Market Commentary – April 15, 2019

by | Apr 15, 2019 | Weekly Stock Market Commentary

Investors took an intermission.
The curtain appeared to close on the first act of 2019 last week – and what an impressive act it was. The Standard & Poor’s 500 Index delivered some dramatic returns and is less than 1 percent away from a new all-time high.

Despite relatively few shares changing hands, major U.S. indices eked out gains. Ben Levisohn of Barron’s explained:
“Trading volume was tepid at best. This past Monday, fewer shares changed hands than on any day since December 24 – when the market closed early for Christmas. Tuesday’s volume was lower than Monday’s, Wednesday’s was lower than Tuesday’s, and…well, you get the point. That was just another sign that no one wanted to place any big bets on the market this past week – in either direction.”

Investors were complacent even though news suggested trade talks with China were progressing well. They remained unruffled in the face of a Presidential tweet suggesting the United States will impose tariffs on Europe in retaliation for illegal subsidies to a European aerospace firm.

There was another interesting development in the United States last week. It was widely reported that a number of companies in retail and banking sectors increased entry-level hourly wages to levels well above the national minimum wage of $7.25 an hour. The companies are paying $13 to $20 an hour, according to Renae Merle of The Washington Post and a report from Reuters.

That is good news for workers, but not such good news for investors since higher wages could lead to lower corporate profits, reported Joe Wallace and Akane Otani of The Wall Street Journal.

Thought required. People make everyday decisions based on the information they possess at any given moment, explained The Economist. As understanding of an issue changes, so do the decisions people make.

For example, a lot of people dislike plastic grocery bags. Many shoppers choose to take cloth bags to the grocery store rather than use plastic bags provided by the store. In fact, some 240 cities and counties have laws that ban or tax plastic bags, according to Planet Money, and there is a national movement afoot to ban the bags.

However, the economics of plastic grocery bags is not as straightforward as many believe. Banning plastic bags appears to be an effective solution to a serious environmental issue. Unfortunately, it is not. An Australian economist studied the effects of plastic bag bans and discovered bans helped and hurt the environment:

  • The good news: Cities with bans used fewer plastic bags, and 40 of those cities generated about 40 million fewer pounds of plastic trash annually.
  • The bad news: Sales of plastic garbage bags increased by 120 percent after the ban, possibly because people reused grocery bags to line trashcans and clean up after dogs. Since trash bags are made of heavier plastic than grocery bags, about 30 percent of the plastic trash gains associated with the bans were lost.

In addition, paper bag use rose, creating 80 million pounds of paper trash annually. Paper is biodegradable and can be composted; however, producing paper bags requires water, fuel, and trees, so that should be considered as well, reported Stanford Magazine.

A separate study conducted by the Danish government found, “The most environment-friendly way to carry groceries is to use the same bag over and over again…the best reusable ones are made from polyester or plastics like polypropylene.”

Weekly Focus – Think About It
Monday, April 15 is tax day in the United States. Below is an excerpt from a radio show:
“Vanek Smith: Joe and his California tax team are eating lunch and talking shop. And they tell Joe they have this idea, an idea they think would save California a bunch of money and time and help taxpayers. They say, most people in California have really simple taxes. They get all of their income from a regular paycheck, and taxes are already withheld from those paychecks.

Bankman: So their idea was – why don’t we start off giving them a tax return that’s already filled out with the income we know they have? And then they can make corrections on it. That was their idea…

Vanek Smith: So they did a pilot program in California. In the 2004 tax season, they sent [completed forms] out to about 11,000 taxpayers along with this little survey.

