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Cybersecurity Update: Your Email Address: The Weak Link in Your Security

                                                                                        May, 2017

Take a second and think about how many times per day you enter your email address to log into an account that is not your email. How many emails do you get from retailers alerting you to a big sale? A lot.

We’re quick to give away our email address to get information or deals—but is it putting our security at risk?

Yes, because every time we enter our email address into a database, we are handing a crucial window into our lives over to companies that often have questionable security practices.

According to a study done by security firm BreachAlarm, 41% of people who check their email address against a database of known hacked email accounts discover that their account has been compromised in a data breach. Mobile identity company Telesign found that two in five people have had an account hacked and a password stolen.

Our commonly used email addresses and passwords are out there for sale on the black market. When companies get hacked, your email address is exposed. And often your password is stolen along with it. But even if it’s not, there’s another easy way for hackers to break in to your email account.

They can use the password reset feature. In many cases, you can reset a password and access an email account by correctly answering security questions. More often than not, these questions can easily be answered by information found on the Internet. For example, “Where did you go to high school?” can be discovered by a quick visit to your Facebook page or a Google search.

Anatomy of an email hack

Once thieves are in your email account, they have the keys to your digital life.

A break-in of your primary email address exposes various aspects of your life. For one, your private life is unmasked: your correspondence, names, addresses, phone numbers, appointments, messages, passwords, photos, and more are in the hands of a hacker.

Social media activity is at risk—your Facebook, Instagram, Twitter, and Pinterest accounts can all be accessed via your email.

Your medical history also becomes public. Many insurance companies send notifications via email about new claims and payments. Clicking on a link in an email from your health insurance provider can give a hacker enough information to commit medical identity theft—a rising threat.

And we’re not done yet. A hacked email account can also uncover sensitive business information such as internal documents, salary records, competitive intelligence, and client notes. Any work you’ve done with a non-profit or in your community can be found as well.

Most dangerous: If your online bank, brokerage, or other financial accounts are linked to your personal email address, hackers now have a path to your money. Once they control your email account, they can hijack your bank account by performing a password reset and then start transferring money.

As you can see, your email account is a digital version of you. Unauthorized access gives the thief enough information to impersonate you and commit frauds that affect all areas of your life.

Keeping hackers away from your money

In order to protect your most sensitive financial accounts, you need to reduce your digital footprint by creating a secret email address. This email will only be used for your financial accounts—credit cards, brokerage banks—reducing the chance that it will get swept up in the next data breach.

When you create your secret email address, you do not want it to include any revealing information such as your first name, last name, initials, or birth date in your username.

You also want to choose the stronger security features to protect this account. Many email providers have begun phasing out password recovery questions because the answers can often be found by searching on the Internet. If you can, choose a recovery phone number for password reset. With this option, a code will be sent to your mobile phone and you will need to provide that code in order to complete the password reset.

Be sure to keep this secret email separate from your primary email address. Doing so will help you maintain secrecy and reduce the chances that a hacker can gain access to your finances. 

Cybersecurity Shorts

Fake Apple support team looks to steal iCloud credentials. Apple customers have received calls from scammers asking for iCloud usernames and passwords and other personal information. The scammers are taking advantage of false claims that millions of iCloud accounts had been compromised. If you receive a call claiming to be from Apple that asks for personal information, hang up.

Tech-savvy? You’re at greater risk of falling victim to identity theft. A study by IT training company CBT Nuggets found that those who are confident in their computer use are 18% more likely to become an identity theft victim. Only 3.7% of those surveyed followed all of the basic security requirements while 40% were “too lazy” or found it to be “too inconvenient.” These basic security requirements include using a VPN and using unique passwords, among others.

Sincerely,

Edward J. Kohlhepp, Jr., CFP®, MBA
President 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

Sources:  horsesmouth.com

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The Fed's Rate Hike

March 2017

The U.S. Federal Reserve Board’s Open Market Committee just raised the Fed Funds rate from 0.75% to 1.00%—the second rate hike in three months.  So what should you do with your investment portfolio in light of this change?

Nothing.

Why?  First of all, the rate change was laughably minor, considering all the press coverage it received.  In the mid-2000s, Fed Chairman Alan Greenspan raised interest rates 17 times in quarter-point jumps, finally taking Fed Funds to a 5% rate.  This time around, the economists at America’s central bank are behaving extremely cautiously.

Second, although you may read that any raise in interest rates is depressing for stocks.  It’s true that borrowing will be incrementally more expensive for American corporations than they were last week.  But bigger picture, this move was actually a validation of the country’s economic progress in our long slow climb out of The Great Recession. 

By raising rates, the Fed was indicating that it believes the companies that make up our economy are healthy enough to survive and prosper under slightly higher interest rates.  The markets apparently felt like this was a positive sign, that the economy no longer needs to be nursed back to health.  The widely-followed S&P 500 stock index rose a full percentage point on the news.  

Third, and more good news, the Fed has now moved into a mode where it is fighting inflation, rather than trying desperately to stimulate it.  The worst thing that could happen to the economy is a bout of deflation, where prices fall and there are no policy remedies to fix the problem.  In the discussion accompanying the rate rise (the infamous Fed “minutes”) the Board of Governors expressed concern that inflation might rise above their “target” of 2%, hence the tightening.  If you read the message between the lines, they seem to feel that the threat of deflation is over.

Finally, the rate hike was expected, and already built into the price of stocks.  And more still are expected: at least two and possibly three 0.25% rises before the end of the year.  But the Fed also signaled that if there is any sign of backtracking, those plans will be scrapped.  The rate rises are anything but reckless.

So what WILL be the effect of the rate hike?  Borrowing to buy a car or a house will be slightly more expensive going forward than it was last week.  The average thirty year fixed mortgage rate this time last year was 3.68%; it’s now up to 4.21%.  

Most credit cards charge variable rates of interest, which likely means a 0.25 percent rise in the rates you pay on any balances you carry from month to month.  

And private student loans with variable interest rates will likely increase each time the Fed raises rates.  Balances on Stafford, Graduate Plus or Parent Plus loans will remain at their current interest rates, but the rates on new loans will probably rise.

If your portfolio is well-diversified, there’s not much more you can do to ride out a (slowly) rising-rate environment.  Ignore the headlines and celebrate the fact that even the most cautious economist in Washington are finally admitting that the economy is on solid ground.

Sincerely,

 

Edward J. Kohlhepp, Jr., CFP®, MBA
President 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Sources:  

https://www.theguardian.com/business/2017/mar/15/us-federal-reserve-raises-interest-rates-to-1

http://www.chicagotribune.com/business/ct-fed-interest-rate-impact-0316-biz-20170315-story.html

https://www.ft.com/content/9ea0e1bd-8c45-31ff-9d7c-241023fd5e12

https://www.nerdwallet.com/blog/investing/fed-rate-hike-4-ways-to-ride-rising-interest-rate-wave/#.WMmTRplBq6o.twitter 

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The A, B, C, & D of Medicare

Breaking down the basics & what each part covers.

March 2017

Whether your 65th birthday is on the horizon or decades away, you should understand the parts of Medicare – what they cover, and where they come from. Even if you are already on Medicare, the following is a good review of how Medicare works.

Parts A & B: Original Medicare. America’s national health insurance program for seniors has two components. Part A is hospital insurance. It provides coverage for inpatient stays at medical facilities. It can also help cover the costs of hospice care, home health care, and nursing home care – but not for long and only under certain parameters.1

Seniors are frequently warned that Medicare will only pay for a maximum of 100 days of nursing home care (provided certain conditions are met). Part A is the part that does so. Under current rules, you pay $0 for days 1-20 of skilled nursing facility (SNF) care under Part A. During days 21-100, a $164.50 daily coinsurance payment may be required of you.2

If you stop receiving SNF care for 30 days, you need a new 3-day hospital stay to qualify for further nursing home care under Part A. If you can go 60 days in a row without SNF care, the clock resets: you are once again eligible for up to 100 days of SNF benefits via Part A.2

Part B is medical insurance and can help pick up some of the tab for physical therapy, physician services, expenses for durable medical equipment (scooters, wheelchairs), and other medical services such as lab tests and varieties of health screenings.1

Part B isn’t free. You pay monthly premiums to get it and a yearly deductible (plus 20% of costs). The premiums vary according to the Medicare recipient’s income level. The standard monthly premium amount is $134 this year, but your Part B premiums will average $109 if you pay them out of monthly Social Security benefits. The current yearly deductible is $183. (Some people automatically receive Part B coverage, but others have to sign up for it.)3

Part C: Medicare Advantage plans. Insurance companies offer these Medicare-approved plans. Part C plans offer seniors all the benefits of Part A and Part B and more. To enroll in a Part C plan, you need have Part A and Part B coverage in place. To keep up your Part C coverage, you must keep up your payment of Part B premiums as well as your Part C premiums.4

To say that not all Part C plans are alike is an understatement. Provider networks, premiums, copays, coinsurance, and out-of-pocket spending limits can all vary widely, so shopping around is wise. During Medicare’s annual Open Enrollment Period (Oct. 15 - Dec. 7), seniors can choose to switch out of Original Medicare to a Part C plan or vice versa; although, any such move is much wiser with a Medigap policy already in place.5

How does a Medigap plan differ from a Part C plan? Medigap plans (also called Medicare Supplement plans) emerged to address the gaps in Part A and Part B coverage. If you have Part A and Part B already in place, a Medigap policy can pick up some copayments, coinsurance, and deductibles for you. Some Medigap policies can even help you pay for medical care outside the United States. You have to pay Part B premiums in addition to Medigap plan premiums to keep a Medigap policy in effect. These plans no longer offer prescription drug coverage; in fact, they have been sold without drug coverage since 2006.6

Part D: prescription drug plans. While Part C plans commonly offer prescription drug coverage, insurers also sell Part D plans as a standalone product to those with Original Medicare. As per Medigap and Part C coverage, you need to keep paying Part B premiums in addition to premiums for the drug plan to keep Part D coverage going.7

Every Part D plan has a formulary, a list of medications covered under the plan. Most Part D plans rank approved drugs into tiers by cost. The good news is that Medicare’s website will determine the best Part D plan for you. Go to medicare.gov/find-a-plan to start your search; enter your medications, and the website will do the legwork for you.8

Part C & Part D plans are assigned ratings. Medicare annually rates these plans (one star being worst; five stars being best) according to member satisfaction, provider network(s), and quality of coverage. As you search for a plan at medicare.gov, you also have a chance to check out the rankings.9

Sincerely,

Edward J. Kohlhepp, Jr., CFP®, MBA
President

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - mymedicarematters.org/coverage/parts-a-b/whats-covered/ [2/14/17]

2 - medicare.gov/coverage/skilled-nursing-facility-care.html [2/14/17]

3 - medicare.gov/your-medicare-costs/part-b-costs/part-b-costs.html [2/14/17]

4 - tinyurl.com/hbll34m [2/14/17]

5 - medicare.gov/sign-up-change-plans/when-can-i-join-a-health-or-drug-plan/when-can-i-join-a-health-or-drug-plan.html [2/14/17]

6 - medicare.gov/supplement-other-insurance/medigap/whats-medigap.html [2/14/17]

7 - ehealthinsurance.com/medicare/part-d-cost [11/5/16]

8 - medicare.gov/part-d/coverage/part-d-coverage.html [2/14/17]

9 - medicare.gov/sign-up-change-plans/when-can-i-join-a-health-or-drug-plan/five-star-enrollment/5-star-enrollment-period.html [2/14/17]

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Tax Scams & Schemes

The “dirty dozen” that criminals & cheats try to get away with year-round.

March 2017

Year after year, criminals try to scam certain taxpayers. Year after year, certain taxpayers resort to schemes in an effort to put one over on the IRS. These cons occur year-round, not just during tax season. In response to their frequency, the IRS has listed the 12 biggest offenses – scams that you should recognize, schemes that warrant penalties and/or punishment.

Identity theft. Theft of federal tax refunds climbed 400% from 2011 to 2013. Cyberspace isn’t always the scene of the crime: thieves can steal your mail or rifle through your trash. If you are a victim, the IRS isn’t even obligated to tell you if the crook has been caught.1

Phishing. If you get an unsolicited email claiming to be from the IRS or the Electronic Federal Tax Payment System (EFTPS), it is a scam. Neither agency emails taxpayers out of the blue seeking information. If such an email lands in your inbox, forward it to This email address is being protected from spambots. You need JavaScript enabled to view it. .2

Phone shakedowns. Each year, criminals call up taxpayers and allege that they owe the IRS money, which must be paid quickly via wire transfer or a pre-loaded debit card. Visual and aural tricks can lend authenticity to the ruse: the caller ID may show a toll-free number and background noise may suggest a call center. The caller may know the last four digits of your Social Security Number, or mention a phony IRS employee badge number. After the initial call, there may be a follow-up call or email from “the DMV” or “the police”. Such behavior can be reported to the Treasury Inspector General for Tax Administration at (800) 366-4484.2

Sham tax preparation services. While there are many good, legitimate small businesses providing tax preparation, there are also some con artists out there who aim to rip off SSNs and personal information and grab phantom refunds. Worth noting, as always: you are legally responsible for what’s on your 1040 form, even if a third party prepares it.2

Tax preparers exaggerating/swiping refunds. In this scenario, the scammers do prepare and file 1040s, but they charge big fees up front, claim refunds that are way out of line, and deposit some or all of the undeserved refund in a bank account. They also avoid giving the taxpayer a copy of the filed return.2

Bogus charities. An old wisecrack says that you can make a lot of money running a non-profit organization. Some taxpayers try to, claiming that they are gathering funds for hurricane victims, an overseas relief effort, an outreach ministry, and so on. You can always ask them for visual proof of their charity’s tax-exempt status, and if you are near a computer or smartphone, you can visit irs.gov and use their Exempt Organizations Select Check search box. A specious charity may ask you for cash donations and/or your SSN and banking information.2

Phony income, expenses & exemptions. Some taxpayers exaggerate or falsify incomes in pursuit of the Earned Income Tax Credit, the fuel tax credit and other big federal tax perks. A fraudulent claim for the fuel tax credit can backfire into a penalty of as much of $5,000. Once caught, taxpayers may be on the hook for repaying the credit and refund amounts with interest and penalties, and may face criminal prosecution.2

Lying on Forms 4852 or 1099. Some individuals send the IRS “corrected” 1099s or 4852s that are lies, claiming they earned nothing last year despite what their employers reported.2

Concealed offshore income. Not all taxpayers adequately report offshore income, and if you don’t, you are a lawbreaker to the IRS. You could be prosecuted, or at least contend with fines and penalties. The IRS restarted its Offshore Voluntary Disclosure Program (OVDP) in 2012 to give taxpayers who were negligent or guilty a chance to come clean.2

Deceits using LLCs, LLPs & offshore credit/debit cards. While the entities and credit/debit cards may be legitimate, some taxpayers use them in multi-layered, flow-through schemes to hide taxable income or true ownership of assets.2

Incredible trusts. Properly structured trusts can help taxpayers defer or reduce taxes, and in some cases legally avoid them. Specious trusts – created with or without the “help” of unprincipled tax and estate consultants – can result in an IRS crackdown.2

Frivolous arguments. There are seminar speakers and books claiming that federal taxes are illegal and unconstitutional, and that Americans only have an implied obligation to pay them. These and other arguments crop up occasionally when people owe back taxes, and at present they carry little weight in the courts and before the IRS. Section 1 of the Internal Revenue Code imposes income tax on all Americans, specifically 26 U.S.C. § 1 and 26 U.S.C. § 1(a). IRC Section 6072 establishes April 15 as the annual federal tax deadline.2,3

Watch out for these ploys – and watch so you don’t run afoul of tax law.

Sincerely,

Edward J. Kohlhepp, Jr., CFP®, MBA
President

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - money.cnn.com/2014/04/16/pf/taxes/refund-identity-theft/ [4/16/14]

2 - irs.gov/uac/Newsroom/IRS-Releases-the-%E2%80%9CDirty-Dozen%E2%80%9D-Tax-Scams-for-2014;-Identity-Theft,-Phone-Scams-Lead-List [2/21/14]

3 - docs.law.gwu.edu/facweb/jsiegel/Personal/taxes/JustNoLaw.htm [4/17/14]

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Protecting Your Parents ® Financially

People reach their peak decision-making abilities sometime in their 50s, and then decline slowly until after age 70, when the decline starts to take off more dramatically. This helps explain why sweepstakes frauds, Nigerian investment schemes and other scams target seniors and retirees.

What can you do to protect yourself—or your parents—from fraud and bad financial decisions? An article in NerdWallet suggests that parents and children can start by drafting Powers of Attorney, one for health care decisions and the other for financial decisions. This lists who the retirees want to speak for them in case they become incapacitated.

You can also simply the financial lives of aging parents, by consolidating the checking accounts at one bank, and the investments at a single advisor or brokerage account. If there are many credit cards, cut up all but two: one for daily purchases and one for automatic bill payment.

The adult children should also make a habit of communicating with their aging parents. Scam artists do their best work when their victims are isolated, without family and friends looking for signs of exploitation. A weekly visit might help you spot the salesman who's getting too friendly.

Some places to learn about the more creative elder fraud schemes include StopFraud.gov, AARP's Fraud Watch Network and the IRS, which offers consumers alerts and an annual list of the “Dirty Dozen” top tax-related scams. Adult children can discuss common frauds, such as telephone imposters pretending to be IRS agents or Microsoft tech support.

Meanwhile, many financial institutions offer text or email alerts to notify their customers (and their advisors) of unusual account activity. People over 65 can have these automatically forwarded to an adult child who functions as an extra pair of eyes on what’s going on in the account.

For many older retirees, there comes a point when the financial issues become too complex and overwhelming. That’s the time to have a trusted successor or advisor take over the management of finances. The best advice here is: don’t resist giving up the day-to-day financial minutia. Experts report that most older Americans don’t recognize their gradual impairment, and often try to hang onto financial control beyond their capacity—and then hide the fact that they fell for a scam out of embarrassment until the next one comes along.

Sincerely,

Edward J. Kohlhepp, Jr., CFP®, MBA
President

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

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358 Hits

How to Reset Your Portfolio

Over the last few weeks, professional financial planners have been fielding calls from clients who are asking the kinds of questions that every professional hates to hear.

