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Posted by in News

January 16, 2017

Dear Reader,

I am reaching out to you in this blog letter because I care about you.  It’s not just business. 

There is a lot of information, disinformation and misinformation out there about financial matters.  A lot of sales people are hyping various products that are supposed to solve problems.  Many make claims that are not substantiated by facts and/or audited figures. 

I submit to you that the biggest issue we all face is wise planning.  Someone once said… 

“Failure to plan is tantamount to planning to fail.” 

I agree.  First let me talk a bit about the past year and why many have a poor understanding of what happened and why expectations for many were not met and why reactions to disappointment could expose you to significant financial mistakes. 

I recently wrote an article published exclusively in Seeking Alpha Pro.  It will be available to all readers in early February.  (If you want to read a wide variety of articles on investing and markets, I encourage you to visit the Seeking Alpha site.)  A few introductory points were these: 

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Posted by in News

2016 Economic and Investment Outlook

January 14, 2016 

By: J. André Weisbrod

 

SUMMARY:

  • Predictions can be a fool’s errand.  The more variables, the more difficult it is to forecast outcomes.  That said…

  • Variables are legion and include: Overall economic growth and company profits; employment; International economies; oil prices; inflation; debt; politics; terrorism;

  • Though somewhat of a toss-up, I will suggest the probability for 2016 is for a modestly positive year for stocks and another flat or losing year for bonds.

  • The above bullets were written January 4, and I have preserved them intact.  Has anything changed except for China and the price of stocks?  Yes and no.  The China fiasco points out that we are vulnerable to global economic events as much or more than ever.  This is truly an interlinked and interdependent planet.  The third bullet, though, remains a statement I can live with.  A “toss-up.”

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Posted by in News

2015 - The Investment Year in Review

January 8, 2016

By: J. André Weisbrod

SUMMARY POINTS:

·         2015 was a disappointing year, ending with a whimper.   Santa failed to show up.

·         2015 saw high volatility.

·         Except for large consumer companies, no major category experienced close to an average long-term return, though a few were modestly positive.  Most categories were well under average and over half were down for the year.

·         The best major sectors of the S&P 500 were Consumer, Health Care, Technology and Telecomm while the worst were Energy, Materials, Utilities and Industrials. 

·         Overall the S&P 500 was up 1.3%, but an equal-weighted S&P 500 actual lost 2.2%. 

·         Of interest is that equal weight indexes, which have generally outperformed the more quoted capital weight indexes over the past 15 years, mostly underperformed the capital weighted indexes the past couple years.  The equal weight S&P 500 returned -2.2% (3.5% less than the capital weighted index) in 2015.  We must remember that indexes do not have expenses.  This explains at least in part why professional managers have had trouble meeting or beating the S&P 500 the last couple years.  (See discussion and tables.)

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Posted by in News

September 24, 2015

Markets Continue to Struggle: Buying Opportunities Near?

By J. André Weisbrod

On August 14the I wrote that the probability of a correction of at least 10% had increased significantly.  (Click here to see that article.)  Indeed we had a much too brief downturn that only reached below 10% for two days.  Parts of it looked more like a flash crash than a true correction and if you examine the charts of some stocks and ETFs you would have seen ridiculous drops in the first hour of trading on August 24th that were unjustified and only could be the result of the modern-day computerized day-trading phenomenon that this writer thinks should be outlawed.  But the "rigged casino" aspect of today's markets will have to wait for another article.  Today I want to continue to examine what is more in line with long term historical market behavior with a dose of common sense.

Consider the following one-year daily chart of the S&P 500:

sp500_1Yr_092415.bmp

 

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Posted by in News

January 5, 2015

Dear Clients and Friends,

2014 was an interesting year economically:  Here are some items that affected us all directly or indirectly.

The Affordable Care Act (Obamacare) went into effect.  It's an amalgam of good and bad, but it is probably here to stay.  It won't be as bad as the naysayers say, and it won't be as good as the Obama administration would like you to believe.  It's just a shame Washington is so broken that few if any can simply ask the question, "What will work best?" and plan it out together.  And while we were trying to provide insurance for more people, we left our veterans out to dry at the Veterans Administration hospitals.   We have worked with many of you to help you make the best choices regarding your health care and will continue to do so in 2015.

Most Americans expressed in polls a low view of our elected representatives and the mid-term elections clearly showed the public's dissatisfaction.  But will Washington listen?  In investments we disclaim that past performance does not necessarily indicate future results.  But in Washington, the past is too often prologue.  If a private for-profit corporation ran its affairs like Washington, it would have been out of business long ago.  And if such a failing company were to be taken over by venture capitalists, the first thing they would do would be to fire all the failures.    

Quantitative Easing Ended. The Federal government continued to borrow/print a lot more money, though it ended the QE (Quantitative Easing) program in the last part of the year.  

