Monthly Archives: February 2015

Heads Up!

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About 800,000 HealthCare.gov customers got the wrong tax information from the government, the Obama administration said Friday, and officials are asking those affected to delay filing their 2014 returns.

The tax mistake is a self-inflicted injury that comes on the heels of what President Barack Obama had touted as a successful enrollment season, with about 11.4 million people signed up. The errors mean that nearly 1 million people may have to wait longer to get their income tax refunds this year. And they could also affect the size of those refunds.

The tax error highlights the complicated links between Obama’s health care law and taxes, connections that consumers will experience for the first time this year. The law subsidizes private health insurance for people who don’t have access to job-based coverage. By delivering those subsidies through the income tax system, the White House and the law’s supporters were able to tout the health care overhaul as a tax cut. But it also introduced new wrinkles to an already-complicated tax system.

The errors disclosed Friday are in new forms that HealthCare.gov sent to millions of consumers receiving coverage through the federal insurance market that serves most states. Those forms, called 1095-As, are like a W-2 for health care. They provided a month-by-month accounting of the subsidies consumers received to help pay their premiums. That information is then used to make sure everybody got the right amount, not too much, or too little.

The administration started notifying the affected consumers Friday.

Valley National recommends taxpayers who purchased insurance through HealthCare.gov follow one of the two courses of action:

a. Wait to file their Federal 1040 until 3/15/2015.

b. Access the marketplace website now at the following address to determine if they are affected by this error:

The Last Time The Nasdaq Crossed 5000… (15 Years Ago)

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The last time the Nasdaq composite stock index crossed 5000 – in March 2000 – it was powered by big companies that make software and hardware for PCs, and red-hot Internet companies with no earnings.

What might push the Nasdaq over 5000 this time? Greece. And red-hot Internet companies with earnings. News of a pending settlement between Greece and its creditors sent all stocks soaring Friday, taking the tech-laden Nasdaq with it. But real companies with solid earnings have made much of the dot-com dream real – 15 years after the bubble burst.

Consider Apple. The company’s iPods popularized legal music delivery via the Internet. Its iPhone pioneered mobile Internet. In 2000, Apple wasn’t among the 10 largest Nasdaq stocks. Today, it’s the largest stock by market value in the U.S., worth $754 billion, paying dividends just like stodgy industrial stocks. In fact, technology stocks now pay out more in dividends than any other stock sector.

Google, the third-largest stock on the Nasdaq, wasn’t traded in 2000. Neither was Facebook, now the fourth-largest Nasdaq stock. Or Amazon, now in fifth place in the index. All have risen because of the power of the Internet – something the dot-com bubble investors foresaw, but paid far too much for.

The Nasdaq has risen at a much more stately pace than it did in the 12 months leading up to the dot-com crash. The index has gained 15% the past 12 months, vs 110% in the blistering 12 months before the bubble burst in March 2000.

Cisco Systems was the biggest stock in the Nasdaq in the dot-com era. It had ripped to a 161% gain in 12 months before the tech wreck began. But the real stars were the Internet stocks. E-commerce software and Web developer BroadVision blasted up 592% the second half of 1999. InfoSpace (now Blucora) leaped 355%. Pets.com, an online pet-supply company, raised $82.5 million in February 2000. It filed for bankruptcy protection in November 2000.

And it all came tumbling down as the nation entered a recession and, suddenly, no one wanted companies with no earnings. By the time the tech wreckage settled, the Nasdaq composite was down 78%, dozens of unprofitable companies had vanished – and the stage was set for a protracted and (somewhat) more sober march back to Nasdaq 5000.

Fifteen years later with the Nasdaq composite opening the week at 4956 following an eight session winning streak, 5000 is just one decent rally away.

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: This grade is an A (very favorable) due to the favorable effect of lower gasoline and heating oil prices.

THE FED AND ITS POLICIES: We 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.

BUSINESS PROFITABILITY: This factor’s grade is a B- (slightly above average).

OTHER CONCERNS: The “Heat Map” is indicating the U.S. stock market is in good shape ASSUMING no international crisis. The Greek government and the European officials have extended the loans with which Greece is saddled for 4 months which delays the hard choices which must be made. On a scale of 1 to 10 with 10 being the highest level of crisis, we rate these collectively as a 2, a decrease from 3 last week. These risks deserve our ongoing attention.

The Numbers

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Last week, US Stocks and Foreign Stocks increased but Bonds declined. During the last 12 months, STOCKS outperformed BONDS.

Returns through 2-20-2015

1-week

Y-T-D

1-Year

3-Years

5-Years

10-Years

Bonds- BarCap Aggregate Index

-.3

.5

 5.0

 2.7

 4.3

4.7

US Stocks-Standard & Poor’s 500

.7

2.8

17.1

18.3

16.2

8.0

Foreign Stocks- MS EAFE Developed Countries

1.6

5.5

.4

 9.0

7.7

4.9

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 and her guest Attorney Dennis Pappas of the law offices of Stanley Vasiliadis & Associates will discuss: “Estate planning in a box – the cautions of using software for your most important documents”

Laurie and Dennis will take your calls on these topics and other inquiries this week. This show will be broadcast at the regular time. Questions may be submitted early through www.yourfinancialchoices.com by clicking Contact Laurie. 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. 