  • The Dow has reached 20,000. Should I take money off the table?
  • My preferred candidate didn’t win the election, and I think the world is going to hell in a handbasket. Don’t you think I should sell my stocks now before it’s too late?
    1. The first question is the easier one to answer. It seems to be human nature to have a strange fascination with round numbers. Why should Dow 20,000 be any different, from a pure investing standpoint, than Dow 19,774.83 or Dow 20,093.65? The questions about this magic number become even sillier when you realize that the Dow is made up of just 30 out of many thousands of American-based companies.
    2. As to the second question, the real issue is the eternal question: what’s coming next in the markets? The only truthful answer to that question, however it’s phrased, is: we don’t know. As investors, we need to take that answer very seriously.

After President Obama was elected, financial planners were fielding questions from their angry and frightened conservative clients, who were asking to bail on their stock portfolios in anticipation of the country going to hell in a handbasket. But ask yourself: how did that work out? Those investors would have missed a strong rising market.

Then, for the last five years at least, the experts were certain that bond rates were just about to rise dramatically, and many professional investors stayed ultra-short to avoid the losses. How did that work out? Bonds stayed where they were for five more years, and those investors missed out on percentage points of additional yield.

For the last four years at least, people have been saying that the current bull market is long in the tooth, what with the markets testing new highs. Over and over they felt like it was a good time to take their winnings off the table. How did that work out? They would have bailed before the markets repeatedly broke record highs.

So now we have a situation where half of the country is still reeling from the election results and predicting that the country is going to hell in a handbasket. Advisors are doing everything they can to keep clients from acting emotionally rather than rationally.

The rational way to frame the question about taking money off the table is: can you afford to lose some percentage of your assets—and that percentage figure depends on how aggressive is your asset allocation—before the markets recover? Will you have time to recover?

If you’re decumulating (withdrawing) in retirement, or just approaching retirement, the percentage you can afford to lose will be lower than it would be for a millennial investor. Whatever that amount is, you should look back historically, take a hard look at the darkest days for your particular mix of assets, and note the times it breached that floor. (Hint: check out early 2009.) Then, see if you want to change your allocations to something more conservative.

Obviously, the market always has its ups and downs. We are always available to discuss your portfolio.

Sincerely,

Edward J. Kohlhepp, Jr., CFP®, MBA
President

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

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Presidential Drawdowns

February, 2017

You’re starting to hear people talk about “if” there’s a bear market during the Trump Administration, when the real truth is they should be talking about “when.” And it won’t necessarily be triggered by a poorly-worded tweet, a global-trade-stopping new tariff regime or tax and entitlement reform. Every presidential cycle has its share of market drawdowns, seemingly regardless of presidential policies.

You don’t believe it? The accompanying chart shows the worst stock market drawdowns for every president since Herbert Hoover in the 1930s, and you can see that good president or bad, Republican or Democrat, they all eventually experienced significant down markets. Some might be surprised to see Ronald Reagan’s 25% and 33% drop from high to low, or the nearly 52% drawdown experienced during George W. Bush’s presidency. Weren’t these pro-business Presidents?

What the chart doesn’t show, but you know already, is that after every single one of these scary drops, the markets recovered to post new highs, which we’re experiencing today. So don’t listen to anybody who talks about “if” the markets are eventually going to go down sometime in the next four years. We’re going to experience a bear market—time, date, duration and extent unknown. And then, if history is any indication, we’ll see new highs again eventually.

Sincerely, Edward J. Kohlhepp, Jr., CFP®, MBA President Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA Founder & CEO

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

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The 25 Worst Passwords

February, 2017

How secure are the passwords you use to access your banking or investment data? A recent article in Forbes magazine surveyed security company SplashData’s password dumps, looking for the world’s most common—and, therefore, easiest to guess—passwords. This is a big problem; SplashData estimates that just over 10% of people use at least one of the 25 most common passwords. Guess which words hackers and cyberthieves are going to guess first when they try to hack into the account that contains your banking information?

The most common password, as you might have guessed, is 123456, which also happened to be the most common in 2014 and 2015. Other popular passwords were 1234, 12345, 1234567, 12345678, 1234567890. Also, for some reason, 121212 became popular in 2016.

The list also includes the old standby “password,” and “password1” (selected by people who discover that somebody else is using “password” so they can’t use it). Others on the most common list include “querty,” “login,” “welcome,” and “admin.” Among the old favorites, SplashData lists “football,” “princess,” “solo,” “abc123,” “dragon” and “master.”

New words making the top 25 this year include “hottie,” “loveme,” “sunshine,” and “flower.”

If you use any of these words, you might want to make a change now, before a hacker decides to route some of your money to an undisclosed offshore location.

Sincerely,

Edward J. Kohlhepp, Jr., CFP®, MBA
President

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Source:

https://www.forbes.com/sites/ygrauer/2017/01/23/2016s-worst-passwords-are-just-as-bad-as-2015s-so-please-tell-me-yours-is-not-on-the-list/#3b2a6eec3387

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Higher Rates: The Tempest in the Teapot

December 2016

Anybody who was surprised that the Federal Reserve Board decided to raise its benchmark interest rate this week probably wasn’t paying attention. The U.S. economy is humming along, the stock market is booming and the unemployment rate has fallen faster than anybody expected. The incoming administration has promised lower taxes and a stimulative $550 billion infrastructure investment. The question on the minds of most observers is: what were they waiting for?

The rate rise is extremely conservative: up 0.25%, to a range from 0.50% to 0.75%—which, as you can see from the accompanying chart, is just a blip compared to where the Fed had its rates ten years ago.

The bigger news is the announced intention to raise rates three times next year, and move rates to a “normal” 3% by the end of 2019—which is faster than some anticipated, although still somewhat conservative. Whether any of that will happen is unknown; after all, in December 2015, the Fed was telegraphing two and possibly three rate adjustments in 2016, before backing off until now.

The rise in rates is good news for those who believe that the Fed has intruded on normal market forces and suppressed interest rates much longer than could be considered prudent. It is even better news for people who are bullish about the U.S. economy. The Fed may have been the last remaining skeptic that the U.S. was out of the danger zone of falling back into recession; indeed, its announcement acknowledged the sustainable growth in economic activity and low unemployment as positive signs for the future. However, bond investors might be less pleased, as higher bond rates mean that existing bonds lose value. The recent rise in bond rates at least hints that the long bull market in fixed-rate securities—that is, declining yields on bonds—may finally be over.

For stocks, the impact is more nuanced. Bonds and other interest-bearing securities compete with stocks in the sense that they offer stable—if historically lower—returns on your investment. As interest rates rise, the see-saw between whether you prefer stability or future growth tips a bit, and some stock investors move some of their investments into bonds, reducing demand for stocks and potentially lowering future returns. None of that, alas, can be predicted in advance, and the fact that the Fed has finally admitted that the economy is capable of surviving higher rates should be good news for people who are investing in the companies that make up the economy.

The bottom line here is that, for all the headlines you might read, there is no reason to change your investment plan as a result of a 0.25% change in a rate that the Fed charges banks when they borrow funds overnight. There is always too much uncertainty about the future to make accurate predictions, and today, with the incoming administration, the tax proposals, the fiscal stimulation, and the real and proposed shifts in interest rates, the uncertainty level may be higher than usual.

Sincerely,

Edward J. Kohlhepp, Jr., CFP®, MBA
President

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Sources:

http://www.businessinsider.com/fed-fomc-statement-interest-rates-december-2016-2016-12

http://www.marketwatch.com/story/fed-to-hike-interest-rates-next-week-while-ignoring-the-elephant-in-the-room-2016-12-09

http://www.reuters.com/article/us-usa-fed-idUSKBN1430G4

http://www.usatoday.com/story/money/personalfinance/2016/12/15/fed-rate-hike-7-questions-and-answers/95470676/?hootPostID=32175354f7440337d62a767b3db92c68

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President Trump ® now what?

We are aware of the shocking results of the election. We expect markets to be turbulent in the short term including today.
We don't always know what is going to happen. Look at BREXIT!
We are reviewing all portfolios and managers in order to understand the implications of a upcoming Trump presidency.
MORE TO COME!

Sincerely,
Edward J. Kohlhepp, Jr., CFP®, MBA
President
Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
Founder & CEO

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

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The Election's Impact On Your Portfolio

By now, most voters have made up their mind about who they want to serve as their next President. But what can they look forward to, from an investment and tax standpoint, if their candidate wins or loses? How will the election affect their portfolio and future net worth?

Let’s look at the least predictable factor. An analysis of historical market returns under different administrations gives a frustratingly incomplete picture. When a President comes into office and immediately enjoys a few boom years, is that due to his great policies or the policies of his predecessor? Similarly, when a President enters office in the middle of a recession (think Obama in 2009 and George W. Bush in 2001), can we attribute the weak market performance to any policies he hasn’t had a chance to enact?

The cliches that Republicans are better for markets than Democrats is hard to support based on the raw statistics. As you can see from the chart, Richard Nixon and George W. Bush are the only presidents who presided over a net loss in the markets, while Bill Clinton and Barak Obama are second and third behind Gerald Ford as the presidents associated with the highest total gains. The record is too mixed, and too complicated, to make predictions based simply on the party that wins the white house.

But what about something more concrete, like tax policy or budget deficits? Surely here we can read the tea leaves about the future. Once again, the historical record can be misleading. President Reagan, known as a great tax cutter, lowered taxes with the 1981 tax act and promptly raised them again with new measures a year later. Democratic President Bill Clinton’s administration presided over the only budget surpluses of the modern era, while Republican President George Bush and Democratic President Barack Obama together, added more to the deficit than all previous presidents. (See chart)

The most reliable clue we have about the fiscal and investment impact of a Trump or (Hillary) Clinton presidency is the actual proposals by the candidates—but even here we have to proceed with caution. It is unlikely that the Democrats will win the Presidency plus a majority in both the Senate and the House of Representatives, which means that a Clinton wish-list will be either stymied or compromised by divided government.

Nevertheless, if Clinton is elected, we know to expect certain changes to the tax code. There will be at least an attempt to add a 4% surtax on incomes above $5 million, an end to the carried interest deduction favored by hedge fund managers and other Wall Streeters, plus a cap on itemized deductions when people reach the 28% tax rate. The existing $5.45 million estate tax exemption would be reduced to $3.5 million $7 million for couples) and estate amounts above that figure would be taxed at a 45% rate. Wall Street brokers would be hit with an unspecified surtax on high-frequency trading activities.

A President Trump would be more likely to get his wishes, but what, exactly, these would be is far less certain. You can get a picture of the fuzziness of his policy proposals when you look at his promise of infrastructure spending. When Candidate Clinton proposed spending $275 billion on road, airport and electrical grid repairs (surely not enough to move the needle on U.S. GDP growth), candidate Trump immediately proposed spending $550 billion on the infrastructure—doubling his opponent’s figure without any apparent analysis.

Many of the proposals have been made off-the-cuff and some are contradictory, but you can expect a President Trump to make an effort to cut taxes by reducing the ordinary income tax brackets to 12% (up to $75,000 for joint filers), 25% ($75,000 to $225,000) and 33% (above $225,000). The standard deduction would double, but itemized deductions would be capped at $100,000 for single filers ($200,000 for joint filers). Corporate tax rates would be reduced from a maximum of 35% to a maximum of 15%. Federal estate and gift taxes would be eliminated, but the step-up in basis would also be eliminated for estates over $10 million.

Lumping together candidate Clinton and candidate Trump’s various proposals (and making a variety of assumptions to cover the fact that the Trump plan is light on details), the Tax Foundation estimates that the Clinton proposals, in the unlikely event that they were fully-enacted, would reduce GDP by 1% a year and reduce the budget deficit by $498 billion. Candidate Trump’s proposals would reduce tax revenues by between $4.4 trillion and $5.9 trillion over the next decade, but the Tax Foundation believes they would add 6.9% to GDP.

Turning back to the markets, the investment herd prefers certainty and status quo to uncertainty and rapid change. A Clinton presidency checked by either the Republican House or a Republican House and Senate would provide a measure of stability. A President Trump, with Republicans controlling both houses of Congress, would represent significant uncertainty, and off-the-cuff policy proposals introduced into the news media at random times would likely spook investors. Loose talk about “renegotiating” America’s debt with Treasury bond holders here and abroad (read: default, followed by demanding a haircut) could, all by itself, lower America’s bond rating once again, following the downgrade aftereffect of the government shutdown.

A Clinton presidency would almost certainly have a negative impact on the coal industry, and to the extent that there are new environmental regulations—which can be imposed by regulation without consulting Congress—it could also negatively impact the energy sector overall. It would not be surprising to see a carbon trading initiative, and more broadly a requirement that whatever environmental degradation companies impose on society will have to be paid for by the companies themselves in some form or fashion.

A Trump presidency would seem to favor industry in a variety of ways. The proposals are frustratingly unspecific, but we could expect less regulation (particularly environmental regulation), no raising of the minimum wage, lower corporate taxes across the board and protectionism. On the other hand, if candidate Trump is serious about deporting undocumented immigrants, the U.S. labor supply would diminish in unpredictable ways. The policy would likely have the biggest negative impact on the farming and construction industries.

Perhaps the biggest risk in this election involves trade. A Trump Presidency would be seen, initially, at least, as a drag on the Mexican markets, and it might see America rip up its trade agreements and pick currency and trade wars with the emerging economic colossus that is China. Interestingly, the Trans-Pacific Partnership agreement, which both candidates now reject, was an effort by the U.S. to create economic ties to Singapore, Korea, Vietnam and other countries in the Asian rim, the better to counter Chinese economic influence. In terms of global trade, China stands to win no matter who wins this election.

The bottom line: prepare for the possibility (but not the certainty due to gridlock) of higher taxes under a Hillary Clinton presidency, and a more certain (but hard to predict the details) lower-tax environment under a President Trump. If you’re a Wall Street traders, you’re going to lose money under a Clinton presidency, and Southeast Asian nations stand to lose expected trade benefits under either president.

Despite the usual stereotypes, the deficit would likely go up under a Trump presidency and it might go down under a Clinton one—again with the caveat that comes with a divided government.

The economic outlook would be much harder to predict. The reality is that no matter who wins, America will still represent the most dynamic economy in the world, and whoever wins the White House is unlikely to change that.

Sincerely,

Edward J. Kohlhepp, Jr., CFP®, MBA
President

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Sources:

http://www.truthfulpolitics.com/http:/truthfulpolitics.com/comments/u-s-federal-debt-by-president-political-party/

http://taxfoundation.org/article/details-and-analysis-hillary-clinton-s-tax-proposals

http://taxfoundation.org/article/details-and-analysis-donald-trump-tax-reform-plan-september-2016

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How Will the Market Respond After the Election?

We may see some volatility, but equilibrium could quickly be restored.

What will happen on Wall Street after November 8? We can shrug and say, “who knows,” and that simple answer may be as good as any other. Trying to predict which way the market will go is difficult, even when it comes to a single trading session. All that said, investors may take some cues from the result of the presidential election and push stocks in one direction or another.

Could there be a market shock? The biggest stock market disruptor so far in 2016 has been the Brexit vote in the United Kingdom. That late June development erased the entire year-to-date advance of the S&P 500 – but the S&P recovered quickly, gaining back its losses by the start of July in a textbook example of stock market resilience. The index rallied for several weeks thereafter.1

The market appears to be pricing in a Clinton win. A Trump win would defy quite a few political forecasts – and perhaps affect Wall Street in a way similar to the Brexit vote.

One forecasting firm, Macroeconomic Advisers, has put out a bold prediction: it believes that the S&P 500 could rise 4% in the near term after a Clinton win, while a Trump win would bring on a 7-8% descent. The Brookings Institute – a research and public policy think tank, not a market analytics firm – feels a Trump victory would prompt a correction. Overseas markets might also slump significantly in reaction to an oncoming Trump presidency, as Trump’s image outside the U.S. is largely unfavorable.1,2

Regardless of who wins, some immediate volatility would not be unusual. Bespoke Investment Group, a very respected provider of market data, finds that the S&P 500 has seesawed in the days surrounding recent presidential elections. The common pattern is a rally on Election Day; then, a pullback the next day, averaging around 1%. An extreme example of this behavior came in 2008, when the index rose 4% on Election Day (Barack Obama was the heavy favorite that year), then fell 5.3% a day later.2

What does history tell us could happen in the months ahead? Understanding that past performance is not indicative of future success (or failure), we see that the performance of the S&P has varied widely on such occasions. In 2012, the index was flat for the rest of the year after the election; the next year, the S&P rose 30%. In 2008, the S&P fell 10% after the election. Then it advanced 23% in 2009. In 2004, a 7% rally after the re-election of George W. Bush was followed by only a 3% gain in 2005. In 2000, an 8% post-election retreat for the S&P preceded a 13% fall for the index in 2001. From numbers like that, we can only conclude that stock market behavior is hard to predict.1

The election is an event on a timeline. Wall Street’s reaction to it, positive or negative, will likely be old news within weeks, if not days. The Federal Reserve’s December policy statement may make bigger waves. Take whatever occurs in stride, knowing that it is but a page in the long story of Wall Street. One market moment should not lead you to rethink your approach or your commitment to saving and investing for your long-term goals.

“Happy” Election day!

dward J. Kohlhepp, Jr., CFP®, MBA
President

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.
1 - businessinsider.com/what-happens-in-the-stock-market-after-us-elections-2016-9 [10/15/16]
2 - money.cnn.com/2016/10/24/investing/stocks-donald-trump-hillary-clinton/index.html [10/24/16]

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Whither Brexit?

 

October, 2016

More than three months after British voters elected to extricate their economy from the European Union, Brexit still hasn’t actually happened.  What’s going on? 

Apparently nothing more than a careful process designed to minimize damage on both sides of the English Channel.  British Prime Minister Theresa May recently announced a target of late first quarter 2017 as the time she and Parliament will finally pull the trigger and invoke Article 50 of the EU’s Lisbon Treaty.   

When that happens, it will, by contract, start two years of negotiations on exactly what the economic relationship between Britain and mainland Europe will become.  At the same time, however, May says she plans to introduce “Great Repeal” legislation next year that will convert all existing EU laws into U.K. legislation.  Parliament will also have to repeal the European Communities Act of 1972. 

But will there actually BE a Brexit?  A group of over 1,000 British barristers have signed a letter pointing out that the Brexit referendum was nonbinding, and that the prime minister cannot make such a significant decision without consulting Parliament.  It’s possible that until Parliament affirms the extrication from the European Union, it won’t legally take place.  London’s High Court is expected to issue a ruling on Parliament’s role in Brexit on October 13, but an appeal is expected no matter what the ruling—sending the case to the U.K. Supreme Court to be heard in mid-December.

