Only
2 Days of Trading Remaining in 2013:
Consider Selling Those Stocks and Mutual Funds That Have a Loss. “Taking your losses” is a good tax planning
strategy (this does not apply to IRAs, TSAs, 401ks, and other pension
accounts).
The
IRS permits you to take losses to the extent you have capital gains, plus $3,000.
NOTE: We anticipate that many mutual funds will
declare and pay a capital gain distribution in December. Taking losses will eliminate the negative
effect of these capital gains dividends in many cases.
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). This is under review for possible upgrade
depending upon the evaluating the results of the Holiday season retail
spending.
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. 10 days ago, the FED finessed
the markets by carefully wording its press release announcing the taper of its
quantitative easing program – more good news!
BUSINESS PROFITABILITY: I continue to grade this factor an A (very favorable).
NOTE: the above grades are unchanged from last
week.
More
“positive” than “negative” economic reports were released during the last 2
weeks indicating the U.S. economy continues to show improvement. New home sales, stronger payroll data, higher
level of manufacturing & construction, lower trade deficit, and stronger
consumer sentiment all pointed toward the “positive” direction. And, the 3rd quarter Gross
Domestic Product (an approximation of the U.S. economic output) came in at 3.6%
annualized increase versus a 3.1% expectation.
On
the negative side, interest rates moved higher thus reducing the number of
refinancing of home mortgages.
Additionally, a significant increase in inventories occurred – consumers
need to buy these products sitting on the shelves in order to keep the economic
ball rolling forward.
Last week, U.S. Stocks and Foreign Stocks increased but Bonds decreased.During the last 12 months, STOCKS outperformed BONDS.
Returns through 12-27-2013
1-week
Y-T-D
1-Year
3-Years
5-Years
10-Years
Bonds- BarCap Aggregate Index
-.4
-2.1
-2.2
3.4
4.4
4.5
US Stocks-Standard & Poor’s 500
1.3
31.9
32.6
16.0
18.7
7.5
Foreign Stocks- MS EAFE Developed Countries
2.3
19.0
18.5
5.1
9.5
4.2
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” 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, the station will re-play a
previously recorded show due to the New Year’s Day holiday. No live telephone calls will be taken this week.
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.
I take great pleasure in announcing 2 employees were
notified last Friday they passed the Certified Financial Planner examination – Joe Goldfeder and Tim Roof. Only a
select group of financial planners have met the rigorous requirements necessary
to call themselves CERTIFIED FINANCIAL PLANNER™ professionals.
The CFP examination is a challenge that tests in the
following wide range of topics:
·
General
Principles of Finance and Financial Planning
·
Insurance
Planning
·
Employee
Benefits Planning
·
Investment
and Securities Planning
·
State
and Federal Income Tax Planning
·
Estate
Tax, Gift Tax, and Transfer Tax Planning
·
Asset
Protection Planning
·
Retirement
Planning
·
Estate
Planning
·
Financial
planning and consulting
Joe and Tim are the 3rd and 4th
Valley National employees to pass the CFP exam in 2013. Earlier in 2013, Frank Stettner CPA and Lou
Mammana also passed the exam. Valley
National now employees 9 who have passed the CFP exam, the highest number of
CFP’s of any financial planning firm in the Lehigh Valley.
Though many Wall Street participants took a holiday
hiatus, stocks still managed a string of record closes and a win last week.
Prices eased slightly on Friday, but the major indexes gained over 1% in a short
trading week.
Prior to Friday, the stock market had closed at
all-time highs for six consecutive sessions. There were few players on the
scene, low volumes, little in the way of economic data, and corporate news flow
was light, but “stocks are acting like they are in a race to the finish
line,” says Fred Dickson, chief investment strategist at D.A. Davidson.
“It was a textbook Santa Claus rally week.”
The Dow Jones Industrial Average advanced 1.6% or
257 points, to 16,478.41. Friday, the average eased slightly, but it remains up
26% on the year. The Standard & Poor’s 500 index rose 1.3% or 23 points to
1841.40. The Nasdaq Composite index picked up 1.3% or 52 points, to 4156.59.
To some extent last week, economic sentiment might
have been boosted by what’s turning out to be a good Christmas retail season,
says Douglas Coté, Chief Market Strategist at ING U.S. Investment Management.
There was heavy media coverage of overwhelmed package-delivery companies, a
“problem” that suggests the economy is busy, Coté says. Additionally,
the stock market seemed to take in stride the move in the 10-year Treasury bond
yield over the psychologically important 3% level, he adds.
The market’s fourth-quarter “gangbusters”
10% rise is capping off a powerful year that could potentially draw back
individual investors, who have missed most of the rally from 2009 lows, Coté
says. Expectations that stock prices will rise over the next six months jumped
7.6 percentage points to 55.1%, the highest in three years, according to the American
Association of Individual Investors’ latest survey.
From a technical point of view, says Dickson, the
rally looks stretched, based on a number of metrics. The thrust has been big
and quick and “usually what happens is a pause or small pullback short
term,” he says, after this kind of move (Source: Barrons Online).
