Tuesday, February 19, 2013

New Location for Future Posts

All future blog posts for The Kaighn Report will appear on our website:  Jersey Benefits Group, Inc.  The web address is http://www.jerseybenefits.com  Please bookmark the address for your future reference.

Friday, January 4, 2013

JERSEY BENEFITS ADVISORS INVESTOR NEWSLETTER WINTER 2013

Market Watch

Well, I have to say the politicians certainly didn’t disappoint me.  Just as I thought would happen, the “political leaders” of our fair land waited until the last possible moment to reach a quite wimpy, less than grand bargain to avoid careening the economy over the fiscal cliff.  While I am pleased they were able to take time from their endless blame game to craft a compromise, I am extremely angry at the complete disregard for working people and retirees exhibited by these so called leaders. 

While they played out their silly drama, the markets relinquished several percentage points worth of gains, which will be reflected as lower returns on the IRA and 401k statements of the average working people they purport to represent.  Although the agreement did spark a triple digit gain on the 31st of December when the Senate passed its compromise, the returns for the year could have been much better had they gotten their act together a month ago.  Alas, we all knew that wasn’t happening.

Fortunately, while the markets were quite skittish during the period between Thanksgiving and the end of the year, we were able to hold onto most of the upside in the market for 2012 and wind up with some respectable gains.  The Dow Jones Industrial Average* finished at 13,104.14 clocking a 7.25% gain for the year.  The S&P 500* closed at 1,421.19 which was a 13.41% annual increase.  The NASDAQ*  ended the year at 3,019.51 adding 15.89%.  Overall, not a bad year to be invested in equities.
 
If the first day of trading in the new year is any indication of the type of year we are going to have, and we all know it is considered to be a positive indicator, then we are certainly off to a rousing start.  The market has been on an upswing since it bottomed out in March of  2009, and the economy has been on the mend since Gross Domestic Product began growing again in July 2009.  This represents three years and six months of recovery and expansion in the economy, albeit at a less than stellar pace.  I have been saying for some time now this could be a longer than average economic cycle, due to the fact we are growing slowly.  If the politicians can just begin to grasp the concept that the markets like the idea of compromise, perhaps they will start to actually take some problem solving steps toward making Social Security solvent and Medicare sustainable.
 
Although I’ve been a bit perturbed by the recklessness of Congress and the Administration, the statistics regarding housing, unemployment, retail sales, manufacturing, and GDP lead me to the conclusion there is room for this expansion to continue.  The financial turmoil we have witnessed has been referred to as a “black swan” event, meaning a random, unexpected debacle that deviates beyond what is normally expected of a situation and that would be extremely hard to predict.  However, many people have been so affected by it psychologically, they don’t recognize the improvement and seem to be waiting for the next catastrophe to happen. 
 
While I am not advocating unabashed enthusiasm for the current situation, I do think the spending cuts needed, which have been deferred for two months, will be enacted.  Hopefully, the politicians will again manage to compromise on the cuts and increase the debt ceiling, which also must be addressed at the same time.

The problems are not insurmountable if addressed.  We will survive as a country, but the politicians will be tarnished by not compromising for the greater good.
 
2013 Contribution Limits Raised For Many Retirement Plans
 
There have been some changes in the contribution limits for retirement plans for 2013.  Participants in 401k, 403b and most 457 plans can contribute $17,500, while the catch up contribution for those 50 & older remains at $5,500.  The limit for IRA and ROTH IRA contributions rises to $5,500 and the catch up for 50 and older remains $1,000. 
 
Contributors to a SIMPLE IRA can contribute $12,000 to their plan in 2013, up from the current level of $11,500.  The catch up for those 50 and older remains $2,500. 
 
These are a few of the changes the IRS announced, due to statutory triggers being met by an increase in the cost of living index.  All of the changes can be reviewed at the following link: http://www.irs.gov
 
No inflation, huh?

Update on the Patient Protection and Affordable Care Act
In 2014, under the Patient Protection and Affordable Care Act of 2010, the states are supposed to set up insurance marketplaces or exchanges where individuals and small businesses can go to shop for health insurance policies.  As of the December 14, 2012 deadline, only 17 states and the District of Columbia had established the exchanges.  Seven other states have opted to establish Partnership Exchanges with the Federal Government.  This means the Feds will be involved in running the exchanges in over half of the states.
 
While this could change going forward, in the states where the Feds are running the exchanges, the chances are there will be a “one size fits all” approach to health insurance.  This would result in exchanges which are less flexible than exchanges tailored to meet challenges specific or unique to each state.  It is hoped the exchanges will create competition between insurance companies and drive down the cost of insurance.
 
Companies with fewer than 25 employees are not required to offer health insurance, so it is a fairly safe bet the companies that currently don’t offer insurance will continue to not offer it.  Those that do provide health insurance coverage to their employees will have an incentive to drop coverage, which will help the bottom line.  This means employers and employees in companies that employ less than 25 workers will probably be going to the exchanges, despite the convoluted tax credits which are available, provided the insurance and the company qualifies.  Hopefully, the options provided by the exchanges will be more affordable for these individuals.
 
