Category Archives: General Financial Planning

Facebook Proves Price Does Matter

Posted on May 21, 2012 by | Comments Off

On Friday the much awaited Facebook IPO began trading. With a storm of issues surrounded this initial offering, it appears that fundamentals overwhelmed hype, which is not always the case. I happened to be with a group of multiple professional investors on Friday, and while we all thought the price was rich, no one called the disappointing (to Wall Street) price action that has ensued.

The Facebook IPO was scheduled for a later am morning issuance so the employees and managers of the company could have a convenient 9 am pacific time viewing. While the NASDAQ made concessions and moved the original open to the west coast, they may have wished they had stayed in New York. After almost 30 minutes of unscheduled delays, trading began as orders were rushed, dumped, and what only a legal battle will soon determine, left few knowing who actually owned shares by the end of the day.

Not withstanding the bad opening and the glitches in the systems, it appears a richly valued company with extreme expectations has done the unthinkable “Broke the Offering price” in less than one day of its trading.

Here is a chart through mid morning trading:

Time will tell how this turns out, but given the questions we have heard from many, we thought it worth mentioning this Monday morning!

Have a Great Day!

JK

214-706-4300

www.jkfinancialinc.com

Comments Off

Posted in General Financial Planning, Investing/Financial Planning, Market Comments

Tagged , , , ,

Zigg Drops by with a Mcteer Question and a Few Grounding Thoughts

Posted on April 27, 2012 by | Comments Off

Zigg, making a pilgrimage from his very crowded small island, on his way to the store for supplies as many of his new fair weather friends are cramping his style and eating his food, stopped by last night to see the family and say hello. He had heard about the McTeer event and added a nice question of his own, which we will certainly ask Mr. McTeer.

For those not familiar with Zigg, he is our mythical friend who is a contrarian. He Ziggs when others Zagg, usually taking an uncomfortable position at any given time. His thoughts are always helpful in keeping things in perspective.

In addition to the McTeer question he shared the following thoughts:

  • This is an Election Year, see (Research Paper) for history
  • Tax cliff may come in the form of possible new taxes
  • Little Brother Country Issues i.e. EU
  • A years worth of market returns already

Zigg was not being negative as he never takes a harsh stance, however he did warn of becoming too optimistic and letting our guards down.

Thanks Zigg, we have missed you and glad you dropped in. It’s funny to see him move from the only positive person, to being a bit more conservative in his views, once again almost alone in voice.

Have a Great Day and a Super Weekend!

JK

214-706-4300

www.jkfinancialinc.com

Comments Off

Posted in Economy, General Financial Planning, Investing/Financial Planning, Market Comments

Tagged , , , ,

Zigg Drops By, Reminding Us to Stay “On Guard”… A Few Funny Quotes from Break

Posted on March 16, 2012 by | Comments Off

Zigg dropped by from his extended sabbatical to remind us of staying disciplined. 

In the vein of the worst mistakes are made at the most profitable moments, we recall the importance of staying “On Guard” and not letting our defenses down.

As markets trudge higher and mostly ignore any negative data, it is critical to rebalance to the correct allocation. At this time that will most likely mean selling portions of equity positions (sell high) and re-deploy to other areas that have not participated in the move (buy low.)  It feels so much easier to do just the opposite, buy high, but history shows that does not do much for our pocket books.

Favorite quotes from our New Mexico trip, which we returned from yesterday evening. ”We can’t be back in Texas, there are no tall buildings” Pierce, “How much farther?” One hour into a MUCH longer drive, Sophia.

Glad to go and knock the rust off, but also glad to be back.

Have a Great Day and a Super Weekend!

JK

PS The drive offered great progress on a sports themed Newsletter.

PSS We are working on something exciting and new, a timely private event for you, clients, business friends, and readers, details not yet complete, but looking good!

214-706-4300

www.jkfinancialinc.com

Comments Off

Posted in General Financial Planning, Investing/Financial Planning

Tagged , ,

Roll Those “NUA’s” Carefully From Your 401k into an IRA or You Might Forfeit a Dramatic Tax Benefit

Posted on March 8, 2012 by | Comments Off

Net Unrealized Appreciation, NUA’s for short, are individual stocks residing within a retirement plan that may have terrific tax benefits available. If an investor is not careful you can lose this tax benefit. NUA tax strategies are available one time, at the time of distribution, and if not used are lost!

NUA’s, most common in long time employed investor portfolio’s of publicly traded legacy companies, may also be found in any investor portfolio with a substantial slug of company stock. Under current tax law, there are possible substantial tax benefits if distributed correctly. 

While this concept can get confusing, let’s use an exaggerated example to make our point.

Example 1:  The Smart Way - 

An investor has a 401k plan with $500k worth of company stock and a basis of $10k. Using an NUA strategy, this investor may be able to roll his $500k worth of NUA stock into a taxable brokerage account by paying ordinary income tax on his $10k of basis, leaving future distributions taxed at current capital gains rates. Assuming this investor is in the 30% tax bracket, a $3k tax bill on the $10k basis would be due at distribution. Future distributions would possibly be at 15% under current tax law. This investor’s total tax bill is as follows: $490k x .15% = $73,5k plus $3k prior taxes for a total of $76.5 in taxes.

