Archive of Newsletters

• 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

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

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

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

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

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

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