It may be helpful to remember that May herself advocated remaining in the European Union prior to assuming her current leadership position.  There is speculation that her uncompromising timeline on Brexit is simply a way to reassure voters that she has heard their message.  Then she can work for a so-called “soft Brexit,” where the country will control its borders via liberal work quotas, and there will be little changed in terms of trade and finance. 

Meanwhile, despite the dire predictions, there has been no British recession as a result of the unexpected vote, and little has changed in regard to London’s status as Europe’s leading financial center. 

Sincerely, 

Edward J. Kohlhepp, Jr., CFP®, MBA
President 
 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

  

Sources: 

http://www.bloomberg.com/news/articles/2016-10-02/may-to-pull-brexit-trigger-by-march-as-u-k-to-enshrine-eu-laws

 

https://www.ft.com/content/a859227e-88bf-11e6-8cb7-e7ada1d123b1?ftcamp=published_links%2Frss%2Fcomment%2Ffeed%2F%2Fproduct

 

http://www.reuters.com/article/us-britain-eu-may-speech-idUSKCN1220LM

 

 

 

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Follow the money

September 2016

Who’s going to win the U.S. Presidential election in November?  If history is a reliable guide, it will be the candidate who raises the most money during the campaign season.  The last time the candidate who raised the most money lost was Gerald Ford vs. Jimmy Carter in 1976.  Ever since, the money determined the winner.

The accompanying chart tells the story, and the first thing you notice is how much more money the recent Presidential campaigns raised (and spent) than those back in the 1960s through 1990s.  The Obama campaigns greatly outraised the McCain and Romney candidacies, and George W. Bush outraised Al Gore and John Kerry in their electoral contests. 

So far, the Clinton campaign is outraising Team Trump by a 3:1 margin. 

Sincerely, 

Edward J. Kohlhepp, Jr., CFP®, MBA

President  

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

 

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Source:   

http://www.forbes.com/sites/niallmccarthy/2016/07/28/how-much-does-money-matter-in-u-s-presidential-elections-infographic

 

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Expensive Olympics

August 8, 2016

The 2016 Olympic games are just beginning, and of course all you’re hearing about is pollution, crime, unfinished facilities, Zika and cheating Russian athletes.  Chances are, the games will go off without a hitch and be highly-entertaining, despite some of the challenges that the athletes will face in their housing and venues.  But once the games are over, the nation of Brazil is likely to experience a familiar dose of economic trauma. 

Why?  A recent study by the Council on Foreign Relations looked at the economics of different Olympic games, and found that the costs inevitably outweigh the benefits.  Part of the problem is enormous cost overruns; when nations bid for the games, they typically underestimate the cost of constructing stadiums, fields, apartments for the athletes, safe transportation and security.  The accompanying chart shows just how much these cost estimates fell short of the actual price tag; note the Beijing and Sochi games, which cost $45 billion and $51 billion respectively.  Building appropriate venues for the games in Athens, Greece actually led to a government bankruptcy. 

If those facilities could be recycled into popular tourist destinations, the expense might be justified.  But the report found that the more typical situation is a lot of so-called “white elephants”—expensive facilities that have limited post-Olympics use.  Beijing’s famous “Bird’s Nest” stadium cost $460 million to build and now sits unused.  The entire city of Sochi, Russia stands idle.   

The Rio Olympics are estimated to cost $20 billion for infrastructure alone, even after plans to overhaul the city’s sewage system were cancelled due to cost overruns.  Estimates suggest that the city will attract only a fraction of the anticipated 480,000 (International Olympic Committee estimate) to 600,000 (Brazilian Ministry of Tourism estimate) visitors, which means that the already-compromised fiscal situation in Brazil will get worse at some point after the games have left town.  And don’t expect the sewage situation to be cleaned up once the visitors have departed. 

Meanwhile, it is getting more expensive simply to bid on hosting the games.  When you add up the cost of drawing up construction plans, hiring consultants, organizing the way the event will be run and the necessary travel expenses, a bid can cost as much as $150 million—as it did when Tokyo made its 2016 bid.  The city of Toronto recently backed out of bidding on the 2022 games, due to an estimated $60 million in bidding expenses—and of course that doesn’t count the rumored under-the-table payments to IOC executives. 

That leaves two countries still in the running for the 2022 Winter Games: Kazakhstan and China.  It may not be a coincidence that neither country has to worry about pesky voters and citizens claiming that the costs are not justified by the benefits. 

Sincerely,

Edward J. Kohlhepp, Jr., CFP®, MBA
President  

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

 

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

  

Sources:

 http://riotimesonline.com/brazil-news/rio-business/ioc-predicts-480000-tourists-in-rio-2016/

 http://www.cfr.org/brazil/economics-hosting-olympic-games/p38148?cid=soc-twitter-in-economics_hosting_olympics-080216

 

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News from Kohlhepp Investment Advisors, Ltd.


Since 1998, Kohlhepp Investment Advisors has helped hundreds of individuals and families meet their financial and personal goals, whether funding a college education, traveling the world, or playing enough golf to fix that persistent slice off the tee. Our family-owned firm provides customized planning solutions and is a trusted advisor for all financial matters.

 

Today, we are announcing an exciting milestone in our history. Ed Kohlhepp, Jr. has been named President of Kohlhepp Investment Advisors, a position he assumed on January 1, 2016. Previously the firm’s Senior Vice President, Ed, Jr. now will oversee day-to-day operations of the firm.

 

Ed, Jr. joined Kohlhepp Investment Advisors in 2000, just two years after our founding, and has been an integral part of our success over the years. He earned his MBA degree from Penn State University that same year.  A Certified Financial Planner professional, Ed also holds securities, life, health and variable annuity licenses and is a member of the Financial Planning Association. 

 

If you already know Ed, Jr., you probably know that he has a strong affinity for Vikings, as a result of a long-ago study-abroad stint in Norway. While he promises not to wear the horned Viking helmet in the office, he does possess the Viking spirit of courage and enthusiasm – important attributes for business leadership.

 

Working side by side with his father for 15 years, Ed shares the vision on which the company was founded: the desire to make a difference in the lives of others by helping them realize their dreams through financial planning.

 

We thank you for trusting us with your financial dreams over the years, and we look forward to continuing to work together to help make those dreams a reality for many more years to come.

 

Sincerely,

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

 
Edward J. Kohlhepp, Jr., CFP®, MBA
President 

 

 

 

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Protected Accounts

 

 August 2016

The Social Security Administration has tightened security in order to prevent hackers and identity thieves.  Now, when you log into your Social Security Administration account, you do what you’ve always done: give your user name and password.  Then you receive a security code sent by text message, and type in that code to complete your login procedure.  In the cybersecurity trade, this is known as multifactor authentication.   

The result is better security, and a big hassle for some users.  On the first day, Verizon customers weren’t getting their security codes; the problem has since been fixed.  Many older Americans don’t text on their phones, which means they’ll either have to learn or do without their SSA account.  At the same time, multifactor authentication doesn’t prevent cyber criminals from fraudulently creating an online account in your name, and siphoning away your benefits.   

Your response?  If you don’t already have an account with the Social Security Administration, now would be a good time to open one, before a thief decides to do it for you.  (Here’s a direct link: https://secure.ssa.gov/RIL/SiView.do)  And if you aren’t into texting, now is a good time to get familiar with that feature of your smart phone.  If you’re having trouble, ask a teenager for some quick tech support. 

Sincerely,

Edward J. Kohlhepp, Jr., CFP®, MBA
President 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 Source: 

http://time.com/money/4434100/social-security-website-two-factor-authentication/?xid=tcoshare

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Deadly but necessary

August 2016

 

Here’s an interesting trivia question: what animal kills more human beings every year than any other?  The shark?  The lion?  Rhino? 

The answer is the mosquito, and the statistics are not even close.  Over 400,000 people were killed last year by mosquito-borne malaria.  Mosquitos carry four different encephalitis viruses, plus the West Nile virus—and most recently, the Zika outbreak that is threatening attendees at the Rio Olympics. 

But that begs a question: why do we tolerate this annoyance—and killer—in our midst?  Scientists who once relied on DDT and other crude chemical poisons now have powerful genetic eradication tools at their disposal, which make it possible to create infertile males who are released to mate with healthy females—and eliminate a generation of offspring.  Rinse, lather, repeat and suddenly a species has been removed from the local area.  An experiment in the Cayman Islands resulted in a 96% reduction in the mosquito population. 

There are several reasons why scientists are hesitating.  The first is that only 200 out of roughly 3,000 varieties of mosquito actually bite humans and animals, and only a few of those are capable of carrying deadly diseases.  Mosquitos are important pollinators in many ecosystems, and they represent an important part of the food chain.  Moreover, even the species that annoy you don’t do it for most of their lives.  Only female mosquitos seek out blood, and only because they need extra nutrition in the time right before they lay their eggs.   

Many of us live in climates where the mosquitos don’t carry dangerous diseases.  If you live in a moist, tropical environment, or plan to visit one, then your best bet is to use a repellant that contains one of the active ingredients recommended by the Centers for Disease Control and Prevention: DEET (Off!; Cutter, Sawyer, Ultrathon), Picaridin (Cutter Advanced, Skin So Soft Bug Guard, Autan), Oil of lemon eucalyptus (Repel), para-menthanediol, or IR3535 (SkinSmart).  And be thankful that you live in a country where malaria has largely been eradicated.   

Sincerely,

Edward J. Kohlhepp, Jr., CFP®, MBA
President 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

 

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

  

Sources:   

http://rense.com/general28/mosded.htm

 http://www.cdc.gov/features/stopmosquitoes/

 https://www.washingtonpost.com/news/speaking-of-science/wp/2016/08/01/dear-science-why-cant-we-just-get-rid-of-all-the-mosquitoes/?tid=sm_tw

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Stocks & Presidential Elections

 What does history tell us – and should we value it? 

 

July 21, 2016

 

As an investor, you know that past performance is no guarantee of future success. Expanding that truth, history has no bearing on the future of Wall Street.  

That said, stock market historians have repeatedly analyzed market behavior in presidential election years, and what stocks do when different parties hold the reins of power in Washington. They have noticed some interesting patterns through the years, which may or may not prove true for 2016. 

Do stocks really go through an “election cycle” every four years? The numbers really don’t point to any kind of pattern. (Some analysts contend that stocks follow a common pattern during an election year; more about that in a bit.)

In price return terms, the S&P 500 has gained an average of 6.1% in election years, going back to 1948, compared to 8.8% in any given year. The index has posted a yearly gain in 76% of presidential election years starting in 1948, however, as opposed to 71% in other years. Of course, much of this performance could be chalked up to macroeconomic factors having nothing to do with a presidential race.1   

Overall, election years have been decent for the blue chips. Opening a very wide historical window, the Dow has averaged nearly a 6% gain in election years since 1833. Across that same time frame, it has averaged a 10.4% gain in “year three” – years preceding election years.2 

Many election years have seen solid advances for the small caps. The average price return of the Russell 2000 is 10.9% in election years going back to 1980, with a yearly gain occurring 78% of the time.1 

Do stocks respond if a particular party has control of Congress? A little data from InvesTech Research will help to answer that.  

InvesTech studied S&P 500 yearly returns since 1928 and found that the S&P returned an average of 16.9% in the two years after a presidential election when the White House and Congress were controlled by the same party. In the 2-year stretches after a presidential election, when Congress was controlled by the party that didn’t occupy the White House, the price return of the S&P averaged 15.6%. When control of Congress was split – regardless of who was President – the S&P only returned an average of 5.5% in those 2-year periods.2  

Could stock market performance actually influence the election? An InvesTech analysis seems to draw a correlation, however mysterious, between S&P 500 performance and whether the incumbent party retains control of the White House. 

There have been 22 presidential elections since 1928. In those 22 years, the incumbent party won the White House 86% of the time when the S&P advanced during the three months preceding Election Day. When the S&P lost ground in the three months prior to the election, the incumbent party lost the White House 88% of the time. Of course, other factors may have been considerably more influential in these elections, such as a given president’s approval rating and the unemployment rate.2   

Annual returns aside, is there a mini-cycle that hits stocks in the typical election year? Some analysts insist so, with the cycle unfolding like this: stocks gain momentum during primary season, rally strongly as the presumptive nominees appear and party conventions occur, and then go sideways or south in November and December.3 

There might be something to this assertion, at least in terms of S&P 500 performance. A FactSet/Wall Street Journal analysis shows that, in election years starting in 1980, the S&P has advanced an average of 4.9% in the period between when a presumptive nominee is declared and Election Day. After Election Day in these nine years, it declined about half a percent on average.3    

How much weight does history ultimately hold? Perhaps not much. It is intriguing, and some analysts would instruct you to pay more attention to it rather than less. Historical “norms” are easily upended, though. Take 2008, the election year that brought us a bear market disaster. The year 2000 also brought an S&P 500 loss. While a presidential election undoubtedly affects Wall Street every four years, it is just one of many factors in determining a year’s market performance.1

Sincerely,  

Edward J. Kohlhepp, Jr., CFP®, MBA
President  

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

 

 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

     

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

  

   

Citations.

1 - marketwatch.com/story/2016-predictions-what-presidential-election-years-mean-for-stocks-2015-12-29 [12/29/15]

2 - kiplinger.com/article/investing/T043-C008-S003-how-presidential-elections-affect-the-stock-market.html [2/16] 

3 - tinyurl.com/j82mg4c [6/12/16]

 

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Are Brexit Fears Overblown?

July 11, 2016 

In the wake of the so-called “Brexit” vote in the United Kingdom, and the possibility (though not the certainty) that the U.K. will leave the European Union, you're likely reading a lot of alarmist stories about the vote’s impact on the U.S. and your portfolio. 

Don’t believe half of what you read. 

Here are some of the most alarming headlines, and the reality behind them. 

1) The Brexit vote has already caused a stronger dollar, which will hurt U.S. exports. 

True, the dollar gained dramatically against the British pound, which means exporters to the U.K. might be more than a little bit less competitive than they were a couple of weeks ago.  But the U.K. only accounts for 0.5% of total U.S. exports.  And there is no reason why the dollar should appreciate in strength against the euro, yen or other global currencies simply because the U.K is less likely to remain in the European Union. 

2) The confusion around Brexit will cause turmoil in the stock market because, well, investors hate uncertainty. 

When was the stock market NOT in turmoil over one thing or another? When have investors NOT hated uncertainty?  We’ve been uncertain about the Fed raising interest rates for the better part of two years, and also about how long interest rates will continue falling, credit and stock market problems in China and Japan’s economic woes for two and a half decades.  Let’s just add Brexit to the list and move on to the next so-called “crisis.” 

3) Brexit signals the imminent collapse of the European Union.  

Remember this prediction a year or two down the road, and realize that sometimes ‘journalists’ should be renamed ‘alarmists.’  The reality is that the U.K. vote has forced the bureaucrats in Brussels to come face-to-face with the unrest caused by their costs and their stifling policies.  There are already indications that the EU members will come together and make decisions that would head off other “leave” movements in France, Spain, Italy and Greece.  In fact, in the next few weeks, we will almost certainly see the EU relax one of its rules and allow the Italian government to recapitalize its ailing banking system with public funds.  Would that have happened pre-Brexit?  It's doubtful. 

4) Brexit will force the Fed to rethink raising interest rates in the U.S. economy, for fear it would trigger additional market volatility, and a concern that the U.S. might slip into a recession. 

Lower interest rates for a few months longer is a BAD thing?  And it’s not unexpected; after all, the Fed entered the year with a firm plan to raise rates four times, and then, pre-Brexit, scaled the plan back to one rate rise.   

We may have to live with low interest rates for another year.  Somehow we'll survive. 

5) U.S. investment in the U.K. will decline. 

It’s true that if the U.K. does apply for exit under Article 50 of the Lisbon Treaty, U.S. companies that have significant operations on British soil, primarily to take advantage of tariff-free exporting to the EU nations, might start checking out office space in Frankfurt or Dublin.  But there’s plenty of time to make that transition.  After the U.K. sorts out its government, it may notify the EU that it’s leaving, and after that, even the most optimist estimate suggests that the full details of leaving, and any new tariff regime, are at least two years down the road.  Nor is it a sure thing that there WILL be higher taxes on exports from the U.K. to the continent. 

The main point here is that there is a lot of alarmist speculation and short-term thinking about a long-term phenomenon that will require years to play out.  People who sold in a panic (including a lot of Wall Street traders) right after the Brexit news hit the Internet have egg on their face and real losses in their portfolios.  The news media seems to want more of the same. 

Sincerely, 

Edward J. Kohlhepp, Jr., CFP®, MBA
President 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
 
Founder & CEO 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Sources: 

http://money.cnn.com/2016/06/24/investing/brexit-impact-on-american-global-economy/index.html 

http://www.nytimes.com/2016/06/25/upshot/how-brexit-will-affect-the-global-economy-now-and-later.html?_r=0

 

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Welcome to Brexit

 

June 24, 2016

Thursday’s vote by the British electorate to end its 43-year membership in the European Union seems to have taken just about everybody by surprise, but the aftermath could not have been more predictable. The uncertainty of how, exactly, Europe and Britain will manage a complex divorce over the coming decade sent global markets reeling.   London’s blue chip index, the Financial Times Stock Exchange 100, lost 4.4% of its value in one day, while Germany’s DAX market lost more than 7%. The British pound sterling is getting crushed (down 14% against the yen, 10% against the dollar).

Compared to the global markets, the reaction among traders on U.S. exchanges seems muted; down roughly 3% in mid-day trading on Friday, though nobody knows if that’s the extent of the fall or just the beginning.

The important thing to understand is that the current market disruptions represent an emotional roller coaster, an immediate panic reaction to what is likely to be a very long-term, drawn out, ultimately graceful accommodation between the UK and Europe. German companies are certainly not 7% less valuable today than they were before the vote, and the pound sterling is certainly not suddenly a second-rate currency. When the dust settles, people will see that this panicky Brexit aftermath was a buying opportunity, rather than a time to sell. People who sell will realize they were suckered once again by panic masquerading as an assessment of real damage to the companies they’ve invested in.

What happens next for Britain and its former partners on the continent? Let’s start with what will NOT happen. Unlike other European nations, Britain will not have to start printing a new currency. When the UK entered the EU, it chose to retain the British pound—that that, of course, will continue. Stores and businesses will continue accepting euros.

On the trade and regulatory side, the actual split is still years away. One of the things you might not be hearing in the breathless coverage in the press is that the British electorate’s vote is actually not legally binding. It will not be until and unless the British government formally notifies the European Union of its intention to leave under Article 50 of the Treaty of Lisbon—known as the “exit clause.” If that happens, Article 50 sets forth a two-year period of negotiations between the exiting country and the remaining union. Since British Prime Minister David Cameron has officially resigned his post and called for a new election, that clock probably won’t start ticking until the British people decide on their next leader. For the foreseeable future, despite what you read, the UK is still part of the Eurozone.