Businesses with less than 50 employees are also not required to provide health insurance and have no consequences for not providing coverage.  Again, there are tax credits if coverage is provided, but attempting to qualify for them may be an effort many employers with less than 50 employees are not willing to make.  Many companies at this employee level may also choose to simply discontinue health care coverage and utilize the exchanges.
 
Finally, if a company has 50 or more workers, it is required to provide health insurance for its employees, starting in 2014.  Failure to provide coverage will result in an assessment of $2,000.00 per full time employee, after the first 30.  Furthermore, coverage must meet the definition of affordable, meaning the employer must pay for 60% of the premium and the worker can’t be required to pay more than 9.5% of family income, before deductions and adjustments, for coverage offered by employers.  The policy offered by the employer must also meet a minimum standard for “essential health benefits”.  The outline of this “comprehensive policy” can be found on the website:
http://www.healthcare.gov.

Company Information

Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J.  08226
Phone:  609 827 0194
Fax:  609 861 9257
Email:  kaighn@jerseybenefits.com
 
Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
570 Carillon Parkway
St. Petersburg, FL  33758-9053
800-245-8250
Member FINRA & SIPC
Transamerica Financial Advisors, Inc. is
not affiliated with Jersey Benefits Advisors
 
 Third Party Administration and Insurance
Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J.  08226
Phone:  609 827 0194
Fax:  609 861 9257
Email: kaighn@jerseybenefits.com
 
All opinions expressed in this newsletter are solely those of John Kaighn and Jersey Benefits Advisors.

* The S and P 500, the DJIA and the NASDAQ are unmanaged indexes that are widely used as indicators of Market Trends. 
 
* Past performance does not guarantee future results.  The performance of these indexes does not reflect fees and charges associated with investing.  It is not possible to invest directly in an index.

* Dollar Cost Averaging through a systematic savings plan is an excellent way to build an account without a sizeable initial investment.  Saving a portion of our pay each month is very important.  Company sponsored pension plans are one method to save and should be used for retirement.  Other systematic investment accounts, SUCH AS ROTH IRA’S, TRADITIONAL IRA’S, COVERDELL ACCOUNTS, 529 PLANS, BROKERAGE ACCOUNTS AND ANNUITIES  can also be opened, and debited directly from your checking or savings account. For more information, just call to set up an appointment. REFERRALS ARE ALWAYS WELCOME. 
 
John H. Kaighn 
 

Wednesday, December 5, 2012

Good News for 529 College Investing Plan Participants

Here is some valuable information for New Jersey Residents investing in a Franklin Templeton 529 College Investing Plan for a student who attends school in New Jersey.


Clients wishing to help a current New Jersey resident pay for college will enjoy additional benefits by investing with Franklin Templeton 529 College Investing Plan.
Double tax-free tax status. Franklin Templeton 529 College Savings Plan is a tax-free investment for New Jersey residents. Your client will not owe either federal or New Jersey state income taxes on earnings or assets withdrawn to pay for qualified educational expenses.2

Up to a $1,500 college scholarship. Franklin Templeton 529 College Savings Plan offers a scholarship rewarding students who pursue higher education in New Jersey. The plan offers increasingly larger scholarships based upon how long your client invests, up to a maximum of $1,500 scholarship for over 12 years of saving.5

Please access the Investor Handbook for more information. Use the Scholarship Request form to apply.


ContributionFull Years Account OpenScholarship Amount
$1,2004$500
$1,8006$750
$2,4008$1,000
$3,00010$1,250
$3,60012$1,500



Limited interference with financial aid. The first $25,000 of contributions to a Franklin Templeton 529 College Savings Plan will not be considered when determining a student beneficiary's eligibility for financial aid awarded by the state of New Jersey.

Investors should read the Investor Handbook carefully before investing and consider whether their or their account beneficiary's home state offers any state tax or other benefits that are only available for investment in its qualified tuition program.

Tuesday, December 4, 2012

How About a Scenic Overlook?

I knew there was going to be a great deal of chatter about the deal that needs to be reached between Congress and the President concerning the fiscal cliff, and I must say the media hasn't disappointed me.  While there have been some talks between the President and Boehner to attempt to find common ground, the right and left wings of the two Parties, through their mouthpieces in the national media, continue to paint a picture of polarization.  What seems like a fairly straightforward compromise dictated by the results of the election, is being presented as bogged down.

The only way to solve this issue is for enough of our elected representatives to step up and realize there need to be cuts in spending and increases in revenue.  There is simply no other way to make the adjustments necessary now to avoid worse options in the future.  Some Republicans have hinted they are willing to abandon the Norquist camp and will consider some tax revenue increases.  Limiting itemized deductions for some taxpayers is the route they would take to increase revenue without raising tax rates.  The President continues to insist the election results dictate increased tax rates on upper income individuals.  This is one area where the common ground is quite obvious, but it seems like they can't get passed the semantics regarding increased revenue as opposed to increased tax rates.

