Monday, May 21, 2012
Seven Ways to Borrow for College
Look for borrower protection, consider credit unions and apply for multiple loans.
May 21, 2012 9:54 AM
By Lynn O’Shaughnessy
As recently as the early 1990s, most students didn't require student loans, but today about two-thirds of students end up borrowing for college.
While families are increasingly relying on loans, many teenagers and their families fail to make the best loan choices.
The latest student loan year began July 1 so this is an excellent time for you and your clients to become familiar with the intricacies of college debt. Families that understand their options are more likely to make smarter decisions and ultimately cut the cost of college.
Here are seven tips to get you up to speed.
1. The best college loan for students is the Stafford Loan.
The Stafford Loan is designed exclusively for students, who must attend college at least halftime to qualify. Regardless of credit scores, all students receive the same fixed rate and protections.
There is a limit on the amount of money that students can borrow each year through the Stafford Loan program. Here are the maximum amounts:
Freshmen: $5,500
Sophomore: $6,500
Juniors: $7,500
Seniors: $7,500
There are two types of Stafford Loans—a subsidized and unsubsidized version. The subsidized loan is the more valuable one because a student with one of these will not be responsible for the interest that accrues while they are in school. The federal government covers the interest payments.
The interest rate on the unsubsidized loan is 6.8 percent. As I write this column, the subsidized interest rate was scheduled to increase from 3.4 percent to 6.8 percent though Congress has been debating whether to maintain the lower rate.
Students will learn if they qualify for a subsidized Stafford when they receive their financial aid packages. The decision depends on the financial wherewithal of the family and the cost of the institution. The greater the cost of the school, the more likely a student will qualify for the subsidized loan. Six percent of subsidized Stafford borrowers come from households with incomes in excess of $100,000 and 24 percent have family incomes between $50,000 and $100,000.
2. Look for borrower protection.
I'd argue that the most attractive feature of the Stafford is its built-in safety net, which is a plus for students who worry that they will end up underemployed or without a job and won't be able to repay their loans.
This won’t be a problem with the Stafford as long as students apply for the federal Income-Based Repayment Plan or IBRP. Essentially this program allows qualified students to repay their loan based on what they can afford not what they owe.
3. Consider parent options.
While the Stafford is a no brainer for students, parents' choices are more complicated. Parents can borrow through a home equity line, the federal PLUS Loan for Parents or cosign a private student loan for their child. Some parents also dip into their retirement accounts, which I certainly wouldn't recommend—and I'm sure you wouldn't either.
The PLUS Loan offers parents a fixed interest rate of 7.9 percent and charges a 4 percent fee on the loan amount. Parents can begin paying 60 days after the loan is disbursed or wait until six months after the child graduates, stops attending school or drops below half-time status.
Because the PLUS interest rate is high in this low interest-rate environment, using a home equity line of credit will probably be cheaper. The caveat is that none of us knows what will happen to interest rates in the future.
For those who itemize, the interest on equity lines is tax deductible. In anticipation of having to borrow to pay for my own children's degree, my husband and I took out a line of credit with Charles Schwab years ago at one percentage point below prime. My daughter has graduated from college and my son is halfway through and I haven't had to touch it yet, but that's where I would turn if I needed cash for college.
4. Check out credit unions.
Credit unions are relatively new players in the private loan niche and they are well worth taking a look at. The non-profit credit unions are routinely going to be the cheapest alternative. While rates can change, recently the rates on private loan rates through credit unions were as low as 4.7 percent. An excellent place to look for college credit union loans is cuStudentLoans.org.
5. Check school credit unions.
Some colleges and universities maintain their own credit unions to tap for student loans. Institutions with credit unions include Harvard, University of Chicago, Amherst, Mount Holyoke Smith, Princeton, MIT and the California State University system.
6. Apply for multiple loans.
Unfortunately, you won't know what private loan rate you will qualify for if you don't actually go through the process of applying. Unfortunately, many parents do not apply for multiple loans, according to Sue Kim, the chief executive officer of AllTuition, which is a private loan comparison site. She told me that shoppers look at many loans on AllTuition, but rarely apply for more than one.
If you're interested in comparing private college loans, try these three comparison sites:
Alltuition
CertifiedPrivateLoans.com
eStudentLoan
7. Don't over borrow.
That advice might seem imminently doable to follow, but when a teenager is in the midst of selecting a college it can be tough to remain financially disciplined. A parent, for instance, recently asked me about her daughter who wanted to borrow $27,000 a year for school. I told the mom that this would amount to financial suicide and recommended that the daughter find a different school. After responding to the mom’s email with my advice, I never heard back from her.
Tuesday, April 10, 2012
Jersey Benefits Advisors Investor Newsletter Spring 2012
Market Watch
In the early weeks of April, much of the vegetation here in the Mid Atlantic region seems to be springing to life a bit ahead of schedule. It almost makes you feel like it is safe to put the summer plants outside, but the wary gardener knows a nasty frost can rear its ugly head at anytime in this very changeable season. With the best quarterly start for the markets since 1998, the prudent investor should also realize there are always dangers lurking ,when the markets jump off to such a stellar start.
At the end of the first quarter, the Dow Jones Industrial Average* closed at 13,212.04, which is an 8.14% gain. Meanwhile, the S&P500* ended at 1,408.47 posting an advance of 12%. Not to be outdone, the NASDAQ* roared to a close of 3,091.57 which was an eye popping 18.67% year to date increase. Needless to say, there is the distinct possibility there may be a bit of a pullback from these levels as we progress through the spring. This is in keeping with the natural ebb and flow of the markets, as investors evaluate the forces that have an effect on their psyche and decision making.
Of course there are more concerns, besides the lack of accommodation by the Fed, which trouble investors. The European economies are still slowing and recession concerns are very real. China, India and Brazil are also hitting some economic rough spots, due to the problems in Europe. Iran continues to thumb its nose at rest of the world in regard to uranium enrichment, and as a result, even though there is more than an ample supply of oil floating around the globe, prices have been rising perilously close to the level where they can seriously disrupt our economy. The main reason prices are this high is because of the concern that Israel might attack Iran’s nuclear facilities, and Iran might retaliate by disrupting the flow of oil through the Straits of Hormuz.
Cautious optimism is how I am personally approaching this juncture. Recently, Iran was cut out of the SWIFT system, which seriously limits their ability to conduct commerce. Slowly but surely, our economy is improving. Finally, at least some US politicians are beginning to talk about fixing Social Security, Medicare & Medicaid.
It’s Time To Get Off The Bench And
Into The Game
If you’ve
been sitting on the sidelines with cash to invest, don’t despair after seeing
the first quarter gains and feel like all of a sudden you need to get fully
invested in the market. Remember, the
markets rarely go straight up or down.
While I don’t think we are headed for a pullback similar to last spring,
the markets still face enough headwinds to provide investors ample
opportunities to deploy capital.
Volatility was tame during the first quarter, and there were a minimal number of triple digit days. Considering a 130 point move in the DJIA represents about 1%, dealing with moves of less that 1% daily helps investors, who are not particularly fond of roller coaster rides, feel a bit more confident. Contact me to diversify your holdings and help you invest systematically.
Will the Politicians Finally Face Facts in 2012?
In
previous issues of this newsletter, we’ve discussed many of the issues
confronting our nation, and as we prepare for the 2012 election, hopefully, we
will begin to take some positive steps toward getting our fiscal house in
order. I referenced above, the fact that
some politicians are beginning to discuss ways to adjust Social Security,
Medicare and Medicaid, the so called “safety net”, in order to preserve these
programs for future generations. We
simply can’t get the government’s budget out of deficit, without making
adjustments to our entitlement programs.
The argument is not whether or not to save these programs, because
neither party, despite all of the demagoguery, wants to scrap them. The argument is how do we save them, preserve
benefits for those at or close to retirement age, and adjust benefits and
expectations for those who will rely on these programs in the future. This is no small task, and it will entail
major compromises, including budget cuts and tax hikes.
In the April 2012 edition of Smart Money, one of the articles discusses the changes in thinking of people near or in retirement. Many of them are holding on to their jobs longer, or if they are retired, are looking for a second act. This is at least partly due to the economic disruption we’ve experienced since 2008. The article goes on to say, ”The decades long retirement is actually a relatively new invention. In the early 1900’s nearly 80% of Americans over the age of 65 had a job. Folks expected to work for as long as they lived, says Dora Costa, an economic historian at the University of California, Los Angeles, and they’d generally stop laboring only if they became too ill or frail to keep going. The average retirement lasted three years. That began to change, of course, with the introduction of Social Security and private sector pensions, both designed to free older workers from the need to choose between work and starvation. By the latter half of the 20th century, longer life spans meant people could count on living well past retirement age, and an evolving financial services industry was pitching products to help people fund a long retirement. The result, right before everything went to hell, the average retirement lasted 20 years”.
Nobody wants to go back to the Darwinian past, but as we are witnessing the unraveling of the European Social Democracies, it is important to realize we don’t have to go down the same path. There needs to be a balance between the public and private sectors, because without the private sector, there can be no public sector. It all comes down to whether you believe in free market capitalism, or whether you believe the government is the great job creation machine.
In the early weeks of April, much of the vegetation here in the Mid Atlantic region seems to be springing to life a bit ahead of schedule. It almost makes you feel like it is safe to put the summer plants outside, but the wary gardener knows a nasty frost can rear its ugly head at anytime in this very changeable season. With the best quarterly start for the markets since 1998, the prudent investor should also realize there are always dangers lurking ,when the markets jump off to such a stellar start.
At the end of the first quarter, the Dow Jones Industrial Average* closed at 13,212.04, which is an 8.14% gain. Meanwhile, the S&P500* ended at 1,408.47 posting an advance of 12%. Not to be outdone, the NASDAQ* roared to a close of 3,091.57 which was an eye popping 18.67% year to date increase. Needless to say, there is the distinct possibility there may be a bit of a pullback from these levels as we progress through the spring. This is in keeping with the natural ebb and flow of the markets, as investors evaluate the forces that have an effect on their psyche and decision making.
As we head
into Easter, a bit of a pullback has already begun, and the same concerns we’ve
discussed before are still very much in the minds of investors. As I am writing this, the markets are
reacting to concerns about the message in the FOMC minutes released this
week. While the Fed is still committed
to holding interest rates at their current level until 2014, one statement in
the report concerned the lack of a need for any more quantitative easing (QE),
and so some investors started selling, because of their concerns the Fed won’t
be quite so accommodating. Yet, a less
than accommodating Fed can also be read as a sign of economic improvement. It just depends on your particular point of
view.