Interest rates and inflation remained abnormally and surprisingly low.  We thought rates would be rising by now.  We were wrong.  Government manipulation is a big part of it, but there is also a free market component as we saw with energy prices.  The laws of supply and demand still command the stage.  Hopefully government interventions will not kill the golden goose.

The economy improved.  While it can't be viewed as robust, it did improve enough to offer hope going forward.  Some reputable forecasters predict 3% or better GDP growth for 2015.

The Deficit/GDP Growth trend improved toward the end of the year.  The Question is whether the economy can continue to grow at a pace sufficient to cover the debts.  The jury is still out.  Ultimately, GDP needs to grow faster than debt in most years in order to preserve wealth long term.  It is possible, and I like some of the encouraging numbers, but the recent borrowing binge certainly makes it a higher hill to climb.  We probably need some years of 4% or better growth to adequately right the ship.

Stocks hit all time highs - so what? US Large Company Stocks had a good year.  But Small company stocks did not.  Nor did International stocks.  We think the overall U.S. stock markets are slightly overvalued, but not alarmingly so.  Some overseas markets are undervalued.  While the headlines talked constantly about markets achieving new highs, such hype is at best overly optimistic in sound.  If the markets don't hit new highs on a regular basis we are in trouble.  Markets historically rise 7 years out of ten.    Unless we hit another period like 2000-2009 new highs should be a normal occurrence, even if the markets go up at a below average pace.

Oil prices got hammered to an extent not anticipated by any of the experts we know.   We did not see this coming.  Nor do we know of any experts that we follow who predicted such a crash in oil prices.  Portfolios that include a decent weighting to energy got hurt at the end of 2014.  We think much of the sector's decline is overkill and therefore we see long term value in holding on and even adding to some positions.  We think oil prices are likely to rise back to the $80-85 area before the end of 2015.  Overall the price decline should help the economy unless prices remain too low too long.

China officially became the largest economy in the world.  And according to the Economist, "the aggregate purchasing power of the ‘E7’ emerging economies – Brazil, China, India, Indonesia, Mexico, Russia and Turkey – will overtake that of the G7 by 2030. By 2015, Asia Pacific will have a larger middle class than Europe and North America combined. And the global emerging middle class will represent an annual market of some US $6 trillion by 2021. Such trends and tipping-points mean the traditional way of classifying economies is becoming increasingly irrelevant." (Source: the Economist, Shift in Global Economic Power, by Silas Young)  Even though International investments had a relatively poor year, we continue to believe that global diversification will be important to investors' health.  We will be looking at which countries might stand to do best in 2015.   

The Dollar strengthened.  Another surprise was the degree toward which the dollar strengthened against t other currencies.  This contributed to the International markets’ subpar performance when converted to U.S. dollars.

Table A: 2014 Index Returns

Cash (3 Mo. T-Bills)

0.0%

Barclay's 1-5 Yr Gov't/Credit Bonds

1.4%

S&P 500 (Large U.S. Stocks)

13.7%

Russell 2000 (Small U.S. Stocks)

4.9%

EAFE (International Stocks)

-4.9%

Average (Balanced Portfolio)

3.0%

Market performance was mixed.  The S&P 500 large U.S. company stock index got all the headlines, with a total return of over 13%, but a broadly diversified portfolio would have performed in single digits.  Unfortunately when one index steals the show, investor expectations can be altered unrealistically.  Consider Table A:

If we factor in that the costs of managing money in mutual funds and/or private accounts is typically 1-2%, a reasonable expectation for a balanced portfolio for 2014 would be only a positive 1-4% maximum return depending on actual cash allocations.  If the managers were weighted toward energy or other underperforming sectors a negative return would be very possible.  And anyone making new investments during the year might not have made much or nothing at all depending on the timing of deposits and the actual investment choices.

Most Active Investment Managers trailed the indexes this year.  At the end of November Rueters reported that 85% of active managers of large cap funds were underperforming.  I don’t think that changed much in December.  They mentioned that even some of the most revered and successful managers were having a tough year.  Also in December, Bloomberg reported that many hedge funds were losing money and the largest number of hedge funds had closed since 2009.

One other factor that investors should consider is that indexes such as the S&P 500 are weighted to the largest companies.  For instance, the stock of Apple, which rose 40% in 2014, is the largest holding in the index.  Only ten stocks out of 500 make up nearly 18% of the index.  If just a few of those falter in 2015, the same managers that trailed in 2014 could perform very well by comparison in 2015.