I do feel there will be no mad cap plunge over the fiscal cliff, but rather the citizenry will have an opportunity to observe, from a scenic overlook, a country on the verge of enjoying a period of better growth, increased Federal revenue, more balanced spending as a percentage of GDP, a manageable debt level, and a restructuring of the various entitlement programs, if the politicians can reach a compromise.  Our forefathers had the insight to create a government with checks, balances, filibusters and other procedures designed to protect minority interests while reflecting the majority's point of view on most issues.  Compromise on issues important to the majority of citizens must be foremost in the minds of our government employees.  If they were to irresponsibly choose to plunge the economy over the fiscal cliff, we will survive, but the President's legacy will definitely pay the price.

Look for this drama to drag on until Christmas or the end of the year, with the media making a huge deal about each and every proposal and counter proposal.  This Congress will make just enough of a compromise, such as postponing some tax increases, delaying some of the more draconian cuts, or some other stop gap measure designed to take us to the edge, but not go into a free fall, until the next Congress can pick up the issue and hopefully reach the bargain necessary.  My hope is the markets are prescient on this issue and won't recoil at the end of December, providing another flat year for the indices, or worse!

Wednesday, November 21, 2012

The Desolate Wilderness and This Fair Land

I usually write the bulk of the material that appears on my blog, but every now and then I feature other authors who have a flair for great writing. This is a piece that is an annual ritual in a national publication that corresponds with the Thanksgiving Holiday season. It does a nice job of reminding the reader of the reasons to be thankful and to whom we owe that gratitude. I hope you enjoy it

The Desolate Wilderness

Here beginneth the chronicle of those memorable circumstances of the year 1620,as recorded by Nathaniel Morton, keeper of the records of Plymouth Colony, based on the account of William Bradford, sometime governor thereof:

So they left that goodly and pleasant city of Leyden, which had been their resting place for above eleven years, but they knew that they were pilgrims and strangers here below, and looked not much on these things, but lifted up their eyes to Heaven, their dearest country, where God hath prepared for them a city (Heb. XI, 16, and therein quieted their spirits. When they came to Delfs-Haven they found the ship and all things ready, and such of their friends as could not come with them followed after them, and sundry came from Amsterdam to see them shipt, and to take their leaves of them. One night was spent with little sleep with' the most, but with friendly entertainment and Christian discourse, and other real expressions of true Christian love.

The next day they went on board, and their friends with them, where truly doleful was the sight of that sad and mournful parting, to hear what sighs and sobs and prayers did sound amongst them; what tears did gush from every eye, and pithy speeches pierced each other's heart, that sundry of the Dutch strangers that stood on the Key as spectators could not refrain from tears. But the tide (which stays for no man) calling them away, that were thus loath to depart, their Reverend Pastor, falling down on his knees, and they all with him, with watery cheeks commended them with the most fervent prayers unto the Lord and His blessing; and then with mutual embraces and many tearsthey took their I leaves one of another, which proved to be the last leave to many of them.

Being now passed the vast ocean, and a sea of troubles before them in expectations, they had now no friends to welcome, them, no inns to entertain or refresh them, no houses, or much less towns, to repair unto tb seek for succour; and for the season it was winter, and they that know the winters of the country know them to be sharp and violent, subject to cruel and fierce storms, dangerous to travel to known places, much more to search unknown coasts. Besides, what could they see but a hideous and desolate wilderness, full of wilde beasts and wilde men? and what multitudes of them there were, they then knew not: for which way soever they turned their eyes (save upward to Heaven) they could have but little solace or content in respect of any outward object; for summer being ended, all things stand in appearance with a weatherbeaten face, and the whole country, full of woods and thickets, represented a wild and savage hew. If they looked behind them, there was a mighty ocean which they had passed, and was now as a main bar or gulph to separate them from all the civil parts of the world.

This Fair Land

Anyone whose labors take him into the far reaches of the country, as ours lately have done, is bound to mark how the years have made the land grow fruitful. This is indeed a big country, a rich country, in a way no array of figures can measure and so in a way past belief of those who have not seen it. Even those who journey through its Northeastern complex, into the Southern lands, across the central plains and to its Western slopes can only glimpse a measure of the bounty of America.

And a traveler cannot but be struck on his journey by the thought that this country, one day, can be even greater. America, though many know it not, is one of the great underdeveloped countries of the world; what it reaches for exceeds by far what it has grasped.

So the visitor returns thankful for much of what he has seen, and, in spite of everything, an optimist about what his country might be. Yet the visitor, if he is to make an honest report, must also note the air of unease that
hangs everywhere.

For the traveler, as travelers have been always, is as much questioned as questioning. And for all the abundance he sees, he finds the questions put to him ask where men may repair for succor from the troubles that beset them.