There have
been many positive signs of economic improvement, which is why the markets
performed so well in the first quarter.
As the employment picture slowly improves, more people are beginning to
feel confident that the economy is truly in expansion mode. Demand for products continues to increase,
with auto sales being the most recent indicator that the automobile industry is
making a comeback. Even with the setback
from
the
President nixing the Keystone Pipeline XL, the oil and gas industries are still
expanding production. As company
earnings are reported and guidance is issued this month, investors will have a
better picture of the health of the economy.
Of course there are more concerns, besides the lack of accommodation by the Fed, which trouble investors. The European economies are still slowing and recession concerns are very real. China, India and Brazil are also hitting some economic rough spots, due to the problems in Europe. Iran continues to thumb its nose at rest of the world in regard to uranium enrichment, and as a result, even though there is more than an ample supply of oil floating around the globe, prices have been rising perilously close to the level where they can seriously disrupt our economy. The main reason prices are this high is because of the concern that Israel might attack Iran’s nuclear facilities, and Iran might retaliate by disrupting the flow of oil through the Straits of Hormuz.
Cautious optimism is how I am personally approaching this juncture. Recently, Iran was cut out of the SWIFT system, which seriously limits their ability to conduct commerce. Slowly but surely, our economy is improving. Finally, at least some US politicians are beginning to talk about fixing Social Security, Medicare & Medicaid.
Volatility was tame during the first quarter, and there were a minimal number of triple digit days. Considering a 130 point move in the DJIA represents about 1%, dealing with moves of less that 1% daily helps investors, who are not particularly fond of roller coaster rides, feel a bit more confident. Contact me to diversify your holdings and help you invest systematically.
In the April 2012 edition of Smart Money, one of the articles discusses the changes in thinking of people near or in retirement. Many of them are holding on to their jobs longer, or if they are retired, are looking for a second act. This is at least partly due to the economic disruption we’ve experienced since 2008. The article goes on to say, ”The decades long retirement is actually a relatively new invention. In the early 1900’s nearly 80% of Americans over the age of 65 had a job. Folks expected to work for as long as they lived, says Dora Costa, an economic historian at the University of California, Los Angeles, and they’d generally stop laboring only if they became too ill or frail to keep going. The average retirement lasted three years. That began to change, of course, with the introduction of Social Security and private sector pensions, both designed to free older workers from the need to choose between work and starvation. By the latter half of the 20th century, longer life spans meant people could count on living well past retirement age, and an evolving financial services industry was pitching products to help people fund a long retirement. The result, right before everything went to hell, the average retirement lasted 20 years”.
Nobody wants to go back to the Darwinian past, but as we are witnessing the unraveling of the European Social Democracies, it is important to realize we don’t have to go down the same path. There needs to be a balance between the public and private sectors, because without the private sector, there can be no public sector. It all comes down to whether you believe in free market capitalism, or whether you believe the government is the great job creation machine.
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.
*
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.
Thursday, March 8, 2012
Stars Can Help Guide College Savers
This article, written by researcher Laura Pavlenko Lutton, from the independent mutual fund rating company Morningstar, shines the light on New Jersey's 529 Plan administered by Franklin Templeton Investments. I thought clients invested in this 529 Plan would enjoy reading it.
By Laura Pavlenko Lutton
Studying 529 plans’ average Morningstar Rating shows which states have done best.
College savers in search of a 529 plan undoubtedly want high-quality investment choices. One way to stack plans up against one another is to study past risk-adjusted returns over longer time periods.
The Morningstar Rating, which compares risk-adjusted returns of investments in the same category, is designed to put past performance in context. Mutual funds, as well as 529 investment options, earn 3-star Morningstar Ratings if their risk-adjusted returns are in the middle of the category pack. Similarly, 4-star and 5-star investments have outperformed, while 2-star and 1-star investments have underperformed. The Morningstar Rating is distributed on a bell curve, with the largest subset of funds earning 3 stars.
Morningstar studied how well 529 plans’ investments have performed historically as measured by the overall Morningstar Rating. Morningstar calculated an asset-weighted average Morningstar Rating for each plan, so within each plan, the largest investment options by asset size carry more weight in the calculation.
Only five 529 plans had an average asset-weighted Morningstar Rating of 4 stars or higher, indicating that most of those plans’ assets meaningfully outperformed similar peers on a risk-adjusted basis. But more than a third of all 529 plans had competitive performance or better, posting an asset-weighted average Morningstar Rating of 3 stars or higher. Morningstar wasn’t able to execute this calculation on more than a dozen plans because their investment options aren’t yet three years old, the minimum performance period required to receive a Morningstar Rating.
Topping the list is a New Jersey-based plan, Franklin Templeton 529 College Savings Plan, with 4.56 stars on average across the plan on an asset weighted basis. This advisor-sold plan is an expanded version of New Jersey’s direct-sold 529 plan, NJBEST 529 College Savings Plan, which averaged 4.06 stars. Performance at these Franklin plans was relatively strong in recent years, though some of that relative success has waned during the recent market volatility. Another top plan was Florida College Investment Plan, which features investment options run by a variety of asset managers.
Interestingly, several of the top-rated plans include primarily indexed funds, which theoretically should turn in returns near the category average. The Vanguard 529 College Savings Plan, New York’s 529 Program (Direct), and Utah Educational Savings Plan each feature primarily Vanguard indexed investment options and have assetweighted, planwide average Morningstar Ratings of 3.72 stars or higher. These 529 plan investment options are among the industry’s cheapest, which gives them a big leg up on their actively managed competition.
Plans with higher asset-weighted average Morningstar Ratings should be proud of their past success, but this backward look at performance is no guarantee of future results. What’s more, the peer groups used to determine the 529 investment options’ Morningstar Ratings have some notable quirks.
For one, 529 category peers often represent a wider range of investment styles than one might see in the similar open-end mutual fund categories. That’s because there are fewer 529 categories, particularly for investments with unusual strategies. For example, there is no stand-alone 529 category for investment options that primarily hold convertible securities or REITs—those options are lumped into diversified equity categories for 529 investment options. By including such outliers in Morningstar’s 529 categories, the peer groups have a broader distribution of returns, which ultimately can impact an investment option’s Morningstar Rating.
Another factor to consider is the rate of change within 529 plans. Most plans that have underperformed for a time—and therefore may have a lower average Morningstar Rating—either got a face-lift or have been completely rebuilt. The plans may not be able to erase poor past performance from their records, but it also would be unfair to expect a revamped plan to perform similarly going forward. This is the case for plans such as the Bright Start College Savings Plans in Illinois and the Oregon College Savings Plan. Ohio took a different tack when its advisor-sold plan, formerly run by Putnam, had poor performance. It added an entirely new plan run by BlackRock and merged the Putnam run assets (thus erasing Putnam’s record) into the new plan when Putnam’s contract with the state expired.
Article written by Laura Pavlenko Lutton, who is an editorial director in Morningstar’s fund research group.
By Laura Pavlenko Lutton
Studying 529 plans’ average Morningstar Rating shows which states have done best.
College savers in search of a 529 plan undoubtedly want high-quality investment choices. One way to stack plans up against one another is to study past risk-adjusted returns over longer time periods.
The Morningstar Rating, which compares risk-adjusted returns of investments in the same category, is designed to put past performance in context. Mutual funds, as well as 529 investment options, earn 3-star Morningstar Ratings if their risk-adjusted returns are in the middle of the category pack. Similarly, 4-star and 5-star investments have outperformed, while 2-star and 1-star investments have underperformed. The Morningstar Rating is distributed on a bell curve, with the largest subset of funds earning 3 stars.
Morningstar studied how well 529 plans’ investments have performed historically as measured by the overall Morningstar Rating. Morningstar calculated an asset-weighted average Morningstar Rating for each plan, so within each plan, the largest investment options by asset size carry more weight in the calculation.
Only five 529 plans had an average asset-weighted Morningstar Rating of 4 stars or higher, indicating that most of those plans’ assets meaningfully outperformed similar peers on a risk-adjusted basis. But more than a third of all 529 plans had competitive performance or better, posting an asset-weighted average Morningstar Rating of 3 stars or higher. Morningstar wasn’t able to execute this calculation on more than a dozen plans because their investment options aren’t yet three years old, the minimum performance period required to receive a Morningstar Rating.
Topping the list is a New Jersey-based plan, Franklin Templeton 529 College Savings Plan, with 4.56 stars on average across the plan on an asset weighted basis. This advisor-sold plan is an expanded version of New Jersey’s direct-sold 529 plan, NJBEST 529 College Savings Plan, which averaged 4.06 stars. Performance at these Franklin plans was relatively strong in recent years, though some of that relative success has waned during the recent market volatility. Another top plan was Florida College Investment Plan, which features investment options run by a variety of asset managers.
Interestingly, several of the top-rated plans include primarily indexed funds, which theoretically should turn in returns near the category average. The Vanguard 529 College Savings Plan, New York’s 529 Program (Direct), and Utah Educational Savings Plan each feature primarily Vanguard indexed investment options and have assetweighted, planwide average Morningstar Ratings of 3.72 stars or higher. These 529 plan investment options are among the industry’s cheapest, which gives them a big leg up on their actively managed competition.
Plans with higher asset-weighted average Morningstar Ratings should be proud of their past success, but this backward look at performance is no guarantee of future results. What’s more, the peer groups used to determine the 529 investment options’ Morningstar Ratings have some notable quirks.
For one, 529 category peers often represent a wider range of investment styles than one might see in the similar open-end mutual fund categories. That’s because there are fewer 529 categories, particularly for investments with unusual strategies. For example, there is no stand-alone 529 category for investment options that primarily hold convertible securities or REITs—those options are lumped into diversified equity categories for 529 investment options. By including such outliers in Morningstar’s 529 categories, the peer groups have a broader distribution of returns, which ultimately can impact an investment option’s Morningstar Rating.
Another factor to consider is the rate of change within 529 plans. Most plans that have underperformed for a time—and therefore may have a lower average Morningstar Rating—either got a face-lift or have been completely rebuilt. The plans may not be able to erase poor past performance from their records, but it also would be unfair to expect a revamped plan to perform similarly going forward. This is the case for plans such as the Bright Start College Savings Plans in Illinois and the Oregon College Savings Plan. Ohio took a different tack when its advisor-sold plan, formerly run by Putnam, had poor performance. It added an entirely new plan run by BlackRock and merged the Putnam run assets (thus erasing Putnam’s record) into the new plan when Putnam’s contract with the state expired.
