Hello and Welcome to our January 2019 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!
January – 2019 Video
Financial Planning Tip (s) –
Get and Earlier than normal start on those Taxes
Here in this post, we remind everyone that due to the new tax laws, it will be a good idea to get your tax information to your professional as soon as possible.
If your using tax software, be sure to do the recommended updates as we feel certain there will be necessary updates to the tables along the way.
Corrected 1099’s are the usual, with only a few last year, we will give everyone the green light once we get our first round of corrected tax forms – but again go ahead and get started with your taxes!
Stunning Findings about your old employer 401k
We had long suspected as much, but in this post we review a Cerulli study that interviewed over 800 401k providers, only to find out that less than 30% really want your funds once you leave.
We have experienced less than stellar service over the years with former employees 401k plans – leading to our long suspicion of these findings.
Make Pension Changes/Decisions Carefully
While our favorite commencement benefit for pensions (100% jt survivor) is fairly straight forward, the simplicity ends there.
In this post, we review recent trends in buy outs and what to watch for, as well as the many scenarios we have experienced that are not always in our best interest.
Capital Market Comments –
Good News – Recovery without a Re-test – So far
What a different a month makes – WOW! We literally have gone from the sky is falling to sunshine!
In our summary post in December, we mentioned that fast moving slumps, such as the one we had, frequently do not last long….
Here, earlier in the month we also mentioned that we fully expected some type of retest of those lows before we gained our footing.
We still do expect some type of re-test, but as of this date we have had the following positives that have added to the markets better mood:
Federal Reserve (FOMC) have turned very cautious about raising rates further (We are happily surprised at their yielding, and even more surprised at market participants joy)
Tariff talks are making progress – Interestingly, China has seen a slow down in their economy making for slightly more urgent talks – with a little compromise and statesmanship a resolve looks more likely – again a positive for capital markets.
Earnings are still cranking along – For the prior 4-6 quarters, earnings were red hot and hitting on all cylinders, so hot, they were not sustainable. Companies are still reporting good earnings, just not the Red Hot, overheated earnings from prior quarters – this is good news as it avails the FOMC to not have to raise rates to slow the economy –
All in all a Win- Win!
Have a Great Day – Talk to you at the end of February!
Welcome to our Video and Audio Podcast Review of our Q 4 2018 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.
Click Here for direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page
Just a few days into the final Quarter of 2018, market participants became grumpy and continued their coal ways all the way through the end of the year – a seasonally strong historic period of time.
In our main capital market article we discuss the reasons why – no one knows for certain, and discuss the speed of the decline along with what the future may hold..
Updated Personal Theft Story
After having three credit cards stolen which we spoke of here, an interview with a detective brought to light some amazing stories of theft
Never give gift cards as a payment –
Don’t fall for fake blackmail –
Have a safe word for fake kidnappers or other similar scams
Meet Jennifer Hill “Jen” Our New Operations Manager
In a more in-depth article that expands on her background, Jennifer “Jen” Hill has our formal introduction along with several fun pictures including a Charlie’s Angels and a D Magazine Wealth Managers Picture from our honored award of D Magazine’s Best Wealth Managers.
Today at 2:30 Eastern time, Jerome Powell, the head of the Federal Open Market Committee (FOMC) will make the decision to hold to his earlier promise of raising rates a tiny .25% and more importantly signal possible future rate increases…
The New Normal
By looking at this multi-decade chart below, it is easy to see that rates are no where near their highs…
After being low so long, the new normal may be lower – market participants seem to think/want so …
From our perch, the best outcome today would be a raise once and “check the data” statement …
We will know in a few hours- do not forget, there are skeleton crews on much of Wall Street – making for a possible sloppy response….
This week a funny thing happened … on the yield curve that is, garnering a lot of attention. Those following our writings, here, here, and here, know we are watching for an inverted yield curve since it has a good predictive nature for recessions – a topic for another discussion. Heck, even Kent Smetters, the Wharton co-host professor mentioned the yield curve had inverted.
Inverted Yield Curve? Kinda!
Here is a good picture of a normal yield curve
Inversion occurs when the short term rate goes higher than the long term rate i.e. the 2 year greater than the 10 or even more clearly, the 90 day rate greater than the 10 year…
What happened this week were the 2 and 5 year yields, slightly inverting –
Does this count?