His countrymen cannot forget the savage face of war. Too often they have been asked to fight in strange and distant places, for no clear purpose they could see and for no accomplishment they can measure. Their spirits are not quieted by the thought that the good and pleasant bounty' that surrounds them can be destroyed in an instant by a single bomb. Yet they find no escape, for their survival and comfort now depend on unpredictable strangers in far off corners of the globe.

How can they turn from melancholy when at home they see young arrayed against old, black against white, neighbor against neighbor, so that they stand in peril of social discord. Or not despair when they see that the cities and countryside are in need of repair, yet find themselves threatened by scarcities of the resources that sustain their way of life. Or when, in the face of these challenges, they turn for leadership to men in high places-only to find those men as frail as any others.

So sometimes the traveler is asked whence will come their succor. What is to preserve their abundance, or even their civility? How can they pass on to their children a nation as strong and free as the one they inherited from their forefathers? How is their country to endure these cruel storms that beset it from without and from within?

Of course the stranger cannot quiet their spirits. For it is true that everywhere men turn their eyes today much of the world has a truly wild and savage hue. No man, if he be truthful, can say that the specter of war is banished. Nor can he say that when men or communities are put upon their own resources they are sure of solace; nor be sure that men of diverse kinds and diverse views can live peaceably together in a time of troubles.

But we can all remind ourselves that the richness of this country was not born in the resources of the earth, though they be plentiful, but in the men that took its measure. For that reminder is everywhere in the cities, towns, farms, roads,
factories, homes, hospitals, schools that spread everywhere over that wilderness.

We can remind ourselves that for all our social discord we yet remain the longest enduring society of free men governing themselves without benefit of kings or dictators. Being so, we are the marvel and the mystery of the world, for that enduring liberty is no less a blessing than the abundance of the earth.

And we might remind ourselves also, that if those men setting out from Delftshaven had been daunted by the troubles they saw around them, then we could not this autumn be thankful for a fair land.

These editorials have appeared annually in the Wall Street Journal since 1961.

HAPPY THANKSGIVING

John H. Kaighn

Jersey Benefits Advisors

Friday, November 9, 2012

Taking Stock

The election is over and many people are talking about the roughly $6 billion dollars that was spent only to wind up with the exact same result.  Well, I will take the money being spent over the way some countries solve their change of power during cantankerous times, which could range from resorting to revolution and civil war to arresting and jailing opponents.  Yes, it certainly would be nice if we could have a campaign of a month or three months with no mudslinging, but the election is about being the president of the largest, most prosperous economy on the planet, so there should be a spirited debate about the various options for leadership.  In the end, one side won, one side lost, each made a speech and now its time to solve the issue of the fiscal cliff, which I discussed in the recent newsletter and follows this post.

Meanwhile, I am posting a video for anyone who would like to view it from Franklin Templeton Investments which talks about the case for investing in stocks now. It highlights the current disconnect between investors' perception of the stock market and reality.   View the video here and contact me if you have any questions or would like a recommendation for your investments.  View the brochure here if you would like to read more information about Franklin Templeton's research and the reasons they feel now is the time to be Taking Stock.

John H. Kaighn

Jersey Benefits Advisors 







Tuesday, October 16, 2012

Jersey Benefits Advisors Investor's Newsletter Fall 2012

Market Watch



With the revised release of second quarter GDP, which was a paltry 1.3%, the Federal Reserve sprang into action and announced plans to buy $40 billion dollars worth of agency mortgage backed securities a month, until the economy begins to grow at a faster pace.  The plan has been dubbed Quantitative Easing 3, or QE3.  Keeping in line with the Fed’s dual mandate of maintaining stable prices and stable employment, Chairman Bernanke announced the latest round of easing because an economy growing at 1.3% can’t produce enough jobs to lower unemployment, which stands at 7.8% as of September 2012.  This move was greeted almost simultaneously with cheers and boos, but the market generally seemed to approve.


At the end of the third quarter, the Dow Jones Industrial Average (DJIA*) stood at 13,437.13.  This represented a 4.32% gain for the quarter and a 9.98% gain for the year.  The S&P 500* added 5.76% for the quarter to reach the 1,440.67  point level.  The index has increased by 14.56% year to date.  The NASDAQ* closed at 3,116.23, which gave the technology heavy index a 6.96% gain for the quarter and brought its year to date return to 19.62%.  These were attractive gains for the quarter, and these returns would be considered respectable for an entire year.  Let’s hope the final quarter manages to maintain or add to these levels.

As we have discussed for quite some time, the market has been climbing a wall of worry, due to concerns about recession in Europe, apprehension about the Fed’s loose monetary policy leading to inflation, unease about the effect of a slowdown in China and other emerging markets on the global economy and the looming fiscal cliff.  Bernanke has stated on more than one occasion that the Fed would not have to continue monetary easing if the Congress and Administration would act in a more responsible way to address fiscal policy.  Between now and the election, there will more than likely be no meaningful outcomes for fiscal policy, and so we will have to listen to the drama concerning the fiscal cliff right up to the end of the current quarter.