Article written by Laura Pavlenko Lutton, who is an editorial director in Morningstar’s fund research group.
Tuesday, February 14, 2012
Keynes vs. Hayek Smackdown: Battle Still Rages Between Long-Dead Economists
By Joyce Hanson, AdvisorOne
To many market watchers, the fight of the century wasn’t the “Thrilla in Manila” that pitted heavyweight champs Muhammad Ali and Joe Frazier against each other in 1975.
No, it was the battle royale that had Cambridge economist John Maynard Keynes opposing Austrian economics professor Friedrich August von Hayek over the course of the Great Depression in the 1930s and on into World War II.
Though both men have been gone for years, their ideas have taken on a life of their own and currently create animated debate between who got it right, the interventionist Keynes or the laissez-faire Hayek.
“Keynes was right about market failures, incomplete information and times when we get prices wrong. To forget this is to consign millions to unnecessary harm,” argued Jared Bernstein, executive director of the White House Task Force on the Middle Class and a member of President Obama’s economic team from 2009 to 2011. Obama’s policies put him squarely in the camp of the Keynesians.
Bernstein made his argument earlier this week at the annual New York conference of the Investment Management Consultants Association (IMCA), which drew 850 attendees at the Marriott Marquis on Times Square.
His worthy opponent, Russell Roberts, a professor of economics at George Mason University and a research fellow at Stanford University's Hoover Institution, countered that Obama’s interventionist stimulus planners have judged their success over the last few years using the false data of predictive models rather than actual facts.
“Macroeconomics isn’t a true science, like biology,” said Roberts, echoing Hayek’s own sentiments. “It’s fake science.”
To underscore the speakers’ points, IMCA screened "Fight of the Century,” a new economics hip-hop music video by John Papola and Russ Roberts of http://EconStories.tv, on the Marriott Marquis’ mainstage. According to the video makers, “Keynes and Hayek never agreed on the answers to these questions and they still don't.”
So who really won, Keynes or Hayek?
While Keynes was convinced that government has a duty to boost spending and intervene in markets during economic slowdowns, Hayek was equally sure that only a laissez-faire stance and the market’s invisible hand could help pull a struggling economy out of the hole.
Maybe the victory was Hayek’s: he won a Nobel prize, after all, and Keynes didn’t.
“The continuous injection of additional amounts of money at points of the economic system where it creates a temporary demand which must cease when the increase of the quantity of money stops or slows down…draws labour and other resources into employments which can last only so long as the increase of the quantity of money continues at the same rate,” wrote Hayek in his 1974 Nobel lecture. “What this policy has produced is not so much a level of employment that could not have been brought about in other ways, as a distribution of employment which cannot be indefinitely maintained and which after some time can be maintained only by a rate of inflation which would rapidly lead to a disorganisation of all economic activity.”
But then again, Keynes won the ear of President Franklin D. Roosevelt, who followed the economist’s advice to let the government print money and create jobs until the depressed U.S. economy revived.
Writing for The Nation in May 1930, Keynes said: “The fact is - a fact not yet recognized by the great public — that we are now in the depths of a very severe international slump, a slump which will take its place in history amongst the most acute ever experienced. It will require not merely passive movements of bank rates to lift us out of a depression of this order, but a very active and determined policy.”
Keynes, who suffered heart trouble for years, died in 1946 at the age of 63 in Sussex, England. Hayek outlived him by 46 years, dying in Freiburg, Germany at the age of 92 in 1992.
To many market watchers, the fight of the century wasn’t the “Thrilla in Manila” that pitted heavyweight champs Muhammad Ali and Joe Frazier against each other in 1975.
No, it was the battle royale that had Cambridge economist John Maynard Keynes opposing Austrian economics professor Friedrich August von Hayek over the course of the Great Depression in the 1930s and on into World War II.
Though both men have been gone for years, their ideas have taken on a life of their own and currently create animated debate between who got it right, the interventionist Keynes or the laissez-faire Hayek.
“Keynes was right about market failures, incomplete information and times when we get prices wrong. To forget this is to consign millions to unnecessary harm,” argued Jared Bernstein, executive director of the White House Task Force on the Middle Class and a member of President Obama’s economic team from 2009 to 2011. Obama’s policies put him squarely in the camp of the Keynesians.
Bernstein made his argument earlier this week at the annual New York conference of the Investment Management Consultants Association (IMCA), which drew 850 attendees at the Marriott Marquis on Times Square.
His worthy opponent, Russell Roberts, a professor of economics at George Mason University and a research fellow at Stanford University's Hoover Institution, countered that Obama’s interventionist stimulus planners have judged their success over the last few years using the false data of predictive models rather than actual facts.
“Macroeconomics isn’t a true science, like biology,” said Roberts, echoing Hayek’s own sentiments. “It’s fake science.”
To underscore the speakers’ points, IMCA screened "Fight of the Century,” a new economics hip-hop music video by John Papola and Russ Roberts of http://EconStories.tv, on the Marriott Marquis’ mainstage. According to the video makers, “Keynes and Hayek never agreed on the answers to these questions and they still don't.”
So who really won, Keynes or Hayek?
While Keynes was convinced that government has a duty to boost spending and intervene in markets during economic slowdowns, Hayek was equally sure that only a laissez-faire stance and the market’s invisible hand could help pull a struggling economy out of the hole.
Maybe the victory was Hayek’s: he won a Nobel prize, after all, and Keynes didn’t.
“The continuous injection of additional amounts of money at points of the economic system where it creates a temporary demand which must cease when the increase of the quantity of money stops or slows down…draws labour and other resources into employments which can last only so long as the increase of the quantity of money continues at the same rate,” wrote Hayek in his 1974 Nobel lecture. “What this policy has produced is not so much a level of employment that could not have been brought about in other ways, as a distribution of employment which cannot be indefinitely maintained and which after some time can be maintained only by a rate of inflation which would rapidly lead to a disorganisation of all economic activity.”
But then again, Keynes won the ear of President Franklin D. Roosevelt, who followed the economist’s advice to let the government print money and create jobs until the depressed U.S. economy revived.
Writing for The Nation in May 1930, Keynes said: “The fact is - a fact not yet recognized by the great public — that we are now in the depths of a very severe international slump, a slump which will take its place in history amongst the most acute ever experienced. It will require not merely passive movements of bank rates to lift us out of a depression of this order, but a very active and determined policy.”
Keynes, who suffered heart trouble for years, died in 1946 at the age of 63 in Sussex, England. Hayek outlived him by 46 years, dying in Freiburg, Germany at the age of 92 in 1992.
Wednesday, January 18, 2012
JERSEY BENEFITS ADVISORS INVESTOR NEWSLETTER WINTER 2012
HAPPY NEW YEAR
MARKET WATCH
When planning a vacation most of us book a round trip fare because the goal is to start the vacation from one point, explore wonderful sights, exquisite beaches, historical landmarks, or other such treats, and return home exhausted. The round trip on the S&P 500* this year, while definitely exhausting, was not particularly satisfying when compared to any of the vacations above. Yet a round trip is exactly how you have to define the performance of the S&P 500* for 2011 when comparing the January open of 1,257.64 with the December close of 1257.60 for a statistically insignificant drop of .04 of a point, or essentially, a FLAT performance for the year!
The rare event of a flat performance for the S&P 500* did not occur without some dramatic point swings and gut wrenching volatility. In fact, the S&P 500* peaked at 1,363.61 on April 29th, and then bottomed out at 1,099.23 on October 3rd. This decline from peak to trough was 19.4% and very close to the 20% decline which defines a bear market. So, in retrospect, I guess we should be thankful for a flat performance.
The stock market this year has been affected by a litany of investor concerns which we have discussed before. Unemployment stuck near 9% for most of the year, global political unrest, natural disasters and the European sovereign debt crisis have been recurrent themes. Even as the news on the economic front continues to improve in the US, all of the other distractions, particularly the perceived dysfunction of government in the run up to the 2012 elections, weighs on market performance.
The good news is the government is performing as it was designed by our forefathers, when there is no clear majority which will support either the extreme left or right policies currently being put forth. Recently, George Will noted, “ Nothing that happens this November will bring an apocalypse. America had 43 presidencies before the current one and will have many more than that after the end of this one in 2013 or 2017. Decades hence, it will look like most others, a pebble in the river of American history”. At some point soon, we might even see some actual compromises taking place, such as reforming the tax code, reining in the deficit, and controlling the costs of entitlement programs, like Medicare, Medicaid and Social Security, so they remain viable for future generations.
Even though the S&P 500* was flat for the year, the Dow Jones Industrial Average (DJIA*) managed to eke out a 5.53% gain closing at 12,217.56 which is an increase of 640 points. On the other hand, the NASDAQ* was down 47.72 points and closed at 2,605.60 which is a 1.80% decline. So, 2011 ends as sort of mixed bag, but 2012 may have some real upside potential if the holiday spending translates into improved earnings.
As of this writing we are one week into 2012, and the DJIA* increased 1.17% from its 2011 close, the S&P 500* has added 1.61%, while the NASDAQ* gained 2.65%. Positive indices for the first week of trading generally bode well for annual performance. The Bureau of Labor & Statistics also released the December Employment Report which added 200,000 jobs to the economy and brought the unemployment rate down to 8.5%. While this report is very positive, there were 42,000 courier and messenger positions added during the month, which indicates at least some seasonal adjustment will occur in next month’s numbers. I think market volatility and economic improvement will continue in the US in 2012.
CHANGES FOR PARTICIPANTS IN VARIOUS RETIREMENT PLANS
There are some changes to the limit on the amount of elective deferrals that a plan participant can contribute to a traditional or safe harbor 401(k) plan, 403(b) plan, SARSEP or 457(b) plan. The limit is $16,500 for 2011, and it increases to $17,000 for 2012. Thereafter, cost of living adjustments will be made to the increase in the amount of elective deferrals. Catch up contributions, up to $5500, are allowed for 2011 & 2012.
The elective deferral limit for a SIMPLE IRA retirement plan is $11,500 for 2011 & 2012. Traditional IRA and ROTH IRA contributions are limited to $5,000 or $6,000 if the individual is 50 or older. If you have any questions, or wish to set up and/or contribute to a retirement plan, please don’t hesitate to contact me.
ENERGY PRODUCTION HEADS TO MORE STABLE LOCALES
During the 4th quarter of 2011, the United States became a net exporter of energy, something which hasn’t happened in several decades. Without much fanfare, or support from the government, Big Oil has been redrawing the energy map. Rather than searching for oil and other fuels in the Persian Gulf, the desert sands of North Africa, the Niger Delta and the Caspian Sea, there has been a shift towards less exotic locales, as Western energy companies increasingly search for supplies in more stable and economically viable countries.
