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.