After notification, attorneys in Whitehall and Brussels would begin negotiating, piece by piece, a new trade relationship, including tariffs, how open the UK borders will be for travel, and a variety of hot button immigration issues. Estimates vary, but nobody seems to think the process will take less than five years to complete, and current arrangements will stay in place until new ones are agreed upon. 

An alternative that is being widely discussed is a temporary acceptance of an established model—similar to Norway’s. Norway is not an EU member, but it pays EU dues, and has full access to the single market as if it was a member. However, that would require the British to continue paying EU budget dues and accept free movement of workers—which were exactly the provisions that voters rejected in the referendum.

Meanwhile, since the Brexit vote is not legally binding, it’s possible that the new government might decide to delay invoking Article 50. Or Parliament could instruct the prime minister not to invoke Article 50 until the government has had a chance to study further the implications. There could even be a second referendum to undo the first.

 The important thing for everybody to remember is that the quick-twitch traders and speculators on Wall Street are chasing sentiment, not underlying value, and the markets right now are being driven by emotion to what is perceived as an event, but is really a long process that will be managed by reasonable people who aren’t interested in damaging their nation’s economic fortunes. Nobody knows exactly how the long-term prospects of Britain, the EU or American companies doing business across the Atlantic will be impacted by Brexit, but it would be unwise to assume the worst so quickly after the vote. 

But you can bet that, long-term, everybody will find a way to move past this interesting, unexpected event without suffering—or imposing—too much damage. Meanwhile, hang on, because the market roller coaster seems to have entered one of those wild rides that we all experience periodically.

Sincerely,

Edward Kohlhepp Jr. CFP®, MBA
President
 
Edward Kohlhepp Sr. CFP®, ChFC, CLU, CPC, MSPA
Founder & CEI

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 


Sources:

https://www.yahoo.com/news/brexit-shows-global-desire-throw-142925862.html

https://www.washingtonpost.com/opinions/global-opinions/after-brexit-what-will-and-wont-happen/2016/06/24/c9f7a2f6-39f1-11e6-8f7c-d4c723a2becb_story.html

http://www.businessinsider.com/global-market-brexit-reaction-2016-6

www.ft.com/cms/s/0/f0c4f432-371d-11e6-9a05-82a9b15a8ee7.html#ixzz4CVixCz25

http://www.ft.com/cms/s/0/f0c4f432-371d-11e6-9a05-82a9b15a8ee7.html?ftcamp=traffic/partner/brexit/dianomi/row/auddev#axzz4CVide1Sz

http://www.newser.com/story/227149/brexit-now-what-happens-welcome-to-article-50.html

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The Brexit Moment of Truth

June 22, 2016

On Thursday, British voters will finally decide whether their country will continue to be part of the European union—albeit with its own currency and immunity from certain rules—or leave the EU altogether. The vote will be momentous for Europe as a whole, a test of whether the union can hold together in the face of myriad challenges like the Syrian refugee crisis, disparities in wealth and economic health between north and south, and debt problems like those posed by Greece and, worryingly, Spain and Italy. There are strong anti-EU parties in Germany, the Netherlands, Greece, Spain and Italy which would certainly be emboldened if Britain were to vote to secede from the EU.

How will the vote go? British Prime Minister David Cameron is strongly in favor of staying in the EU, as is much of his Conservative government, the Labour Party, the Liberal Democrats and the Scottish National Party. Ironically, if there is a “Brexit,” then the Scottish people might vote to exit Britain and join the EU on their own.

On the other side, less than half the Conservative members of Parliament are in favor of exiting the EU, along with members of the UK Independence Party and many lower-wage workers who view EU membership as an attack on British sovereignty.

What’s at stake? With an “exit” vote, British companies could lose access to the consolidated European market for duty-free trade and financial services. Some analysts think that London would be unable to function as Europe’s de facto financial center if Britain were no longer a part of Europe’s union. And U.S. companies have long seen Britain as the gateway to free trade with the 28 nations in the European Union, which explains why American corporations and Wall Street firms have donated substantial sums to the “stay” campaign. Britain could lose American investment and manufacturing jobs that would move across the channel to mainland Europe.

Add it all up, and the International Monetary Fund has predicted that a Brexit would reduce British economic growth by up to 5.6 percent in the next three years, partly driven by a sharp decline in the British currency. Meanwhile, you may have noticed that the global investment markets have become noticeably choppier in the runup to the vote. The uncertainty created by a British “leave” vote would create still more volatility, which is why Fed Chairperson Janet Yellen has mentioned the referendum overseas as having an influence on the decision of whether or not to raise interest rates in the U.S.

Who will win? The vote is expected to be close, but recently, the oddsmakers in Britain have given 73% odds on a “stay” vote. Another voting machine, the global currency markets, have driven a two-day rise in the value of the British pound that is the seventh-largest since 1971—a clear sign that the most sophisticated global investors expect the European Union to stay intact.

Sincerely,   

Edward J. Kohlhepp, Jr., CFP®, MBA
President 
 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
 
Founder & CEO

 

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

 

Sources: 

https://www.washingtonpost.com/news/wonk/wp/2016/06/18/how-brexit-could-hurt-america/

http://www.ft.com/fastft/2016/06/21/pounds-two-day-jump-among-biggest-on-record/http://www.nytimes.com/interactive/2016/world/europe/britain-european-union-brexit.html?_r=0

http://www.ft.com/fastft/2016/06/21/pounds-two-day-jump-among-biggest-on-record/

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What is the Jobs Report Telling Us?

 

June, 2016

You’ve probably heard that the Bureau of Labor Statistics () Employment R for the month of May was disappointing. Economists who follow job growth in the U.S. economy were expecting 123,000 new jobs to be created. The actual number, according to the BLS, was 38,000—the smallest gain since September of 2010.

What’s going on?  How worried should we be? Is an 85,000 shortfall in job growth, in a single month, telling us that the U.S. economy is about to plunge into a deep recession?

As it turns out, the investment markets largely shrugged off the surprising number—for a variety of reasons. First of all, a strike affecting 35,000 Verizon employees was somehow factored into the data, so unless all the striking workers are never coming back to work, a real count would have put the job-adding number at around 73,000. Second, the employment data comes with a huge asterisk: these are estimates with a margin of error of 100,000 jobs. That means we won’t actually know how many jobs were created until sometime in the future.

Third: despite the low job creation figure, the Bureau of Labor Statistics also told us that the unemployment rate is dropping, currently to 4.7%, the lowest rate since November 2007. How can that be? BLS statistics say that people are leaving the workforce at a faster rate than previously, but the economy has also been adding 180,000 to 200,000 jobs almost every month for the past five years. Is it possible that it has finally given a job to most of the people who want one? 

As evidence, the BLS has reported that hourly earnings by workers are up 3.2% for the first five months of 2016, which suggests that workers have a bit more pricing power than they did, say, last year. That suggests that we are experiencing a tighter labor market, not one where jobs are falling off the table and many people are too discouraged to apply for a job.

Finally, the uncertainty over jobs has almost certainly delayed the rise in interest rates that had, before the report, been widely expected from the U.S. Federal Reserve Board in June or July. You can expect the Fed to be more cautious about adding any costs to the economy until its economists can get a handle on what that odd job statistic means for the overall health of U.S. businesses. That would give the economy a slight boost, and might lead to higher jobs growth figures in the future.

Sincerely,

 

 

Edward J. Kohlhepp, Jr., CFP®, MBA
President 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
 
Founder & CEO

 

 

 

 

 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Sources:

http://thereformedbroker.com/2016/06/03/wall-street-stunned/?utm_source=dlvr.it&utm_medium=twitter

http://www.businessinsider.com/wall-street-on-may-2016-jobs-report-2016-6

http://www.businessinsider.com/us-jobs-report-may-2016-2016-6

http://www.forbes.com/sites/samanthasharf/2016/06/03/jobs-report-u-s-adds-just-38000-jobs-in-may-unemployment-rate-down-to-4-7/?linkId=25155735#22a015b216da

https://www.washingtonpost.com/news/wonk/wp/2016/06/03/what-just-happened-with-jobs-in-america/?tid=sm_tw

http://www.ft.com/fastft/2016/06/03/us-markets-shake-off-grim-jobs-report/

 

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Big Vote in Europe

 

 

May 2016

The big question in Europe this year is how the British people will vote on June 23. Will they vote to leave the European Union (what’s being called the “Brexit”) or decide to continue to be part of the 28-nation economic alliance? 

What’s at stake? It’s hard to know, exactly. Great Britain already maintains its own currency, separate from the euro, so the vote will be about whether the country continues to pay into the EU budget and adhere to the eurozone’s regulations. Norway is also living outside the EU, yet it contributes to the budget, adheres to the regulations and seems to get most of the benefits of membership—and thereby offers a way for Britain to exit and still maintain all the trappings of membership. The uncertainty over the seven years that would be required to transition out of membership would be over how, exactly, a new relationship would be structured.

The eurozone is suffering from high unemployment, low economic growth and a disparity between the richer (UK, Germany, Scandinavia) and poorer (Greece, Spain) nations. All European Union members are governed by policies created by the European Commission and the European parliament, and subject to the dispute resolution powers of the European Court of Justice. British voters might decide they don’t like the shared sovereignty and ties to the economic problems.

Naturally, there is a lot of lobbying on both sides in the runup to the vote. Economists seem to be uniformly against a Brexit, pointing out the obvious: that it would be hard for London to continue its role the financial capitol of Europe if its nation is not actually a part of the European Union. They point out that, unlike Greece, Britain already controls its own currency, and it is not a part of the passport-free zone, which is shorthand for having control over its own policies in regard to the Middle Eastern refugee crisis.

Those in favor of Brexit say that Britain would be freer to enter into trade deals with other countries (think: China) than it is today, and of course there is a lot of nationalist sentiment about reducing foreign influence over British affairs.

Who will win? The most recent polls show 46% of British voters will cast a ballot to leave the EU, vs. 44% who will vote to remain—and 10% who say they don’t know how they’ll vote. A little more than a month from the actual Brexit election, there appears to be plenty of time for either side to continue pressing their case.

Sincerely, 

Edward J. Kohlhepp, Jr., CFP®, MBA
President 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
Founder & CEO
 
 

 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

Sources:

http://www.ft.com/intl/cms/s/2/70d0bfd8-d1b3-11e5-831d-09f7778e7377.html#axzz40tXOLR6p

http://www.ft.com/intl/cms/s/2/e7b2d4d4-daea-11e5-98fd-06d75973fe09.html#axzz48O9tGx46

http://www.economist.com/node/21697253
 

http://www.express.co.uk/news/politics/668624/EU-referendum-ICM-poll-UK-on-course-for-Brexit-Europe-Day

 

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Puerto Rico Defaults

The island’s debt crisis worsens. Will Congress act before July 1?  

May 2016

 

On May 2, Puerto Rico defaulted on its debt again. As it managed to negotiate with some of its creditors, its Government Development Bank did pay part of the $422 million it owed this week, but about $270 million in payments were missed.1,2  

Puerto Rico’s fiscal crisis made headlines last year when its total debt passed $70 billion, more than any U.S. state except for New York and California. Its government has defaulted three times on its debt since the start of 2015.3,4 

Puerto Rico has been in a recession for the better part of a decade. About 45% of Puerto Ricans live in poverty, and people are leaving the commonwealth at a rate of 1,500 a week. Its schools, hospitals, and social services programs have already been hit with severe budget cuts.3,5  

On May 1, Governor Alejandro García Padilla called the default “a painful decision,” but also a necessary one. Faced simultaneously with “the inability to meet the demands of our creditors and the needs of our people, I had to make a choice. I decided that essential services for the 3.5 million American citizens in Puerto Rico came first.”5 

July 1 presents a critical deadline. On that day, the commonwealth must make about $2 billion in debt payments. Analysts are highly skeptical that Puerto Rico will be able to do that.1       

Will Congress intervene?The pressure is certainly mounting on Capitol Hill lawmakers.  

Will a bailout be necessary? Maybe not. Last spring, the House Natural Resources Committee attempted to put together a relief bill in response to the crisis. If passed, it would not represent a bailout, as it would not deliver any federal money to Puerto Rico. The bill is still in the works.1  

In 2015, House Speaker Paul Ryan (R-WI) gave Congress a March 31, 2016 deadline to address this issue, but that deadline came and went without action. Treasury Secretary Jack Lew and the White House implored Congress to address the problem this week. In a letter to congressional leaders, Lew stated that minus “a workable framework for restructuring Puerto Rico’s debts, bondholders will experience a lengthy, disorderly, and chaotic unwinding, with non-payment for many a real possibility.”1,2   

Lew also warned that without legislation including “appropriate restructuring and oversight tools, a taxpayer-funded bailout may become the only legislative course available to address an escalating crisis.” Since Puerto Rico is not a state, a Chapter 9 bankruptcy is not an option.4,5 

What does this mean for bond investors?Greater levels of concern. American investors have bought Puerto Rico’s bonds for years, as they are exempt from federal and state income tax. Earlier this year, the commonwealth defaulted on $37 million of bonds issued by the Puerto Rico Infrastructure Financing Authority, which were not constitutionally backed. This week, Puerto Rico defaulted on bonds backed by its Government Development Bank. If the GDB cannot make the huge debt payment due July 1, then Puerto Rico will default on some of the general obligation bonds issued by its government.4     

Most municipal bond funds have sold off their Puerto Rican debt and have not been greatly affected by these developments. Small investors holding Puerto Rican debt can take some solace in the fact that several Puerto Rican bonds are insured; in case of a default, the principal and interest would be protected by a bond insurance company. Contrast that with the plight of the funds still heavily invested in distressed Puerto Rican debt; as the commonwealth cannot declare bankruptcy, they may have to turn to regular courts in pursuit of payouts.4       

Sincerely,

Edward J. Kohlhepp, Jr., CFP®, MBA
President 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
 
Founder & CEO

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

     

Citations.

1 - thehill.com/policy/finance/278352-puerto-rico-defaults-as-islands-governor-pushes-congress [5/2/16]

2 - fortune.com/2016/05/03/puerto-rico-default-more-political-fallout-than-market-impact/ [5/3/16]

3 - bloombergview.com/quicktake/puerto-ricos-slide [4/28/16]

4 - abcnews.go.com/Business/wireStory/qa-puerto-ricos-debt-crisis-explained-38803972 [5/2/16]

5 - usatoday.com/story/money/2016/05/01/puerto-rico-expected-default-further-debts/83794076/ [5/1/16]

 

 

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DOL Announcement

April 14, 2016

 

Dear Valued Client,

You may have seen recent media coverage regarding a new fiduciary rule approved by the U.S. Department of Labor (DOL). This regulation will affect our business and the financial industry as we work under a new set of rules and disclosure requirements, but it should not dramatically impact the most important thing to us, which is our relationship with you. 

 We want you to know that we are working with our broker-dealer, Cambridge Investment Research, Inc., and its team of legal, fiduciary, and retirement experts as they are in the process of reviewing the details of the DOL rule. Given the DOL rule was posted with over 1,000 pages, we are expecting this to take a reasonable period of time to properly understand how this affects you as an investing client and us as your financial advisor, as well as the full scope of impact across the retirement industry. 

While the full details are unclear at this early stage, we are anticipating a “phased” implementation approach to the rule with some of the final rule’s changes taking effect in April 2017, and other requirements going into full effect on January 1, 2018. This phased implementation is appreciated so we can work together to decide what is in your best interests in terms of your investing and financial goals, while observing relevant requirements of this new DOL rule. At this point, Kohlhepp Investment Advisors, Ltd. and Cambridge’s policies or processing of business related to retirement plans or IRA accounts have not changed. If you have any questions about our current fiduciary status or the rules under which we currently operate, please ask! 

Remember: As CERTIFIED FINANCIAL PLANNER™ practitioners, we DO have a fiduciary responsibility to you. 

This simple commitment states: We believe in placing your best interests first.

Therefore, we are proud to commit to the following five principles:

  •          We will always put your best interests first.
  •          We will act with prudence; that is, with the skill, care, diligence, and good judgment of a professional.
  •          We will not mislead you, and We will provide conspicuous, full and fair disclosure of all 
         important facts.
  •          We will avoid conflicts of interest.
  •          We will fully disclose and fairly manage, in your favor, any unavoidable conflicts.

We greatly value our relationship and plan to provide you with periodic updates as insight on the new rule becomes clear and applicable to your investing interests and goals.

Sincerely,

Edward J. Kohlhepp, Jr., CFP®, MBA
President 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO
 
 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

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Cheaters, Thieves and Tax Havens

 

April, 2016

Leaked information tells the story of prominent world leaders who avoided taxes or looted their country’s treasuries in order to squirrel away not only money, but expensive yachts, luxury homes, ownership of a candy company and investments in construction companies. The Prime Minister of Iceland has already resigned as a result of the leaked client files of a Panamanian-based law firm that specializes in creating secret tax havens.

What, exactly, are we to make of the Panama Papers leak?

The sometimes shocking revelations that are making their way into news outlets is the result of a hack into the files of a giant Panamanian law firm known as Mossack Fonseca, which had apparently become the world’s go-to resource for kleptocrats and tax avoiders who wanted to hide assets away in shadowy offshore shell corporations. 

The hackers ultimately sent 11.5 million records to the German newspaper Suddeusche Zeitung, which promptly shared the massive data trove with the various news organizations that are members of the International Consortium of Investigative Journalists. Their analysis is far from complete, but what we know so far is what you probably already suspected: the leaders of certain countries like the Ukraine, Syria, Saudi Arabia and Russia have been squirreling away state resources into their own secret personal accounts, while prominent leaders in less corrupt nations have been quietly funneling money into offshore havens to avoid having to pay their fair share of taxes. And this activity has apparently been going on for decades.

Nobody should be terribly surprised that close associates of Russian president Vladimir Putin—including cellist Sergei Roldugin, along with brothers Arkady and Boris Rotenberg—are connected to more than $2 billion in shadowy assets, some of which found their way back into Russia’s TV advertising business.   The Rotenbergs are also proud owners of seven British Virgin Islands-based companies that, in turn, control investment assets around the world. 

Nor was the world astonished to learn that two cousins of embattled Syrian President Bashar Assad have been filtering tens of millions of dollars worth of the country’s oil revenues through numerous offshore accounts. Former Iraqi interim prime minister Ayad Allawi managed, in his brief kleptocratic term in office, to secret away assets in a Panama-registered company called I.M.F. Holdings and a British Virgin Islands company called Moonlight Estates Ltd.