The oil sands of Canada, as well as deep water oil off the coasts of Brazil and the US, shale oil in the continental US, and shale gas deposits in the US and Europe are becoming technologically and economically more attractive than energy deposits in countries such as Venezuela and Russia, where the threat of nationalization is more likely. This new way of looking at risk is fundamentally reshaping the way international oil companies are doing business. They can either invest in oil that is easy to produce, but runs the risk of political interference, or they can produce oil and gas in countries which are stable, but have deposits which are more difficult to extract. The latter seems to be the choice most companies are making at the present time.
The technological advances making this seismic change possible are called horizontal drilling and hydraulic fracturing, or fracking, as it is commonly called. Many communities in the Midwest and Eastern regions of the US are now debating the economic and environmental implications of production in areas such as the Marcellus & Devonian Shales. While the debate rages, many land owners are realizing the economic benefit of owning mineral rights beneath their property.
North Dakota is one of the newest oil hot spots in the United States. Along with parts of Montana, Saskatchewan, and Manitoba, North Dakota is home to the largest accumulation of oil in North America. This oil deposit is bigger than Louisiana, Texas, California, and Alaska's Arctic National Wildlife Refuge, and it is called the Bakken Formation. While much of the country is suffering from close to 9% unemployment, this region can’t seem to fill oil production jobs fast enough.
Meanwhile, President Barack Obama and Congress are starting the election year locked in a tussle over a proposed 1,700-mile oil pipeline from Canada to Texas that will force the White House to make a politically risky choice between two key Democratic constituencies, unions and environmentalists. The fate of the Keystone Pipeline XL must be decided by February, as part of the agreement extending the payroll tax cut. This should be a very interesting election year.
* 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
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:
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
Http://www.jerseybenefits.com/
All opinions expressed in this newsletter are
solely those of John Kaighn & Jersey Benefits Advisors.
LD 42655 - 01/12
Thursday, December 1, 2011
What Clients can Learn from the Four Worst Market Calls Ever
I came across this article and thought it was in line with my way of thinking in regard to people who hold themselves out to be market gurus. However foolish it may be, there are always those who like to believe they really are above being laid low by changes in the market they didn't anticipate. For those of us with a bit more humility, these examples tend to vindicate our judgement, even though they had terrible consequences for the media proclaimed gurus and their followers.
This article was written by Dan Richards for Advisor Perspectives on November 15, 2011.
Bad investment advice can come from many sources, but perhaps none has been worse than what was offered by four experts whose media profile exceeded their investment acumen: Irving Fisher, Joe Granville, Robert Prechter and Henry Blodget.
Here’s some historical context and practical advice to help clients avoid the trap of listening to the gurus who dominate newspaper headlines.
Four sad stories
In the 1920’s, Yale’s Irving Fisher was a household name in America and by far its best known economist; his pronouncements regularly made front-page headlines. Three days before the crash of 1929, he famously announced that “stock prices have reached what appears to be a permanently high plateau” – and for months after the crash, maintained that a recovery in stock prices was imminent.
In 1980 and 1981, Joe Granville’s investment seminars drew packed audiences and his predictions caused major one-day moves in the market. He even predicted that he would win the Nobel Prize in economics and on one occasion literally walked on water, as he made his entrance strolling across a swimming pool that he’d had filled with concrete.
But according to Hulbert Report that tracks the performance of investment newsletters, from 1980 to 2005 The Granville Letter was dead last among American newsletters, with investors who followed its advice losing 95% of their capital.
In 1987, Elliott Wave proponent Robert Prechter told clients to sell in advance of “Black Monday.” He’s been dining out on that call ever since, in the process told his readers to stay on the sidelines throughout the record bull market of the 1990s.
And in 2000, Merrill Lynch tech guru Henry Blodget predicted that tech valuations would continue to climb – and backed up his words by putting his personal net worth on the line, most of which quickly evaporated.
The media’s agenda is different from yours
Last summer, the New York Times examined why the media consistently provides a platform to financial gurus with extreme, often simplistic (and sometimes simple-minded) views.
The answer was simple – middle of the road, consensus thinking is boring; it’s much more interesting to have a guest with provocative, unconventional opinions. That’s led to a body of “they never saw a mike they didn’t love” experts in the field of politics and investing, opining on events of the day. Sometimes called media hounds or the less complimentary media whores, these experts can be omnipresent.
Very few of these media gurus manage meaningful amounts of money; often their biggest asset is their reputation. But that doesn’t prevent clients who watch their interviews from getting worked up and potentially deflected from their plan.
So if we recognize that most of these experts’ impact on clients is neutral at best and can in fact do significant damage, the question is what to do about it.
Bringing facts and reason into play
Just telling clients to ignore these gurus won’t typically work – the very fact that they are given a media platform, deserved or not, gives them credibility.
That’s why I was struck by the reasoned, fact-based approach to this topic in a video by industry veteran and Columbia professor Michael Mauboussin. A repeat winner of Institutional Investor’s All-America research team, he has served as chief US investment strategist at Credit Suisse First Boston and is currently chief investment strategist for Legg Mason Capital Management
Mauboussin points to research proving that expert predictions do not beat the market, and that there is even a negative correlation between media profile and accuracy – the higher an expert’s media profile, the worse they do.
This video lasts three minutes. For those looking for a more in-depth perspective, here is a 30-minute interview with Mauboussin.
You could share these videos with clients who ask about views they’ve seen on television – or strike a pre-emptive blow by sending the links to all your clients. While you can’t control what your clients see on television, you can try to influence how they’ll respond.
--------------------------------------------------------------------------------
Dan Richards is a top-rated presenter at advisor conferences and an award winning instructor in the MBA program at the University of Toronto, as well as author of Getting Clients Keeping Clients: The Essential Guide for Tomorrow’s Financial Advisor. To learn more about his conference keynotes and workshops, email dan@clientinsights.ca.
This article was written by Dan Richards for Advisor Perspectives on November 15, 2011.
Bad investment advice can come from many sources, but perhaps none has been worse than what was offered by four experts whose media profile exceeded their investment acumen: Irving Fisher, Joe Granville, Robert Prechter and Henry Blodget.
Here’s some historical context and practical advice to help clients avoid the trap of listening to the gurus who dominate newspaper headlines.
Four sad stories
In the 1920’s, Yale’s Irving Fisher was a household name in America and by far its best known economist; his pronouncements regularly made front-page headlines. Three days before the crash of 1929, he famously announced that “stock prices have reached what appears to be a permanently high plateau” – and for months after the crash, maintained that a recovery in stock prices was imminent.
In 1980 and 1981, Joe Granville’s investment seminars drew packed audiences and his predictions caused major one-day moves in the market. He even predicted that he would win the Nobel Prize in economics and on one occasion literally walked on water, as he made his entrance strolling across a swimming pool that he’d had filled with concrete.
But according to Hulbert Report that tracks the performance of investment newsletters, from 1980 to 2005 The Granville Letter was dead last among American newsletters, with investors who followed its advice losing 95% of their capital.
In 1987, Elliott Wave proponent Robert Prechter told clients to sell in advance of “Black Monday.” He’s been dining out on that call ever since, in the process told his readers to stay on the sidelines throughout the record bull market of the 1990s.
And in 2000, Merrill Lynch tech guru Henry Blodget predicted that tech valuations would continue to climb – and backed up his words by putting his personal net worth on the line, most of which quickly evaporated.
The media’s agenda is different from yours
Last summer, the New York Times examined why the media consistently provides a platform to financial gurus with extreme, often simplistic (and sometimes simple-minded) views.
The answer was simple – middle of the road, consensus thinking is boring; it’s much more interesting to have a guest with provocative, unconventional opinions. That’s led to a body of “they never saw a mike they didn’t love” experts in the field of politics and investing, opining on events of the day. Sometimes called media hounds or the less complimentary media whores, these experts can be omnipresent.
Very few of these media gurus manage meaningful amounts of money; often their biggest asset is their reputation. But that doesn’t prevent clients who watch their interviews from getting worked up and potentially deflected from their plan.
So if we recognize that most of these experts’ impact on clients is neutral at best and can in fact do significant damage, the question is what to do about it.
Bringing facts and reason into play
Just telling clients to ignore these gurus won’t typically work – the very fact that they are given a media platform, deserved or not, gives them credibility.
That’s why I was struck by the reasoned, fact-based approach to this topic in a video by industry veteran and Columbia professor Michael Mauboussin. A repeat winner of Institutional Investor’s All-America research team, he has served as chief US investment strategist at Credit Suisse First Boston and is currently chief investment strategist for Legg Mason Capital Management
Mauboussin points to research proving that expert predictions do not beat the market, and that there is even a negative correlation between media profile and accuracy – the higher an expert’s media profile, the worse they do.
This video lasts three minutes. For those looking for a more in-depth perspective, here is a 30-minute interview with Mauboussin.
You could share these videos with clients who ask about views they’ve seen on television – or strike a pre-emptive blow by sending the links to all your clients. While you can’t control what your clients see on television, you can try to influence how they’ll respond.
--------------------------------------------------------------------------------
Dan Richards is a top-rated presenter at advisor conferences and an award winning instructor in the MBA program at the University of Toronto, as well as author of Getting Clients Keeping Clients: The Essential Guide for Tomorrow’s Financial Advisor. To learn more about his conference keynotes and workshops, email dan@clientinsights.ca.
Sunday, November 20, 2011
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
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
Thursday, October 13, 2011
JERSEY BENEFITS ADVISORS INVESTOR NEWSLETTER FALL 2011
MARKET WATCH
At the risk of sounding like a broken record, when you look back at market performance for the third quarter, you can’t help but realize the litany of investor concerns were quite similar to the worries of the first two quarters of 2011. Unemployment stuck at 9.1%, global unrest, natural disasters and the European sovereign debt crisis, especially in Greece, seemed to be the recurrent themes causing investor angst. Unfortunately, the market indices were unable to mount the end of quarter surge that provided some relief during the first two quarters, and the market indices took a tumble in the third quarter, leaving them teetering near bear market territory.
Of course, Congress did not disappoint with their political partisanship exhibited during the August debt limit debacle. Their inability to develop a credible solution to the country’s fiscal situation, and the President’s inability to propose anything other than tax increases on the “so called rich” and more spending led to a downgrade by S&P on US debt. Of course, S&P may have had just a slight reason to play gotcha, since their ratings of mortgage backed securities and collateralized debt obligations during the housing boom have been called into question by Congress and the President.
