prices have risen as the Treasury prices have fallen. Normally, this process would move slowly from month to month but the crisis in Japan may accelerate the dropping value of Treasuries. Recently, PIMCO Manager, William Gross announced his portfolio has eliminated Treasury Bonds. This situation is of great concern to me. Changes to your investment mix may be warranted by these recent developments.
  • Excessive government promises, and the spending needed to fulfill these unrealistic promises, may be the tsunami headed for the United States. Social Security, Medicare, government retirement systems, etc. are all in jeopardy to some degree. Of course, the discussion of real reform of these systems appears to be beyond discussion since very few people would favor a reduction in their personal benefits. Taxing the “rich” has been proposed repeatedly but the savings of the retired in the form of their estate taxes may be the real target of those who want to tax more. In my opinion, if you earned it you should be able to keep it and use it or pass it along any way you choose. My suggestion is that you communicate with your government representatives regularly.


THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services

January 2011

  • According to Google Finance the Dow Jones 30 Industrial Average increased 10.05% for the year ending December 31, 2010. The relatively low volume of trades allowed the few optimistic traders to push the market up after a year of volatility. In my opinion, the market may continue to improve as the bond market gives up some of its recent gains. Volatility will probably continue since investor’s faith in the economy is still tenuous, so investments may have dramatic response to the news of the day.
  • Analyze your investments: So, how do your investments measure up? Get a free analysis of your portfolio today from our new Morningstar software.
  • Separately Managed Accounts: Can provide options for investors that are not available to managed equities. If you have more than $25,000 invested, this type of account is something you need to know about. So, give me a call and find about how you can use Separately Managed Accounts for your money.
  • Unemployment as of December 2010 was reported by the Bureau of Labor Statistics U-6 report (seasonally adjusted) as 17 percent unemployment, which is substantially worse than 12 months prior. The U-3 report, which is more commonly quoted, also worsened to 9.8 percent unemployed over the same period. It is my opinion that the U-6 number more accurately portrays reality without the political spin. Speculation by various experts seems to indicate the unemployment numbers will improve slightly. Regardless of the outcome the number of unemployed people is one of the most important economic factors to watch.
  • National Debt continues to rise but politicians fail to act: As a nation, we are spending more than we are taking in. The size of government, State and Federal must be reduced. The competition for money between the government and the public (you) is one reason interest rates rise. If government programs are not cut we may see a dramatic rise in interest rates and that could hurt our recovery. Please let your government representatives know what you think and consider reducing your bond positions.

*The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values and yield will decline as interest rates rise and bonds are subject to availability and change in price.

Stock investing involves risk including loss of principal.

THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services

October2010

  • Analyze your investments: So, how do your investments measure up? I will run an analysis of your portfolio so you can see how your portfolio compares to the market and other investments; just give me a call to start the process.
  • According to Yahoo Finance the Dow Jones 30 Industrial Average increased 3.45% from December 31, 2009 to September 30, 2010.
  • Unemployment as reported by the Bureau of Labor Statistics U-6 report (seasonally adjusted) was 17.1 percent unemployment, which is slightly worse than 12 months prior. The U-3 report, which is more commonly quoted, improved to 9.6 percent unemployed over the same period. It is my opinion that the U-6 number more accurately portrays reality without the political spin.
  • Family home values have not changed nationally; some regions have improved while others remain at the same low levels seen for several months. Banks seem slow to liquidate foreclosed homes and not all defaulted homes have be taken over by the banks. In my opinion, homes with non-performing loans must be liquidated quickly to relieve restrictions on the money flow.
  • Illegal Immigration is hurting all of us since it creates “black markets” for workers, drugs and other things which most of us would not want in our communities. Anyone who has hired an illegal has done so because they are cheaper and don’t have the government oversight that a legal worker would have. Things like minimum wage, wrongful termination and withholding regulations are usually ignored with an illegal worker making them appealing for many employers. My opinion is that minimum wage laws ignore economic reality and causes “black markets” to form. So, if the illegal immigrants are made legal and subject to standard laws, I think a new crop of illegal workers will show up to take their places. This is an economic issue caused by poor law making and lack of boarder control.
  • Separately Managed Accounts: Can provide options for investors that are not available to other types of money management. I suggest getting information on this innovative type of investing. You may be surprised by the options that are available to you.



THE WOODSHED

News and Commentary
From
Woods Financial and Insurance Services

July 2010

  • According to Google Finance the Dow Jones 30 Industrial Average declined in the second quarter to 9,774 from 10,428 or a decline of about 6 percent. This decrease followed fairly good performance in the first quarter of 2010 and continued a long period of high volatility.
  • Unemployment as reported by the Bureau of Labor Statistics U-6 report showed 16.5 percent unemployment, which is unchanged from 12 months prior. The U-3 report, which is more commonly quoted, indicated an unemployment rate of 9.5 percent, which was also unchanged from a year ago.
  • Family home values improved slightly in popular areas while the majority of homes through the U.S. saw little change to their historically low values.
  • Long Term Care has been ignored by many people but the aging of America is changing that. According to a report commissioned by AARP, 65.7 million people were care givers in the U.S. 66% of those caregivers are women. The AARP report said that the caregivers spent an average of 20 hours a week providing this care. This data is important because of the life impact of being a caregiver. As more Americans find themselves as the ones being cared for, they may wish that Long Term Care Insurance had been explored more fully. Imagine your loved ones providing this level of care.
  • End of the “Bush tax cuts” may be a certainty unless the legislature changes dramatically. If no action is taken, you can expect to pay more taxes regardless of how much you earn. Here are a few of the high points: Estate taxes return to many Americans, Capital Gains taxes increase substantially, average income tax per individual may increase. If that isn’t enough, how about the price of goods and services increasing as businesses pass along increased cost associated with the above tax increases.
  • Deleveraging is a term used frequently but many people don’t know what it means. Of course, “deleveraging” means a reduction of debt, so it means business and people paying off debt. It also refers to completing the resolution of defaulted loans. In either case this pr