Many STAAR portfolios trailed in 2014.  We have had years where our approach didn't work before.  One was in 1999 when we trailed indices by as much as 10 percentage points if I remember correctly.  That was a year that saw all the "experts" in the media announce that you didn't need advisers or managers... just throw all your money into index funds and throw away the key.  The next ten years the markets lost money while we made money, received 4 and 5 star ratings by Morningstar and were even named a top 15 manager by Kiplinger.

STAAR Financial Advisors was again was listed in Pittsburgh Magazine as a Five-Star Wealth manager.  It also continued as a Better Business Bureau Accredited Business.  We are so thankful for our clients and we continue to strive to serve you with care and integrity.   Remember, if you do well we do well and if you don’t do well neither do we.  Unlike many in the financial services business we are set up to be on your side.   We look forward to our client review meetings beginning in February.

Please look for our scheduling letter that should go out this week.


Thank you for your continued confidence.  We are working diligently on your behalf and hope the New Year brings us all a harvest of fulfillment and satisfaction.

Sincerely,

J. André Weisbrod

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Posted by in News

August 22, 2014

TAXES AND IMMIGRATION:  TWO MAJOR SYSTEMIC OVERHAULS COULD CHANGE EVERYTHING

By J. André Weisbrod

Do you want your financial future to be more secure?  Do you want to see the economy grow and businesses do well so that your investment portfolios have a better chance of producing good real returns?  Do you want your health care to be reliable and affordable?  Do you want to have better job and career opportunities?  Do you want to afford good housing, vacations and educations for your children.  Do you want your retirement to be more secure?  Do you want your neighborhood and city to be safer and more economically sound?  Do you want all this for your children and grandchildren?  If so then consider the following two major changes that could help bring these goals closer to fulfillment.

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Posted by in News

So far 2014 has been year where interest rates have stayed low, the private sector has grown modestly and stock markets have climbed the "wall of worry."  The only real surprise for us is that stocks have not had much of a correction since 2012.

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Tagged in: Economy Markets
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Posted by in News

Record Close, Retiree Health Care Costs, Closing Credit Cards, Millennials Overwhelmed by Debt, Where Did the Young Workers Go, Inflation Risks Chain Reaction :Articles and Information from Other Sources

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Posted by in News

Current Economic Trends
April 24, 2014

Interest rates, Inflation, Quantitative Easing Taper, Federal Debt, Household Debt, Bull Market, Unemployment, Jobless Claims, Labor Force Participation, Population Growth, Economic Hubs, Middle East Societal Tensions, Income Disparity, Cyber Threats, Lack of Values in Leadership, Growth of Megacities, On Line Misinformation

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Posted by in News

News of Note February 17, 2014

Here are some news items (with links) from other sources along with my comments. 

Is the Correction Over? 

Americans Losing Faith in American Dream

Income Inequality

Bundesbank Does Not Think Emerging Markets Turmoil Will Derail Global Recovery

Dollar Weakness

Cost of living: How far will my salary go in another city?

 

Click below to read.

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Posted by in News

STAAR Strategies Report  January 2, 2014

Happy New Year!

 The Economy and Markets in Review and Looking Forward

 

Indexes*

Tot. Returns as of 12/31/13

Russell 2000 (Small Company Stocks)

38.8%

S&P 500 (Large Company Stocks)

32.4%

EAFE (International Developed Country Stocks)

22.8%

MSCI EM (Emerging Country Stocks)

-5.7%

S&P Global REIT (Real Estate)

2.8%

MS Core Long Term Bonds

-6.9%

MS Core Intermediate Term Bonds

-1.1%

MS Core Short-Term Bonds

0.6%

T-Bills

0.1%

Gold and Silver (average of both)

-18.1%

Equal-Weighted Average

6.6%

*Preliminary, may change

 

It was a surprisingly outstanding year for US stocks and a very good year for the overall developed market International stocks.  Emerging markets lagged and gold and silver plummeted.   The MSCI Global IMI index returned.....

To read the rest of this article you must be a STAAR Financial Advisors client, fund shareholder or registered VIP site member.  If you are one of these, log-in now.  Otherwise you may sign up here:  Join.     (If you need help, call 412-491-1963).

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Posted by in News

December 23, 2013

Every December it seems to get a bit crazy.   It all comes out, from “bah humbugs!” to wonderful acts of kindness and generosity.

Let me start with finances.  This is after all a blog centering on personal economics.

It is easy to lose perspective and control of our finances at the end of the year.  Not just because we feel compelled to give a lot of gifts, but because we often have neglected to save for those gifts and pile it up on the plastic.  We also might fail to take a good look at our tax situation or other financial considerations going into the end of the year.  End of year finances can be stressful.

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Posted by in News

December 2, 2013

"If all the economists were laid end to end, they'd never reach a conclusion." -- George Bernard Shaw;  "If the nation's economists were laid end to end, they would point in all directions." -- Arthur H. Motley

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Tagged in: Economy Quotes
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Posted by in News

November 5, 2013

 

Here are a few articles and videos you might have missed.  Finances, house prices, retirement, sports and slaps.