It looks like we might be stuck in this current range for the markets until the 2012 elections are over unless the super committee, which was born out of the debt limit crisis, can come up with some recommendations for trimming the deficit and getting our fiscal house in order. If they don’t, $1.2 trillion across the board spending cuts will be implemented. The clock is ticking, as their deadline is November 23.
It gets extremely frustrating when you listen to the rhetoric of our leaders and realize their utter cluelessness at how their inability to compromise affects the markets. They talk about helping main street, yet they fail to realize the markets contain the retirement assets of most of the citizens of this fair land. In his testimony before Congress’s Joint Economic Committee, Ben Bernanke, Chairman of the Federal Reserve, stated, ”Political brinksmanship over the debt ceiling is no way to run a railroad”. Too bad Congress doesn’t get it, regarding the effect of their inaction on market sentiment.
The Dow Jones Industrial Average* closed the quarter at 10,913.38 down 12% for the quarter and a –5.74% return for the year. The S&P 500* ended the quarter at 1,131.42 a –10.04% year to date return and off 14% for the quarter. Meanwhile, the NASDAQ* finished the quarter at 2,415.40 having fallen 13% for the quarter and –8.95% for the year. As uninspiring as these results are, the market indices have not crossed into bear market territory as we go to print on 10/6/2011. Even though there have been some harrowing events in October, the crashes of 1929 and 1987 come readily to mind, Jeff Hirsch, editor in chief of Wiley’s Stock Trader’s Almanac states, “Going back to 1950, September has had a greater average loss than October”. Furthermore, according to research by Bank of America Merrill Lynch, since 1964 there have been 15 quarters in which the S&P 500 lost 10% or more. After12 of those 15 quarters, the subsequent quarter saw an average rally of 10%. Let’s hope the odds are in our favor going forward, and that there are some adults in the room during the super committee’s debate on deficit reduction.
If you have any questions or concerns, please don’t hesitate to contact me.
ARE WE HEADING FOR THE DREADED DOUBLE DIP?
Most economists are not predicting a “double dip recession”, but it is a topic currently being discussed. I have heard odds of anywhere between a 20% chance of it happening, to the point where some people are saying we are already in recession again. If you remember in the past, we discussed an inverted yield curve as a recessionary indicator. At the current time the Fed is attempting to lower long term interest rates and flatten the yield curve, since it now has a positive slope.
While it is possible for the economy to slip into recession with a positive yield curve, I don’t think we will see a double dip. Businesses will be reporting their earnings in the next few weeks, and it will be positive for the markets. There is just too much doom and gloom, so I’m a contrarian on the double dip.
A Familiar Chart?
Dot Com Bust!
Housing Bust!
Gold?
OPERATION TWIST & NEW ADDITION TO OUR WEBSITE
OPERATION TWIST
At the September FOMC meeting the Federal Reserved stated the economy was facing headwinds and interest rates would remain low. They also announced Operation Twist, one of the tools at the Feds disposal to put pressure on long term interest rates. This tool was last used in the 1960’s and gets its name from Chubby Checker’s hit of that era, The Twist. Basically, the Fed will be selling short term bonds from the Treasury and replacing them with longer term bonds with maturities between 25 and 30 years.
The Fed will be competing with individual and sovereign bond buyers, so the objective is to increase the price of longer term bonds, which in turn lowers the yield. Besides lowering long term interest rates, the Fed is also hoping investors will move their assets into higher risk investments. Recently, investors have been fleeing riskier investments for the perceived safety of Treasuries. They have been willing to park their money in an investment with no return, in order to prevent losses. This creates risk too, because bonds purchased at a premium can fall in price and produce a loss.
ONLINE LIFE INSURANCE
We have partnered with ORG, Inc. to develop and market an online life insurance quotation system that allows individuals to enter their information and receive competitive quotes from major insurance carriers online. In most cases the application can also be completed online. There is also a direct toll free line to speak to a customer service representative, as well as an email link to ask questions or receive assistance with the quotation or application process. The quotes can be obtained from our Jersey Benefits Group, Inc. Website, or the Jersey Benefits Life Insurance Website. For people who wish to complete the process of applying for life insurance totally on their own, and like to evaluate numerous quotes independently before applying, this site should satisfy their needs. Quotes are free and no money is exchanged until the individual is approved for the policy quoted.
Of course, anyone who is interested in talking to an insurance advisor, who will meet with them in the traditional face to face manner, simply needs to contact the company either by telephone or email to set up an appointment. Through the ORG network, we can assist individuals outside the state of NJ to locate insurance professionals who can meet with them face to face. The toll free number to call, outside NJ, is (855) 802-4123 and the email address for those outside NJ is jersey.benefits@life4org.com. Anyone in the state of New Jersey can contact me directly for their insurance needs at (609) 827-0194 or by email Kaighn@JerseyBenefits.com.
* 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.
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
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:
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
Http://www.jerseybenefits.com/
All opinions expressed in this newsletter are
solely those of John Kaighn & Jersey Benefits Advisors.
LD41861 - 10/11
At the risk of sounding like a broken record, when you look back at market performance for the third quarter, you can’t help but realize the litany of investor concerns were quite similar to the worries of the first two quarters of 2011. Unemployment stuck at 9.1%, global unrest, natural disasters and the European sovereign debt crisis, especially in Greece, seemed to be the recurrent themes causing investor angst. Unfortunately, the market indices were unable to mount the end of quarter surge that provided some relief during the first two quarters, and the market indices took a tumble in the third quarter, leaving them teetering near bear market territory.
Of course, Congress did not disappoint with their political partisanship exhibited during the August debt limit debacle. Their inability to develop a credible solution to the country’s fiscal situation, and the President’s inability to propose anything other than tax increases on the “so called rich” and more spending led to a downgrade by S&P on US debt. Of course, S&P may have had just a slight reason to play gotcha, since their ratings of mortgage backed securities and collateralized debt obligations during the housing boom have been called into question by Congress and the President.
It looks like we might be stuck in this current range for the markets until the 2012 elections are over unless the super committee, which was born out of the debt limit crisis, can come up with some recommendations for trimming the deficit and getting our fiscal house in order. If they don’t, $1.2 trillion across the board spending cuts will be implemented. The clock is ticking, as their deadline is November 23.
It gets extremely frustrating when you listen to the rhetoric of our leaders and realize their utter cluelessness at how their inability to compromise affects the markets. They talk about helping main street, yet they fail to realize the markets contain the retirement assets of most of the citizens of this fair land. In his testimony before Congress’s Joint Economic Committee, Ben Bernanke, Chairman of the Federal Reserve, stated, ”Political brinksmanship over the debt ceiling is no way to run a railroad”. Too bad Congress doesn’t get it, regarding the effect of their inaction on market sentiment.
The Dow Jones Industrial Average* closed the quarter at 10,913.38 down 12% for the quarter and a –5.74% return for the year. The S&P 500* ended the quarter at 1,131.42 a –10.04% year to date return and off 14% for the quarter. Meanwhile, the NASDAQ* finished the quarter at 2,415.40 having fallen 13% for the quarter and –8.95% for the year. As uninspiring as these results are, the market indices have not crossed into bear market territory as we go to print on 10/6/2011. Even though there have been some harrowing events in October, the crashes of 1929 and 1987 come readily to mind, Jeff Hirsch, editor in chief of Wiley’s Stock Trader’s Almanac states, “Going back to 1950, September has had a greater average loss than October”. Furthermore, according to research by Bank of America Merrill Lynch, since 1964 there have been 15 quarters in which the S&P 500 lost 10% or more. After12 of those 15 quarters, the subsequent quarter saw an average rally of 10%. Let’s hope the odds are in our favor going forward, and that there are some adults in the room during the super committee’s debate on deficit reduction.
If you have any questions or concerns, please don’t hesitate to contact me.
ARE WE HEADING FOR THE DREADED DOUBLE DIP?
Most economists are not predicting a “double dip recession”, but it is a topic currently being discussed. I have heard odds of anywhere between a 20% chance of it happening, to the point where some people are saying we are already in recession again. If you remember in the past, we discussed an inverted yield curve as a recessionary indicator. At the current time the Fed is attempting to lower long term interest rates and flatten the yield curve, since it now has a positive slope.
While it is possible for the economy to slip into recession with a positive yield curve, I don’t think we will see a double dip. Businesses will be reporting their earnings in the next few weeks, and it will be positive for the markets. There is just too much doom and gloom, so I’m a contrarian on the double dip.
A Familiar Chart?
Dot Com Bust!
Housing Bust!
Gold?
OPERATION TWIST & NEW ADDITION TO OUR WEBSITE
OPERATION TWIST
At the September FOMC meeting the Federal Reserved stated the economy was facing headwinds and interest rates would remain low. They also announced Operation Twist, one of the tools at the Feds disposal to put pressure on long term interest rates. This tool was last used in the 1960’s and gets its name from Chubby Checker’s hit of that era, The Twist. Basically, the Fed will be selling short term bonds from the Treasury and replacing them with longer term bonds with maturities between 25 and 30 years.
The Fed will be competing with individual and sovereign bond buyers, so the objective is to increase the price of longer term bonds, which in turn lowers the yield. Besides lowering long term interest rates, the Fed is also hoping investors will move their assets into higher risk investments. Recently, investors have been fleeing riskier investments for the perceived safety of Treasuries. They have been willing to park their money in an investment with no return, in order to prevent losses. This creates risk too, because bonds purchased at a premium can fall in price and produce a loss.
ONLINE LIFE INSURANCE
We have partnered with ORG, Inc. to develop and market an online life insurance quotation system that allows individuals to enter their information and receive competitive quotes from major insurance carriers online. In most cases the application can also be completed online. There is also a direct toll free line to speak to a customer service representative, as well as an email link to ask questions or receive assistance with the quotation or application process. The quotes can be obtained from our Jersey Benefits Group, Inc. Website, or the Jersey Benefits Life Insurance Website. For people who wish to complete the process of applying for life insurance totally on their own, and like to evaluate numerous quotes independently before applying, this site should satisfy their needs. Quotes are free and no money is exchanged until the individual is approved for the policy quoted.
Of course, anyone who is interested in talking to an insurance advisor, who will meet with them in the traditional face to face manner, simply needs to contact the company either by telephone or email to set up an appointment. Through the ORG network, we can assist individuals outside the state of NJ to locate insurance professionals who can meet with them face to face. The toll free number to call, outside NJ, is (855) 802-4123 and the email address for those outside NJ is jersey.benefits@life4org.com. Anyone in the state of New Jersey can contact me directly for their insurance needs at (609) 827-0194 or by email Kaighn@JerseyBenefits.com.
