Author Archives: Caroline Galbraith

2017 3rd Quarter Review

There was no “September Surprise” in 2017 as stocks and risk assets continued their climb without a meaningful pullback.  Year to date the US stock market is up 14%, developed international stocks up 20%, and emerging market stocks up 28%.  After years of under-performance, emerging markets have begun to recover helped by strong performance in Latin America and a weaker dollar here in the US.  Bonds are up 3%, gold up 12%, and cash only up 0.6% in this low interest environment.  Economic data continues to come in strong, and a focus on tax reform in Washington continues help the markets.

What we’re reading:

Should the US move to a cashless society? (MarketWatch)

Manufacturing in the US expands at fastest pace in 13 years (Bloomberg)

Here’s what to expect from Google’s huge product event Wednesday (CNBC)

Some market myths hurt investors (Bloomberg View)

Economic Calendar:

Week in review:

  • New home sales at 560k
  • Durable goods orders up +5.1% y/y
  • 2Q17 GDP third estimate at 3.1%
  • Jobless claims at 272k

Week ahead:

  • Market/ISM PMIs
  • Light vehicle sales
  • ADP/ BLS employment reports

• Jobless claims

Short term rates and Tax reform

The Fed’s communications and decisions last week were largely as expected.  They announced no change in short term rates and confirmed that it will begin shrinking their balance sheet in October.  The market was expecting this, and we believe the focus will now turn to progress on tax reform in Washington until a new earnings season kicks off in early October.

What we’re reading:

The history of Sears predicts nearly everything Amazon is doing (The Atlantic)

Here’s what is new in Republican’s latest effort to overhaul healthcare bill (CNBC)

Microsoft finally starts doing something with LinkedIn (Tech Crunch)

Dudley sees Fed rate hikes; inflation weakness fading (Reuters)

Economic Calendar:

Week in review:

  • Housing starts rose to 1.18m
  • Existing home sales down to 5.35m
  • Jobless claims fell to 259k
  • Fed held rates unchanged at 1%-1.25%

Week ahead:

  • New home sales
  • Final Real GDP estimate
  • Jobless claims

• Personal consumption

Our Thought of the Week: September 11, 2017

Thought of the week:
Economic Impact: In the wake of back to back natural disasters (Hurricanes Harvey and Irma), our thoughts and prayers continue to be first and foremost for the safety of those affected. That said, many are wondering what, if any, impact these storms will have on our economy. In analyzing the four previous natural disasters over the past 15 years, history suggests that we should expect a short term rise in jobless claims in the affected areas. We don’t believe this will spill over into the broad US economy. Rising gas prices may have an impact on the consumer in the short run, however, there are other areas such as insurance claims that could offset this. In short, we believe the economic impact should be short lived. Uncertainty like this demonstrates why proper diversification in portfolios is so essential.

What we’re reading:

Stocks Open Higher as Irma Fears Subside (CNBC)
Get Ready for a Much More Powerful Apple TV (Techcrunch)
Just How Big was the Equifax Breach? (The Atlantic)
Oil Weakens on Demand Fears (Reuters)

Economic Calendar:

Week in review:
• Trade deficit up to -$43.7B
• Jobless claims at +298K
• Nonfarm productivity up 1.5% qtr/qtr
• Factory orders down -3.3% mo/mo

Week ahead:
• Retail sales
• Jobless claims
• Preliminary consumer sentiment

What we don’t know about Medicare could cost us

Lisa Butler, Director of Client Services at HawsGoodwin Financial, is featured as a guest blogger in the Nashville Business Journal along with Frank Cardenas, President of FEDlogic LLC.

We recently learned that the Social Security Administration announced a three-tenths of one percent raise in Social Security Benefits.

Though any increase is welcomed by beneficiaries, the increase is tied to the Consumer Price Index and the rate of inflation. These two have stayed stagnant in the last year which is the reason the increase was slight. However, the price of healthcare has been on the rise and the increase is simply not enough for our Medicare beneficiaries to combat the price of healthcare. This is why it is so important to understand that there are certain policies and laws that individuals should know about regarding their healthcare premiums, especially with Medicare.

Medicare retrieves their information from the latest tax report from the IRS. Since taxes are not due until April of each year, they are not reported onto each individual tax payers’ record until later into the year — making Medicare’s data behind by one to two years. What a lot of families are encountering is that their earnings may be vastly different from two years prior.

For example: Your 2016 Medicare premiums are derived by what the family’s earnings were in 2014, but what if your family’s earnings are considerably lower in 2015 or 2016?

Does a family have to pay inflated premiums when their financial situation has changed? For some families, the answer is “no.” This is called IRMAA (Income Related Monthly Adjustment Amount). There are certain provisions that allow some of these families that have a life qualifying changing event, to have their Medicare premiums adjusted based on the latest tax records available. It is important for families to evaluate their Medicare premiums on a yearly basis to see if they may receive a premium adjustment on their Medicare.

