Broker Check

Client Update: 3rd Quarter 2016

| November 16, 2016

We strive to represent your best interest and to help you achieve your long-term financial goals.  We monitor your strategy and the investments in your portfolio on an ongoing basis.

The following are year-to-date and 1 year investment results through 10/7:





Dow Jones









Barclays US Aggregate




Moderate Balanced Funds that are allocated approximately 60% equities and 40% fixed income were up 7.53% year-to-date through 10/7.  For the 12 months ending 10/7, they were up 7.02%

How will the financial markets react to the election results?    We believe that there is an underlying question about the long-term direction of world markets and globalization that goes beyond the US Presidential Election.  Any short-term strategy would have to accurately predict that some political proposals will become realities and some will fail to materialize.

Weak global trade and weak economies exist around the world.  Low and negative interest rates, massive debt ($152 Trillion per the IMF) and central bank interventions are deeper issues that will not be decided by our election.  This is not necessarily because of the candidates as much as it is a pushback around the world against open borders, free trade and financial deregulation.

We believe that this trend may translate to a period of greater volatility as other countries in Europe contemplate their own version of Brexit.  Many believe that globalization has not delivered on its’ decades old promises.  International integration and largely deregulated financial markets have benefitted the global elites and multi-national corporations more than the public. IMF Managing Director, Christine Lagarde recently said, “Growth has been too low for too long benefitting too few.”

Where is the way forward?  Progress in technology is welcome when it solves problems and improves the quality of human lives.  New technology may create and destroy jobs. What the United States and world economies need is genuine sustained growth that creates well-paying full time employment.  Infrastructure spending is widely anticipated for 2017.  $1 Billion of infrastructure spending translates to about 19,000 jobs.  The San Francisco Federal Reserve research shows “Well targeted infrastructure investments generate more economic growth than just the first infusion of cash because they enable more growth to occur in the future”.  Part-time, retail sales, cashiers, and food prep jobs may make the labor force participation rate look better but they don’t do much to help build financial security.

Investment by corporations is historically low and has been sidelined by share buy backs and mergers.  This financial engineering does not help create jobs or build long term value.  Recent New York Times statistics show that U.S. corporations are sitting on a record $2 trillion of cash.  General Motors holds nearly half of the value in cash.  Apple holds about one third.  Some of the buildup is attributable to tax avoidance and holding out for potential opportunities.  If this cash can be unlocked, growth should follow.

Economic and job growth can also come from tax policy and regulatory relief.  Payroll tax forgiveness for new hires is a good idea but more spendable income for all should translate into purchases of goods and services.  Some saw lower energy bills as a tax cut but it appears the savings went to pay health insurance premiums and credit card bills.

The world’s economy is faced with a need for structural reform.  The underlying holdings in your portfolio will also evolve over time.  We now see more purchases of shares in companies that will benefit from infrastructure investments.   Your overall risk profile and your goals will need to remain stable barring any changes in your circumstances.  We advocate keeping a years’ worth of expenses aside to cover monthly distributions or the annual required minimum distribution from your IRA.  This helps avoid making sales if there is a market downturn and may even provide cash for a dip.

The new President will have to find a way to work with Congress or to find a way to govern effectively.  Years of scandals have diminished confidence in our government and the press. This political season has highlighted many short comings.  Sentiments like “the system is rigged” resonate at home and abroad. Restoring confidence in the system is one of government’s most important functions.  Clear policies and consistently applied laws are crucial for investors and markets.

 Let’s keep an eye on the biggest issues that present opportunities and challenges for the years ahead.

How can Financial Planning help you?  Concerns about how financially prepared you are for retirement are common.  A study done by the AICPA showed that almost 41% of CPA financial planners’ clients top retirement concern was running out of money.  Susan Tillery, Chair of the AICPA PFS Credential Committee, goes on to say, “The fear of running out of money in retirement has always been present.  However, we are at a demographic crossroads where the Baby Boomers are supporting both their parents and their children.  This has amplified the fear.”  A financial plan can help you identify and organize your financial goals and needs.  “What if” analysis can then be run to stress-test your savings portfolio.  Please give us a call if you are interested in help preparing a financial plan.

Our New Website. We recently updated our website,    We believe the new site is more user friendly and now includes a blog post where you can read our most recent newsletters and other articles we find interesting and useful.  The future outlook for Social Security was a recent topic.  We plan on discussing financial planning opportunities and welcome your questions or input.

Fraud Update/Email. As we have covered in prior newsletters, security has become a growing issue in all of our daily lives.  Recent arrests in India connected to an IRS tax fraud show how these scams and information security threats have grown worldwide.

The IRS recently reported another attack where a mailer was sent by scam artists to individuals and then followed up with an aggressive phone call to try and force a fraudulent payment by credit card.

To proactively help protect our clients, we are enhancing our cyber security.  Changes that may impact you include an increased use of encrypted emails, as needed. Most emails will require encryption.  Expect a phone call from us before we wire money to any account.  Please give us a call if you have any questions or trouble with encryption.  As always, we appreciate and value your confidence and trust.  We strive to act and serve your best interests.

Michael Devine, MSFS, AIF ®/ Becca Cummings, CPA, AIF® / Eric Bleiler, CPA/PFS CFP®