* 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.
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
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:
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
Http://www.jerseybenefits.com/
All opinions expressed in this newsletter are
solely those of John Kaighn & Jersey Benefits Advisors.
LD41861 - 10/11
Monday, September 26, 2011
The Monday Morning Quarterback Is Alive and Well
Trying to get a handle on the deluge of information constantly bombarding investors on a daily basis is a daunting task, to say the least. This morning I had the distinct pleasure of hearing a sports reporter, who was reporting on Michael Vicks' broken hand, launch into a dissertation about how sports serve as a distraction for the "disasterous state of our economy, the horrendous jobs situation and polarized politics". Well, no duh! However, is it appropriate for a sport's announcer to utilize negative and potentially inflammatory language about the economy on a Monday morning?
Anyway, as the campaign season heats up in earnest, Obama is already stumping for the 2012 election, while the Republicans continue to try to convince voters to get behind an "electable candidate". The two front runners have written books recently, both of which have remarks towards Social Security which can be utilized by the Democrats to sway voters. Meanwhile, the economy and employment, issues which we are told are priorities of both parties, will not see any significant legislative action for the foreseable future. The reasons being the Democrats hope to paint the Republicans as standing in the way of job growth, by not adopting Obama's new "jobs program", and the Republicans hope to convince voters the blame belongs to Obama for 9% unemployment from "failed stimulus plans" and trillion dollar deficits. Of course, there is the possibility that a lack of any government fiscal intervention might actually allow the economy to limp along and begin to repair itself.
Thanks to a swift and effective move by the Swiss to intervene in their currency when traders were moving to the Franc as a safe haven due to the rout of the Euro, the dollar has strengthened significantly. Gold, silver and other commodities have taken it on the chin as the dollar has once again become a safe haven for investors worried about worldwide demand slowing. Many emerging markets are in bear market territory as the week begins, and economists are all over the place in handicapping a new recession, or "double dip". Hopefully, the Eurozone will strengthen their political union enough to agree to sell bonds, which will backstop Greece and the rest of the PIIGS.
On the home front, I can't help but ask when we will finally unleash a credible energy plan utilizing natural gas, uranium and coal to put people back to work. We've seen the result of the government trying to pick technologies, as evidenced by Solyndra debacle and it doesn't work. I am not saying abolish the EPA, but I am saying we might be able to postpone some of the drastic steps we need to take to "save the planet" until our economy is functioning better and our energy sources are not quite as precarious. While we are at it, we could also evaluate if our response to 9/11, while a complete and utter success, might not have given al Qaeda more credit as a threat to the US than they actually turned out to be. Balance is what we need going forward.
John H. Kaighn
Jersey Benefits Advisors
Anyway, as the campaign season heats up in earnest, Obama is already stumping for the 2012 election, while the Republicans continue to try to convince voters to get behind an "electable candidate". The two front runners have written books recently, both of which have remarks towards Social Security which can be utilized by the Democrats to sway voters. Meanwhile, the economy and employment, issues which we are told are priorities of both parties, will not see any significant legislative action for the foreseable future. The reasons being the Democrats hope to paint the Republicans as standing in the way of job growth, by not adopting Obama's new "jobs program", and the Republicans hope to convince voters the blame belongs to Obama for 9% unemployment from "failed stimulus plans" and trillion dollar deficits. Of course, there is the possibility that a lack of any government fiscal intervention might actually allow the economy to limp along and begin to repair itself.
Thanks to a swift and effective move by the Swiss to intervene in their currency when traders were moving to the Franc as a safe haven due to the rout of the Euro, the dollar has strengthened significantly. Gold, silver and other commodities have taken it on the chin as the dollar has once again become a safe haven for investors worried about worldwide demand slowing. Many emerging markets are in bear market territory as the week begins, and economists are all over the place in handicapping a new recession, or "double dip". Hopefully, the Eurozone will strengthen their political union enough to agree to sell bonds, which will backstop Greece and the rest of the PIIGS.
On the home front, I can't help but ask when we will finally unleash a credible energy plan utilizing natural gas, uranium and coal to put people back to work. We've seen the result of the government trying to pick technologies, as evidenced by Solyndra debacle and it doesn't work. I am not saying abolish the EPA, but I am saying we might be able to postpone some of the drastic steps we need to take to "save the planet" until our economy is functioning better and our energy sources are not quite as precarious. While we are at it, we could also evaluate if our response to 9/11, while a complete and utter success, might not have given al Qaeda more credit as a threat to the US than they actually turned out to be. Balance is what we need going forward.
John H. Kaighn
Jersey Benefits Advisors
Tuesday, September 20, 2011
Looking For a New Banking Relationship? Try EverBank!
Online Banking Through Everbank
FDIC Insurance. High yields. Stability. Isn’t this what you’re looking for in a bank these days?
EverBank offers all of this and more. With EverBank’s Yield
Pledge® promise, your money earns a yield in the top 5%
of competitive accounts(1). Even better, this pledge applies to
EverBank’s Yield Pledge Money Market, Yield Pledge Checking
and Yield Pledge Savings accounts, as well as their Yield Pledge
CDs.
EverBank isn’t like any ordinary bank. They do things differently,
in a way to benefit you. With EverBank, you’ll earn a high-yield
on all Yield Pledge accounts, including your checking. EverBank
also keeps fees low, and provides all types of convenient features
including Online and Mobile Banking. You can access Mobile Banking at
mobile.everbank.com on your wireless device.
Opening an account with EverBank could be the right move for
you. Give me a call and I’ll show you how, or you can complete an application online. Be sure to include the Advisor ID: jokai490 on the application. Online Banking Through Everbank.
Best regards,
John H. Kaighn
(609) 827-0194
Jersey Benefits Advisors
1. EverBank promises to keep the yield on your account in the top 5% of competitive accounts as measured the last Wednesday of each month in Bankrate Monitor, a weekly national survey of large banks and thrifts, surveyed by Bankrate.com. For the Yield Pledge CD, EverBank promises to keep the yield on your account in the top 5% of competitive accounts
as measured each week in Bankrate Monitor. This promise applies at the time of purchase, or when rolling your expiring CD into a new CD with EverBank.
EverBank’s relationship with the Financial Institution employing your Investment Professional is through a joint marketing agreement for the sale of banking products only. Otherwise, there is no affiliation.
© 2011 EverBank. All rights reserved. 11EAP0092.1
EverBank is an Equal Housing Lender, Member FDIC.
FDIC Insurance. High yields. Stability. Isn’t this what you’re looking for in a bank these days?
EverBank offers all of this and more. With EverBank’s Yield
Pledge® promise, your money earns a yield in the top 5%
of competitive accounts(1). Even better, this pledge applies to
EverBank’s Yield Pledge Money Market, Yield Pledge Checking
and Yield Pledge Savings accounts, as well as their Yield Pledge
CDs.
EverBank isn’t like any ordinary bank. They do things differently,
in a way to benefit you. With EverBank, you’ll earn a high-yield
on all Yield Pledge accounts, including your checking. EverBank
also keeps fees low, and provides all types of convenient features
including Online and Mobile Banking. You can access Mobile Banking at
mobile.everbank.com on your wireless device.
Opening an account with EverBank could be the right move for
you. Give me a call and I’ll show you how, or you can complete an application online. Be sure to include the Advisor ID: jokai490 on the application. Online Banking Through Everbank.
Best regards,
John H. Kaighn
(609) 827-0194
Jersey Benefits Advisors
1. EverBank promises to keep the yield on your account in the top 5% of competitive accounts as measured the last Wednesday of each month in Bankrate Monitor, a weekly national survey of large banks and thrifts, surveyed by Bankrate.com. For the Yield Pledge CD, EverBank promises to keep the yield on your account in the top 5% of competitive accounts
as measured each week in Bankrate Monitor. This promise applies at the time of purchase, or when rolling your expiring CD into a new CD with EverBank.
EverBank’s relationship with the Financial Institution employing your Investment Professional is through a joint marketing agreement for the sale of banking products only. Otherwise, there is no affiliation.
© 2011 EverBank. All rights reserved. 11EAP0092.1
EverBank is an Equal Housing Lender, Member FDIC.
Tuesday, August 30, 2011
August: The Quiet Month?
Needless to say, it has been an eventful end of August on the East Coast, with an earthquake, hurricane and tornado warnings. Hurricane Irene came and went and left Cape May County pretty much intact, minus a few cubic yards of beach sand and some toppled trees. I know there was quite a bit of grumbling about the mandatory evacuation being overkill, and I thought that myself at first, but had the eye of the storm been out to sea a bit more or gone up the Delaware Bay, I think I would have been chest high or worse in water in my living room. Had people stayed, and the worst case scenario happened, there might have been some serious injury, especially in the ranks of the tourists who swell our population exponentially at this time of year. You just have to look north and west for evidence.
Having worked in a school system for a major portion of my life, I equate the purpose and intent of the evacuation with a fire drill. This was the opportunity for the governor and emergency management officials to err on the side of caution and see if the evacuation plans for removing approximately one million people from Cape May County would work. I have to say it did work quite well, even though I know quite a few of the locals, myself included, did remain and the Bull and Bear Tavern was quite packed Friday night. It helped to know I live on just about the highest ground in the county and the area shelter was literally right around the corner!
Speaking of bulls and bears, the month of August, traditionally a time for vacation, has been full of activity and debate. A 17.9% drop in the S&P 500 took us well beyond a correction and very close to bear market territory. However, there has been a rebound off the low of 1,119.46 to 1,210.08 as we prepare for the Labor Day weekend. The aforementioned natural calamities also added to the show. Of course, the politicians exhibited their expertise by taking the debt ceiling debate down to the wire and generating a debt downgrade. Now the Fed, which just ended its meeting in Jackson Hole, announced it effectively can't do much more with monetary policy and that fiscal policy is the solution to our ills. That leaves things to the "Super Committee" born out of the debt ceiling debate. It looks to be an interesting September.
Having worked in a school system for a major portion of my life, I equate the purpose and intent of the evacuation with a fire drill. This was the opportunity for the governor and emergency management officials to err on the side of caution and see if the evacuation plans for removing approximately one million people from Cape May County would work. I have to say it did work quite well, even though I know quite a few of the locals, myself included, did remain and the Bull and Bear Tavern was quite packed Friday night. It helped to know I live on just about the highest ground in the county and the area shelter was literally right around the corner!