With that said, look for an eleventh hour agreement before the end of the year whereby Congress addresses fiscal matters and attempts to come up with a plan for handling the threatening consequences of sequestration, or the blunt, automatic across-the-board budget cuts enacted by law by the Budget Control Act of 2011, a consequence of Congress’s failure to agree on a bipartisan deficit reduction plan.

As a result, the first installment of cuts goes into effect January 1st of 2013, cutting $2.4 trillion from federal debt over ten years.  Over the same ten year period, $1.2 trillion is slated to be cut from discretionary spending, which doesn’t even address entitlement spending.  The sequestration in conjunction with the expiring Bush Era tax cuts threatens to undermine the current, lackluster expansion and shave anywhere from 2% - 3.6% from GDP, depending on whose forecasts you cite. 

With GDP currently growing at 1.3%, it is a very real possibility that without an agreement to mute the effects of the of the budget cuts and tax increases, we could be looking at a possible recession in 2013.

As I have stated before, this expansion is one of the weakest expansions this country has ever experienced, coming out of a recession.  With that said, it suffices to say the last recession was the worst since the Great Depression.  If an agreement can be reached on budget cuts and tax increases, the expansion may continue.

More Parents Are Saving For College




According to a survey conducted by the College Savings Foundation, the number of parents who have saved at least $5000 for their children’s college years has increased from 40% to 45% since 2009.  The number of families saving has steadily increased since the 2009 survey, when less than a third of all families had saved that much.  “Coming out of 2008 and early 2009, many families sat on the sidelines and said they wouldn’t make a decision about saving for college until things turned around,” said Roger Michaud, chairman of the College Savings Foundation and a senior vice president at Franklin Templeton Investments.  Considering the cost of a four year college education can run as high as $250,000, families need to save more.  Call me for information on 529 Plans.

Family & friends gathered for a Labor Day luau to celebrate my 60th birthday.  Thanks, Margie for the surprise of a lifetime.  $%!  %&  You really got me this time!











Have You Reviewed Your Life Insurance Lately?


 When was the last time you  took a serious look at your life insurance coverage.  Life insurance was created to provide cash for your family in the event of your death.  The goal being to provide your beneficiaries a means to ease the financial burden that results from the death of a parent or spouse.  The beneficiaries may choose to use the benefits of a life insurance policy in any way they desire, such as paying for funeral expenses, covering mortgage payments or investing the proceeds and taking systematic payments to augment income.  Generally, the death benefit from a life insurance policy is paid free of any federal tax. 


One of the most important questions to ask  when evaluating life insurance needs is the amount of coverage needed.  Many financial planners recommend an amount of five to seven times gross annual salary as a guideline when purchasing life insurance, but as with all things in life, each family's goals are different.  It is always best to take an inventory of your family's current financial situation and then try to evaluate future needs.  Listing current and anticipated future expenses, as well as income sources is a good place to start.  If there are children, you might want to consider the cost of their education.  The younger the children, the more of a need for coverage, due to the length of time they will be dependent on one parent, in the event of a death of a parent.  Of course, this is exactly the time when a family may have the least amount of income available for insurance!


This is why there are different types of policies available.  The two broad categories of life insurance are :
  
    ·   Term Life Insurance
    ·   Permanent Life Insurance


Term Life Insurance provides protection for the pure cost of insurance for periods of 5, 10, 15, 20 or 30 years and is usually less expensive than permanent insurance.  The death benefit is only paid if you die during the specific term of the policy.  At the end of the term, the policyholder may be able to convert to a permanent policy or begin a new term, at a higher cost.


Permanent Life Insurance provides protection as long as you continue to pay your premiums, which can be fixed or tailored to your specific needs.  Permanent policies include Whole Life, Universal Life and Variable Universal Life.  These policies have a "cash value" feature, which means part of the premiums go into an account which builds up monetary value over time.  This is why the cost of a permanent policy is higher than term. Many times  a combination of the two types of policies can provide coverage and savings in stages for a lifetime.  Feel free to contact me if you would like to review your insurance needs and discuss the options available to you.

* The S&P 500, the DJIA and the NASDAQ are unmanaged indexes that are widely used as indicators of Market Trends.  Past performance does not guarantee future results.  The performance of these indexes does not reflect fees and charges associated with investing.  It is not possible to invest directly in an index.
Dollar Cost Averaging through a systematic savings plan is an excellent way to build an account without a sizeable initial investment.  Saving a portion of our pay each month is very important.  Company sponsored pension plans are one method to save and should be used for retirement.  Other systematic investment accounts, SUCH AS ROTH IRA’S, TRADITIONAL IRA’S, COVERDELL ACCOUNTS, 529 PLANS, BROKERAGE ACCOUNTS AND ANNUITIES  can also be opened, and debited directly from your checking or savings account. For more information, just call to set up an appointment. REFERRALS ARE ALWAYS WELCOME. 
John H. Kaighn 