Bankman: So we asked people, do you think you’d like to use this again next year? And 99 percent of the people said yes. Ninety-nine percent of people don’t say yes to anything.”
–Joseph Bankman, Stanford Professor of Law and Business and Stacey Vanek Smith, Planet Money radio host

Best regards,
John F. Reutemann, Jr., CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

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* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Stock investing involves risk including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Sources:
https://www.barrons.com/articles/stocks-near-record-highs-as-investors-sit-tight-51555121334?mod=hp_DAY_3 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-15-19_Barrons-Stocks_Near_Record_Highs_as_Investors_Sit_Tight-Footnote_1.pdf)
https://www.nytimes.com/2019/04/09/us/politics/boeing-airbus-tariffs.html
https://www.washingtonpost.com/business/2019/04/12/jamie-dimon-defends-jpmorgan-chases-an-hour-minimum-wage-says-its-not-an-arms-race/?utm_term=.4f16708d86ab
https://www.nbcnews.com/business/business-news/target-raises-minimum-wage-13-hour-tight-labor-market-n990866
https://www.wsj.com/articles/investors-brace-for-hit-to-profits-as-costs-rise-11554283800 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-15-19_WSJ-Investors_Brace_for_Hit_to_Profits_as_Costs_Rise-Footnote_5.pdf)
https://www.economist.com/finance-and-economics/2019/04/04/simple-interactions-can-have-unpredictable-consequences (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-15-19_TheEconomist-Simple_Interactions_Can_Have_Unpredictable_Consequences-Footnote_6.pdf)
https://www.npr.org/sections/money/2019/04/09/711181385/are-plastic-bag-bans-garbage
https://stanfordmag.org/contents/paper-plastic-or-reusable?utm_source=npr_newsletter&utm_medium=email&utm_content=20190408&utm_campaign=money&utm_term=nprnews
https://www.npr.org/templates/transcript/transcript.php?storyId=521132960

Lessons from March Madness

by | Apr 11, 2019 | Noteworthy

This year is no exception. Every spring, millions of people tune their televisions to March Madness, the annual tournament to decide the best team in college basketball. If you’ve ever watched before, you know it’s a time of great excitement as underdogs rise, giants fall, and new legends are made.

While watching a few games, it struck me how many parallels there are between March Madness and finance. The winning teams, whether they’re favorites or longshots, often display many of the same qualities that lead to financial success.

To illustrate what I mean, here are a few lessons we can take from March Madness:
1. Have a financial game plan. No winning team ever shows up to a game unprepared. They spend days, weeks, even months practicing, watching game film, and studying their opponent. The same should be true of your finances. Researching your investments, planning your taxes ahead of time, understanding your own strengths and weaknesses, laying out goals and determining how to achieve them – these are the best ways to get ahead in the game. Whether it’s sports or finance, planning beats just winging it every time.

  1. Aim for financial balance. Research shows that it’s not the teams with the best offense or best defense that are likely to win the tournament.1 On the contrary, it’s the most balanced teams – meaning those that play well on both sides of the court – that usually take home the trophy.
    Balance is important in finance as well. Some people spend all their money and time on their investments, thinking if they can just pick the right stock, they’ll be set for life. Others focus solely on saving every penny they earn without ever investing a cent. Still others think financial success is all about securing the highest-paying job.

The truth is, you’re more likely to achieve your goals when all aspects of your finance are in balance. That means paying equal attention to your income, investments, spending, saving, taxes, insurance, and so on. 
It doesn’t matter how much you earn if you spend even more. And while it’s great to save as much as you can, you won’t get as far as you would if you invested wisely. Furthermore, even if you nail every single one of those aspects, you could lose more than you can afford if the unexpected happens and your insurance isn’t in order. See what I mean about balance?