We have seen families paying additional Medicare premiums based on their income but through evaluation we are finding that many of these families are able to take advantage of the IRMAA policy and thus saving them thousands of dollars in premiums each year. It is important that families talk to their advisors on whether they may qualify.

When discussing retirement planning in younger years, many think about spending more time with family, traveling, and/or other leisure activities. We’ve experienced clients in retirement having second careers, volunteering or being caregivers to loved ones. Longer term financial and investment planning are essential to address the benefits and challenges of retirement; including Medicare and Social Security. Coupled with that, it is a necessity for clients to incorporate knowledgeable advisors when retirement actually arrives.

Planning can help guide them through the many factors facing them, including deciphering major governmental programs such as Medicare.

See the article in the Nashville Business Journal What we don’t know about Medicare could cost us.

Presidents & Markets: What the election means for you

By Art Haws, CFP| Guest Column for the Nashville Business Journal | November 2016

Presidents and Markets: What the election means for you

With the election finally over and President Trump preparing to enter office in January, it’s time to take stock of what having a new president means for us. The truth is that this election cycle has been tough and extremely uncertain, with the media predicting market instability. So now that the election is over, what exactly does it mean for you?

First, we need to acknowledge that fact that our financial markets will most likely be impacted. However, this impact might be less than we’ve been lead to believe. On election night, when it became apparent that Trump would win, the S&P 500 futures market was down as much as 700 points. However, the market bounced back Wednesday morning, opening approximately 76 points up, and traded up during parts of the day.

A good way to gauge the impact of this election is to take a look at the impact of past presidential elections.

Read More

Humanizing the Robo Advisor

By Caroline Galbraith | Guest Blogger | Nashville Business Journal | September 2015

Automation has become a normal and expected part of our daily routine. As it relates to your personal life, applications that target entertainment, shopping and other social activity can be convenient and save you time.

But are “convenience” and “time-saving” terms you really want associated with professional services such as legal and financial counsel? For some, the answer to that question will always be a resounding, “No.”

At the same time, there is a growing number of people who want to balance technology and personal interaction when it comes to their professional service relationships. Here are a few ways to achieve that balance as it relates to your investment adviser as well as some recommendations on how to structure a strategy that includes both technical and human elements:

The Rise of Robo-Advisors

A Robo-Advisor is an online portfolio management platform that utilizes advanced algorithms to recommend an investment strategy based on a pre-defined criteria. Simply put, you answer a series of questions, and the Robo-Advisor invests your money based on your responses.

At a base level, that’s the structure of all investment relationships. At the same time, keep in mind that technology is merely one vehicle for achieving your financial goals. Assuming that you are looking at your path to financial success through a broader lens, let’s consider some of the immediate upsides of Robo-Advisement:

  • Robo-Advisors have gained more ground in terms of engaging young investors than all other mediums. They offer an accessible, affordable platform for people to start investing, and they utilize a technology with which this audience is comfortable.
  • Robo-Advisors are convenient. They work on all types of devices, and accounts are simple to create. And if you are just getting started with building a portfolio, they push you out of the gate quickly, allowing you to establish an investment pattern and to start building a more strategic plan for the future .
  • While Robo-Advisors utilize algorithms to define your investment strategy, those algorithms are typically built around solid economic research such as the modern portfolio theory.

Picking the Right Robo-Advisor Platform for You

To pick the best Robo-Advisor platform for you, first understand that a technology can’t respond to some critical investment factors such as emotion, family and education planning or a sudden change in income. Those are all human factors that require human interaction to address. Here are some quick steps to point you in the right direction:

Outline your financial future. Identify goals and objectives that span three, five and 10 years down the road, taking into consideration your tolerance for financial risk and all the other factors that define your investment personality.

Spend time researching Robo-Advisor platforms to make sure that they contain some element of actual human interaction. There are not many of them out there. You will want and need to have access to a qualified financial professional at some point. If nothing else, you need a financial adviser to review the Robo’s recommendation on an investment strategy. If all you are getting is an algorithmic blue print, keep looking.

Make a plan. How much and how often do you want to invest? That is one advantage to Robo Advisement — the automation component will enable you to invest with consistency.

Watch your portfolio’s performance and make adjustments based on your personal financial situation. Again, this is where you really need access to a qualified professional who can advise you based on the Robo’s available options.

A Robo-Advisor should be considered a short-term solution for most investors. As you accumulate wealth, look for a relationship with a registered investment adviser who can significantly customize and carefully monitor your investments. If you have taken the time to identify a technology platform overseen by professionals, this transition could be seamless.