Company Information:



Investment Advisory Services offered through:
Jersey Benefits Advisors
P.O. Box 1406
Ocean City, N.J.  08226
Phone:  609 827 0194
Fax:  609 861 9257
Email:  kaighn@jerseybenefits.com
Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
570 Carillon Parkway
St. Petersburg, FL  33758-9053
800-245-8250
Member FINRA & SIPC
Transamerica Financial Advisors, Inc. is
not affiliated with Jersey Benefits Advi-
sors.
Third Party Administration and Insurance
Services offered through:
Jersey Benefits Group, Inc
P.O. Box 1406
Ocean City, N.J.  08226
Phone:  609 827 0194
Fax:  609 861 9257
Email: kaighn@jerseybenefits.com
All opinions expressed in this newsletter are
solely those of John Kaighn & Jersey Benefits
Advisors.


LD044932 - 10/12







Thursday, October 4, 2012


 
John H. Kaighn   Becomes a Member of the Financial Services Institute

FSI Advocates for Main Street Americans’ Access to Independent, Affordable Financial Advice

 

Woodbine, NJ – Local financial advisor John H. Kaighn, of Transamerica Financial Advisors, Inc., today announced he has become a member of the Financial Services Institute (FSI) in Washington, D.C. FSI advocates for Main Street Americans’ access to unbiased, affordable financial advice, delivered by a growing network of over 35,000 independent financial advisor members.

 
“I am proud to become a member of the FSI, an organization that works hard every day, to protect my clients’ access to quality financial advice,” said Kaighn. “FSI helps educate elected officials and regulators on what Americans need from financial advisors and how the industry works with clients to secure their financial futures. They also help ensure that I can continue to offer my clients and potential clients the advice they need.”

 
“We are very pleased to have John H. Kaighn as a new member,” said FSI President & CEO Dale E. Brown. “Our advocacy is only as effective as our engaged members. And conscientious advisors like John help bring real-life experience to our efforts. We plan to work closely with Mr. Kaighn as we advocate for independent financial advisors and the hard-working clients they serve.”

 
About the Financial Services Institute (FSI): FSI is an advocacy organization for independent financial services firms and independent financial advisors. Established in January 2004, we have well over 100 broker-dealer members and over 35,000 financial advisor members. Our member firms have upwards of 180,000 financial advisors affiliated with them. Our mission is to create a more responsible regulatory environment for independent broker- dealers and their affiliated independent financial advisors through effective advocacy, education and public awareness. And our strategy includes involvement in FINRA governance, constructive engagement in the regulatory process and effective influence on the legislative process. For more information, please visit www.financialservices.org.

 

Wednesday, September 19, 2012

What's Not To Like?

The scripted political conventions are now history, the Federal Reserve has announced a plan to buy $40 billion a month of agency mortgage-backed securities (QE3), oil prices are on the rise, and the market has been rising steadily throughout the year.  One could ask, "what's not to like?"  The messages are quite mixed and are emblematic of the debate the country is having with itself. 

The advent of QE3 certainly looks political in nature, because it could be construed to help the current administration, except when you factor in the fact that Ben Bernanke is a Republican.  Of course, since Romney wants to replace Ben if he wins the election, perhaps it is just a case of Ben seeking job security.  One would hope the Fed's motivations are not quite that transparent.

The election is being framed as a contrast between Big Government vs Limited Government, yet I still can't quite understand how Romney is going to create jobs, since that is what private industry does, unless of course he plans to add government jobs.  Oh yeah, that's right, it is the conditions which have to be altered to stimulate the Great American Jobs Machine.  So, what he is really going to do is cut down on regulation and limit the agencies which are creating laws and regulations which are chocking us.  At least I hope I understand that to be the case.

The President likes to remind us daily how his administration has created 4 million new private sector jobs, which sounds good as a sound bite, until you realize the economy lost 8 million jobs during the recession.  Of course, we all know that is George Bush's fault, because he gave all those millionaires tax cuts and sank the economy.  Hey, but don't worry, Dodd and Frank have given us a brand new set of regulations designed to stop any of those Wall Street types from "rolling the dice" on home ownership in the US.  Oops, I think those were Barney's words, right????

So, I heard a guest on CNBC use a football analogy to describe the election, just after the left released a video recording which would have you believe Romney insulted 1/2 the US population as not being responsible for themselves.  He said that right now there are 2 minutes left in the 4th quarter, with Romney down 10 points and Sanchez as the quarterback for Team Romney.  I wonder what odds the fantasy football fans give Romney?  The media is calling it dead even, but I really think I should contact Rachel Maddow and get her take on things.  I am sure she will be as spot on with an analysis of the election, as she was with her analysis of Chris Christie's speech at the RNC.

