This Newsletter was so full of tax related information, especially reach back to last year NOW savings ideas, that we published and sent paper copies early in the Quarter to beat the regular tax filing deadline.
Welcome to our Video and Audio Podcast Review of our Q 2 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
In likely the last year of this deduction due to changing tax laws, this deduction is given to most in a standard amount, but can be further enhanced under the appropriate situations.
If you had a big ticket item of any type that had sales tax, you likely will be above the standard given amount. Think back of when you purchased that car or other item. If it was last year, add all of your sales tax up as there is no limit to this deduction. (Phase outs may limit)
Note: Those in state income tax states are likely not a user of this deduction.
Forgotten frequently, we reminded recently in this post of the Medical Expense Deduction. In our Newsletter we really roll up the sleeves and attempt to remind everyone of the possible Medical Expenses you may have forgotten.
Publication 502, located here at the IRS website does a fantastic job of numbering the various deductions.
Home Improvements
Transportation
Television
Telephone
These are our favorite possibly forgotten Medical Expense Related Deductions.
If you are in doubt be sure to check the link to Publication 502 as we really can’t emphasize enough just how comprehensive their list is.
VIX and the XIV
In our detailed article in the Newsletter, we gest of the silliness of too aggressive investments.
When you pick up Penny’s in front of a giant steam roller … When the giant awakens …
Oops … it looks like this!
Much of the Volatility in the Capital Markets were sturred up by this event.
It may take some time to clear this completely. Patience!
Roth Versus IRA – AKA Pre-tax or After Tax
This is a super article that speaks to those who wonder if it is better to do a Roth or another type of Pre-Tax plan such as a 401k, IRA or SEP.
The answer to this question as mentioned in great detail in the Newsletter article is actually not that complicated.
The vast majority of people are in a higher tax bracket while working and lower while retired. If you are one of those people, Pre-Tax is better.
If you find yourself in a low income year/early earning, and expect your income to be higher in the future, a Roth might be better.
On word of caution that is included in our Newsletter .. Roth’s are often overused, so be careful.
Hope you enjoyed this slightly longer than normal summary and detailed review of our Newsletter – Podcast – Video, Review !
In our last Newsletter (Q1 2018) we ranted at length on the record breaking sleepiness of 49 times the VIX (Fear Gauge – low reading means no fear) had closed under 10 in the year 2017 after only closing below 10 a total of nine times prior to 2017 since the inception in 1990.
While we were warning of more normal times to come, money poured into a product that made money by a continued sleepy VIX or XIV.
We had no idea just how fast a return to normal would occur. Good timing or lucky, either way …. capital market returned to more NORMAL ways!
VIX versus the XIV
Just like in any other parts of life, fear goes up WAY faster than it goes down, or subsides.
Here is our chart, literally from our Newsletter – A very Sleepy VIX – fear gauge.
Looking back at the chart above one can easily see the VIX does not always sleep.
Fast forward to late January early February … the VIX awakened … like a sleeping giant, but not happy.
While we knew of Wall Street products that bet the VIX would remain asleep. We had no idea several billion dollars had found their way into these products.
We liken these money making, if sleepy VIX, products to picking up nickels in front of a steam roller … all good UNTIL!
Here’s what UNTIL looks like:
With several billion dollars (not any more) in these type of assets, when the VIX awakend and the opposite drop occurred, synthetic products became mandatory buyers and sellers of our fear index, the VIX … exaggerating capital market movement.
Just like in a traffic accident, this was not the only item that occurred, but this was another straw that helped awaken the sleeping giant!
Two and 1/2 issues in one week… No one was harmed, but it was a great reminder, they are out there!
As we mentioned in our post just prior to this one, the Grand Enchilada of Tax Forms enters the mail and electronic systems this week. These most popular forms are due by the end of January and fraudsters are taking notice.
Keep your eyes and ears out for anything suspicious!