The embattled people of Ukraine are doubtless outraged to discover that Ukranian President Petro Poroshenko is sole owner of a British Virgin Islands firm that secretly controls a European candy factory, auto plants, a TV channel, a chocolate business and a shipyard. And one wonders why Saudi Arabian king Salman Bin Abdulaziz Bin Abdulrahman Al Saud would want to hide assets offshore in several British Virgin Islands companies that hold $34 million in mortgages for luxury homes in London, and a fancy yacht that he uses for pleasure cruises.

The most immediate fallout from the released files is the resignation of the Prime Minister of Iceland, Sugmundur Gunnlaughsson, after it was revealed that the Panamanian law firm had secreted $4 million of bonds in his name through a British Virgin Islands shell company—assets he had never gotten around to revealing to the nation’s tax collector.

The list of offshore cheats also includes the former Prime Minister of the nation of Georgia, Argentine President Mauricio Macri, former Jordanian Prime Minister Ali Abu Al-Ragheb, former Qatari Prime Minister Hamad Bin Jassim Bin Jaber Al Thani, and some people whose names you might recognize: soccer player Lionel Messi and the late father of UK Prime Minister David Cameron, who apparently avoided British taxes for 30 years on his investment fund by employing accounts based in the Bahamas but incorporated in Panama. 

High-ranking Chinese and Spanish officials, and six members of the British House of Lords also made the list.

As the hacked files are sifted through for more revelations, it reminds us that, while data security issues are a huge nuisance for all of us, they not an unalloyed evil. Hacked files can sometimes lead to greater social transparency, and help us spot the people who cheat or steal, some of whom, by strange coincidence, happen also to be among the world’s wealthiest individuals. But, if these assets are frozen by international monetary authorities, perhaps not for long. 

Sincerely, 

Edward J. Kohlhepp, Jr., CFP®, MBA
President 
 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO
 

 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

 

 

Sources:

http://www.usatoday.com/story/news/world/2016/04/04/panama-papers-list/82607516/

http://www.cnn.com/2016/04/04/world/panama-papers-explainer/index.html

http://www.theguardian.com/news/2016/apr/03/the-panama-papers-how-the-worlds-rich-and-famous-hide-their-money-offshore
 
 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

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How Should We Think About the Future?

 

April, 2016

Chances are, you’re underestimating the amount of progress we’re going to make in technology, medicine and a host of other things. Why? Because your brain, and mine, and everyone else’s, thinks linearly, rather than exponentially. We are living in an age of exponential change in things like computing power and speed, decoding and finding medical uses for the human genome, adoption of the Internet mobile technology and various social media sites, self-driving cars and many other things that were not even on your radar ten years ago.

According to an article at Singularity Hub, our brains are wired to predict the future based on the past. If we’re walking down a road, and taking steps a meter in length, we assume that it will take 30 steps to travel 30 meters. This progress is relatively easy to predict, and this linear thinking would have worked pretty well for evaluating the growth of our economy and its various technologies until fairly recently.

But now think about exponential growth, where each step we take is twice as long as the previous one. Our first step is a meter, the next one is two, and by step number 30, you will have traveled a billion meters—a distance equal to 26 trips around the Equator. This kind of rapid change is very difficult for our minds to wrap themselves around, but it accurately describes the evolution of many of the technologies and medical services that we enjoy today.

One of the hardest things to adjust to, the article tells us, is how things seem to appear out of nowhere. Think: mobile device apps, or the iPhone itself, or the exponential growth of information available on the Internet. That’s because exponential growth seems to happen overnight. When you double the length of each of those steps, you’re traveling 125 million miles at step 28, which is as much as all of the previous steps combined. Your next step is 250 million miles, again as much as all previous steps, and then you step 500 million miles, and you have traveled a full billion. If this were technology, those last two steps may see the advent of something completely unexpected and far beyond whatever came before.

Individuals and companies can’t predict exactly what will happen. But we can prepare for a future that moves so quickly that it seems out of control, and know that it’s actually the result of steady progress where a lot of previous steps built on each other invisibly but exponentially. We can allow ourselves to be pleasantly surprised by what the world brings us in the next ten or 20 years in the form of new therapies, new conveniences and access to more and better information—because changes are coming faster than our humble minds can predict, whether we decide to adjust to them or not.

Sincerely, 

Edward J. Kohlhepp, Jr., CFP®, MBA
President 
 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
 
Founder & CEO

 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

 

Source:

  

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

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Beware the Bogus IRS

 

March, 2016

Most people have seen bogus emails purported to be from the executors of the estate of Nigerian princes or other obscure foreign notables who want to give them millions of dollars, and sometimes they get bogus calls telling them they can win a lottery sweepstakes or receive debt relief.

But apparently one of the most effective and dangerous telephone scams these days involves what appears to be a call from the Internal Revenue Service. The phone rings, and a very aggressive person on the other end of the line tells you that you owe money to the IRS. This debt, you are told, must be paid promptly through a pre-loaded debit card or wire transfer. If you refuse to cooperate (as, of course, you should), you’re threatened with arrest, suspension of a driver’s license or revocation of a business license. In the case of recent immigrants, the caller may also threaten deportation.

In the most sophisticated calls, the scammer may know (and recite) the last four digits of your Social Security number, and may even use electronic spoofing to make it appear on your phone’s caller ID that the calling number comes from IRS headquarters. A bogus follow-up email may be sent to support the bogus call, or sometimes a follow-up call from an individual who is pretending to be from the local police or the Department of Motor Vehicles.

The goal, of course, is to scare you out of your wits—enough so that you’ll make a payment so the federal authorities will go away and leave you alone. In all, the IRS says that 5,000 victims have collectively paid over $26.5 million to bogus IRS scammers.

A more recent version of the scam involves a less aggressive phone call from somebody pretending to be an IRS agent, who says he or she wants to verify your tax information so your forms can be processed. The scam artists say they’re looking at your tax return, and need a few additional pieces of information. The goal is to get you to give up personal information such as your Social Security number, bank numbers or credit card information that can then be used for identity theft scams.

The IRS has assured the public that it never, ever asks for credit card information over the phone, and it never requests prepaid debit card or wire transfer payments. It never asks for you to divulge personal information by phone or email, or demands payments without giving you an opportunity to appeal the amount they say you owe.

If you receive a call that threatens police action and demands immediate payment, that is a certain indication that the caller does not represent the IRS. Generally taxpayers who have a legitimate tax issue are contacted by mail.

If you receive one of these bogus calls, you can report the incident to the Treasury Inspector General at 800-366-4484. And if you get an email that purports to be from the IRS, make sure you don’t click on any attachments. Instead, forward the email, in its entirety, to This email address is being protected from spambots. You need JavaScript enabled to view it. .

 

Sincerely,

 

Edward J. Kohlhepp, Jr., CFP®, MBA
President 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Founder & CEO

 

 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

 

Sources: 

http://www.ktvn.com/story/31465469/irs-says-scammers-changing-tactics-again

https://www.irs.gov/uac/Newsroom/IRS-Repeats-Warning-about-Phone-Scams

https://www.irs.gov/uac/Newsroom/IRS-Warns-of-Pervasive-Telephone-Scam

  

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

 

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Avoiding the Pain

February 19, 2016

There’s no question that we experience emotional pain and anxiety when our portfolios are losing money due to market downturns. Behavioral scientists tell us that we feel losses twice as keenly as positive returns.

But that doesn’t tell us what we really want to know, which is: other than selling at the wrong time and locking in losses, how do we make these downturns less painful?

Economist Richard Thaler conducted a stock market experiment that offers us all some insight. He asked people to select one of two investment options, one heavier weighted in stocks with higher returns and higher volatility, the other with fewer stocks, lower returns and less bouncing around. Half of the people were shown how that investment would have panned out eight times in the next year, while the other half were only shown the result once a year. In other words, some were looking at the stock market roller coaster eight times as often as the others.

You can probably guess the result: those who saw their results eight times a year only put 41% of their money into stocks. Those who saw the results just once a year invested 70% in stocks. The more often you look at your portfolio, in good times and bad, the more pain and anxiety you are likely to experience, and the more cautious you tend to be.

In a recent blog post, a market analyst looked at all the bear markets and bull markets going back to 1928, and found something interesting. The bull market rallies, on average, delivered 57% returns, while bear markets, on average, took away 24% of the market’s value. The bull runs lasted, on average, 474 days, while bear market drops were more intense, compressed into an average of just 232 days before the next upturn.

In other words, the significant declines were only about half as large as the market gains, but they were much faster, lasting about half as long as the slow, incremental rises that are habitual to bull runs. And this was also true at the extremes. On average, gains of 40% or more actually generated an average 84.9% return, while the losses of 20% or more were down, on average, 37.2%. Those significant bull runs lasted, on average, almost two years: 713 days. The most severe downturns lasted, on average, less than a year: 359 days.

Combine these statistics, and you come to a few simple conclusions: bull markets don’t attract a lot of attention, and move more gradually than the eye-catching downturns. Bull markets, over time, generate twice the upside as bear markets do downside. And the best way to avoid the mental anguish of these occasional sharp downturns is to spend less time looking at your overall returns. You miss the two steps forward, and most importantly, you also miss the more traumatic one step backward.

Sincerely,  

Edward J. Kohlhepp, Jr., CFP®, MBA
President 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
Founder & CEO

 

 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

 

Source:

http://awealthofcommonsense.com/2016/02/why-bear-markets-are-so-painful/

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

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The Good Side of Bad Markets

 

February, 2016

After the recent downturn in the U.S. and global stock markets, you can be pardoned if you wished that the markets were a bit tamer. Wouldn’t it be nice to get, say, a steady 4% return every year rather than all these ups and downs?

Be careful what you wish for. There are at least three reasons why you should hope the markets continue scaring investors half out of their wits.

1) The very fact that stock downturns scare people is one reason why stocks deliver a higher return than bonds. Economists call it the “risk premium;” which can be roughly translated as: people are not willing to pay as much for an investment that will periodically frighten them to death as they would pay for an investment that delivers a less exciting investment ride. Over their history, stocks have been a fairly consistent bargain relative to less volatile alternatives, which is another way of saying that they’ve delivered higher long-term returns than bonds and cash.

2) If you’re accumulating for retirement by putting money in the market every month or quarter, every downturn means that you can buy shares at a bargain price while many other investors are selling out at or near the bottom.   Over time, as the market recovers, this can give a little extra kick to your overall return.

3) Market downturns give an advantage to those who are willing to practice disciplined rebalancing among different asset classes. Basically, that means that when stocks go down, any new cash goes disproportionately into stocks to bring them back up to their former share of the overall portfolio. This, too, allows you to buy extra shares when the prices are low, and can also boost long-term returns.

There’s no question, the downward plunge on the stock market roller coaster is scary. It’s hard to maintain your discipline when the voice in the back of your brain is telling you to bail out on the bouncy trip before somebody gets hurt. 

But unless this is the first time in history that the market goes down and stays down forever, we will ultimately look back on the decline and see a buying opportunity, rather than a great time to sell and jump to the sidelines. The patient, disciplined, long-term investor should see market volatility as one of your best friends and allies in your journey toward retirement prosperity.

Remain patient!

Sincerely,

 

 

 

 

 

Edward J. Kohlhepp, Jr., CFP®, MBA
President 
Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
Founder & CEO

 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

 

 

 

 

 

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When Will Stocks Stabilize?

How deep will this correction ultimately be? 

 

                                                                                                                                                                              January 22, 2016                       

January may prove to be the worst month for stocks in eight years. The S&P 500 just corrected for the second time in five months, and some investors think the bull market may be ending.1,2 

Bull markets do end, and the current one is nearly seven years old, the third longest in history. If a bear market is truly on the horizon, it may not last very long – the 12 bear markets recorded since the end of World War II have averaged 367 days in duration.2    

How far would stocks have to fall for a bear market to begin? Should the S&P close at 1,708 or below, you would have an “official” bear market on Wall Street – a 20% fall of that index from its most recent peak. Right now, the S&P is above 1,800.2,3    

While the S&P, Dow Jones Industrial Average, and Nasdaq Composite have all corrected this month, the damage to the small caps has been worse. The Russell 2000 is now in a bear market, off more than 20% from its June 2015 high. On January 20, the MSCI All-Country World index went bear, joining the Nikkei 225, TSX Composite, Hang Seng, and Shanghai Composite.2,4  

Where is the bottom? We may not be there just yet. For the market to stabilize or rebound, institutional investors must accept (or at least distract themselves from) three realities that have been hard for them to stomach...     

Oil prices may remain under $50 all year. Earlier this month, the Wall Street Journal asked 12 investment banks to project the average crude oil price across 2016. Their consensus? West Texas Intermediate crude will average $48 in 2016; Brent crude will average $50. Oil price forecasts are frequently off the mark, however – and if the oil glut persists, prices may take months to regain those levels. Saudi Arabia and Russia are not cutting back output, as they want to retain market share. With embargoes being lifted, Iran is set to export more oil. U.S. daily oil output has fallen by only 500,000 barrels since April.5 

China’s manufacturing sector may never again grow as it once did. Its leaders are overseeing a gradual shift from a robust, manufacturing-centered economy to a still-booming economy built on services and personal consumption expenditures. The nation’s growth rate has vacillated between 4%-15% since 1980, but for most of that time it has topped 8%. In 2015, the Chinese economy grew only 6.9% by official estimates (which some observers question). The International Monetary Fund forecasts growth of just 6.3% for China in 2016 and 6.0% in 2017. Stock and commodity markets react quickly to any sputtering of China’s economic engine.6       

The Q4 earnings season looks to be soft. A strong dollar, the slumping commodities sector, and the pullback in U.S. stocks have all hurt expectations. A note from Morgan Stanley struck a reasonably positive chord at mid-month, however, stating that “a lowered bar for earnings should be cleared” and that decent Q4 results could act as “a catalyst to calm fears.”7  

What developments could help turn things around this quarter? OPEC could cut oil output, Chinese indicators could beat forecasts, and corporate earnings could surprise to the upside. If these seem like longshots to you, they also do to economists. Still, other factors could emerge.    

Central banks could take further action. Since China’s 6.9% 2015 GDP came in below projections, its leaders could authorize a stimulus. The European Central Bank could increase the scope of its bond buying, and the Federal Reserve could hold off on tightening further in the first half of the year. If this month’s Fed policy statement notes that Fed officials are taking extra scrutiny in light of recent events, it could be reassuring. Any statement that could be taken as “second thoughts” about raising interest rates would not be reassuring.6 

U.S. GDP could prove better than expected. The Atlanta Fed thinks the economy grew 0.6% in Q4 and Barclays believes Q4 GDP will come in at 0.3%; if the number approaches 1%, it could mean something for investors. Moving forward, if the economy expands at least 2.5% in Q1 and Q2 (which it very well might), it would say something about our resilience and markets could take the cue. Other domestic indicators could also affirm our comparative economic health.8    

While the drama on Wall Street is high right now, investors would do well not to fall prey to emotion. As Jack Bogle told CNBC on January 20, “In the short run, listen to the economy; don’t listen to the stock market. These moves in the market are like a tale told by an idiot: full of sound and fury, signaling nothing.”9 

Sincerely, 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Edward J. Kohlhepp, Jr., CFP®, MBA

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 - bostonherald.com/business/business_markets/2016/01/market_analyst_believes_stocks_will_rebound_after_correction [1/14/16]

2 - jillonmoney.com/will-stock-correction-lead-to-bear-market/ [1/16/16]

3 - foxbusiness.com/markets.html [1/20/16]

4 - cnbc.com/2016/01/20/msci-global-stock-market-index-hits-bear-market.html [1/20/16]

5 - tinyurl.com/h6ry47n [1/12/16]

6 - bbc.com/news/business-35349576 [1/19/16]

7 - usnews.com/news/articles/2016-01-14/will-corporate-earnings-be-the-stock-markets-savior [1/14/16]

8 - money.cnn.com/2016/01/19/news/economy/global-fears-federal-reserve-rate-hike/ [1/19/16]

9 - cnbc.com/2016/01/20/investing-legend-jack-bogle-stay-the-course.html [1/20/16]

 

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The Great Panic of 2016

 

                                                                                                   January 20, 2016

Wow! There’s no diplomatic way to say this: the global stock markets are in panic mode right now. In two weeks of trading, the U.S. S&P 500 index is down 8% on the year, which brings us close to correction territory (a 10% decline), and has some predicting a bear market (a 20% decline). 

On top of that, we’ve been hearing a widely-publicized, rather alarming prediction from Royal Bank of Scotland analyst Andrew Roberts, saying that the global markets “look similar to 2008.” Mr. Roberts is also predicting that technology and automation are set to wipe out half of all jobs in the developed world. If you listen closely out the window, you can almost hear traders shouting “Sell! Head for the exits!”

When you’re in the middle of so much panic, when people are stampeding in all directions, it’s hard to realize that there is no actual fire in the theater. Yes, oil prices are down around $30 a barrel, and could go lower, which is not exactly terrific news for oil companies and oil services concerns—particularly those who have invested in fracking production. But cheaper energy IS good news for manufacturers and consumers, which is sometimes forgotten in the gloomy forecasts. Chinese stocks and the Chinese economy are showing more signs of weakness, and there are legitimate concerns about the status of junk bonds—that is, high-yield bonds issued by riskier companies with high debt levels, and many developing nations. These bonds have stabilized in the past few weeks, but another Fed rate hike could destabilize them all over again, leading to forced selling and investors taking losses in the dicier corners of the bond market.

If you can think above the shouting and jostling toward the exits, you might take a moment to wonder about some of these panic triggers. Are oil prices going to continue going down forever, or are they near a logical bottom? Is this a time to be selling stocks, or, with prices this low, a better time to be buying? Are China’s recent struggles relevant to the health of your portfolio and the value of the stocks you own?

And what about the RBS analyst who is yelling “Fire!” in the crowded theater? A closer look at Mr. Roberts’ track record shows that he has been predicting disaster, with some regularity, for the past six years—rather incorrectly, as it turns out. In June 2010, when the markets were about to embark on a remarkable five year boom, he wrote that “We cannot stress enough how strongly we believe that a cliff-edge may be around the corner for the global banking system (particularly in Europe) and for the global economy. Think the unthinkable,” he added, ominously.    (“The unthinkable,” whatever that meant, never happened.)