The Republic will survive, whatever the outcome of this election, but it is hard to say whether there will be a clear mandate for either party to do anything.  Perhaps the mandate will be to compromise.  After all, once the election is over, the stock market won't have a wall of worry with which to contend, but rather investors will be concerned with sailing right over the fiscal cliff we've all heard so much about.  Oh well, that's another day!       

Monday, August 27, 2012

Which Simple Rule for Monetary Policy?


Monday, August 27, 2012

By John B Taylor
Economics One Blog


The discussion of "Simple Rules for Monetary Policy" at last week’s FOMC meeting is a promising sign of a desire by some to return to a more rules-based policy. As described in the FOMC minutes, the discussion was about many of the questions raised in recent public speeches by FOMC members Janet Yellen and Bill Dudley. A big question is which simple rule?

Yellen and Dudley discussed two rules. Using Yellen’s notation these are

R = 2 + π + 0.5(π - 2) + 0.5Y
R = 2 + π + 0.5(π - 2) + 1.0Y

where R is the federal funds rate, π is the inflation rate, and Y is the GDP gap. Yellen and Dudley refer to the first equation as the Taylor 1993 Rule and the second equation as the Taylor 1999 Rule, though the second equation was only examined along with other rules, not proposed or endorsed, in a paper I published in 1999.

The two rules are similar in many ways. Both have the interest rate as the instrument of policy, rather than the money supply. Both are simple, having two and only two variables affecting policy decisions. Both have a positive weight on output. Both have a weight on inflation greater than one. Both have a target rate of inflation of 2 percent. Both have an equilibrium real interest rate of 2 percent.

The two rules differ substantially, however, in their interest rate recommendations as this amazing chart constructed last April by Bob DiClementi of Citigroup illustrates. The chart shows two rules along with historical and projected values of the federal funds rate. The rule labeled “Taylor” by DiClementi is the rule I proposed. The other rule is labeled “Yellen” by DiClementi because it corresponds to the rule apparently favored by Yellen. The projected values are the views of FOMC members.

Observe that the first rule never gets much below zero, while the second rule drops way below zero during the recent recession and delayed recovery. The difference continues though it gets smaller into the future. Note that the projected interest rates by FOMC members span the two rules.

This big difference between the two rules in the graph can be traced to two factors: (1) The second rule has a much larger GDP gap, at least as used by Yellen. (2) The second rule has a much bigger coefficient on the GDP gap.

In my view, a smaller value of the GDP gap and a smaller coefficient are more appropriate. This view is based on a survey of estimated gaps by the San Francisco Fed and simulations of models over the years. But given the striking differences in DiClememti's chart, more research on the issue by people in and out of the Fed would certainly be very useful. 

Monday, July 9, 2012

JERSEY BENEFITS ADVISORS CLIENT NEWSLETTER SUMMER 2012


MARKET WATCH

In my last newsletter I talked about the possibility the second quarter might be a good time to deploy some capital into the markets, especially since the first quarter was not very volatile, and the major indices had produced gains many investors would be pleased to garner for a full year.  As the European crisis played out over the last three months paring the Euro 12% against the dollar, oil and gas prices declined by 12.5%, and emerging markets shed about 18% of their value.  Meanwhile, US markets revisited their December 31, 2011 level,  briefly, and then slowly climbed back to a point that is quite respectable for mid year.

As we closed the books on the first half of the year, the DJIA*, at 12,880.09, has gained 5.42% year to date, even though it fell 2.5% in the second quarter.  The S&P 500* ended  at 1,362.16 for a 8.31% gain year to date, while dropping 3.3% in the second quarter.  The NASDAQ* is still sporting a double digit gain for the year at 12.66%, even though it gave back over 5% during the second quarter.  Needless to say, the markets never just go up in a straight line.  My guess is there will probably be more chances to invest, if you have been sitting on the sidelines during the first half of the year, although, there is some talk of a possible summer rally this year, due to a couple of events that transpired the last few days of June. 

The European Union took an unexpected step toward solving the crisis which has embroiled the Euro since 2010, by agreeing to create a banking union. Rather than having the funds flow through profligate governments, they’ve agreed to have money flow right to the banks, more than likely through a German controlled entity.  Also, the Supreme Court issued a ruling on the Patient Protection and Affordable Care Act, basically upholding the mandate for all Americans to buy insurance, not on the premise of the Commerce Clause, but rather by stating the mandate is a tax, which is within the power of Congress.  While neither of these events bring closure to these issues, the European summer vacation season should keep the debt issues of Spain, Italy, Portugal & Greece at bay, while it will take a Republican Presidential victory and control of both Houses of Congress to allow Mitt Romney to make good on his pledge to repeal the act.  Hence, there is a good chance we could have a better market this summer, rather than revisiting the doldrums  experienced during the last two summers. 

Manufacturing had been a bright spot for the US economy, expanding for 34 consecutive months, until the most recent report, which showed a drop off for the month of June.  The index had a reading of 49.7 down from a 53.5 reading in May.  A number below 50 indicates contraction in the sector.  The interconnectedness of the various markets around the world means the pain being felt in Europe translates to less exports from China and other emerging market economies being purchased by Europeans.  It also means less income for the Chinese and the other emerging market economies who in turn purchase a large percentage of our exports.  Another rather large percentage of our manufactured products are usually exported to Europe. 

