Fixed returns on investments are reaching historic lows. Many of our clients who are in the distribution phase of life want a portion of their assets in fixed type investments so the portfolio is not subject to the ups and downs of the market.   But with returns so low, how do you balance risk and reward with the need to create a livable income from the portfolio? Paul Sullivan, reported in the New York Times on January 28th, “When Safe Bonds don’t Yield Enough to Retire On,” t...  Read more...

The recent rise in oil prices and subsequent increase to near $4 per gallon for regular unleaded gasoline is likely to negatively impact consumer confidence and retail sales. The below chart shows the negative influence increasing gasoline prices (inverted on chart) has on consumer confidence.From The Blog of HORAN Capital AdvisorsThe negative impact on confidence also negatively impacts retail sales when gasoline reaches $4 per gallon. Note, gasoline prices lead retail sales by one month in the...  Read more...

Absent the significant market contraction in 2008/2009, both the Dow and S&P 500 Index have generated decent returns. For investors though, the equity market pullback during the financial crisis period of '08/'09 remains top of mind. As the below tables shows, the year over year returns for these two indices have been pretty strong resulting in 3-year annualized returns in the mid-teens. Unfortunately, the significant decline during the financial crisis has resulted in no return over the four an...  Read more...

The below chart was provided by the Wall Street Journal courtesy of Doug Kass.  Read more...

In Congress' effort to continue transportation funding, Senate Finance Chairman Max Baucus (D., Mont.) has recommended the bill include a provision limiting the tax deferral options of inherited IRAs unless the IRAs have been converted to a Roth. In simple terms, currently, inherited IRA beneficiaries are able to withdrawal funds over the beneficiary's life expectancy. Beginning in 2013, the proposed legislation would require most non-spouse inheritors of traditional IRAs to withdraw the entire ...  Read more...

As we noted in our fourth quarter investor letter, the new phrase repeated throughout 2011 was “risk on/risk off,” simply defined as buying riskier investments during positive market moves and selling riskier investments during downward moving equity markets. “Risk on” assets include stocks, commodities and high-yield bonds; whereas “risk off” assets include cash, U.S. treasuries and gold. Specifically, in a "risk on" environment, stocks that have higher betas tend to be favored by investors. Hi...  Read more...

American households are still failing to fully embrace the current economic growth for three reasons - low interest rates on savings, ongoing loss of wealth, primarily caused by the decline in real estate dollars and persistently high credit card balances. Historically low returns on fixed investments are challenging all Americans, but especially Seniors.  The U.S. Treasury Department reports that the average interest rate paid by the US government was 5.034% as of 12/31/06.  In ...  Read more...

More times than not, in a presidential election year the stock market has had better performance when the incumbent party wins. As noted in a recent T. Rowe Price report, "the S&P 500 Index has risen in 12 of the 16 election years since World War II. While that’s about the same percentage of all up years in that time, the index had an average gain of 9.2% when the incumbent party won and just 2.2% when it lost, according to Ned Davis Research." The report also notes that the market has declined ...  Read more...

A two minute excerpt from a 1979 Phil Donahue show where Milton Friedman talks about capitalism and socialism.  Read more...

Although the equity market liked the employment report this morning, the labor market is far from where it needs to be to absorb the jobs lost since the last recession. The 243,000 jobs that were added was the highest in the last nine months; however, the number of employed is far below the level prior to the recession--5.6 million below.From The Blog of HORAN Capital AdvisorsCertainly the addition of 200,000+ new jobs is a positive, but this recovery remains one of the weaker recoveries in term...  Read more...