Entries for October 2011

October was certainly a good one for the U.S. equity markets in spite of the 276 point decline today. The Dow Jones Industrial Average increased more than 1,000 points in the month returning 9.5%. The S&P 500 Index increased 10.8% in the month and was the best return since December 1991. A 3-5% pullback certainly would not be surprising given the strength of the advance in October. Will investor then buy into this pullback? I believe they will. One key will likely be the ability of the market to...  Read more...

In the past week, the IRS and Social Security Administration have announced cost of living adjustments for Tax Year 2012. In general, many of the limitations will change in 2012 because the increase in the cost of living index met the statutory thresholds that trigger their adjustment. Highlights Include: Social Security COLA Increase: 3.6% -- the first increase since 2009 Estate Tax Exemption: Will be $5.12 million for 2012 (up from $5 million in 2011). This higher thresh...  Read more...

For some perspective on one of the more important global stock markets, today's chart focuses on Chinese stocks and presents the current trend of the iShares FTSE/Xinhua China 25 Index (FXI). As today's chart illustrates, Chinese stocks have endured what amounts to an extremely wild ride since 2005. The FXI trended upward at an ever accelerating rate (i.e. parabolic) from 2005 to Q4 2007. As the credit bubble began to unravel, so too did Chinese stocks with the FXI trending downward at an ever a...  Read more...

Correlations were high in the strongly negative performing third quarter for most equity markets. So far in October though, the market has rallied strongly off the lows resulting in one of the best performing Octobers since 2000 with one week remaining. Europe's efforts to come up with a solution to their sovereign debt issues and Washington's Deficit Panel or Gang of 12 outcome could create headwinds for the market. Our 3rd Quarter Investor Letter contains our prospective views on the market fo...  Read more...

This evening I had a conversation with an individual whose career is working as an economist. The discussion topic focused on taxes and the deficit. He was adamant that the risk for the U.S. was centered around the "law of large numbers" as it relates to this countries debt level.This brought to mind the article post written by the Terry Horan, the CEO of our business partner firm HORAN Associates, on his blog today, Parties in the Park and Dancing in the Dark. In his post he discusses the 99 P...  Read more...

Cities in the United States are now witnessing rallies of individuals frustrated with the Government, Wall Street and the Capitalistic System. The 99 Percenters argue, “no fair shake, the system is rigged, it is time for Change.” They may be swaying to that hit tune of the ‘80’s, “Dancing in the Dark,” by Bruce Springsteen.  Obviously, no one can be happy when there is a 9% official unemployment rate coupled with slow economic growth.   The Federal Government recently rele...  Read more...

Let me list for you some of the questions that we find employers are asking themselves in the current economic environment. If they sound familiar – that’s good. You know you are not alone. How can I encourage a given employee to retire before he/she might want to? How can I hold onto a very good employee that I don’t want to move on any time soon? How can I help all my employees to think more comfortably about retirement when the economic and health care odds seem – at least at...  Read more...

Preliminary buyback data released by Standard and Poor's indicates S&P 500 companies bought back $109 billion of their stock in the second quarter. This is the first time buybacks have exceeded $100 billion since the first quarter of 2008 when buybacks totaled $113 billion. On a year over year basis, the Q2 buyback amount was 41% higher than the buyback total in Q2 2010.Howard Silverblatt of S&P notes, "At this point, companies are continuing to use buybacks to prevent earnings dilution from emp...  Read more...

Recently the Journal of Financial Service Professionals published the article, “Rethinking the Social Security Start Date” by Kenn B. Tacchino and David Littell and Bruce Schobel.  As I begin to approach the golden years, I am soon faced with the same question that our clients have pondered. At what age do I take Social Security?   The question is important. I would need a nest egg of approximately $750,000 to replace the stream of income that the Social Security System wi...  Read more...

It has been some time since I last reported on the performance of companies that buyback their own equity shares. With a number of companies sitting on large amounts of cash and announcing share buybacks, including Berkshire Hathaway (BRK.A), one way to track the performance of companies buying back shares is to review the performance of the PowerShares Buyback Achievers Portfolio (PKW). The PowerShares Buyback Achievers Portfolio will normally invest at least 90% of its total assets in common ...  Read more...