The 3rd revised GDP estimate for the first quarter remains at 1.9%.  The employment report for June indicated the economy added an anemic net 80,000 jobs and the unemployment rate remained 8.2%  The report will lead to calls for more stimulus.  This has certainly been a less than stellar expansion, thus far.  Perhaps this will be a longer than average expansion this time around.    

Privacy Policy And Variable Annuity Update

 PRIVACY POLICY

At Jersey Benefits Advisors and Jersey Benefits Group, Inc. protecting your privacy is very important to us.  We want you to understand what information we collect and how we use it.  We collect and use information from you on applications and other forms as well as information  about financial transactions with us and from non-affiliated third parties.  This “nonpublic personal information” is obtained in connection with providing a financial product or service to you.

We do not disclose any nonpublic personal information about you without your express consent, except as permitted by law.  We may disclose the nonpublic personal information we collect to persons or companies that perform services on our behalf. 

We restrict access to your nonpublic personal information and only allow disclosures to persons and companies as permitted by law to assist in providing products or services to you. 
We maintain physical, electronic and procedural safeguards to protect your nonpublic personal information at all times.
VA BENEFIT EXCHANGE

You usually know you’ve got something good when someone offers to buy out your interest.  This is essentially the position in which some holders of older variable annuities with Guaranteed Minimum Income Benefits (GMIB) find themselves .  While the offer might be a good deal for a client who purchased the annuity as a way to guarantee a stream of income during retirement, but has had something change, so now they need cash, most clients who purchased the annuity for retirement income will be better served remaining with their current contract. 

AXA Equitable Life Insurance and Transamerica Life Insurance Company are two companies who have unveiled programs to “buy out” some existing contract holders in a move that will help reduce the companies’ liabilities.  Most of the  products being offered the buy out from Transamerica have GMIB’s of 6% compounded annually, and their cost for the rider is about half the cost of the current rider.  “The fact that insurers are willing to offer the arrangement only emphasizes the true value of the living benefit”, said Andrew Murdoch, an advisor with Somerset Wealth Strategies, Inc. 

According to Dave Paulsen, CEO of Transamerica Capital, Inc., “This offer is completely optional for our customers, and we don’t require anybody to use it.  For those who will benefit by accepting the offer, there is some benefit for Transamerica, as well, as some older capital-intensive assets would be removed from our books.”  Recently, VA providers have been increasing the pricing of GMIB’s due to hedging costs. 

Do You Or A Family Member Have Multiple Employer Plans?

Many people have multiple retirement accounts with various employers, because they have changed jobs.  One of the problems with this is the duplication of objectives within each account. Having a lot of funds, in several accounts, does not always provide the diversification we aim to achieve.  It also makes it very difficult to keep track of your assets, when you have statements coming from multiple brokers and mutual fund companies.

Many employees find themselves or a family member in the situation of having multiple employer plans. Most people can consolidate these assets into one diversified IRA or ROTH IRA. Call me if you would like to consolidate your accounts.  I will analyze the assets, make recommendations and help you with the paperwork. 

* The S&P 500, the DJIA and the NASDAQ are unmanaged indexes that are widely used as indicators of Market Trends.  Past performance does not guarantee future results.  The performance of these indexes does not reflect fees and charges associated with investing.  It is not possible to invest directly in an index. Dollar Cost Averaging through a systematic savings plan is an excellent way to build an account without a sizeable initial investment.  Saving a portion of our pay each month is very important.  Company sponsored pension plans are one method to save and should be used for retirement.  Other systematic investment accounts, SUCH AS ROTH IRA’S, TRADITIONAL IRA’S, COVERDELL ACCOUNTS, 529 PLANS, BROKERAGE ACCOUNTS AND ANNUITIES  can also be opened, and debited directly from your checking or savings account. For more information, just call to set up an appointment. REFERRALS ARE ALWAYS WELCOME. 

Investment Advisory Services offered through:
P.O. Box 1406
Ocean City, N.J.  08226
Phone:  609 827 0194
Fax:  609 861 9257
Email:  kaighn@jerseybenefits.com
Http://www.jerseybenefits.com

Securities offered through:
Transamerica Financial Advisors, Inc.
A registered Broker/Dealer
570 Carillon Parkway
St. Petersburg, FL  33758-9053
800-245-8250
Member FINRA & SIPC
Transamerica Financial Advisors, Inc. is
not affiliated with Jersey Benefits Advi-
sors.

Third Party Administration and Insurance
Services offered through:
P.O. Box 1406
Ocean City, N.J.  08226
Phone:  609 827 0194
Fax:  609 861 9257
Email: kaighn@jerseybenefits.com
Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are
solely those of John Kaighn & Jersey Benefits
Advisors.