  1. It’s all about the team. Basketball is a team sport, not an individual one. A college could have the single best player in the world, yet still come up short if they played against a better drilled, better prepared, more balanced team. No one player can achieve victory by his- or herself. For a team to win, everyone must contribute. Similarly, you could be the smartest, hardest-working person in the world and yet still fail to reach your goals if you try to do it all alone. These days, having a financial team is more important than ever. That’s because there’s so much to know, so much to do. Working with experienced, caring professionals who specialize in the various aspects of your finances – your investments, your taxes, your estate, etc. – can make all the difference.
  2. Don’t blindly assume success. In March Madness, every team is assigned a seed from one through sixteen. (In this case, the lower the number, the higher the seed.) In most cases, when lower-seeded teams play higher seeds, nearly everyone expects the higher seed to win.
    But that doesn’t always happen.
    March Madness is (in)famous for upsets, where an underdog beats a favorite. This is more likely to happen when the favorite comes into the game assuming they’ll win. As a result, they may take the game less seriously or play less hard. The result? They go home early.
    Similarly, we shouldn’t just assume we’ll be financially successful. Achieving our goals takes planning, time, patience, and hard work – qualities we’re less likely to show if we just assume success is guaranteed.
  3. Always have a winning attitude. At the same time, we should never be pessimists about financial success, either. Remember what I said earlier about lower seeds beating higher seeds? When an underdog goes into a game thinking defeat is inevitable, their lack of belief becomes a self-fulfilling prophecy. But when a longshot plays with unshakeable confidence, believing they can win, knowing they can win – then suddenly, the impossible becomes very possible. We see it every year.

So, as you work toward your own goals, remember to always bring a winning attitude to everything you do. Believe in yourself and your abilities. Believe in your dreams.

It’s the surest way of making them come true.

Market Commentary – April 8, 2019

by | Apr 8, 2019 | Weekly Stock Market Commentary

The first quarter of 2019 brought a welcome reversal.
Last year, Barron’s published a group of market strategists’ expectations for 2019 performance. The article came out in mid-December, before the steep year-end stock market decline. At that time, all of the strategists agreed: The S&P 500 Index would move higher during 2019.

Their expectations appeared to be wildly optimistic when the Index lost 3.5 percent during the last two weeks of 2018, and finished the year down 6.2 percent.

Overall, at the end of 2018, strategists expected the Index to reach 2,975 by year-end 2019. Despite starting 2019 at a lower level than many anticipated, the Index finished last week at 2,892, a gain of about 15.4 percent year-to-date, and 83 points from strategists’ full-year performance expectations.

While the U.S. stock market has delivered attractive returns year-to-date, suggesting investors anticipate strong economic growth ahead, the bond market has been telling a different story.

Late in the first quarter, the yield curve inverted, which means the yield on short-term Treasury bonds was higher than the yield on long-term Treasury bonds. Inverted yield curves are unusual because investors normally want to earn a higher yield when they lend their savings for longer periods of time.

In some cases, inverted yield curves have been a sign that recession is ahead. That may not be the case this time, reported Eva Szalay of Financial Times. It seems the extreme measures taken by central banks following the financial crisis may have undermined the yield curve’s predictive value: “…according to a new piece of research from Pictet Wealth Management, the curve has been sending out misleading signals for a while. The distortions created by extraordinary post-crisis monetary policies have led to the breakdown in the relationship between interest rate expectations and economic growth, the firm argues…Since central banks have injected vast amounts of liquidity into their respective economies to compensate for lackluster growth, long-term interest rates have become artificially compressed…So the old rule no longer applies.”

The yield curve has since righted itself.

While recession may not be imminent, there are signs economies around the world are growing more slowly. Capital Economics reported, “World GDP [gross domestic product] growth seems to have slowed sharply in Q1, but the latest business surveys suggest that growth has bottomed out in some parts of the world at least…there are very few signs of improvement in the euro-zone and the United States has clearly been suffering from previous interest rate hikes and the fading fiscal boost. Those hoping for an imminent rebound in global growth are therefore likely to be disappointed.”

Slowing growth isn’t a sign recession is imminent in the United States. Last week’s jobs report suggests the American economy is still healthy, reported Tim Mullaney of MarketWatch, even if it is puttering along at a slower pace than many would like. 

exercise is important – really important – but don’t get too much. Researchers tested the relationship between mental health and exercise by collecting self-reported data from 1.2 million Americans. They discovered exercise – including everything from childcare and housework to weight lifting and running – can improve mental health.

