Two of the “Heat Map” indicators have been downgraded and the third, “The FED and its Policies” is subject to the results of the FED meeting this Wednesday. In addition, China’s economic slow-down coupled with its stock markets’ unusual gyrations are cause for concern.

RECOMMENDED ACTION: make sure any portfolio withdrawals anticipated during the upcoming 18 months (from your portfolio) are in more stable short term bonds or money funds. If you are aware (and we are not) of an upcoming withdrawal for a new car, home renovations, second home purchase, etc., please notify me ASAP to make sure the anticipated withdrawal is not invested in stocks or stock mutual funds.

The stock markets have been acting like a yo-yo. Nevertheless, the long term trend is up. If you could visualize your portfolio, the best description is think of how a yo-yo looks when someone is playing with it, while going up an escalator.

And currently, we believe the escalator is still trending up, based upon our interpretation of the three factors reported below under the “Heat Map”.

One of our roles as portfolio manager is to keep your eye focused on the long term: the escalator and its direction. (Avoid over-focusing on the yo-yo which could steer you toward emotional investment decisions).

NOTE: The news media prefers you to focus on the yo-yo and tune-in each day for an update. Frequently, the news will be biased in such a way to elicit your desire for an update – sometimes to alarm you unnecessarily. It’s best to put it in perspective as described above.

The situation in Greece will capture headlines this coming week and make the markets behave like a yo-yo. The news media will hold interviews with financial pundits who will forecast bad outcomes. That’s what they do to attract your attention. But, my experience indicates the markets will be affected only in the short term due to Greece’s mounting problems and will appear as a mere bump in road when looking back from a future vantage point.

Nevertheless, we will monitor whether interest rates for Italian, Spanish or Portugal government bonds jump. If so, this is a sign these countries may have been affected by investors pulling their money like what is happening in Greece– that could lead to a more serious problem. We suspect this will not occur; but, we will closely monitor nevertheless.

Valley National takes great pride in announcing Valley National’s Executive Vice President and Chief Operating Officer Matt Petrozelli has been recognized as a member of “Forty under 40” by the Lehigh Valley Business magazine.

This awards program celebrates 40 of the Greater Lehigh Valley’s most accomplished young businessmen and women who have been making headlines in their field and who share a commitment to business growth, professional excellence and to the community. For more information, click here.

Americans have paid down and/or refinanced their mortgage debt to an incredible degree. Mortgage payments as a percentage of disposable income has dropped to the lowest level in 34 years, according to Federal Reserve statistics. Lower mortgage payments mean consumers have more spendable income – a big plus for future economic growth in the US.

SOCIAL SECURITY EARNINGS HISTORY & ESTIMATED BENEFITS STATEMENTS REINSTATED

Back by popular demand, paper statements of EARNINGS HISTORY & ESTIMATED BENEFITS will again be mailed out by the SSA (except for those who have set up online accounts). Workers turning 25, 30, 35, 40, 45, 50, 55, and 60 will again receive a printed statement 3 months before their applicable birthdays.

When received, I recommend you review the statements, and send them to me for our reference, and your permanent files.

The probability is growing for a “needs test” taking away part of well-to-do retirees Social Security benefits. In one possible scenario, a formula will be devised to take back part of Social Security benefits for those above certain thresholds of income or net worth.

New studies from two Ivy League schools Harvard and Dartmouth researchers concluded Social Security really is in worse shape than most originally thought. In looking at the Social Security Administration’s actuarial forecasts the Ivy League researchers found that these have been consistently overstating the financial health of the program’s trust funds since 2000.

If you are thinking a “needs test” is far-fetched, consider this. When I prepared my first income tax return in 1977, retirees’ Social Security were NOT taxed. However, in 1984 the US Government levied its first “needs test” by taxing 50% of retirees’ Social Security-thus taking away part of well-to-do taxpayers benefits through the income tax system. In 1993, the US Government increased the level to 85% on higher income retirees. In effect, two “needs tests” have been levied in an effort to remedy the distressed Social Security system. The probability is rising on a third.

Before you store your income tax return in your archives: now is a good time of the year to check your beneficiaries on IRA’s, Roth IRA’s, 401k’s, and life insurance or annuity policies. Confirm the Primary Beneficiaries are those persons you intend to be your heirs. And, check whether Contingent Beneficiaries exist in case the Primary Beneficiary passes before the account owner. It is important not to name your estate as beneficiary. And, keep in mind the beneficiary named on these types of accounts determines who receives the money when the account owner passes, not the deceased’s will.

Economic analysts have “written off” the 1^st calendar quarter of 2015 as a disappointing one for the U.S. economy due to: (1) the severe winter in the Northeast and Midwest; plus, (2) the dock strike on the West Coast. As a result, many economic analysts believe “as goes the 2^nd Quarter, so goes the year”. Much stock market volatility will result from the 2^nd Quarter reports which will be released in May, June, and July. If one of these economic reports appears too “cold” the stock market will respond negatively because it will appear the economy has not bounced back. On the other hand, if the report appears too “hot” the stock market may respond negatively because the FED will probably raise interest rates that much faster (a negative for the stock market). In short, “goldilocks” economic reports will be best received. It’s unlikely each report will be a goldilocks report. Thus, the upcoming 3 months will most likely be a time period of higher volatility. The 3 month period may end with a positive market performance – however, we can expect higher levels of stock market fluctuations.

If you are eligible to contribute to a Roth, I strongly recommend you do so. If you are not eligible, consider gifting to your child or grandchild if they are eligible. Roth IRA’s are one of the best long term investment opportunities available.

A Roth IRA is a retirement savings account that allows your money to grow tax-free. You fund a Roth with after-tax dollars, meaning you’ve already paid taxes on the money you put into it. In return for no up-front tax break, your money grows and grows tax free, and when you withdraw at retirement, you pay no taxes.

In order to contribute to a Roth IRA, you must have employment compensation, and then there are income limits.

The deadline for making a contribution for 2014 is April 15, 2015. There is still time: e-mail or call me for more details.