Speaking of bulls and bears, the month of August, traditionally a time for vacation, has been full of activity and debate. A 17.9% drop in the S&P 500 took us well beyond a correction and very close to bear market territory. However, there has been a rebound off the low of 1,119.46 to 1,210.08 as we prepare for the Labor Day weekend. The aforementioned natural calamities also added to the show. Of course, the politicians exhibited their expertise by taking the debt ceiling debate down to the wire and generating a debt downgrade. Now the Fed, which just ended its meeting in Jackson Hole, announced it effectively can't do much more with monetary policy and that fiscal policy is the solution to our ills. That leaves things to the "Super Committee" born out of the debt ceiling debate. It looks to be an interesting September.
Wednesday, August 10, 2011
AFTER THE DOWNGRADE
Unimpressed with U.S. deficit reduction plans, S&P delivers on its warning.
Presented by John H. Kaighn
Unprecedented and unsettling. Standard & Poor’s issued a historic downgrade of U.S. debt on August 5, sensibly waiting until the market week had concluded to send a shock wave toward global investors. It reduced America’s long-term debt rating – which had been AAA since 1941 – to AA+(1)
S&P felt Congress did too little too late. The credit rating agency had threatened to lower the boom if Congress passed any deficit reduction plan smaller than $4 trillion in scope. The Budget Control Act of 2011 “falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics,” an S&P statement noted. It also retained its “negative” credit outlook on the U.S. (2)
S&P is also skeptical that the federal government can collect more money from taxpayers. Its analysts do not think the Bush-era tax cuts will sunset at the end of 2012 “because the majority of Republicans in Congress continue to resist any measure that would raise revenues.” (2)
On August 5, S&P sovereign ratings committee chair John Chambers told Fox News that the new AA+ rating could be cut to AA within 6-24 months if the U.S. doesn’t arrange to slash $4 trillion from its deficit in the next decade. The implication: Congress better agree on more cuts by February. (3)
China’s comments. The world’s largest holder of U.S. debt issued a withering critique of Congress through Xinhua, its official news agency. The state commentary stressed that the U.S. has a “debt addiction” only curable via major cuts to defense spending and entitlement programs. It also said that the option of a “new, stable and secured global reserve currency” should be explored. (4)
The Treasury’s claim. Friday evening, the Treasury argued that S&P’s analysis contained an accounting error that unnecessarily added $2 trillion to its projection of U.S. debt. S&P admitted the error but stuck with the downgrade. (1)
So what happens now? The early August global response aside, analysts are divided as to what the short-term impact might be for the American economy. Could it cripple the recovery, or just prove inconvenient to it?
Demand was big for Treasury notes even before the threatened downgrade and Treasuries still symbolize comparative safety to institutional investors, so an August selloff might be short-lived. If this turns out to be the case, the effect on interest rates might be less significant than feared.
In the opinion of JP Morgan Chase analysts, Treasury yields could increase by 60-70 basis points as a result of the downgrade, translating to $100 billion in added annual borrowing costs for America. Citing Federal Reserve research, these analysts think that an increase of 50 basis points in Treasury yields (0.5%) could take a 0.4% bite out of U.S. GDP. (2)
Could the Fed launch QE3*? The possibility exists, particularly if foreign investors ditch dollar assets. The Fed’s Open Market Committee will make an announcement on August 9, and few analysts expect another wave of bond buying – but it is an option.
When might the U.S. recapture its AAA rating? It might take years for that to happen. S&P has cited political gridlock on Capitol Hill as a major reason for the downgrade, and it doesn’t see that going away in upcoming months. On top of that, the U.S. economy expanded just 1.3% in the first half of 2011 - about half the pace needed to dispel the lingering effects of recession. (5)
Are mortgage rates going to go north? Maybe; maybe not. Rates on conventional mortgages have a direct relationship with 10-year Treasury yields. Recently, those yields have dramatically fallen, and demand for longer-term Treasury notes has been palpable. Interest rates on auto loans might see a spike, as those rates are pegged to 2-year notes and factors like the LIBOR rate. The hardest hit might come from credit card issuers. Credit card interest rates reflect the prime rate. Credit.com credit card advisor Beverly Blair Harzog told CNNMoney that she believed credit card firms could possibly jack up rates 1-5% as a result of jitters over the downgrade. (6)
Wall Street might sail through this. Does that sound far-fetched? Look at some historical examples. S&P downgraded Canada’s AAA credit rating in the spring of 1993, yet Canadian stocks gained 15% in 1994 and our northern neighbor had its AAA rating back by 1997. Moody’s Investors Service downgraded Japan in November 1998 and its stock market advanced more than 25% in the next 12 months. Italy, Canada, Ireland, Japan, Belgium and Spain have all suffered S&P downgrades from AAA, and most of these cuts had little sustained impact on government bond yields. (6,7)
What’s your outlook? You might be considering some major moves in the wake of the S&P decision. Remember that impulsive decisions are often regretted down the line. Confer with the financial professional you trust to determine what you may (and may not) want to do.
John H. Kaighn may be reached at (609) 827-0194 or kaighn@jerseybenefits.com.
Jersey Benefits Group, Inc.
This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.
* Quantitative Easing [round] 3
LD41171-08/11
Citations.
1 - nytimes.com/2011/08/06/business/us-debt-downgraded-by-sp.html [8/5/11]2 - bloomberg.com/news/2011-08-06/u-s-credit-rating-cut-by-s-p-for-first-time-on-deficit-reduction-accord.html [8/5/11]
3 - foxbusiness.com/markets/2011/08/06/sp-us-faces-further-downgrade-beyond-double/ [8/6/11]
4 - nytimes.com/reuters/2011/08/06/world/asia/news-us-china-sp.htm [8/6/11]
5 - huffingtonpost.com/2011/07/29/gdp-us-q2-second-quarter-expectations_n_913032.html [7/29/11]
6 - money.cnn.com/2011/08/06/pf/sp_rating_money.moneymag/ [8/6/11]
7 - marketwatch.com/story/china-rips-us-on-debt-rating-downgrade-2011-08-06 [8/6/11]
8 - montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29 [8/6/11]
Presented by John H. Kaighn
Unprecedented and unsettling. Standard & Poor’s issued a historic downgrade of U.S. debt on August 5, sensibly waiting until the market week had concluded to send a shock wave toward global investors. It reduced America’s long-term debt rating – which had been AAA since 1941 – to AA+(1)
S&P felt Congress did too little too late. The credit rating agency had threatened to lower the boom if Congress passed any deficit reduction plan smaller than $4 trillion in scope. The Budget Control Act of 2011 “falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics,” an S&P statement noted. It also retained its “negative” credit outlook on the U.S. (2)
S&P is also skeptical that the federal government can collect more money from taxpayers. Its analysts do not think the Bush-era tax cuts will sunset at the end of 2012 “because the majority of Republicans in Congress continue to resist any measure that would raise revenues.” (2)
On August 5, S&P sovereign ratings committee chair John Chambers told Fox News that the new AA+ rating could be cut to AA within 6-24 months if the U.S. doesn’t arrange to slash $4 trillion from its deficit in the next decade. The implication: Congress better agree on more cuts by February. (3)
China’s comments. The world’s largest holder of U.S. debt issued a withering critique of Congress through Xinhua, its official news agency. The state commentary stressed that the U.S. has a “debt addiction” only curable via major cuts to defense spending and entitlement programs. It also said that the option of a “new, stable and secured global reserve currency” should be explored. (4)
The Treasury’s claim. Friday evening, the Treasury argued that S&P’s analysis contained an accounting error that unnecessarily added $2 trillion to its projection of U.S. debt. S&P admitted the error but stuck with the downgrade. (1)
So what happens now? The early August global response aside, analysts are divided as to what the short-term impact might be for the American economy. Could it cripple the recovery, or just prove inconvenient to it?
Demand was big for Treasury notes even before the threatened downgrade and Treasuries still symbolize comparative safety to institutional investors, so an August selloff might be short-lived. If this turns out to be the case, the effect on interest rates might be less significant than feared.
In the opinion of JP Morgan Chase analysts, Treasury yields could increase by 60-70 basis points as a result of the downgrade, translating to $100 billion in added annual borrowing costs for America. Citing Federal Reserve research, these analysts think that an increase of 50 basis points in Treasury yields (0.5%) could take a 0.4% bite out of U.S. GDP. (2)
Could the Fed launch QE3*? The possibility exists, particularly if foreign investors ditch dollar assets. The Fed’s Open Market Committee will make an announcement on August 9, and few analysts expect another wave of bond buying – but it is an option.
When might the U.S. recapture its AAA rating? It might take years for that to happen. S&P has cited political gridlock on Capitol Hill as a major reason for the downgrade, and it doesn’t see that going away in upcoming months. On top of that, the U.S. economy expanded just 1.3% in the first half of 2011 - about half the pace needed to dispel the lingering effects of recession. (5)
Are mortgage rates going to go north? Maybe; maybe not. Rates on conventional mortgages have a direct relationship with 10-year Treasury yields. Recently, those yields have dramatically fallen, and demand for longer-term Treasury notes has been palpable. Interest rates on auto loans might see a spike, as those rates are pegged to 2-year notes and factors like the LIBOR rate. The hardest hit might come from credit card issuers. Credit card interest rates reflect the prime rate. Credit.com credit card advisor Beverly Blair Harzog told CNNMoney that she believed credit card firms could possibly jack up rates 1-5% as a result of jitters over the downgrade. (6)
Wall Street might sail through this. Does that sound far-fetched? Look at some historical examples. S&P downgraded Canada’s AAA credit rating in the spring of 1993, yet Canadian stocks gained 15% in 1994 and our northern neighbor had its AAA rating back by 1997. Moody’s Investors Service downgraded Japan in November 1998 and its stock market advanced more than 25% in the next 12 months. Italy, Canada, Ireland, Japan, Belgium and Spain have all suffered S&P downgrades from AAA, and most of these cuts had little sustained impact on government bond yields. (6,7)
What’s your outlook? You might be considering some major moves in the wake of the S&P decision. Remember that impulsive decisions are often regretted down the line. Confer with the financial professional you trust to determine what you may (and may not) want to do.
John H. Kaighn may be reached at (609) 827-0194 or kaighn@jerseybenefits.com.
Jersey Benefits Group, Inc.
This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.
* Quantitative Easing [round] 3
LD41171-08/11
Citations.