Americans who were active tended to be happier and experienced poor mental health about 35 days a year. In contrast, those who remained inactive felt bad emotionally about 53 days a year, reported Entrepreneur.com. Exercising in a social setting – team sports, classes, and group cycling, for instance – appeared to deliver the biggest mental health benefits.

The study’s findings indicated it might be possible to exercise too much. “Exercising for 30-60 minutes was associated with the biggest reduction in poor mental health days…Small reductions were still seen for people who exercised more than 90 minutes a day, but exercising for more than three hours a day was associated with worse mental health than not exercising at all. The authors note that people doing extreme amounts of exercise might have obsessive characteristics which could place them at greater risk of poor mental health.”

If you’re not exercising regularly, you may want to find ways to include it in your day.

Weekly Focus – Think About It
“I have always tried to put my kids first, and then…put myself a really close second, as opposed to fifth or seventh. One thing that I’ve learned from male role models is that they don’t hesitate to invest in themselves, with the view that, if I’m healthy and happy, I’m going to be a better support to my spouse and children. And I’ve found that to be the case: Once my kids were settled, the next thing I did was take care of my own health and sanity. And made sure that I was exercising and felt good about myself. I’d bring that energy to everything else that I did, the career, relationship, on and on and on.”
–Michelle Obama, Former First Lady of the United States

Best regards,
John F. Reutemann, Jr., CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

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* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Stock investing involves risk including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

 

Sources:
https://www.barrons.com/articles/u-s-stocks-could-rally-more-than-10-in-2019-51544837183 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-08-19_Barrons-2019_Outlook-US_Stocks_Could_Rally_About_10_Percent-Footnote_1.pdf)
https://finance.yahoo.com/quote/^GSPC?p=^GSPC (Historical data)
https://www.macrotrends.net/2488/sp500-10-year-daily-chart
https://www.cnbc.com/2019/03/22/the-rally-got-mugged-by-economic-realities-and-a-global-slowdown.html
https://www.investopedia.com/terms/i/invertedyieldcurve.asp
https://www.ft.com/content/15d4048e-552f-11e9-91f9-b6515a54c5b1 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-08-19_FinancialTimes-Why_the_Yield_Curve_is_Not_the_Economic_Guide_It_Once_Was-Footnote_6.pdf)
https://www.capitaleconomics.com/publications/global-economics/global-economics-chart-book/divergent-surveys-offer-limited-hope/ (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/04-08-19_CapitalEconomics-Global_Economics_Chart_Book-Footnote_7.pdf)
https://www.marketwatch.com/story/the-jobs-report-nails-it-its-a-slowdown-not-a-recession-2019-04-05
https://www.thelancet.com/journals/lanpsy/article/PIIS2215-0366(18)30227-X/fulltext
https://www.sciencedaily.com/releases/2018/08/180808193656.htm
https://www.entrepreneur.com/article/331696
https://www.sciencedirect.com/science/article/pii/S221503661830227X
https://www.glamour.com/story/michelle-obama

Digital Assets and Baby Boomers

by | Apr 5, 2019 | Learning

How many password-protected accounts do you have?
Whether you keep them locked in the depths of your memory, use a password manager, or have a written record of your passwords (which is certainly not recommended), take a quick count. You are most likely to find you have some or all of these types of accounts:

  • Email accounts
  • Social media accounts
  • Online storage accounts
  • A domain name
  • Online bank accounts
  • Online brokerage accounts
  • A website or blog
  • Online shopping accounts
  • Online bill paying
  • Photo and video sharing accounts
  • Gaming accounts
  • Materials and coding that are copyrighted

These are all digital assets. They are part of your virtual life, as is any digital property you own, such as computers, external drives, storage devices, smart phones, digital cameras, e-readers, and other devices.