Vault Saves Day Twice
Here in our real life experience post, we ended up needing the Vault to help save time and a HUGE hassle at a far distant Tennis Tournament. Who would have thought they would be so strict in identification at a Tennis Tournament?
Here is a neat reminder of what might do into your very own Personal Vault:
Legal Documents □ Wills □ Deeds □ Revocable & Irrevocable Trusts □Power of Attorney □ Codicils (Supplements made to a Will) □Living Wills/Health Directives □Prenuptial Agreements □ Buy/Sell Agreements □ Contracts Social Security and/or Veteran’s Administration Info Insurance Policies (Life, LTD, Disability, Medical, Car, Property) Medical Records Bank & Investment Statements □Pensions, IRAs, Annuities etc. □Investment Accounts □Stock Options/Certificates Liabilities □List of Credit Cards with contact information □ Mortgages □Loans Taxes □Tax Returns □ W-2 Forms Identification □ Birth Certificates □ Drivers Licenses □Passports Family □ Adoption Papers □ Marriage License □Pictures □ Audio Files □ Video Clips Property □Titles to Homes, Autos, Boats, etc. □ Warranties Employment Benefits
Capital Market Comments
Interest Rates
10 Year Treasury touches 2.70% – Where to next?
After floundering in the low 2% range, it appears interest rates may be on the rise. This is just in time as the FOMC (Federal Open Market Committee) are set to raise short term rates several times this year and the one thing we DO NOT WANT is an inverted yield curve (more on this another time).
We have argued higher rates are helpful as long as they move gradually.
Welcome to our Video and Audio Podcast Review of our Q 1 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
In this long overdue article we dig deep into the background of Medicare and the means testing of recent years. IRMAA, Income Related Monthly Adjustment Amount – AKA higher premiums thresh holds are analyzed and presented for 2018.
In the best part of this article we discuss what to do in order to lower your higher means testing Medicare Premiums.
Have We Already Had a Bear Market?
A Bear Market is generally defined as a drop of 20% or greater. In late 2015 – 2016 almost every asset category except the most popular dropped by 20%. In this article we discuss why this may be good news for the future of the current market.
VIX – A Fear Gauge Goes to Sleep
VIX a volatility (fear measure) rises when fear is rampant and slowly drifts lower when fear is absent. Over the last 26 years the VIX index has closed below 10 a total of 9 times. In 2017 this fear index closed below this level 52 times. We warn not to take these placid seas for granted.
First Time Personal Reflections
In this off the cuff article, we give thanks for all the wonderful things we have, what good things have come during the year and a general Thanks To All of YOU our clients and friends.
Here is our December 2017 Monthly review. If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast format.
In our post, here and here we discuss the Medicare Means testing levels, both historic and what we are faced with in 2018.
Due to the faster lower Tiers of income, the Social Security Administration has casted a wider net for all of us.
Here are the new levels, again from our post AND in even GREATER details in our Q1 2018 Newsletter.
A life event change may create relief – Life events not limited to the following-
Marriage
Divorce/Annulment
Death of Your Spouse
Work Stoppage
Work Reduction
Loss of Income-Producing Property
Loss of Pension Income
Employer Settlement Payment
Please see our Q1 2018 Newsletter for detailed instructions on how to get relief from these faster grabbing surcharges.
Personal Spring Cleaning in the Winter
Personal Reminder Email Tip
In our post mid-month here we discussed cleaning your emails to lower the Tidal Wave of daily emails.
After almost four weeks we are down to a trickle.
What was most interesting were the different experiences of who was up front and nice about the “Unsubscribe” request and who was down right dirty about letting us off their list. Surprised and disappointed with some companies.
Capital Market Comments
VIX – Fear Index Goes into Hibernation
We initially wrote in our Newsletter article and Blog post here, the VIX went to sleep … after another few closes below 10, we are coining it “Hibernation”
From 1990 to 2016 this Fear index closed below 10 a total of 9 times. During the year 2017, it has closed below that level 52 times and counting !!
Wow … Hibernation!
