As Published in the Spring 2013 Edition of NJ Lifestyle
With all of the current discussion about the U.S. Government struggling to get its fiscal house in order (debt ceiling, deficits, sequester, etc.), we thought it was the ideal time to discuss household fiscal responsibility and provide readers with some tips for getting their fiscal house in order. As financial planners and practicing CPA’s, we interact with people from all across the financial spectrum. Our experience has taught us that whether a household is in good financial condition or not has less to do with household income, and more to do with household spending. (Sound familiar … can you say federal government?)
As Published in the Winter 2013 Edition of NJ Lifestyle
Stocks shrug off concerns and climb wall of worry in 2012 to double-digit gains
Europe —The year 2012 began much as the year 2011 ended, with much of the news revolving around the fiscal crisis in Europe. Would Greece default and leave the Eurozone? Would the Eurozone break up or kick some of the smaller financially weaker nations out? It seemed again that Europe might drag the rest of the developed world back into the recession it had just left several years before. That is, until the European Central Bank’s (ECB) President Mario Draghi announced in August that the ECB would use the roughly $500 billion Euros ($620 billion dollars) of the ECB’s lending capacity to purchase bonds of struggling countries in an attempt to keep yields from rising sharply on these cash strapped countries. It was a brilliant move for two reasons. First, the ECB did not have enough money to bail out all of the countries in need, but by preventing escalating borrowing costs for these countries, he bought them the much-needed time to get their fiscal houses in order. Secondly, it restored confidence in Europe, at least for the time being. In financial markets, as we saw in 2008, confidence, or lack of confidence, can mean life or death.
As Published in the Holiday 2012 Edition of NJ Lifestyle
This past week, while attending a national investment advisor conference Schwab Impact 2012 in Chicago, we had the privilege of hearing a speech from former Senator Alan Simpson (Republican) and former Chief of Staff for President Clinton Erskine Bowles (Democrat) on the fast approaching fiscal cliff our nation faces (See Spring 2012 Issue for our analysis of the fiscal cliff) and the need for comprehensive federal budget reform.
In 2010, President Obama created the National Commission on Fiscal Responsibility and Reform to identify policies to improve the fiscal situation in the medium term, and to achieve fiscal responsibility over the long run. The bi-partisan commission included nineteen appointees, including six Senators and six members of the House of Representatives. They came up with a report, which is commonly referred to as the “Simpson-Bowles Plan” that included comprehensive budgetary reforms that would cut our federal debt by $4 trillion over a ten year period.
As Published in the Fall 2012 Edition of NJ Lifestyle
The most recent recession (often dubbed “The Great Recession”) was the longest and most severe recession in the United States since The Great Depression in the 1920’s. Officially, the recession began in December 2007 and ended in June 2009, at which point the economy started to grow again. What has been concerning to so many is that usually by this stage of a ”recovery”, U.S. GDP would be growing at 4-6%, based on historical measures. Instead, the U.S. economy is barely generating 2% growth presently.
Although there are many factors contributing to this lackluster recovery, perhaps the largest factor has been the weak housing sector. It is, of course, intuitive that housing would be weak in a recovery following a recession that was caused by a “housing bubble.” The years leading up to 2007 were marked by excess housing construction, speculation, and poor lending practices. The excess housing supply created by the housing bubble has caused new home construction to slow down dramatically from historic averages. Over the last 40 years, the United States has produced, on an annual basis, approximately 1.5 million new housing starts. This number decreased all the way to 500,000 in 2010.
As Published in the Summer 2012 Edition of NJ Lifestyle
It is almost futile to attempt to time the markets or consistently predict with any high level accuracy what will unfold in the future, especially with so many major unresolved and pending issues currently confronting investors. As advisors, we strive to remain objective. We weigh the known data and information in order to position our clients and give them the best chance of success, while also reducing, as much as possible, the potential downside risk related to any known or unknown fat tail events. With the first half of 2012 in the rear-view mirror, it is a good time to evaluate and reassess the strengths and weaknesses in the Global Economy. This article will attempt to identify and differentiate between the Good, the Not-So-Bad, and the downright Ugly.
As Published in the Shore 2012 Edition of NJ Lifestyle
Since we are in an election year, you would think our politicians would spend time trying to solve our nation’s monumental fiscal problems: A national debt of $15.6 trillion and a 2011 federal budget deficit of $1.5 trillion. Instead, most political journalists and insiders believe that nothing will be done until after the elections in November. What is so troubling about this is that only leaves about 6-7 weeks to address what Federal Reserve Chairman Bernanke referred to as the “Fiscal Cliff”. There are four events that will happen automatically on December 31, 2012 if Congress fails to act:
- End of the Bush-era tax cuts
- End of the 2% social security payroll tax holiday
- End of the extended unemployment benefits package
- Automatic spending and budget cuts that are a result of the Budget Control Act Bush Era Tax Cuts
As Published in the Spring 2012 Edition of NJ Lifestyle
- Much Longer Retirement: Due to the increase in longevity, today’s retirees that retire in their 60’s may be retired for 30 years, whereas their parents’ life expectancy at age 60 was fifteen years or less. Being retired potentially twice as long as their parents’ means Boomers need more money saved.
- Savings Instead of Pensions: Although the Boomers’ parents had a much lower per capita income, many had corporate pensions. Boomers were the first generation to demand higher salaries and the freedom to change employers and, for that flexibility, saw their pensions phased out for 401(k)s. Many Boomers don’t have enough saved in their retirement savings plans and do not have the corporate pension to fund their basic needs.
As Published in the Winter 2012 Edition of NJ Lifestyle
The Year 2011 was a historic year in many respects:
- Protest, social unrest and change in Northern Africa and the Middle East
- The death of Osama Bin Laden and the end of the Iraq War
- The elevated risks of the on-going sovereign debt crisis in Europe
- Removal of the Unites States AAA credit rating by Standard & Poor’s
- US Congress gridlock, including the debt ceiling debacle
- Occupy Wall Street movement