Again, in July 2012, his analyst report read, in part: “People talk about recovery, but to me we are in much worse shape than the Great Depression.” Wow! Wasn’t it scary to have lived through, well, a 3.2% economic growth rate in the U.S. the following year? What Great Depression was he talking about?   Taking his advice in the past would have put you on the sidelines for some of the nicest gains in recent stock market history. And it’s interesting to note that one thing Mr. Roberts did NOT predict was the 2008 market meltdown.

Since 1950, the U.S. markets have experienced a decline of between 5% and 10% (the territory we’re in already) in 35.5% of all calendar years—which is another way of saying that this recent drawdown is entirely normal. One in five years (22.6%) have experienced drawdowns of 10-15%, and 17.7% of our last 56 stock market years have seen downturns, at some point in the year, above 20%. 

Stocks periodically go on sale because people panic and sell them at just about any price they can get in their rush to the exits, and we are clearly experiencing one of those periods now. Whether this will be one of those 5-10% years or a 20% year, only time will tell. But it’s worth noting that, in the past, every one of those drawdowns eventually ended with an even greater upturn and markets testing new record highs. 

Many investors apparently believe this is going to be the first time in market history where that isn’t going to happen. The rest of us can stay in our seats and decline to join the panic.

 Sincerely,

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Edward J. Kohlhepp, Jr., CFP®, MBA

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

 


 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 


Sources:

http://finance.yahoo.com/news/why-the-heck-are-the-markets-tanking-165146322.html

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7857595/RBS-tells-clients-to-prepare-for-monster-money-printing-by-the-Federal-Reserve.html

http://www.publicfinanceinternational.org/news/2012/07/economic-crisis-%E2%80%98worse-great-depression%E2%80%99

http://blogs.spectator.co.uk/2016/01/the-author-of-the-rbs-sell-everything-note-has-been-predicting-disaster-for-the-last-five-years/

http://www.marquetteassociates.com/Research/Chart-of-the-Week-Posts/Chart-of-the-Week/ArticleID/140/Frequency-and-Magnitude-of-Stock-Market-Corrections

 

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339 Hits

The Drama on Wall Street

 

January 8, 2016

Have your long-term financial goals changed in the last three days?

Are American companies less valuable because investors in China are panicking?

Is there any reason to think that because Chinese investors are panicking, that Chinese companies are less valuable today than they were a few days ago?

These are the kinds of questions to ponder as you watch the U.S. stock market catch a cold after China sneezed. In each of the first four trading days of the year, China closed its markets due to a rapid fall in share prices—a move which may have made the panic worse, since it made investors fear being trapped in stocks that are seen as dropping in value. It’s unclear exactly how or why, but the panic spread to global markets, with U.S. stocks falling 4.9% to mark the worst first-of-the-year drop in history. 

For long-term investors, the result is much the same as if you went to the grocery store and discovered that the prices had fallen roughly 5% across the board. At first, you might think this is a great bargain. But then you might wonder whether the prices will be even lower tomorrow or next week. One thing you probably WOULDN’T worry about is whether prices will eventually go back up; you know they always have in the past after these sale events expire.

Will they? The truth is, nobody knows—and if you see pundits on TV say with certainty that they know where the markets are going, your first impulse should be to laugh, and your second should be to check their track record for predicting the future. Without a working crystal ball, it’s hard to know whether the markets are entering a correction phase which will make stocks even cheaper to buy, or whether people will wake up and realize that they don’t have to share the panic of Chinese investors on this side of the ocean. The good news is there appears to be no major economic disruption like the Wall Street derivatives mess that triggered the 2008 downturn. The best, sanest investors will once again watch the markets for entertainment purposes—or just turn the channel.

Stay tuned!

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Edward J. Kohlhepp, Jr., CFP®, MBA

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Sources:

http://www.ft.com/intl/cms/s/0/f248931e-b4e5-11e5-8358-9a82b43f6b2f.html#axzz3wc533ghn
 

http://www.ft.com/cms/s/0/bc8c0d60-b54d-11e5-b147-e5e5bba42e51.html?ftcamp=published_links%2Frss%2Fhome_us%2Ffeed%2F%2Fproduct#axzz3wc533ghn

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The Fed Makes Its Move

Wall Street rallies as interest rates rise for the first time since 2006. 

December 18, 2015 

U.S. monetary policy officially changed course Wednesday. Federal Reserve officials voted to raise the federal funds rate by a quarter of a percentage point, ending an unprecedented 7-year period in which it was held near zero. Nearly ten years had passed since the central bank had adjusted interest rates upward.1  

The Federal Open Market Committee voted 10-0 in favor of the rate hike. It also raised the discount rate by a quarter-point to 1.0%.1     

Addressing the media after the FOMC announcement, Federal Reserve chair Janet Yellen shared the central bank’s viewpoint:With the economy performing well, and expected to continue to do so, the committee judged that a modest increase in the federal funds rate target is now appropriate, recognizing that even after this increase, monetary policy remains accommodative.”2 

Equities started Wednesday with minor gains, then advanced further. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite respectively advanced 1.28%, 1.45%, and 1.52% Wednesday. The yield on the 2-year Treasury hit a 5-year high of 1.021%. Gold rose $15.20 to close at $1,076.80 on the COMEX.3,4 

As a December rate increase was widely expected, the real curiosity concerned the following press conference. Would Janet Yellen offer any hints about monetary policy in 2016? 

She offered one: she said she doubted that any interest rate hikes in 2016 would be “equally spaced.” Aside from that remark, no new insights emerged; Yellen reemphasized that the Fed does not plan to raise rates aggressively.2 

Investors gained more insight from the Fed’s latest dot-plot chart, which expresses the Federal Open Market Committee’s opinion on where the benchmark interest rate will be at near-term intervals. The new dot-plot forecasts four rate hikes during 2016, with the federal funds rate climbing toward 1.5% by the end of next year (the median projection is 1.4%).5 

The dot-plot revealed benchmark interest rate targets of 2.4% for the end of 2017 and 3.3% for the end of 2018, slightly lower than the previously stated targets of 2.6% and 3.4%.5

That corresponds with the consensus of analysts surveyed by CNBC. Their expectation was for three quarter-point rate hikes across 2016, taking the federal funds rate toward 1%.6

Some analysts wonder if the next rate hike might occur at the FOMC’s March meeting. Nothing could be gleaned about that from Yellen’s press conference or the new FOMC announcement.6  

With more tightening seemingly ahead, what is in store for the market? Bears may want to wait before making any gloomy pronouncements. While rising interest rates are commonly assumed to impede a bull market, this is not always the case. In fact, the S&P 500 advanced 15% during the last round of tightening (2004-06).7  

Could higher interest rates decrease inflation pressure? That is a distinct possibility, and that would hurt wage growth and business growth. The Fed would like to see inflation in the vicinity of 2%, yet the Consumer Price Index is up only 0.5% in the past 12 months, held in check by a 14.7% annualized retreat in energy prices and a 24.1% annualized fall in gas prices. On the other hand, the Core CPI (minus food and energy prices) is up 2.0% in the past year.6    

The Fed may have made just the right move at the right time. If it had waited until 2016 to tighten, a collective “uh-oh” might have been heard from pundits and analysts, with comments along the lines of “Does the Fed know something about the economy that we do not?”  

As JPMorgan Private Bank chief U.S. investment strategist Kate Moore told CNNMoney this week, “Keeping interest rates at zero is enforcing the idea that the U.S. economy is fragile.” Years of easing certainly helped the stock market over the last 5 years or so.2,7      

Ultimately, the central bank felt the time had come for tightening. At Wednesday’s press conference, Yellen commented that data had led the Fed to raise rates – it had not made its move in response to any shifts in public opinion. “Consumers are in much healthier financial condition” than they once were, she remarked. The rate hike certainly expresses confidence in the economy, which could strengthen further in 2016.2 

Sincerely,

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
 

Edward J. Kohlhepp, Jr., CFP®, MBA

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives

 

 

       

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

  

Citations.

1 - marketwatch.com/story/federal-reserve-lifts-interest-rates-for-first-time-since-2006-2015-12-16 [12/16/15]

2 - blogs.marketwatch.com/capitolreport/2015/12/16/live-blog-and-video-of-the-fed-interest-rate-decision-and-janet-yellen-press-conference/ [12/16/15]

3 - cnbc.com/2015/12/16/us-markets-fed.html [12/16/15]

4 - reuters.com/article/usa-bonds-idUSL1N1452HC20151216 [12/16/15]

5 - marketwatch.com/story/federal-reserve-dot-plot-still-signals-4-interest-rate-hikes-in-2016-2015-12-16 [12/16/15]

6 - latimes.com/business/la-fi-federal-reserve-rate-hike-20151216-story.html [12/16/15]

7 - money.cnn.com/2015/12/15/investing/stocks-markets-fed-rate-hike/ [12/15/15]

 

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293 Hits

The Paris Attacks

 

November, 2015

Most of us watched news coverage of the multiple terrorist acts against the city of Paris, France, with a mixture of horror and dread. The horror was our usual response to terrorism, the feeling that arises when we ask ourselves: how can people think this way? And when we realize that, somehow, there ARE people who think that way, which is so far from our own reality that the realization triggers deep emotions somewhere far on the opposite end of the spectrum from inspirational. 

The dread, of course, comes from the realization that these attacks could have, and might still, happen here—that is, wherever we happen to be sitting, whatever concert venue or restaurant we might be planning to visit.

Hard on these emotions comes outrage, and that helps illustrate something that is seldom realized about terrorism. In a recently published book entitled The Better Angels of Our Nature, author Steven Pinker points out that terrorism is far from a new phenomenon. After the Roman conquest, resistance fighters in Judea—who called themselves zealots—would stab unguarded Roman officials whenever the opportunity arose. In the 11th century, Shia muslims launched furtive assassinations on officials who practiced a different version of their belief system. For 200 years, a cult in India strangled tens of thousands of people traveling through their country. The assassination of President William McKinley was executed by a particularly ugly breed of of terrorist known at the time as anarchists. Most of us remember days when London and Belfast were routinely rocked by Irish Republican Army terror strikes. And in the U.S., the Weather Underground of the 1960s had a terrible habit of setting off explosives in public places. 

The book lists many other instances of terrorist organizations, but all of them prove a point: eventually, each of these groups will go too far, provoke the consciousness of the general public in the wrong way, and turn sympathy to their cause into outrage. Pinker cites statistics that show that virtually zero terrorist organizations ever accomplish their aims, and they tend to die out after their most visible credibility-destroying “success.” One has only to think of the fate of Al Qaeda after 9/11 as an example of a terrorist organization whose relevance declined to near zero in the messy aftermath.

No doubt, the ISIS leaders who planned the attacks on Paris believed that this bloodletting would cause all Western nations to recoil in fear, and back off of their military efforts to contain the new caliphate, in order to placate the caliphate so it wouldn’t strike again. You and I know that this is pure nonsense. The inevitable outcome will be a new resolve, a hardening, a coming-together of the Western nations in a display of solidarity with France. Countries that were inclined not to get involved in the Middle Eastern messiness are now motivated to sign on for an international military campaign that will contain and perhaps hopefully completely destroy ISIS. Leaders who feared that their citizens would revolt at the thought of military intervention can now count on the support of their outraged voters. The next year or two will almost certainly reveal the ISIS attacks on Paris to have been a fatal mistake for those who dream of an Islamic, Sharia-governed caliphate in Syria and Iraq.

Today (Monday), you will see the world’s investment markets open lower, and probably close lower, as the horror of the events in Paris are translated into uncertainty about the world we live in—and, therefore, the safety of our assets, reflected in our stocks. The markets always respond reflexively and negatively to threats to our safety.

But as the year proceeds through its last few weeks, the smart money always tells us that these downturns are temporary. Fears that global enterprises are somehow worth less because blood was spilled overseas will prove to be overblown. More importantly, after the events in Paris, the object of our horror and fear—the terrorist organization known as ISIS—is about to confront an opponent more powerful than its leaders have the ability to imagine: the resolve of the Western nations. At the same time, it will have to endure the disgust and repudiation of moderate members of the muslim faith, in the Middle East and elsewhere.

The world changed over the weekend, but not in a way that affects the value of your investments. The change will be felt most powerfully in the failed dreams of a caliphate whose leaders have made a grave and awful miscalculation, who are destined to pay dearly for their malicious stupidity.

Sincerely,

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA 
 

Edward J. Kohlhepp, Jr., CFP®, MBA

 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives

 

  

Sources: This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

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335 Hits

Are You Using an EMV Card

 

October 8, 2015

By October 2015, the majority of credit and debit cards in the United States will be equipped with EMV-chip technology. EMV has already been implemented around the world to make payment cards more secure, but its safety net has significant limitations.

 

EMV, which stands for Europay, MasterCard, and Visa, technology promises to make your use of credit and debit cards safer than ever but the chips are not a cure-all when it comes to fraud. You may already have an EMV card, but you still need to be careful, understanding when and whether you are protected.

 

What is an EMV card?

 

EMV cards are equipped with a small computer chip that creates a unique code every time the card is used this code cannot be used again. Current credit and debit cards contain a magnetic strip that produces the same code every time it is used, making these cards easy to duplicate.

 

There are two types of EMV cards, “chip and PIN” and “chip and signature.” Chip and PIN cards require you to place your card in the chip enabled terminal and then enter your PIN to finish the transaction. Your card is not ejected from the terminal until the transaction is complete. Chip and signature works the same way, but rather than entering your PIN, you must sign to complete the purchase.

 

Chip and PIN cards are considered the more secure option, but the majority of EMV terminals in the U.S. will only be able to accommodate chip and signature transactions. This option is more secure than the magnetic strip cards, but requiring a PIN would cut down on fraud even further. Merchants and banks were concerned that requiring consumers to enter a PIN for each transaction would be too time consuming and would turn people off from using their cards.

 

How do you use your new card?

 

Most U.S. banks and credit card companies have already started issuing EMV cards to their customers. Research and consulting firm Aite Group estimates that 70 percent of credit cards and 40 percent of debit cards in the U.S., 1.1 billion cards total will support EMV by the end of this year.

 

If you have received a new card with a small chip on the front, you have an EMV card. While you may be prepared to make the EMV switch, many merchants are not. You’ll notice that your EMV card still has a magnetic strip on the back. This is to allow you to use the card in old magnetic stripe systems until all merchants have upgraded their systems.

 

In a store or restaurant that is still using the old payment systems, you would swipe your card as you normally do and carry out the transaction from there. The EMV technology would not be used in these situations. However, if you use your card at a merchant with a chip enabled terminal, you would “dip” your card in the machine (like you do at an ATM) and the terminal will ask for your PIN or your signature. You can then remove your card from the payment terminal.

 

The liability switch

 

The introduction of EMV cards has also changed the liability for fraudulent transactions. Currently, the bank or payment processor is responsible for reimbursing the consumer in all cases. After the Oct. 1, 2015, deadline, the liability will depend on the transaction. For example, if you use an EMV card at a merchant that has not upgraded their payment systems to accept EMV cards, the merchant will be liable for fraudulent charges rather than the bank. But if your bank or credit card company failed to issue you a new card and you use your old card at a merchant with EMV enabled terminals, the card issuer is still liable.

 

How will EMV cards lessen fraud?

 

As previously mentioned, these new cards contain micro-processing chips, making them dynamic, rather than static like older cards. The chip communicates with the payment terminal and creates a new transaction code for every purchase. Therefore, your card cannot be duplicated and used.

 

If you were to use your EMV card at a store that has been breached, your credit card data on file cannot be used to create a counterfeit card. The one time transaction code will be stored, but that code will not work again. So while EMV cards will not stop data breaches from occurring, they will protect your personal information and thereby reduce the profit that thieves currently make from duplicating and selling physical cards in the underground market.

 

But they won’t stop everything

 

You may still be in trouble, though, if your physical card is lost or stolen. Because the majority of U.S. payment terminals will only ask for your signature (rather than a secure PIN), a thief could successfully use your physical card by forging your signature. Furthermore, EMV cards will not protect you during online transactions. Because you are not entering your card in an EMV terminal for online payments, the chip technology is not being used. Therefore, if a hacker can get your payment card data from your online purchase (card number, expiration date, and security code) they can continue to make fraudulent online purchases. Similarly, if a thief is able to get your credit card number from a data breach, he would be able to successfully use the card online. EMV cards will decrease the amount of counterfeit cards being created but won’t do much to stop stolen card fraud or online fraud.

 

Making the switch to EMV cards is a step in the right direction but it isn’t the cure all for our fraud problem. The chip and signature cards being introduced in the United States don’t fully protect you from fraudulent charges. You must continue to take precautions to keep your accounts safe.

 

You should sign up for text or email notifications for your new EMV card. By doing so, you will receive a notification every time your card is used. If you see a charge you did not make you can quickly resolve the fraud with your bank or credit card company.

 

You should also continue to monitor your statements carefully. In many cases a thief will test your card with small charges first, so be on alert for any transaction you did not make.

 

Staying proactive about your bank and credit card security is the best way to keep your accounts safe from the hackers.
 
 
 

 

Sincerely,

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA


Edward J. Kohlhepp, Jr., CFP®, MBA
 
   
 
 
 
 
 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives. 