Interest Rate Increases
Just few years ago, with former FOMC (Federal Open Market Committee) chair Ben Bernanke running the show, a miscalculated mention of a pending interest rate increase threw the Capital Markets into a tail spin – and that was just a mention of one small .25% increase. WOW-
When the history books are written on this period of time, FOMC members “Listening” to markets may be prominent, and possible reason for success.
In 2017, the FOMC raised rates 3 times with very little market disruption. They are on record for 3 more in 2018. The best part of this, market participants are not throwing a hissy fit and seem to be welcoming the increases.
Today, we think NOT increasing the rates as forecasted would cause more harm than increasing – exactly the opposite of just a few years ago. Way to pivot FOMC officials.
The VIX index is a fear index that pops up really high when fear is rampant, and drifts down when fear subsides.
VIX and The Year 2017 Record Breaking
Over the last 26 years the VIX has registered a end of the day reading of 10 or less 9 times.
At the close of market just a few days ago, as you can see, 9.42.
Care to guess how many days and counting the VIX closed below 10 in 2017 SO FAR?
49 … FORTY NINE … and counting!
While this is terrific news for a smooth ride in 2017, looking ahead we don’t want to get to used to this type of calm.
Think about this for a second, the fear index has closed below 10 in the last 26 years only 9 times, and this year it has closed below that level 49 times! (So far!)
With a heavy week of posting we wanted to keep this Friday light as you head into your weekend. We will keep this at a high level with greater details to come, but wanted to lightly review (brag..haha) while the events are still recent.
Three items we wanted to point out that have already had a hit in the new year from our Q 1 2013 Newsletter are as follows:
Our biggest worry, Interest Rate Misbehavior:
Interest rates took a step up after several dissenting FOMC members noted in their recently released transcript that they may be ready to “Stop the Juice” (As opposed to our prior concerns “The Juice is Loose“) …Actions: This demands careful attention and with our belief of a soggy economy especially in the first half of this year, is most likely a noise, but the stakes are high and this ranks as one of our most watched items from the past several years and will continue so moving forward.
Geithner Retirement:
Jack who? … No Jack Lew is a possible replacement for the abruptly retiring announced Timothy Geithner who is the current Treasury Secretary (lookout debt ceiling talks… Lew you are in the crosshairs):
While no secret of a possible departure, there was at least doubt that Geithner would resign this year, especially this early in the year. Our expectation/concern was that he would, however we never imagined he would announce his departure before we could get our Newsletter to you. Whoever gets the nod, in baptism by fire notion, you better be ready as the debt ceiling negotiation is about to begin with the first deadline in mid February…..buckle up!
The CBOE in almost confession like fashion, released this short report of how the VIX has never dropped so fast in such a short time. Ah ha, we told you so, this is one of the items we feel is no longer as true of a gauge as it used to be in reading the tea leafs of the markets. Again, this happened BEFORE we could get you the newsletter. Hat tip Donald “The Brain” as the bones of this article are his, only my words here.
While we have never had such a fast payoff on our previews (hard to believe these hit before we even sent the Newsletter), we hope our skeptical economic view for this year is wrong, but we are still very conservative for this year at best.
Have a super weekend!
JK
PS Hope you liked my confession article this week, it was a toughie to write and very personal but hopefully worthy of your time!
On Monday, August 13, 2012 the NYSE experienced the lowest non-holiday trading volume in almost a decade (thanks Zero Hedge.) Our favorite fear indicator the VIX (volatility index) fell to an almost 5 year low as well.
Why is this happening?
While many, including ourselves are on vacation (but happily remained tethered), and the month of August is normally a month of The Hampton’s refuge by Wall Street types, these events transpire annually and are not unusual for comparison purposes, as such this does not explain all for us. Our belief is that our world has become, at least for the moment, so consumed by our European counterparts, that we have slowed dramatically since many across our friendly pond take the month of August as Holiday.
Of course no one knows for certain, and anyone can run with a thesis, we like ours the best.