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Posted by in News

October 1, 2013

Ready for Halloween?  The tricks are coming early.  

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Posted by in News

THE SEVEN key ingredients for a healthy economy

September 26, 2013

by J. Andre Weisbrod

I offer these in outline form for your contemplation and comments.

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Posted by in News

Current News of Interest for Your Finances
September 24, 2013

Economic forecasts, home prices, mortgage rates, the tooth fairy and more.

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Posted by in News

September 17, 2013

As the markets bounced back up over the last two weeks, we were reminded not so much of "irrational exuberance" as we were of shifting winds before a storm.   This market is too news-driven for our taste.  It is also trader-driven, which greatly affects short-term swings.  (To read the full report, click below.  This is for clients and VIP Members only, so you must log in to read.)

Read more... 

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Posted by in News

September 16, 2013

From College Degrees with Lowest Earning Power to Dark Chocolate to Cancer Care Crisis to Happiest Countries and a Financial Planning Flow Chart, I’ve compiled a list of some interesting articles that may or may not affect your finances, but I thought worth passing on.

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Posted by in News

We have been looking at Obamacare and think that it is a very complex combination of good, bad and ugly.  The full ramifications will be revealed only as it is implemented and/or changed, and it is almost certain that no one really knows how it will all work out.  We do know that nearly all of us will be affected directly and indirectly.  We will be following developments closely and look here for future articles and seminar opportunities.  Follow this link for an opinion published on MarketWatch on how Obamacare will affect employment:

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Posted by in News

The STAARBlogTM
March 5, 2013                        Follow STAAR Financial onFacebookandTwitter

Editor: J. André Weisbrod

DOW Sets Record High – So What?   

It was only a matter of time and it took over 5.6 years to do it.  It seems everyone gets crazy when something like this happens.  I remember when the DOW first hit 5,000, then 7,000 and 10,000.  So what?  The DOW will

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Posted by in News

The STAARBlog
February 28, 2013                                                Follow STAAR Financial onFacebookandTwitter

Editor: J. Andre Weisbrod

Sequester: Much Ado About Nothing?

Of course they could do another midnight deal again, but it looks like there will be no deal this time on the "Sequester."  That means that automatic budget costs will come into play over the course of many months unless the Obama Administration and the Republican controlled House can cut a deal.  Boo hoo.

There has been much demagoguery on this with some Democrats and the President himself sounding a lot like Chicken Little in their doomsday warnings.  And the Republicans have not been bastions of integrity either.  But then political posturing is usually fraught with hyperbole and theater of the absurd.

As we understand it, the total budget cuts required total $1.2 trillion over 9 years with only about $44 billion in 2013, not the $85 billion some politicians have been touting (source - Congressional Budget Office).  That last figure is only a bit over a 1% cut in the estimated spending of $3.55 trillion the CBO estimates for 2013.  And the government will still spend more in 2013 than it did in 2012!  The truth is that the "sequester" isn't enough by far.

Most of us in the private sector have had to undergo much harsher cuts, not only

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Posted by in News

I recommend reading this article, which is based on detailed surveys of Americans in various age groups who are moving or seriously contemplating moving out of the country.

The Great Escape – the Barron’s article


I have had the privilege of writing ...

http://www.americawave.com/2011/11/28/the-great-escape-the-barrons-article/ 

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Posted by in News

A reasonably good fact check by the HuffPost on President Obama's State of the Union address and Rebublican response.  Of particular interest to us and our clients will be the progress or lack thereof of practical and effective actions to reduce government deficits by reducing wasteful government spending while simultaneously creating business environment and tax structures that maximize the enabling of the private sector to do what it does best: innovate and create increasing goods and services that will grow the economy.   

http://www.huffingtonpost.com/2013/02/13/state-of-the-union-fact-check_n_2674573.html?icid=maing-grid10%7Chtmlws-sb-bb%7Cdl1%7Csec1_lnk3%26pLid%3D269764

 

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Posted by in News

 

The STAARBlogTM
February 12, 2012                        Follow STAAR Financial onFacebookandTwitter


Affordable and Not So Affordable Cities for Housing

According to MarketWatch, the most affordable include Detroit (no surprise), Decatur, IL and Toledo, OH while least affordable include Honolulu, the New York City Area and San Francisco.

http://www.marketwatch.com/story/5-most-and-least-affordable-cities-for-housing-2013-02-12?dist=afterbell

 

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Posted by in News

Everyone has a special interest or interests.  But even in government there are those who make sense, at least occasionally.  Consider this from the CFO of the state of FL:  http://www.myfloridacfo.com/pressoffice/newsletter/ 

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