October — BOOOO- 2018 Podcast Video, Financial Planning and Capital Market Update – By John Kvale

Hello and Welcome to our October 2018 Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast format as well as Video!

Newbies – We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

A Special Congrats to the Capones growing family!

Nathan Elliott Capone

Nathan Capone

October – Booo – 2018 Video

Break In – Holiday Party Reminder

10-9-18 - Holiday Party Invitation


Financial Planning Tip (s) –

RMD Season

In our explanative post here, we overview the RMD season items …. and remind those in the first year of their chose to defer or take …

  1. RMD $$ mandated amounts are determined by the value of applicable accounts on the last day of the prior year
  2. Current year age is a necessary factor included in calculating the RMD – see below next, first time exception – each year of seasoning (getting older) we are forced to take more out of the applicable accounts – hey the IRS has never taxed us on these in many cases – it’s their time!
  3. After tax contributions to a qualified account MUST be accounted for in order to avoid taxes – here are greater details and our taxpayer obligations on this –  don’t overpay – the IRS is not tracking this and will not come to the rescue and lower your taxes
  4. All of an individual’s accounts must be included/totaled/value (certain exceptions are made to those continuing to work) to ascertain the needed distribution
  5. Any one account can be used to satisfy the needed distribution (you do not have to take a little from each account, making it easier from an organization standpoint) BUT you must take at least the minimum distribution
  6. Failure to take the mandated distribution amount COULD result in a 100% tax – Break in – our experience has been the IRS is nice about this, but let’s not test them

Social Security COLA Bump

Congratulations to those on a fixed income, the Social Security Administration SSA’s favorite inflation gauge measured a 2.8% increase, which we review in our post here and also even created this neat historical graph for our collective review…

2019 Cola SS


Capital Market Comments –

Suddenly it’s Raining?

After a drop at the beginning of 2018 – mostly blamed on a creative synthetic product that bets risk will stay low (XIV) our patience was rewarded and footing found … until Ugly October came to roost…

What Gives?

At this time, no one with 100% certainty, can pin point what turned the market sky’s grey and sent rain…

Oddly, it may not be any one thing, just like an auto accident – usually multiple items occur at the same time that lead to an opening for contact with another …

Here are our best thoughts in order of our priority/possibility – again no one knows for sure…

  1. Trendy high flying stocks that have been a momentum favorite, suddenly took it on the chin – alone in time not a big deal – seen next
  2. Most mutual funds and many other assets managers close their books at the end of October – many heavily invested in the above trendy stocks had their year turn very ugly right at the finish line, possibly setting a musical chair like exit, causing much more volatility than what would have otherwise occurred if not so near the end of many fiscal years – an extra worry juggle ball in the air
  3. Mid-Term elections are finally here, and it is unlikely anyone can predict with any certainty the outcome of the elections – capital market participants hate uncertainty – not a big deal if this was all they are watching, but another juggle/worry ball up in the air
  4. Interest Rate Increase banter on how many an how long rates will increase before being “Normal” – we have discussed in great length the inverted yield curve and while we are no where near this event, yes… another juggle worry ball in the air
  5. Tarif Talk has been around all year, but looks to come to more of a peak near the end of the year – yet another worry/juggle ball up in the air

The good news is the sun will likely come out again soon, but in true rain like fashion, it seems like the days go by SLOOOOWER when your stuck inside, under cover, without sun!

The GREAT news is earnings have been for the most part very good, not GREAT and screaming as they had earlier in the year, but still very good by comparison.

MAYBE ? – we are just overdue for a correction – This fantastic chart from our friends at JPMorgan reminds us all that these type of corrections are more of the norm, not the abnorm – we have just been without regular bouts for some time!

Q4 18 JPMorgan drawdowns

Have a Great Day – Talk to you at the end of November!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

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