Example 2:  Not Smart Way -

This same investor (an exaggerated example..) rolls his 401k over into an IRA and then takes a full distribution. This time the tax bill, under the same tax law is $500k x 30% = $150k in taxes.

Under our first example the total tax bill was $76.5k and under the second, $150k, of course this is a no brainer.

Bottom Line

Life is never that easy, and there are many nuances we are not mentioning which must be reviewed. However, we hope you get the point, which is to recognize the potential of a lower tax strategy and dig deeper before you forfeit it!

Have a Great Day!

JK

214-706-4300

www.jkfinancialinc.com

 

Comments Off

Posted in General Financial Planning, Investing/Financial Planning, Tax Related

Tagged , , ,

Question of the Week, Including a Personal Story…. “How Frequently Should I Review My Will?”

Posted on January 27, 2012 by | Comments Off

Our question of the week, this week, comes from our field of dream clients again (that’s you guys), but is also part of our regular repertoire of questions we ask when meeting new clients. This weeks answer comes with a slight twist due to possible tax law changes.

From our question one can infer we recommend everyone have a Will. Even if your situation is relatively simple, a lack of Will directives can extend the process in time and increase financial costs.  As an example, my Uncle passed away about 13 years ago and was single with no children. Unfortunately his Will could not be found. While his estate was not complicated, the lack of organization and direct beneficiaries strung the settling of his estate process out to almost 2 years, and greatly increased the expenses.

We recommend a review of your Will at least every 5 years or earlier if your situation changes. By dusting off that Will and reviewing the major players (Executor, Trustee, Guardian, Power Of Attorney) you may find someone in the document you have lost contact with, or whom a better person may fit today. Take action and call your Attorney to have these folks updated, it is an easy process and well worth your time in the long run. 

Here is the Twist:

There are possible major Estate law changes on the horizon which we will constantly be notifying you of over the next several quarters. Given this fact dramatic estate planning changes may be ill-advised at this time. Please do not take this as a reason to procrastinate necessary updates, but there are significant tax laws sun setting at the end of this year. 

We are not attorneys or attempting to practice law so see your attorney for that, but do dust off that Will if it has not seen light in over 5 years, you might be surprised at what you find!

Next week, we have a CFA related event that brings Donald in town for a whirl wind tour and a meeting of self-professed expert forecasts for the year 2012 (we will bring you the commentary.)  Office upgrades continue as this week brings a new high-tech trading platform and a Tamarac system,  which we will explain soon.

Have a Super Day and A Great Weekend, and don’t worry Zigg is doing fine!

JK

214-706-4300

www.jkfinancialinc.com

Comments Off

Posted in General Financial Planning, John Kvale, Personal

Tagged , ,

Favorite Question of the Week from the Field; Zigg Still on Vacation

Posted on January 20, 2012 by | Comments Off

With our friend Zigg still on his island and his friends intent on staying for a while, we decided to shift gears and discuss our favorite question of the week.  This week’s question derives its origin from several conversations we have had lately with client’s, making it topical for discussion.

Should I only put the amount the company matches in my 401k? and a follow-up question,  Should I put extra, non-pre taxed funds into my plan?

NO and NO !

We recommend you put as much as possible in your company 401k even if there is no match at all. There are various restrictions such as compensation and general government caps which limit contributions, but putting as much PRE-tax funds into your 401k as possible, is our recommendation.

Various plans allow you to continue after-tax contributions to retirement plans, which we are not advocates of doing.  Most plans do not have the ability to provide for specialized allocations which may be more appropriate for investment.  Don’t bypass saving these extra dollars and spend!  Just save these funds in a more self-directed manner. 

In closing, just because Zigg is on vacation, does not mean there are not sharks out there, keeping our guard up for an “Event” is still a good idea, however, economic, consumer, and earnings (more discussions soon) look very good!

Have a Super Day and a Great Weekend!

JK

214-706-4300

www.jkfinancialinc.com

 

Comments Off

Posted in General Financial Planning, Investing/Financial Planning

Tagged , , ,

How We Are Navigating This Manic Stock Market In Two Easy Steps

Posted on November 28, 2011 by | Comments Off
Given the headlines and the market movement of late, we have been complimented frequently on our calm demeanor, to which we thank everyone, but wanted to highlight our secret.

In an effort to attempt to always keep things simple, we have found our own secret sauce, which, as you might have anticipated, is just that, Simple! (By the way, we certainly have learned from mistakes in the 207-2009 “off the cliff“, time frame, and we are generally more conservative and cautious investors today.)

In our opinion, here are the two most important items in navigating this market today, and why it is helping us stay grounded:

Step One:

Have the correct Stock/Bond mix for your situation. Throughout 2007-2009 we learned as professional advisors we were unknowingly slightly more aggressive in certain areas than we had originally thought. We also learned we wanted to be generally more conservative, across the board, given the world events and future possibilities. With a few more gray hairs, and an extra wrinkle or two, we are more conservative today in our allocations, and our specific investments. As most of you know, here is our go to allocation chart of risk and reward (Fixed/Equity).