Purchasing an umbrella in the rain is often more expensive than while the sun shines. Portfolio insurance carries many of the same characteristics.
As market participants ring the all clear bell, we happily enjoy the fruits of their efforts as portfolio insurance has become cheaper, due in most part to the continued downward path of the CBOE Volatility Index or VIX.
The VIX, a measurement of fear, also has a directly influence on the option prices we have mentioned in many of our educational series.
We are not calling for rain, however if an umbrella was needed during the last storm, now is a better time to make the purchase than during the storm.
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.
Annuities etc. □Investment Accounts □Stock Options/Certificates Liabilities □List of Credit Cards with contact information □ Mortgages □Loans Taxes □Tax Returns □ W-2 Forms Identification □ Birth Certificates □ Drivers Licenses □Passports Family □ Adoption Papers □ Marriage License □Pictures □ Audio Files □ Video Clips Property □Titles to Homes, Autos, Boats, etc. □ Warranties Employment Benefits
Q 2 2018 Newsletter (Early Release) Video Audio Podcast Review By John Kvale
Early Release Special Q 2 2018 Newsletter
Welcome to our Video and Audio Podcast Review of our Q 2 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
Let’s get going!
Q 2 2018 Newsletter
And here is your review!
Five Reach Back NOW Tax Savings Techniques
In this hugely in depth article was originally run in abbreviated form, her on street-cents.com
HSA – The Health Savings Account
In this part of the Newsletter Article we discuss why we like the HSA so much. Here are a few…
Here is the concise post, here on street-cents.
SEP – The Simplified Employee Pension Plan
Here are the high points to this portion of the Newsletter Article …
Here is the post, again specific to just to the SEP.
IRA – Vintage original retirement program, but still a goodie
Often forgotten, the good ole IRA makes up the third of our five tax savings techniques.
Here is our post specific to the IRA.
Sales Tax Deduction
In likely the last year of this deduction due to changing tax laws, this deduction is given to most in a standard amount, but can be further enhanced under the appropriate situations.
If you had a big ticket item of any type that had sales tax, you likely will be above the standard given amount. Think back of when you purchased that car or other item. If it was last year, add all of your sales tax up as there is no limit to this deduction. (Phase outs may limit)
Note: Those in state income tax states are likely not a user of this deduction.
Here is the specific post.
Medical Expense Deduction
Forgotten frequently, we reminded recently in this post of the Medical Expense Deduction. In our Newsletter we really roll up the sleeves and attempt to remind everyone of the possible Medical Expenses you may have forgotten.
Publication 502, located here at the IRS website does a fantastic job of numbering the various deductions.
These are our favorite possibly forgotten Medical Expense Related Deductions.
If you are in doubt be sure to check the link to Publication 502 as we really can’t emphasize enough just how comprehensive their list is.
VIX and the XIV
In our detailed article in the Newsletter, we gest of the silliness of too aggressive investments.
When you pick up Penny’s in front of a giant steam roller … When the giant awakens …
Oops … it looks like this!
Much of the Volatility in the Capital Markets were sturred up by this event.
It may take some time to clear this completely. Patience!
Roth Versus IRA – AKA Pre-tax or After Tax
This is a super article that speaks to those who wonder if it is better to do a Roth or another type of Pre-Tax plan such as a 401k, IRA or SEP.
The answer to this question as mentioned in great detail in the Newsletter article is actually not that complicated.
The vast majority of people are in a higher tax bracket while working and lower while retired. If you are one of those people, Pre-Tax is better.
If you find yourself in a low income year/early earning, and expect your income to be higher in the future, a Roth might be better.
On word of caution that is included in our Newsletter .. Roth’s are often overused, so be careful.
Hope you enjoyed this slightly longer than normal summary and detailed review of our Newsletter – Podcast – Video, Review !
See Ya next Quarter!
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
www.street-cents.com
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Posted in Audio, Investing/Financial Planning, Market Comments, Newsletters, Tax Related, Video
Tagged Reach Back Tax Savings, Tax Savings, VIX, XIV