Digital assets should be part of your estate plan
Unless you live off the grid, it’s likely your digital life will outlive you and become a part of your legacy. Your digital assets may have significant financial or personal value for your heirs. Consequently, you should give some thought to how these assets should be managed after your death.1

The catch is digital estate planning can be tricky. Many digital accounts and assets cannot be transferred to a new owner because they are not your property. Assets that fall into this category are subject to contracts and licensing agreements established with a service provider.1

For example, if you’ve spent significant sums accumulating a virtual music library, you may not be able to pass it on through a will or another estate planning tool because you do not own the digital music files, according to Nolo.com. This may also be true with other types of accounts.1

“Social network accounts, domain name registrations, email accounts, and most other types of online accounts are ‘yours’ by license only. When you die, the contract is over and the business that administers the account controls what happens to it,” explained Betsy Simmons Hannibal on Nolo.com.1

This doesn’t mean you have no control over what happens to these accounts. Your estate can leave instructions about account management and should provide a complete record for your executor. Jeffrey Salas offered an opinion about best practices on LegalZoom.com. He recommended:2

  1. Checking the account providers’ Terms of Service/Terms of Use. Work with your estate planning attorney and the digital executor you’ve appointed to review requirements for different types of accounts. For example:
  • Leave usernames and passwords for any online financial accounts – banking, utilities, brokerage, mortgage, retirement plan, life insurance, tax preparation, or others – to the executor as they will need this information to pay bills, close accounts, and administer your estate.1
  • Social media companies have diverse policies regarding the management of digital assets upon the death of the user. Some delete or deactivate accounts after being notified of a death. Others put accounts into ‘memorial’ status.1
  • In general, companies will not know about the death until they’re notified. As a result, a digital executor who is armed with passwords may be able to access your account to post final updates, delete items (per estate instructions), or delete/deactivate accounts.1
  • Email accounts, online communities, and blog management may also be guided by provider agreements. However, your executor may be allowed to notify friends or followers of your death and then delete, print, or archive your communications.1
  • Digital photos that are stored online may be passed on through a will or another estate planning tool.1
  • If you have one or more websites, domain names may have value and they may be transferrable.1
  • If you have an online store, you may want to leave instructions about what should happen to the store, the items for sale, and any income or profits that may continue to arrive.

    2. Add language regarding digital assets to your will and/or trust. Currently, there is no uniform federal law to guide the management of digital assets.2 At the start of 2017, Kiplinger reported, “Federal law regulating access to digital property does not yet exist. At this time, 29 states have established legislation or laws to protect digital assets and to provide a deceased person’s family procedures and rights to manage those accounts and assets after death.”3  Regardless, it can still be a good idea to include language that specifies your wishes for the treatment of each of your digital accounts.2

     

    3. Check the law in your state. Talk with your attorney or advisor about whether any laws your state has that apply to digital assets, and make sure your estate plan is consistent with these laws.2

While estate and inheritance laws are behind the curve when it comes to digital assets, it is important to inventory your digital assets and decide how they should be managed upon your death. If you would like additional information about estate planning, please give us a call.

 

Sources:
1 https://www.nolo.com/legal-encyclopedia/a-plan-your-digital-legacy.html
2 https://www.legalzoom.com/articles/what-happens-to-your-digital-assets-when-you-die
3 https://www.kiplinger.com/article/retirement/T021-C032-S014-put-digital-assets-in-your-estate-plan.html

Market Commentary April 1, 2019

by | Apr 1, 2019 | Weekly Stock Market Commentary

“Fascinatingly counterintuitive…”
That’s how Michael Arone, an investment strategist, described the U.S. market environment to Avi Salzman of Barron’s:  “‘Stocks are rallying, but bond yields are reflecting much lower growth.’ Stocks rose during the quarter because the Fed backed away from raising interest rates, and investors grew more confident that the U.S. and China would sign a trade deal, Arone said. The market was also rebounding from a very rough fourth quarter – ‘conditions at the end of the year were wildly oversold,’ he noted.”

Through the end of last week, the Standard & Poor’s 500 Index was up more than 13 percent year-to-date, despite falling corporate earnings and modest consumer spending gains.