 
 
 
 
 
 
 

 

Source: http://www.horsesmouth.com/areyouusinganemvcardhowsafeisit

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Ed's Eye - The Fed Decides to Wait

 

The Fed Decides to Wait

 

September 23, 2015

 

On Thursday, the Federal Reserve postponed raising short-term interest rates.Citing “global economic and financial developments” that could “somewhat” impair economic progress and lessen inflation pressure,the Federal Open Market Committee voted 9-1 against a rate hike, with Richmond Fed President Jeffrey Lacker being the lone dissenter.1

 

This spring, a September rate hike seemed probable – butduringthis past week, assumptions grew that the central bank would put off tightening. On Wednesday, the futures market put the likelihood of a rate hike at less than 30%.2

   

The latest economic indicators did not suggest the time was right. The August Consumer Price Index retreated 0.1%, and the core CPI ticked up only 0.1%. In annualized terms, core CPI was up 1.8% through August while the Federal Reserve’s own core Personal Consumption Expenditures (PCE) price index was only up 1.2%. Retail sales advanced a mere 0.2% in August, 0.1% minus auto sales. Industrial production slipped 0.4% last month. The healthy labor market aside, none of this data was particularly compelling.3,4

  

Additionally, central banks have eased across the board the last few years. The Bank of Japan, the Reserve Bank of India, the People’s Bank of China, the Bank of Canada, the European Central Bank – none of them have begun tightening. Fed officials may have worried about the global impact had the FOMC elected to start a rate hike cycle.4

 

Some institutional investors hoped the Fed would tighten. Royal Bank of Scotland researcher Alberto Gallo recently surveyed 135 influential market participants and found that a majority wanted a September rate hike; 80% called for the Fed to make an upward move by the end of 2015. (Just 42% thought a September rate hike would occur, however.)2

  

That may seem like an odd viewpoint, but another response to the RBS survey helps to explain it: 63% of these institutional investors felt central banks had been too accommodative to equities markets, to the point where their credibility was slipping and exits from easy money policies appeared difficult.2

  

We may be witnessing a hawkish pause. The Fed uses a dot-plot chart to publish its forecast for the key interest rate, and the latest dot-plot projects the federal funds rate at 0.40% by the end of 2015. In other words, the Fed more or less told investors to get ready for a rate hike on either October 28 or December 16, the dates of its next two policy meetings.1,5

 

At the press conference following Thursday’s FOMC policy statement, Fed chair Janet Yellen acknowledged that a rate hike could happen in October. (She noted that if it did, the Fed would arrange a press conference following that FOMC meeting.) Yellen said that the central bank wanted “a little more confidence” that annualized core inflation would approach its 2% target before adjusting rates. She also commented that the recent global equities selloff and the strengthening dollar do “represent some tightening of financial conditions.”6

  

On the whole, investors reacted positively to the news.In the wake of the announcement, the Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 were all up more than 1%, with the S&P cresting the 2,000 mark and the Nasdaq approaching the 5,000 level. The CBOE VIX quickly dipped under 20.6 

 

In one respect, it was a day of reassurance for investors – but it was also a day that brought signals that the Fed would soon start the process of normalizing monetary policy.

 

On Friday, nervousness and anxiety returned to the markets. Monday, we had another decent up day. Let’s see what the next few weeks bring.

 

Enjoy the wonderful weather!

 

 

Sincerely,

 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
 

 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600 

 

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives. 
 
 
 
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied on as such. All indices are unmanaged and are not illustrative of any particular investment.
 
Citations.
1 - marketwatch.com/story/federal-reserve-keeps-interest-rates-unchanged-but-forecasts-hike-this-year-2015-09-17 [9/17/15]
2 - msn.com/en-us/money/markets/stocks-rise-as-fed-hike-odds-fade/ar-AAenA97?li=AA9ZWtY [9/16/15]

3 - briefing.com/investor/calendars/economic/2015/09/14-18 [9/17/15]

4 - forbes.com/sites/greatspeculations/2015/09/16/why-the-fed-will-not-hike-rates-this-year/ [9/16/15]

5 - dailyfx.com/calendar/bank-calendar.html [9/17/15]

6 - blogs.marketwatch.com/capitolreport/2015/09/17/live-blog-and-video-of-fed-decision-and-janet-yellen-press-conference-2/ [9/17/15]

 

 

 

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The Dog Days of Late Summer

 

September 2015

 

Chances are, these days you’re sneaking a peak at the investment markets, probably more than once a day. They’ve certainly been providing their share of excitement: down 4% one day, up more than 2% the next day or two, and who knows what’s causing the turmoil?

In August, the direction was mostly down, turning what had been tentative gains for the year into (as yet) relatively modest losses. And there wasn’t a lot of value in diversification. Large cap, midcap and small cap U.S. stock indices all dropped between 5.5% and 6%, real estate fell about the same and foreign stocks dropped roughly 7% over the same time period. Commodities did worse.

Analysts are scrambling to tell us why, one day, the markets are down sharply, and then come up with a reason why, the next day, they’re back up again. One long-term trader remarked, watching these swings, that the fact that the Dow can fall 1,000 points and then recover 700 in the space of four hours is prima facie evidence that there is no rational explanation for what’s going on. We hear that the weakness in the Chinese economy, or its stock market, are causing U.S. stocks to somehow be less valuable, but does anybody really believe that?

Meanwhile, the doomsayers are predicting catastrophe—which is not well-defined, but seems to mean that U.S. companies will be 30% to 50% less valuable in a few weeks than they are today. Their solution? Buy gold! It’s helpful to remember that $10 invested in gold in 1926 would be worth $615 today.  Ten dollars invested in the stock market would be worth $55,000. 

Perhaps the most interesting analysis came from Jason Zweig, who writes an investment column for the Wall Street Journal. He said that this would never happen, but what if there were a Ben Graham TV channel, which provided market commentary based on the teachings of the father of value investing? You’d have the host coming on to announce some great news: stocks today are unexpectedly on sale, selling, on average, 4% cheaper than they did yesterday. Will this great news continue, or should we take advantage of the buying opportunity while it lasts?

The guest that day offers his hope that the markets will continue their downward rally, making stocks even cheaper to buy. But he’s not optimistic, given the fact that stocks seem to get relentlessly more expensive over time, and have been doing this, with some regularity, since the early 1800s. Still, one can hope for a sustained downturn that would provide a chance to buy at prices even lower than they are today.

The host and guest console themselves with the thought that finally, for the first time in seven years, we may finish out the year with an opportunity to buy stocks for less than they cost on January 1. 

We may not get that lucky, and the markets may continue their bull run. Nobody knows what you’re going to see the next time you check the investment tables, or what will happen between now and the end of the year—except this: the actual value of American and global companies won’t be affected by the mood swings of investors who lurch between an inclination to buy and an inclination to sell. Whatever those underlying values are, the markets will eventually return to them, however much of a bargain the market decides to offer us between now and then.

Sincerely,

 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
 

Edward J. Kohlhepp, Jr., CFP®, MBA

 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600 

 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives

 

 

 

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

http://www.wilshire.com/Indexes/calculator/

http://www.russell.com/indexes/data/daily_total_returns_us.asp

http://www.standardandpoors.com/indices/sp-500/en/us/?indexId=spusa-500-usduf--p-us-l--

http://www.tradingeconomics.com/united-states/unemployment-rate

http://quicktake.morningstar.com/Index/IndexCharts.aspx?Symbol=COMP

International indices: http://www.mscibarra.com/products/indices/international_equity_indices/performance.html

 

 

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How to Read the Panicky Market

 

August 25, 2015

Some of the most entertaining times to be a long-term investor are those periods when short-term investors are looking over their shoulders for an excuse to sell. They’re convinced that the market is going to go down before they can get out, and so they jump on any bad news that comes across their Bloomberg screen.

And, of course, last Friday was a marvelous time to see this in action. With all the economic drama playing out in the world, there were plenty of opportunities to panic. The Greek Prime Minister has resigned! Sell! China devalued its currency a few days ago by 2%! Head for the hills! Chinese stocks are tanking yet again! Get out of American stocks while you can! The Fed might raise short-term interest rates from zero to very nearly zero! It’s the end of the world!

Of course, a sober analyst might wonder whether a change in governance in a country whose GDP is a little less than half the market capitalization of Apple Computer Corp. is really going to move the needle on the value of U.S. stocks—especially now that Greece seems to have gotten the bailout it needs to stay in the Eurozone. Chinese speculators are surely feeling pain as the Shanghai Composite Index goes into free-fall, but most U.S. investors are prohibited from investing in this tanking market. If the market value of PetroChina, China Petroleum & Chemical and China Merchants Bank are less valuable today than they were a week or a month ago, does that mean that one should abandon U.S. stocks? Does it mean that American blue chips are somehow less valuable?

What makes this dynamic entertaining—and sometimes scary—is the enhanced volatility around very little actual movement. You see the market jump higher and faster, lower and faster, but generally returning to the starting point as people realize a day or two later that the panic was an overreaction, and so was the false exuberance of realizing that the world isn’t going to come to an end just because we’re paying less at the gas pump than we were last year. Despite all the jitters investors have experienced over the past nine months, despite the drop on Friday, the S&P 500 is only down about 4% for the year, and was in positive territory as recently as August 19.

If you want a broader, more rational picture of our current economic situation, read this analysis by a long-term trader who now refers to himself as a “reformed broker” in Fortune magazine: http://fortune.com/2015/08/20/american-economy-worries/ He talks about the “terrible news” that it hasn’t been this cheap to fill your gas tank in over a decade, and businesses that rely on energy to manufacture their goods are now forced to figure out what to do with the excess capital they’re not spending on fuel.

Oh, but it gets worse. American corporations are struggling under the burden of enormous piles of cash they don’t have a use for. They may have no choice but to return some of that money back to shareholders in the form of record dividends. Of course, you read about the risk to corporate profit margins. It seems that unemployment is so low that wages for American workers are going up, and that could raise consumption and demand for products and services.

Meanwhile, contributions to 401(k) and other retirement plans are up dramatically; housing starts and the construction sector are booming, America’s biggest global economic competitor (China) is reeling, and the Federal Reserve might decide that it no longer has to keep short-term interest rates low because the emergency is over and the economy has recovered. The author apologizes (tongue in cheek) for bringing us all this terrible news, but hey, we can always sell our stocks and get out until conditions improve.

Right?

Nobody would be surprised if the U.S. stock market suffered a 10% or even a 20% short-term decline, this year, or perhaps next year. But what can you do with that information? Nobody would have been surprised if this had happened at any point in the long bull market since March 2009, and nobody can predict whether Friday was a signal that the market will take a pause, or if this week will bring us another wave of short-term euphoria measured mostly in sighs of relief. And if you don’t know when to sell in this jittery market, how will you know when to buy back? 

These short-term swings provide entertainment, but very little useful information for a mature investor. If you aren’t entertained by watching people sell in a panic and then panic-buy their way back in when they realize things aren’t as dire as the headlines made them out to be, then you should probably watch a movie instead.

If you are nervous give us a call. The end of summer is supposed to be a peaceful, relaxing time. Turn off the TV and enjoy the weather.

Sincerely,
 
Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPAE

Edward J. Kohlhepp, Jr., CFP®, MBA

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives

 

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

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409 Hits

Bear in the China Shop

 

August 24, 2015

China’s stock market appears to be back in free-fall, despite the Chinese government’s efforts to control stock prices and stem the panic. The chief culprit appears to be leverage: investors last year and in the first half of this year borrowed billions in order to buy stocks on margin, offering little or no collateral except the shares themselves. As prices fall and stock values drop below the level of debt, it triggers margin calls from the lenders, which forces investors to sell at any price, further depressing prices, causing more margin calls in a downward spiral whose bottom is not easy to see from here.

A recent report said that the volume of these margin loans dropped by 6%, or $23 billion over the past week or so, which implies that there is still $383 billion more that could be called over the next months or years, an alarming 9% of the roughly $4 trillion in total market value on the Shanghai market. 

But leverage is only part of the problem. The CSI Information Technology Index, a mix of high-tech names in China similar to the Nasdaq in the U.S., is still trading at around 75 times earnings, while Nasdaq’s PE is closer to 30. If the two indices were to normalize, it would imply that Chinese stocks could drop an additional 60% in value before the current bear market has run its course—and that’s assuming the debt situation doesn’t cause the market to overshoot on the downside.

One complication in the situation is the fact that, since late last year, foreign investors have been allowed to invest directly in Shanghai-listed stocks. Savvy market traders with years of experience in these death spiral events have been making program trades which bet on further drops. Chinese regulators recently suspended 34 U.S.-based hedge fund accounts from trading, including the Citadel Fund, and short selling is now totally forbidden.

Meanwhile, the economic fundamentals in China aren’t looking good. The Caixin China Manufacturing Purchasing Manager’s Index recently fell to levels which indicate economic contraction, and industrial output is at the weakest level since November of 2011. You don’t often see a market rally when an economy is sliding into recession, so at these valuations, you aren’t likely to find many bulls left in the Shanghai China shop.

Beware of investing in China!

Sincerely,

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA 

Edward J. Kohlhepp, Jr., CFP®, MBA

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives

 

Sources:

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

http://fortune.com/2015/08/03/china-looks-for-scapegoats-in-continued-stock-market-decline/http://fortune.com/2015/06/29/china-stocks-crash-into-bear-territory-as-margin-calls-bite/

http://www.ft.com/intl/fastft/242222/china-overtake-japan-stock-market-cap

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Devaluation Panic

August 19, 2015

Investors across the globe were sent into a panic recently when the Chinese Central Bank devaluated the nation’s currency, the yuan. The U.S. market lost more than 1% of its total value, oil prices fell and global shares plummeted on news that China decided to make its currency two percent cheaper than it was before.

You actually read that right. Headlines raised the prospect of a global currency war, and there were hints in the press that nations might resort to trade barriers, which would slow down global trade in all directions. If you’re following the story, you probably didn’t read that the Chinese yuan, even after the devaluation, was actually more valuable against global currencies than it was a year ago in trade-weighted terms. And that China actually intervened in the global markets to make sure the devaluation didn’t go any further in open market trading.

The background for the devaluation is China’s slowing economic growth and its recent stock market volatility. The country is on track for a 7% growth rate this year—three times the U.S. rate, but sluggish by recent Chinese standards, and quite possibly unacceptable to the country’s leaders. You probably already know that the Chinese stock market climbed to impossibly high levels earlier this year and then fell just as far in a matter of weeks. As you can see from the accompanying chart, the Chinese government marched into the chaos with a heavy hand, outlawing short sales, banishing hedge funds to the sidelines, suspending margin calls and even buying stocks directly in an effort to put a floor on prices. The theory was that the devaluation was part of this intervention, since it would make exports cheaper and boost sales, raising profit margins of those companies whose stocks were recently free-falling.

A more nuanced view of the situation is that the recent depreciation is a small step to keep the yuans value in line with those of its peers, not a dramatic shift in exchange-rate policy or a part of the Great Shanghai Market Panic. Indeed, if you look at the accompanying chart, you can see that China’s percentage of world exports has been steadily growing for this entire century, without any need to add the stimulus of a weaker currency. 

A scarier scenario, which nobody seems to be talking about, is that China’s endgame goal is to make the yuan the reserve currency for global trade—replacing the U.S. dollar. China is already lobbying to join the list of reserve currencies recognized by the International Monetary Fund. The new exchange rate is more in line with basic economic fundamentals, strengthening the argument that the yuan is not under the total control of an interventionist central government. But so long as China imposes strict limits on the amount of its currency that can flow into and out of the country, and attempting to manipulate its own stock market, this will be a difficult argument to make.
 
Sincerely,

 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Edward J. Kohlhepp, Jr., CFP®, MBA
                                                               

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives

                        

Sources:

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

http://www.economist.com/news/finance-and-economics/21661018-cheaper-yuan-and-americas-looming-rate-rise-rattle-world-economy-yuan-thing?fsrc=scn/tw/te/pe/ed/yuanthingafteranother

http://www.bloombergview.com/quicktake/chinas-managed-markets

http://finance.yahoo.com/news/global-markets-china-devaluation-hits-165238168.html

 

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265 Hits

Territorial Default

August 17, 2015

You’ve probably read that the island territory of Puerto Rico formally defaulted on its municipal debt obligations over the weekend—an unsurprising event that has been expected by insiders for more than three months. What did surprise everybody was the fact that the Puerto Rican Public Finance Corporation (PFC) found a way to make a partial payment on its $58 million in interest obligations—even if the amount was only $628,000.

Going forward, the situation is rather bleak. The Moody’s credit rating service has noted that, according to the debt contracts, interest payments can only be made if and when the PFC has appropriated funds for them. Since the PFC has not done so, there appears to be no legal requirement for Puerto Rico to pay the debt, or any legal recourse for bond holders.

A number of mutual fund companies are probably wishing that they had read these contracts more closely before buying a big chunk of the territory’s $70 billion in debt on behalf of their shareholders. Puerto Rican muni bonds were once considered to be the Swiss army knife of the muni world, since they qualify as tax-exempt in all 50 U.S. states and therefore can be placed into any state-specific muni fund portfolio. They also paid significantly higher interest than most states were offering—between 9% and 21% right before the default on 20-year issues, as high as 5% on 2-year notes. The national averages among all U.S. states are closer to 2.85% and 1%, respectively. 

How much of the default are you, personally, on the hook for? Very little to none at all unless you’re invested in broker-sold Oppenheimer funds. Oppenheimer manages nine of the ten funds with the greatest exposure to these daredevil investments—$5.1 billion according to the Morningstar mutual fund analysis service. The other fund with high exposure is the Franklin Double-Tax Free Income Fund, which currently has about 60% of its shareholders’ money tied up in the Puerto Rican fiasco. Ten of Wells Fargo’s 14 municipal bond funds have also wagered on Puerto Rico’s debt, as have 20 of Eaton Vance’s 27 muni funds.

As mentioned, the default is not exactly a shock. Puerto Rican bonds, once sold as high-rated paper, have been sliding down the ratings scale for years, causing losses for investors all along the journey. A $5 million class action lawsuit was filed against the brokerage firm UBS as far back as 2013, alleging that older investors were urged to take out loans in order to load up on risky Puerto Rican bond funds that brokers touted as safe and secure. An estimated $500 million was ultimately borrowed to buy into the mess, and investors in those funds suffered at least $1.66 billion in losses when the suit was filed—two years before the recent downgrade.

Meanwhile, the Vanguard and BlackRock organizations eliminated their small positions in the territory late last year. 

Sincerely, 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA 

Edward J. Kohlhepp, Jr., CFP®, MBA

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives 

 

 

Sources:

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

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The Latest from Greece

 

August 12, 2015

While negotiations on Greek debt continue to be mired in uncertainty, the Greek banking system is taking a daily pounding. And you can understand why. If Greek representatives were to suddenly walk away from the table and leave the Eurozone, the country would have to print its own currency (Drachmas), which would almost certainly be worth less against the Euro from day one.   In order to pay its creditors, the Greek government might have to keep the presses working overtime, which means that the poor Greek citizen who left his money in a Greek bank would watch helplessly as his Euros were automatically exchanged for a currency that would be at least 30% less valuable. Better to take the Euros out now and keep them under the mattress until the negotiations work themselves out.

This may be a wise strategy for individual Greeks, but it’s terrible for a banking system that relies on deposits in order to make loans and, more basically, remain solvent. Meanwhile, Greek negotiators are trying to stave off German demands for austerity, arguing that the country has already experienced the worst recession in Eurozone history, and stocks have fallen to roughly the level they were at in 1990. If the past five years of austerity has produced this kind of results, they argue, then perhaps a different strategy is in order. 

The banking situation has complicated these negotiations, since international observers now believe that the banks may need an infusion of as much as $27.5 billion to remain solvent—before the next day’s lines at the ATM machines. That means negotiators are now talking on two fronts; debt relief and recapitalization of the lending system that is the nerve center of any economy.                                                                   

Will you be affected? For most U.S. investors, the Greek tragedy is simply a spectacle to tell your grandchildren about. Greece will survive, eventually the money will come out from under the mattresses, and Europe as a whole might find a way to be more accommodating when one of its own gets into financial trouble.