Valley National is Hiring

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It is that time of year again. We are reaching out to find the next rising stars to join our team. We are looking not only for recent college graduates, but will also consider other individuals who are re-entering the workforce or just getting started in their career. If you know anyone who you think has the skills, education and drive to join our team, please let me know ASAP. And, please circulate this to your own contacts. If you have any questions, let me know.

Entry Level ProfessionalFinancial Services

Valley National’s Entry Level Professional (ELP) program is designed to hire a select group of entry level professionals and integrate them into Valley National’s expanding “one-stop” financial planning business model. These individuals should have a strong desire to live and work in Lehigh Valley. The ELP program will train, educate, and teach each employee the foundations of financial planning, tax preparation, and investment management in order to give them the skills necessary to serve and grow Valley National’s client base.

Read the Full Job Description

The Markets This Week

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Greece gave U.S. investors a gift. Stocks stormed to new highs after the debt-laden country and its euro-zone creditors reached an agreement late Friday on a four-month extension of its bailout package. Trading activity was moderate.

Action in major indexes ebbed and flowed all week with continuing negotiations, which were played out in the headlines. Markets were headed for a loss until rumors of an accord began to swirl Friday and after better European growth data released earlier the same day.

Market observers said that to some extent a rise in the U.S. 10-year Treasury yields, to 2.14% from 1.67% a few weeks ago, plus relatively stable oil prices, went some way to easing fears in the equity markets of deflation, for now.

The verbal warfare between Greece and Germany weighed on the market. The deal is just an extension, notes Milton Ezrati, market strategist for Lord Abbett, but “the sense right now is that Europe is going to pull it off,” and keep Greece in the euro zone.

Last week, the Dow Jones Industrial Average picked up 121 points or 0.7% to 18,140.44, a new high. The Standard & Poor’s 500 index did the same, closing at 2110.30 up 13. The Nasdaq Composite gained 62, or 1.3%, to 4955.97.

Friday, Markit, a financial information services firm, said its February Composite Flash Purchasing Managers’ Index for the euro zone rose to 53.5 from 52.6 last month, its highest level in seven months and topping forecasts. Business activity in services led. Overall, it’s not blazing growth, but investors took solace that it’s not contracting.

With Friday’s data, U.S. investors are more upbeat on Europe’s growth prospects, says RDM Financial Group’s chief market strategist, Michael Sheldon. German business sentiment improved, and even French data were better. “Europe is showing a pulse, and investors are warming to the fact that growth in Europe is starting to improve,” he says.

Investors might not have noticed that European stock markets have sharply outperformed the U.S. since the mini-correction last October in local currency terms, almost doubling up the S&P 500 index’s 13% rise. Over the next few years, Sheldon thinks U.S. equities, which have had a better run in recent years, will continue that underperformance. The European market is trading at a lower valuation, with a price/earnings ratio of 16.2 times versus 17.7 for the U.S., and lower operating margins, which have room to expand. Moreover, for this year at least, earnings estimates for S&P 500 companies are coming down, he adds.

This week investors will focus on Federal Reserve Chair Janet Yellen’s testimony in Congress on Tuesday and Wednesday. The Greek drama isn’t over, just postpone.

(Source: Barrons Online)

Heads Up!

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What would have happened, if you would have passed away yesterday, to the “digital assets” you own? Digital assets do not have a uniformly accepted definition, but generally include digitally stored content, online accounts, travel miles, credits on eBay or Paypal or Amazon, online storage accounts like Drop Box, or iCloud, or music held in iTunes or Pandora. As our lives become ever more digital, this question will continue to grow in its importance. Individual states have been slow to pass legislation dealing with the ownership issue. Both Pennsylvania and New Jersey have considered legislation but have yet to pass it into law.

Some social networks have acted – Facebook for one. The social network rolled out an update Thursday that lets you assign a Facebook friend as a “legacy contact” to your account, essentially granting special access to the account in the case of your death. You can also choose to have your account deleted entirely. This legacy contact will not be able to post on your behalf or see your private messages. They will, however, be able to download your Facebook archive, which includes all of your photos, and post a note that will remain pinned to the top of your profile page.

If you want your profile deleted, Facebook will honor that request and remove your photos, Timeline, and past likes and comments (although some stuff like “log records” will remain). Facebook already memorialized profiles at the request of the deceased user’s family, and has done so for a number of years, said Vanessa Callison-Burch, a product manager at the company. That, of course, didn’t give users much control over what was done with their accounts, and the new update provides that option. If you choose someone as your legacy contact, he or she will not be alerted to your decision until you’ve passed away, added Callison-Burch. The update is available only for U.S. users, but will expand internationally “soon,” she said.

Source: (In Part from: The Wall Street Journal and http://www.digitaldeath.com )

Please contact me if you have questions or concerns about how this affects you.

The Economy

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Economic reports were sparse last week. The negative economic news exceeded the positive. Here is a recap:

Positives:

  1. Import prices declined 8% year over year.

Negatives:

  1. Initial jobless claims came in at 304k vs expectations of 287k.
  2. Retail sales ex-autos and gasoline gained just 0.2% vs the expected 0.4%.
  3. Mortgage applications fell for the fourth straight week.
  4. University of Michigan Consumer Confidence fell to 93.6 from 98.1.