Step Two:

Rebalance, rebalance, rebalance. When markets are slow lumbering elephants moving through the forest like they were in early 2011, specific individual investments tend to be the key. When markets are bouncing around like kids on a pogo stick, massive groups of investments all move together, for the good or the bad. When one group goes up and becomes too large for the appropriate allocation, trims are necessary. When another group gets dragged down by macro market movements, allocating funds to this situation is key.

Against the Crowd

This step is the ultimate in courage and confidence, as EVERY time we are selling investments that have gone up, and buying the investments that have gone down, most mainstream folks are Zagging, and telling us how silly we are as we politely Zigg !

From a client perspective, this is why you have seen more movement in portfolios this year.

Thanks very much for your continued confidence and compliments, we appreciate it very much and hope you have enjoyed this quick refresher of how we are keeping our cool!

Have a Super Day and Welcome Back!

JK

214-706-4300

Comments Off

Posted in Clients/Clients Only, General Financial Planning, Investing/Financial Planning

Tagged , , , ,

A Two Day Blasting of Meetings With Over 40 Public Company Managers

Posted on November 16, 2011 by | Comments Off

Over the next 48 hours, a twelve-hour run today, and an eight hour run tomorrow, I will have the opportunity to visit, in person, with over 40 publicly traded managers (CEO and CFO’s) from across the country.

A wonderful by-product of this two-day blasting of meetings is a sketching of the  economy from all walks of life in the public sector.  I will be looking for themes to bring you as they develop, along with any positive or negative outlooks. The more consensus that is established the easier it will be to get a feel for the mood from this sampling of managers.  It is a given that companies from certain sectors will have differing views, which makes it even more interesting.

Each year I look forward to this CFA related event to hear the latest news from various company insiders and learn more about their respective company.  Each meeting lasts a short period of time in which managers briefly go over their business model, then jump into the big three Accounting sheets, (Balance Sheet, Income Statement, Cash Flows) and then give an outlook for the future, with the last item being critical, as stated earlier.

Today lunch is hosted by former Dallas Fed chief, Robert McTeer. Robert is a good guy, whom I have visited with before and written much about over the years. I look forward to hearing his perspective on the macro economy and will bring you any major updates from his camp.

Have a Great Day!

JK

214-706-4300

P.S. Feel free to share our insights with friends!

Comments Off

Posted in Economy, General Financial Planning, Investing/Financial Planning

Tagged

401k Fund Exchange Season Reminder

Posted on November 15, 2011 by | Comments Off

As the end of the year approaches many 401k providers will replace, adjust, and redo various investment options of their company plans.

Please keep us in the loop, as occasionally these changes are dramatic (auto directed transfers) or offer something new we had been waiting for and wanted to invest.  We will get back with you very quickly as we know some of these windows of change are short.

What to send us:

The related company email announcement, a fax of the new investment options, or generally as much information as possible, will help us determine if the new options are something we want to participate. By including your latest balances and related investment holdings, we will review our current allocations for possible rebalancing and adjustment needs as well.

Have a Great Day!

JK

214-706-4300

john@jkfinancialinc.com, don@jkfinancialinc.com, cathy@jkfinancialinc.om

Fax 214-706-4262

Comments Off

Posted in Clients/Clients Only, General Financial Planning, Investing/Financial Planning

Tagged

Attention Executors and Trustees, Another Tax Deadline Nears

Posted on November 9, 2011 by | Comments Off

As the end of 2011 draws near, another year winds down.  From the IRS’s standpoint, if you are an Executor or Trustee of an Estate or Financial entity, it can be their last time to visit if you complete your duties by year-end.

In most situations 12-31 of each year marks the end of the tax reporting for Estates, Trusts and other Estate planning entities. For Executors and Trustees who are able to wind down by year-end (we understand many have extended duties), it may save you significant tax reporting/issues.

Here are a few tips:

  • If you can finish your duties by year-end, do it. If you have items that push into the next tax year, by just a day, it could mandate another year of tax filings and federal income tax reporting.
  • Each new tax year exposes your entity to tax law changes. A tax law of some type changes every year. Trust and Executors are in the bull’s eye of tax changes some years, with these changes being difficult to predict, closure, sooner than later may be better.
  • If liquid cash/money market is all that remains in an Estate account for shot term possible future needs, consider a non-interest bearing estate checking account. (Not recommended for large or long time horizon needs.) By having no reported interest on the afore-mentioned account, future filings may be avoided.
  • Attempt to transfer ownership/titles to the respected beneficiaries by year. The farther along one can continue in the process the better. If it appears you are not able to finish by year-end, keep the process going, every little bit helps in the long run.

Pushing past the year-end deadline is sometimes unavoidable, do not fret, just do the best you can, and understand that if you do, even by a week or a few days, you may be subject to another year of federal filings.

We are not Attorneys or CPA’s, as such this information is for informational purposes. Please contact your respected advisor for information specific to your situation.

Have A Great Day!

JK

214-706-4300

Comments Off

Posted in General Financial Planning, Investing/Financial Planning, Tax Related

Tagged , ,