Daily Archives: November 19, 2013

Heads Up!

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2013 Tax Planning – Don’t be surprised,
be prepared.

As January 1, 2014 gets closer, you need to finalize your year-end tax planning.  

 

While new tax legislation has brought greater certainty, it also created new challenges. The number of changes made to the Tax Code and the opportunities these changes bring may seem overwhelming. However, engaging us to help with tax planning will help you to maximize your potential tax savings and minimize your tax liability.

 

Without planning, you may be surprised that you owe additional taxes in 2013, even with the extension of the previous decade of tax brackets. Three new taxes are in effect for 2013: the Net Investment Income surtax, the Additional Medicare Tax and a revived 39.6 percent tax bracket for higher income individuals. The 3.8-percent Net Investment Income surtax very broadly applies to individuals, estates and trusts that have certain investment income above set threshold amounts. The Additional Medicare Tax applies to wages and self-employment income above threshold amounts. Please click the link here to review our Changes in Tax Rates chart summarizing the new taxes and revived brackets and phaseouts.

With these new taxes in place, make sure you don’t lose the benefit of some generous but temporary tax incentives that are available in 2013, but may not be in 2014. Please click the link here to review our 2013 Tax Planning Checklist to help you get started on your tax planning. If your situation has changed or you need more detailed planning, please contact me for more information.


The “Heat Map”

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Most
of the time the U.S. stock market looks to 3 factors (call them the “pillars”
that support the stock market) to support its upward trend – let’s grade each
of the pillars. 

CONSUMER SPENDING:  I grade this factor a C (neutral).



THE FED AND ITS POLICIES:  I continue to grade this factor an A+ (extremely favorable) because the
FED cannot do much more than it is doing to support the stock market and asset
prices.  And, the FED announced on
9/18/2013 it intends to continue the highly accommodative policy to stimulate
the economy.



BUSINESS PROFITABILITY:  I continue to grade this factor an A (very favorable). 



NOTE:  the above grades are unchanged from last
week.


The Economy

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The
U.S. economy continues to grow, at a slow pace; but still it grows.  We saw confirming evidence in this last
week’s economic reports.  FOMC Chair
nominee Janet Yellen gave traders what they want in her testimony: more
accommodative Fed policy to come.  Gasoline
prices are down more than 10% since the start of September.

One
negative – Empire state manufacturing index collapses to -2.2 versus
expectations of 5, lowest level in 6 months.


The Numbers

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Last week, U.S. Stocks, Foreign Stocks and Bonds all increased.  During the last 12 months, STOCKS outperformed BONDS.

Returns through 11-15-2013

1-week

Y-T-D

1-Year

3-Years

5-Years

10-Years

Bonds- BarCap Aggregate Index

   .4

-1.5

-1.6

  3.2

 5.6

4.7

US Stocks-Standard & Poor’s 500

  1.6

28.5

35.8

17.0

18.1

7.7

Foreign Stocks- MS EAFE Developed Countries

  1.6

16.9

26.7

  4.8

10.0

4.6

Source:
Morningstar Workstation. Past performance is no guarantee of future
results. Indices are unmanaged and cannot be invested into directly.
Three, five and ten year returns are annualized excluding dividends.

“Your Financial Choices”

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“Your
Financial Choices”  The
show airs on WDIY Wednesday evenings, from 6-7 p.m. The show is hosted by
Valley National’s Laurie Siebert CPA, CFP®, AEP®.  This week Laurie will discuss: “Giving thanks this
Thanksgiving.” 

Laurie will take your phone inquiries regarding this
topic or any other.  This show will be
broadcast at the regular time. WDIY is broadcast on FM 88.1 for reception in
most of the Lehigh Valley; and, it is broadcast on FM 93.9 in the Easton and Phillipsburg
area; and, it is broadcast on FM 93.7 in the Fogelsville and Macungie area – or
listen to it online from anywhere on the internet.  For more information,
including how to listen to the show online, check the show’s website www.yourfinancialchoices.com
and visit www.wdiy.org. 


Personal Notes

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Last week, five other Valley National advisors and I
attended Charles Schwab’s “IMPACT” investment conference in Washington,
DC. 

IMPACT is an important conference in the investment
industry.  Over 7,000 independent
Investment Advisors attend IMPACT.  Those
advisors manage over $1 trillion dollars of client investments.  So, the IMPACT conference receives attention
and attracts top flight, expert speakers who give us their thoughts on the
current economic conditions and prospects for the future.



I was surprised to hear that each and every speaker
was bullish on the market.  Each had his
or her own set of reasons for optimism. 
But, I felt uncomfortable that ALL the speakers were optimistic.  I do recall the saying, “the candle that
burns the brightest is the quickest extinguished.”


The Markets This Week

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Things on Wall Street look pretty good. On Main
Street, not so much.

The stock market jumped another 1.6% last week,
hitting an all-time high for the 36th time this year. Equity markets the world
over rose about 1%.


These
synchronized gains followed Thursday’s appearance in the U.S. Senate of Federal
Reserve Vice Chairwoman Janet Yellen, who has been selected by President Obama
to replace the central bank’s departing chairman, Ben Bernanke. Yellen
indicated there would be no change any time soon in the Fed’s policy of monthly
bond buying, a quantitative-easing strategy that has fueled much of the
market’s gain this year. In other words, tapering remains on hold. What little
concern remained about a policy shift effectively disappeared with her
comments.


On the week, the
Dow Jones Industrial Average gained 200 points, or 1.3% to 15,961.70, and the
Standard & Poor’s 500 index rose 28 to 1798.13. Both were new highs. The
Nasdaq Composite index added 1.7%, or 67, to 3985.97, and briefly crossed the
4000 mark for the first time since September of 2000. The MSCI World Index rose
1% on the week.


The Fed’s clampdown on interest rates has fueled a
headlong rush into risk assets such as stocks. The resultant wealth effect
appears to have spilled into the disparate New York City worlds of fine art and
taxi medallions.


An Andy Warhol painting sold for $105 million last
week, the highest price ever for the artist. A Francis Bacon work, “Three
Studies of Lucian Freud,” sold for $142.4 million, a record for a single
piece. At the first auction in five years of yellow cab medallions, a pair went
for $2.5 million, almost double the price at the previous auction. The city
restricts the number of permits to about 13,000 (Source:  Barrons Online).