Consumer optimism may have played a role in U.S. stock market gains. The University of Michigan’s Surveys of Consumers Economist Richard Curtin reported:  “…the last time a larger proportion of households reported income gains was in 1966. Rising incomes were accompanied by lower expected year-ahead inflation rates, resulting in more favorable real income expectations…Moreover, all income groups voiced more favorable growth prospects for the overall economy…Overall, the data do not indicate an emerging recession but point toward slightly lower unit sales of vehicles and homes during the year ahead.”

The Bureau of Economic Analysis released its report on economic growth in 2018 last week. Real gross domestic product (GDP), which is a measure of economic growth after inflation, was revised down to 2.2 percent in the fourth quarter of 2018. Growth was up 2.9 percent for the year, though, which was an improvement on 2017’s gain of 2.2 percent.

Slowing economic growth gives weight to bond investors’ expectations, while consumer optimism supports stock investors’ outlook. Divergent market performance and conflicting data make it hard to know what may be ahead. One way to protect capital is to hold a well-diversified portfolio.

how much does it cost to make money? You may not have given it much thought, but it costs money to make money. In fact, the costs of the metals required to make some U.S. coins is higher than the value of the coins! George Washington and Abraham Lincoln might not approve, if they knew. Take this quiz to see what you know about the cost and value of U.S. coins.

  1. How much did it cost the U.S. Mint to make a U.S. penny in 2018?
    1. 0.5 cents
    2. 1.25 cents
    3. 2.06 cents
    4. 3.0 cents
  2. How much did it cost the U.S. Mint to make a U.S. nickel in 2018?
    1. 1.25 cents
    2. 4.97 cents
    3. 6.03 cents
    4. 7.53 cents
  3. What makes a coin valuable to a collector?
    1. Metal
    2. Age
    3. Rarity
    4. All of the above
  4. Which of these coins is the most valuable to collectors?
    1. 1849 Coronet Head Gold $20 Double Eagle
    2. 1913 Liberty Nickel
    3. 1943-D Lincoln Wheat Cent Penny
    4. 1835 Classic Head Gold $5 Half Eagle

 

Weekly Focus – Think About It
According to the Federal Reserve, the estimated lifespan of a $10 bill is 4.5 years. The estimated lifespans of a $5 and $1 bill are 5.5 years and 5.8 years, respectively. A $100 bill may last 15.5 years because it circulates less frequently.

 

Answers:

  1. It cost 2.06 cents to make a one-cent coin that few people use. A group of citizens has been encouraging the government to retire the penny.
  2. It cost 7.53 cents to make a nickel in 2018.
  3. All of the above.
  4. The 1849 Coronet Head Gold $20 Double Eagle is worth more than $16,600,000. It is one of the rarest U.S. coins.

 

Best regards,
John F. Reutemann, Jr., CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

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* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Stock investing involves risk including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Sources:
https://www.barrons.com/articles/the-s-p-500-is-off-to-its-best-start-since-1998-51553908143?mod=hp_DAY_1 (or go to https://www.barrons.com/market-data/market-lab
http://www.sca.isr.umich.edu (or go to http://www.sca.isr.umich.edu/
https://www.reuters.com/article/us-usa-economy-spending/u-s-consumer-spending-soft-inflation-benign-as-economy-slows-idUSKCN1RA1EK
https://www.bea.gov/news/2019/gross-domestic-product-4th-quarter-and-annual-2018-third-estimate-corporate-profits-4th
https://www.usmint.gov/about/reports (Click on 2018 Annual Report, go to page 10)
https://www.federalreserve.gov/faqs/how-long-is-the-life-span-of-us-paper-money.htm
http://www.retirethepenny.org
https://www.usmint.gov/learn/kids/collectors-club/ten-facts-of-collecting#nine
https://www.usacoinbook.com/encyclopedia/most-valuable-coins/
https://www.usacoinbook.com/coins/4291/gold-20-double-eagle/coronet-head/1849-P/unique-smithsonian-collection/

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