1 - nytimes.com/2011/08/06/business/us-debt-downgraded-by-sp.html [8/5/11]2 - bloomberg.com/news/2011-08-06/u-s-credit-rating-cut-by-s-p-for-first-time-on-deficit-reduction-accord.html [8/5/11]
3 - foxbusiness.com/markets/2011/08/06/sp-us-faces-further-downgrade-beyond-double/ [8/6/11]
4 - nytimes.com/reuters/2011/08/06/world/asia/news-us-china-sp.htm [8/6/11]
5 - huffingtonpost.com/2011/07/29/gdp-us-q2-second-quarter-expectations_n_913032.html [7/29/11]
6 - money.cnn.com/2011/08/06/pf/sp_rating_money.moneymag/ [8/6/11]
7 - marketwatch.com/story/china-rips-us-on-debt-rating-downgrade-2011-08-06 [8/6/11]
8 - montoyaregistry.com/Financial-Market.aspx?financial-market=an-introduction-to-the-stock-market&category=29 [8/6/11]
Thursday, July 7, 2011
JERSEY BENEFITS ADVISORS INVESTOR NEWSLETTER SUMMER 2011
MARKET WATCH
We have just completed halftime in America, to borrow a sports analogy, as the residents of this fair land took a much needed respite, to reflect on their revered and fragile independence. Judging from the traffic here at the Jersey Shore, at least a few souls didn’t seem to mind parting with the $3.49 per gallon it took to reach the sizzling sand and take a dip in the unseasonably warm 4th of July ocean. Then, it was back to work, for the 9 out of 10 who officially had a job, as the second half of the year began, hopefully without some of the shocks we experienced in the first half, but realizing it could very well be more of the same.
Actually, the first half ended very much like the first quarter as the news generally was focused on the same regions of the world. The US economy seemed to be on the verge of a boom, only to get mired down in international events which captured the media’s attention as the market rebounded from a 7% decline, just days before the quarter’s close, to make a fantastic comeback and post quite respectable results. The Middle East and North African uprisings raged on but were stalemated, European debt problems seemed to flare up and cool off every other week, with constant threats of a Greek default. Japan has put on its game face and set out to rebuild a tsunami battered economy, while so many seem just so enamored with “everything China”. It reminds me of the 70’s mindset towards the Soviet model. For those of you who weren’t around then or don’t remember the history, suffice it to say, there is no Soviet Union now!
One major bright spot during the second quarter was the Navy Seals’ killing of bin Laden. Unfortunately, the initial euphoria was met with the stark realization his al Qaeda buddies might want revenge. While things have been quiet, the destabilizing unease due to the threat of terrorism dampens our collective consciousness. Still, it does bring us one step closer to closing a chapter which has been consuming a large part of our treasure and dividing us as a people.
The major indices were all up for the year at the halfway point, thanks to the surge during the last four trading days in June. The Dow Jones Industrial Average* closed at 12,414.34 which is a 7.2% return for the year, so far. The S&P 500*, a measure of the broader market, closed at 1,320.64 which was 5 points lower than its close for the first quarter, but still a 5% return thus far for 2011. Finally, the NASDAQ*, the bell weather of technology, finished the first half at 2,781.07, 8 points lower than the first quarter, but still a 4.5% return for the year. Considering the headwinds the market faced during the first half of the year, and after two nearly 7% corrections, a positive return was a lot like a small lead at halftime; it felt good, but you don’t want to get complacent, because the game could take many twists and turns before time expires.
Speaking of twists and turns, all of the fuss about the debt limit needs a bit of clarification, as the August deadline looms. Look for a last minute compromise that raises some taxes and makes some budget cuts, possibly even to Medicare and Social Security. To play chicken with the debt ceiling, which in effect is gambling with the credibility of the government to make its interest payments, would be as devastating to the markets as when Congress failed to initially approve the TARP legislation. It would be nice for politicians to stop all of the rhetoric and talk plainly about the need to live within a budget like you & I must do.
HAPPY 4TH OF JULY From the Jersey Shore!
PRIVACY POLICY & NEW ADDITION TO OUR WEBSITE
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.
ONLINE LIFE INSURANCE
We have partnered with ORG, Inc. to develop and market an online life insurance quotation system that allows individuals to enter their information and receive competitive quotes from major insurance carriers online. In most cases the application can also be completed online. There is also a direct toll free line to speak to a customer service representative, as well as an email link to ask questions or receive assistance with the quotation or application process. The quotes can be obtained from our website.
This system eliminates speaking to numerous agents who call with quotes, which is the model used by many websites that market insurance quotes. For people who wish to complete the process totally on their own, and like to evaluate numerous quotes independently before applying for insurance, this site should satisfy their needs. Quotes are free and no money is exchanged until the individual is approved for the policy quoted.
Of course, anyone who is interested in talking to an insurance advisor, who will meet with the client in the traditional face to face manner, simply needs to contact the company either by telephone or email to set up an appointment. Through the ORG network, we can assist individuals outside the state of NJ to locate insurance professionals who can meet with them face to face. The toll free number to call, outside NJ, is (855) 802-4123. Within the state of NJ, clients can contact me directly.
INVESTOR PSYCHOLOGY: BUY LOW, METHODICALLY & DISCIPLINED
Investor psychology has been a topic receiving much attention recently, as many of the tried and true philosophies of investing have been questioned. With all of the talk of a lost decade of returns, the focus has been on how to beat the market consistently, utilizing everything from alternative investments to holding physical commodities. As we’ve discussed time and time again, market timing and excessive trading can be very detrimental to a portfolio. As James Stewart stated in the July issue of Smart Money, “If market peaks tend to be unremarkable, market lows tend to arrive when times seem apocalyptic”. That’s why I continue to believe buying quality funds in as many sectors of the economy as you can, and dollar cost averaging into them constantly, is still the best overall strategy.
* 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
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
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:
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
Http://www.jerseybenefits.com/
All opinions expressed in this newsletter are
solely those of John Kaighn & Jersey Benefits
Advisors.
LD 41031-07/11
We have just completed halftime in America, to borrow a sports analogy, as the residents of this fair land took a much needed respite, to reflect on their revered and fragile independence. Judging from the traffic here at the Jersey Shore, at least a few souls didn’t seem to mind parting with the $3.49 per gallon it took to reach the sizzling sand and take a dip in the unseasonably warm 4th of July ocean. Then, it was back to work, for the 9 out of 10 who officially had a job, as the second half of the year began, hopefully without some of the shocks we experienced in the first half, but realizing it could very well be more of the same.
Actually, the first half ended very much like the first quarter as the news generally was focused on the same regions of the world. The US economy seemed to be on the verge of a boom, only to get mired down in international events which captured the media’s attention as the market rebounded from a 7% decline, just days before the quarter’s close, to make a fantastic comeback and post quite respectable results. The Middle East and North African uprisings raged on but were stalemated, European debt problems seemed to flare up and cool off every other week, with constant threats of a Greek default. Japan has put on its game face and set out to rebuild a tsunami battered economy, while so many seem just so enamored with “everything China”. It reminds me of the 70’s mindset towards the Soviet model. For those of you who weren’t around then or don’t remember the history, suffice it to say, there is no Soviet Union now!
One major bright spot during the second quarter was the Navy Seals’ killing of bin Laden. Unfortunately, the initial euphoria was met with the stark realization his al Qaeda buddies might want revenge. While things have been quiet, the destabilizing unease due to the threat of terrorism dampens our collective consciousness. Still, it does bring us one step closer to closing a chapter which has been consuming a large part of our treasure and dividing us as a people.
The major indices were all up for the year at the halfway point, thanks to the surge during the last four trading days in June. The Dow Jones Industrial Average* closed at 12,414.34 which is a 7.2% return for the year, so far. The S&P 500*, a measure of the broader market, closed at 1,320.64 which was 5 points lower than its close for the first quarter, but still a 5% return thus far for 2011. Finally, the NASDAQ*, the bell weather of technology, finished the first half at 2,781.07, 8 points lower than the first quarter, but still a 4.5% return for the year. Considering the headwinds the market faced during the first half of the year, and after two nearly 7% corrections, a positive return was a lot like a small lead at halftime; it felt good, but you don’t want to get complacent, because the game could take many twists and turns before time expires.
Speaking of twists and turns, all of the fuss about the debt limit needs a bit of clarification, as the August deadline looms. Look for a last minute compromise that raises some taxes and makes some budget cuts, possibly even to Medicare and Social Security. To play chicken with the debt ceiling, which in effect is gambling with the credibility of the government to make its interest payments, would be as devastating to the markets as when Congress failed to initially approve the TARP legislation. It would be nice for politicians to stop all of the rhetoric and talk plainly about the need to live within a budget like you & I must do.
HAPPY 4TH OF JULY From the Jersey Shore!
PRIVACY POLICY & NEW ADDITION TO OUR WEBSITE
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.
ONLINE LIFE INSURANCE
We have partnered with ORG, Inc. to develop and market an online life insurance quotation system that allows individuals to enter their information and receive competitive quotes from major insurance carriers online. In most cases the application can also be completed online. There is also a direct toll free line to speak to a customer service representative, as well as an email link to ask questions or receive assistance with the quotation or application process. The quotes can be obtained from our website.
This system eliminates speaking to numerous agents who call with quotes, which is the model used by many websites that market insurance quotes. For people who wish to complete the process totally on their own, and like to evaluate numerous quotes independently before applying for insurance, this site should satisfy their needs. Quotes are free and no money is exchanged until the individual is approved for the policy quoted.
Of course, anyone who is interested in talking to an insurance advisor, who will meet with the client in the traditional face to face manner, simply needs to contact the company either by telephone or email to set up an appointment. Through the ORG network, we can assist individuals outside the state of NJ to locate insurance professionals who can meet with them face to face. The toll free number to call, outside NJ, is (855) 802-4123. Within the state of NJ, clients can contact me directly.
INVESTOR PSYCHOLOGY: BUY LOW, METHODICALLY & DISCIPLINED
Investor psychology has been a topic receiving much attention recently, as many of the tried and true philosophies of investing have been questioned. With all of the talk of a lost decade of returns, the focus has been on how to beat the market consistently, utilizing everything from alternative investments to holding physical commodities. As we’ve discussed time and time again, market timing and excessive trading can be very detrimental to a portfolio. As James Stewart stated in the July issue of Smart Money, “If market peaks tend to be unremarkable, market lows tend to arrive when times seem apocalyptic”. That’s why I continue to believe buying quality funds in as many sectors of the economy as you can, and dollar cost averaging into them constantly, is still the best overall strategy.
* 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
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
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:
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
Http://www.jerseybenefits.com/
All opinions expressed in this newsletter are
solely those of John Kaighn & Jersey Benefits
Advisors.
LD 41031-07/11
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