Maybe? BUT the real predictability is from the afore mentioned short and long, not short and slightly longer short…
Here is the 2 and 10’s, followed by the 90 day and 10’s
It may invert, and we will let you know when it happens, if it happens, but for now, in our minds ….
Hello and Welcome to our November 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!
November – 2018 Video
Financial Planning Tip (s) –
Clump – Maximizing the new standard deduction
With a $12k individual standard deduction and double that for joint filers it takes work to maximize the standard deduction threshold… Add the fact that SALT State and Local Tax deductions are now limited to $10k annually, clumping expenses into one year as mentioned here in our post and visually below may be the only way to get above the standard deductions for many …
Capital Market Comments –
Powell Signals a Slower Rate Increase
Current FOMC (Federal Open Market Committee) chairman Jerome Powell signaled the rate increases may be closer to over than just was stated just a month earlier… where a December increase, which is still almost certain, but three additional increases were promised in 2019 – not any more.
Given the long/lower rates of the last decade, it is not a surprise that the new normal may be lower –
Market Participants cheered this statement!
Have a Great Day – Talk to you at the end of December!
In addition to the above Unemployment level, average hourly earnings were also released and they were up 3.1% year over year — breathing a much needed pay increase to many ….
The bad news for many is that they believe these good numbers will give the Federal Open Market Committee (FOMC) ammunition for continued rate increases.
Currently FOMC members are on record saying they will raise rates in December and three more times next year (2019).
The worry is an eventual inverted yield curve – which we have mentioned many times is a very good precursor to a recession!
By looking at this chart, we are far from an inverted yield curve at this time- leading us to believe this “Good News = Bad News” may be very unwarranted…
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 …
RMD $$ mandated amounts are determined by the value of applicable accounts on the last day of the prior year
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!
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
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
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
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…
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…
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
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
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
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
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!
Have a Great Day – Talk to you at the end of November!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, please consult your financial advisor prior to investing!
Background
The is the vocal portion of J.K. Financial, Inc. a Dallas Texas Based Fee Only Total Wealth Financial Planning Firm. Founded by John Kvale, a Dallas Texas Fee only Financial Planner and Total Wealth Manager.
January 2019 Podcast Video, Financial Planning and Capital Market Update – By John Kvale
Hello and Welcome to our January 2019 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!
January – 2019 Video
Financial Planning Tip (s) –
Get and Earlier than normal start on those Taxes
Here in this post, we remind everyone that due to the new tax laws, it will be a good idea to get your tax information to your professional as soon as possible.
If your using tax software, be sure to do the recommended updates as we feel certain there will be necessary updates to the tables along the way.
Corrected 1099’s are the usual, with only a few last year, we will give everyone the green light once we get our first round of corrected tax forms – but again go ahead and get started with your taxes!
Stunning Findings about your old employer 401k
We had long suspected as much, but in this post we review a Cerulli study that interviewed over 800 401k providers, only to find out that less than 30% really want your funds once you leave.
We have experienced less than stellar service over the years with former employees 401k plans – leading to our long suspicion of these findings.
Make Pension Changes/Decisions Carefully
While our favorite commencement benefit for pensions (100% jt survivor) is fairly straight forward, the simplicity ends there.
In this post, we review recent trends in buy outs and what to watch for, as well as the many scenarios we have experienced that are not always in our best interest.
Capital Market Comments –
Good News – Recovery without a Re-test – So far
What a different a month makes – WOW! We literally have gone from the sky is falling to sunshine!
In our summary post in December, we mentioned that fast moving slumps, such as the one we had, frequently do not last long….
Here, earlier in the month we also mentioned that we fully expected some type of retest of those lows before we gained our footing.
We still do expect some type of re-test, but as of this date we have had the following positives that have added to the markets better mood:
All in all a Win- Win!
Have a Great Day – Talk to you at the end of February!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
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Posted in Economy, FOMC, General Financial Planning, Interest Rates, Investing/Financial Planning, Market Comments, Monthly Review, Podcast, Retirement Planning, Tax Related, Video
Tagged 401k, Fed Funds Rate, FOMC, Jerome Powell, Pension, Pension Buy out, Pension Lump Sum, Tariff