Sincerely,

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Edward J. Kohlhepp, Jr., CFP®, MBA

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives

 

Sources: This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

http://news.yahoo.com/greek-banking-stock-plunge-again-debt-crisis-dominates-082744811--business.html

http://www.huffingtonpost.com/jakob-von-uexkull/from-greek--to-euro-crisi_b_7926532.html

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Credit Freezes: Your Best Defense Against Cyber Attacks and Data Breaches.


August 10, 2015

Updating you from our June newsletter, The Office of Personnel Management breach that occurred in June is now said to have affected over 21 million people. Upon first announcing the hack, OPM believed only 4 million current and retired federal employees were at risk.

After investigating, the U.S. government announced that 19.7 million people who applied for a background investigation along with 1.8 million non-applicants (family, friends, or spouses of applicants) had their information stolen.

FBI Director, James Comey, said the hackers picked up a "treasure trove of information." Included in a traditional background check is Standard Form 86. This 127-page questionnaire asks for information such as Social Security number, past addresses, foreign trips, as well as information on family, friends, college roommates, etc. Officials also believe that over one million fingerprints were stolen.

Experts worry that this information could be used to blackmail current and former government employees. Officials have said the hack originated in China, however, the Obama administration has not confirmed.

Katherine Archuleta, the director of the Office of Personnel Management has resigned following the breach.

OPM has offered affected employees three years of credit monitoring and $1 million in identity theft insurance. They are also offering victims full service identity restoration support and victim recovery assistance. Minor children that were affected will also receive free credit monitoring.

In our continued efforts to educate and inform you, we remind you again that credit monitoring is not the best protection! With the amount of information that was stolen, anyone who thinks or knows that they were affected should immediately freeze their credit.

Even if you were not a part of this particular security breach, we are recommending security freezes to all of our clients as one of the best ways to protect yourself against identity theft.

How to Freeze Your Credit:

  • To do so, you will need to contact all three of the credit bureau agencies—Experian, Equifax, and TransUnion.
  • You will need to freeze your file at all three agencies to be properly protected.
  • Prices for a credit freeze vary per state, but usually cost about $10 at each bureau. You will need to pay an additional $10 to unfreeze your file when opening a new line of credit. Freezing your credit can cost up to $30 all together, but that is much less expensive and stressful than dealing with a stolen identity.
  • If you are a proven identity theft victim, the freeze and unfreeze fees are waived in all states.

Credit Bureau Contact Information:

Equifax
Equifax, Inc
P.O. Box 740241
Atlanta, GA 30374
866-349-5191
Freeze

Experian
Experian, Inc
P.O. Box 4500
Allen, TX 75013
888-397-3742
Freeze

TransUnion
TransUnion LLC
P.O. Box 2000
Chester, PA 19022-2000
888-909-8872
Freeze

 

It seems like every day the headlines are full of new stories of cybersecurity breaches and some type of new hacking threat. Below are some recent statistics and information with links to additional articles and more security tips.

67,168: The number of security incidents reported by federal government agencies in 2014. That's 7,000 more than 2013 and almost 20,000 more incidents than in 2012. A security incident is not necessarily a breach that exposes personal information, however 27,624 of the incidents reported in 2014 did.

2015 on track to be most breached year, according to the Identity Theft Resource Center. As of June 30, 2015, 400 data breaches had been reported with 117,576,693 records at risk.

Do you know the safest ways to share your credit card information? Nerd Wallet recently released a guide to help you protect your information online, through the mail, and over the phone. In general, sharing your credit card information over secure websites and text messages carry the lowest risk. Learn more here.

We strongly recommend a credit freeze, and if you need assistance, more cybersecurity tips and information, please contact us. This will help protect your credit and identity from being used fraudulently.

 

Sincerely,

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Edward J. Kohlhepp, Jr., CFP®, MBA
 
 


Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives.



Source: Horsesmouth, LLC
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365 Hits

®Grexit® Vote Coming

July 1, 2015

Any way you look at it, the standoff between the nation of Greece and the leaders of the European Union is a mess. But it may not be quite the problem that the press is making it out to be.

In case you haven’t been following the story, the gist of it is that the Greek government, over a period of years that included the time it hosted the Summer Olympics, issued more bonds than, in retrospect, it could possibly pay back. The total debt outstanding peaked at somewhere around $340 billion, which is actually more than the $242 billion in goods and services that the entire Greek economy produces in a year.   You’ve no doubt heard about a series of bailouts organized by the European Union, the International Monetary Fund and other groups which have collectively extended loans and extensions amounting to $217 billion to date. As you can see from Figure 2, on the right-hand side, roughly $4 billion in payments are due in July and more than $3 billion in August, after which time the payment schedule becomes somewhat more forgiving through 2022.

There are three problems with this picture. First, it has become apparent that Greece doesn’t have the money to make the July and August payments. Second, in return for additional debt relief, the various creditors are asking that the Greek government do more than just balance its budget (which it has). Their demands seem a bit harsh and somewhat picky when they’re organized in a list: Greece would have to reduce pension payments to current and retired workers by 40%, raise the retirement age to 67 in 2022 rather than 2025, phase out supplemental bonuses for poorer retirees in 2017 rather than 2018, and cut back on early retirement immediately. (The proposals also include additional taxes on consumers but not businesses.) 

And third: the newly-elected Greek government, led by Alexis Tsipras of the Syriza party, ran on a platform of rejecting any further budget concessions and compromises. This turned out to be an extremely successful political strategy: the party won 149 out of the 300 seats in the Greek Parliament in what is regarded as a rousing popular mandate.

Negotiations predictably broke down, and now the Syriza leaders are asking the Greek citizens to vote on whether they will accept or reject the austerity measures that the EU creditors are demanding. Polls suggest that the voters would like to keep their country in the Eurozone but that they oppose any additional budget reductions. In other words, nobody knows how the referendum will end. If the citizens of Greece reject austerity, it will present the European Union with a difficult choice: back down and continue to help Greece ease out of the crisis (which would be politically difficult to sell, especially to German voters), or deny the concessions that Greece needs, and effectively force Greece out of the Eurozone.

If the latter happens, then the future becomes a bit murky. Greek banks have been shut down in advance of the July 5 vote, strongly suggesting that Greek leaders, holding a “no” vote, would no longer use the euro as its currency. They would print drachmas, which, in those frozen bank accounts, would replace euros at par. The drachmas would immediately lose value on the international markets, which would allow Greece to undercut its competitors in the export markets. Meanwhile, Greece could default on all or portions of its debt, and offer to pay drachmas instead.

Who loses in this scenario? Everybody. The European banks holding Greek debt, and private investors, are the obvious losers. But closer to home, any Greek citizen who didn’t get his/her money out of the bank before the freeze will have to accept a haircut on the deposits, as drachmas will inevitably be worth less than euros.

At the same time, many Greek banks are holding massive amounts of Greek government debt, which they need as collateral for European Central Bank loans that are keeping THEM (the banks) afloat. Alternatively, Greece could offer everyone 50-70 cents on the dollar in debt repayments, and would probably get mostly takers from creditors who would like to put this whole saga behind them.

Do YOU lose in any of these scenarios? If either side blinks, then the situation goes back to business as usual. If Greek voters agree to give the EU what it wants, then some economists believe that the Greek economy will go into a steep recession, but your personal exposure to Greek companies is almost certainly minimal, and the problem will be temporary.

If Greek voters vote “no,” the EU negotiators remain intractable and Greece leaves the Eurozone, then you can expect breathless and sometimes scary headlines and short-term turmoil in European stocks, with some investors panicking and others uncertain. But the smart money says that the Eurozone is strong enough to sustain the loss of one of its smallest economies, and Greece, too, will survive. 

The irony, which nobody seems to have noticed, is that after accepting many of the earlier austerity measures, the Greek government is actually running a budget surplus without the debt payments—something U.S. citizens can only dream of. If the additional austerity measures do, eventually, get put in place, the subsequent recession would reduce tax receipts and push Greece back into deficits again. 

If you’re a Greek citizen who hit the ATM machines after they had run out of money, then this is a pretty big crisis for your long-term financial situation. Otherwise, like most so-called “crises,” the possibility of a “Grexit” and the upcoming special election in Greece is more about entertainment than about making or losing money in your long-term portfolio.
 
Happy Fourth of July!

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
 
 

 







http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives

 

 

Sources: This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

http://confluenceinvestment.com/assets/docs/2015/daily_Jun_29_2015.pdf

http://www.zerohedge.com/news/2015-02-03/who-owns-greek-debt-and-when-it-due

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/06/25/europe-strikes-back-it-seems-to-be-trying-to-push-greece-

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381 Hits

Government Breach Hits Millions

 

Government Breach Hits Millions



 

June 18, 2015

Up to 21.5 million current and former federal employees may have had their personal information stolen in the Office of Personnel Management breach disclosed last week, according to the American Federation of Government Employees.

The Office of Personnel Management and the Obama administration said the hack affected four million current and retired employees—but the union's president, J. David Cox, believes the hack involved personal information on all federal employees, all federal retirees, and one million former federal employees. Others briefed on the hack also believe the number of people affected is significantly greater than four million.

According to the union, hackers stole birth dates, pay history, health insurance information, life insurance information, military records, addresses, and Social Security numbers on millions of federal employees from the "Central Personnel Data File.” The stolen Social Security numbers are believed to be unencrypted.

U.S. intelligence officials believe the hack came from China and the information was collected to create a database of American federal employees. The stolen information could be used for blackmail or to create sophisticated phishing attacks containing spyware used to penetrate government networks. According to experts, this breach is one of the most serious government breaches in history.

The OPM will cover 18 months of credit monitoring for all affected current and former employees.

As you may already know, credit monitoring is weak and will not fully protect those affected in the OPM breach. Credit monitoring alerts you aftersomeone opens new credit in your name.

With the amount of information stolen, those affected by this hack should sign up for a credit freeze. A credit freeze locks your credit with a special PIN. Before any credit can be opened in your name, you must unfreeze your file with the PIN by contacting the credit bureaus. This makes it much more difficult for someone to fraudulently obtain credit in your name.

 

How to Freeze Your Credit:

  • To do so, you will need to contact all three of the credit bureau agencies—Experian, Equifax, and TransUnion.
  • You will need to freeze your file at all three agencies to be properly protected.
  • Prices for a credit freeze vary per state, but usually cost about $10 at each bureau. You will need to pay an additional $10 to unfreeze your file when opening a new line of credit. Freezing your credit can cost up to $30 all together, but that is much less expensive and stressful than dealing with a stolen identity.
  • If you are a proven identity theft victim, the freeze and unfreeze fees are waived in all states.

If you have been affected by the OPM breach or want to protect yourself, we recommend a credit freeze. This will help protect your credit and identity from being used fraudulently.

Sincerely,

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Edward J. Kohlhepp, Jr., CFP®, MBA

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The Ransomware Threat

 

Cybercrime has reached a new level.

 

                   June, 2015

 

 

Imagine cybercriminals holding your files for ransom. It sounds like something out of a movie set in the distant future, but business owners and households are facing such a threat today.

 

Hackers are now using ransomware to hijack computers and hold files hostage in exchange for payment. Malware programs like CryptoWall, CryptoLocker and CoinVault spring into action when you unsuspectingly click on a link in an email, encrypting all of the data on your hard drive in seconds. A “ransom note” appears telling you that you need to pay $500 (or more) to access your files again. If you fail to pay soon, they will be destroyed.1

 

Worldwide, more than a million computer users have been threatened by ransomware – individuals, small business, even a county sheriff’s department in Tennessee. The initial version of CryptoLocker alone victimized 500,000 users, generating more than $3 million in payments along the way.2,3 

 

The earliest ransomware demanded payments via prepaid debit cards, but hackers now prefer payment in bitcoin, even though few households or businesses have bitcoin wallets. (The emergence of bitcoin effectively aided the rise of ransomware; keeping the payment in virtual currency is a hacker’s dream.)2,3

    

If your files are held hostage, should you pay the ransom? The Department of Homeland Security and most computer security analysts say no, because it may be pointless. By the time you get the note, your files may already be destroyed – that is, encrypted so deeply that you will never be able to read them again.

 

Some people do pay a ransom and get their data back. As for prosecuting the crooks, that is a tall order. Much of this malware is launched overseas using Tor, an anonymous online network. That makes it difficult to discern who the victim is as well as the attacker – if one of your workers thoughtlessly clicks on a ransomware link, you cannot find, scold or even help that employee any more than you could locate the hacker behind the extortion.3

    

How do you guard against a ransomware attack? No one is absolutely immune from this, but there are some precautions you should take.

 

First, back up your data frequently – and make sure that the storage volumes are not connected to your computer(s). Cloud storage or a flash drive that always stays in one of your computer’s USB ports is inadequate. If you back up your files regularly enough, weathering a ransomware attack becomes easier.3

  

Keep your anti-virus software renewed and up to date. Those alerts you receive about the latest updates? Heed them.

  

Never click on a mysterious link or attachment. This is common knowledge, but bears repeating – because even after years of warnings, enough people still click on mysterious links and attachments to keep malware profitable.

 

Ransomware is a kind of cyberterrorism. This is why the Department of Homeland Security issues warnings about it. When you deal with terrorists, playing hardball has its virtues. As Symantec Security Response director Kevin Haley told NBC News: “If none of us paid the ransom, these guys would go out of business.”2

 

Sincerely,

 

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA
Edward J. Kohlhepp, Jr., CFP®, MBA
 

 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives

 

 

 

  

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

   

Citations.

1 - rackspace.com/blog/dont-be-held-hostage-by-ransomware-hackers/ [1/15/15]

2 - nbcnews.com/nightly-news/security-experts-you-should-never-pay-ransomware-hackers-n299511 [2/4/15]

3 - tinyurl.com/n3rcrsm [12/8/14]

 

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321 Hits

Is Good News Really Bad News

 

March, 2015

You may have read last week that the U.S. stock market took a tumble based on what would seem like really good news: that the U.S. unemployment rate is falling faster than anybody expected. If you’re scratching your head, you’re not alone.

First, let’s focus on the good news and what it may mean. At the beginning of 2015, there were 3 million more Americans at work than the year before. The unemployment rate had fallen to 5.5%—a level that economists at the International Monetary Fund had projected that the U.S. wouldn’t achieve until 2018 at the earliest. 

Then came the U.S. Bureau of Labor Statistics report for February, which showed a seasonally-adjusted increase of 295,000 jobs (nonfarm payroll employment), well ahead of projections. As you can see from the chart, America has not only pulled out of the long unemployment slump triggered by the Great Recession; it is now creating jobs faster than at any time since 2000, roughly equal to the go-go economy of the late 1990s. The government report noted that there are 1.7 million fewer unemployed persons today than there were at this time last year. More importantly, perhaps, there are 1.1 million fewer people in the “long-term unemployed” category, which is now down to 2.7 million overall.

                                                                      

                                    

 

 

How can this be considered bad news for U.S. stocks? There are three possible explanations. First, the labor markets may be creeping toward that place where businesses have to compete for talent and pay their workers higher wages. When payrolls go up, it eats into corporate profits. There is little direct evidence this is happening yet—overall, wages are up just 2% in the past year, roughly even with inflation. But there are reports that small business employers have more unfilled job openings than at any time since April 2006. Meanwhile, the average workweek is inching up, which suggests that companies need people at their desks longer than they did before. 

If the unemployment rate hits 5.4%—which could happen this Spring—then our economy will have reached what Federal Reserve economists consider to be “full employment.” This, of course, does not mean what those words actually say; it is a coded way of saying that the balance of negotiating power will have started to shift from employers to workers.

Reason number two is bond rates. While stocks were tumbling last week, bond yields were moving in the opposite direction in what was described as the biggest one-day selloff since November 2013. The yields on 10-year Treasuries rose from 2.11% to 2.239% in a single day. As bonds become more competitive with stocks, demand for stocks goes down—and so do stock prices. Interestingly, the stocks with the highest dividends tended to be the biggest losers in the selloff, suggesting that some investors who were temporarily relying on stocks for income are shifting back to bonds.

But perhaps the biggest reason for the market’s angst is concern about the next move by Federal Reserve Board. Fed chairperson Janet Yellen has made it clear that the health of the U.S. labor market will factor into her decision on when to finally allow short-term interest rates to rise. The good unemployment news could accelerate that schedule; at the worst, it probably confirms the current unofficial timetable of graduated rise beginning in June. For the impact that would have, go back to reason number two.

How credible are these three concerns? Should we be worried? It’s helpful to remember that higher employment means more money in the pockets of consumers, which can trigger a virtuous circle of more spending, more corporate revenues, a healthier economy. We’ve learned from past experience that the stock market is easily spooked by shadows and headlines, by good news as well as bad news. Bond rates are still pretty low compared with historical numbers, and the possible threat of higher payrolls is not exactly the same as seeing them show up in the actual workforce. (Remember those 2.7 million long-term unemployed workers still searching for any kind of a paycheck.) 

Short-term traders, who measure their investment horizon on the second hand of their watch, can panic if they want to. Those of us who measure our investment horizon with a calendar should be celebrating another milestone in the U.S. economy’s long and fitful recovery.

Sincerely,

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Edward J. Kohlhepp, Jr., CFP®, MBA

  

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives

 

 

Sources: 
 
http://www.bls.gov/news.release/empsit.nr0.htm
 
http://www.reuters.com/article/2015/03/06/us-usa-economy-idUSKBN0M20E620150306
 
http://www.economist.com/blogs/freeexchange/2015/03/americas-jobs-report?fsrc=scn/tw/te/bl/thewinningstreakcontinues
 
http://www.bls.gov/news.release/empsit.nr0.htm
 
http://blogs.wsj.com/economics/2015/03/06/economists-react-to-the-february-jobs-report-full-employment/
 
http://www.nasdaq.com/article/stocks-tumble-as-dollar-bond-yields-soar-on-us-jobs-report-20150306-00624

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

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373 Hits

Index Churning

                                                                                                                                                                                  March, 2015

Most people think of the major stock indexes as a stand-in for a certain sector or category. The S&P 500 represents large companies, the Russell 2000 tells you what small capitalization stocks are doing, and the Dow represents broad economic sectors. You see tables showing the return of these indices over decades of time, and you might assume that they are made up of the same stocks during that time period, instead of trading in and out of stocks like a mutual fund.

But in fact, all of these indices are somewhat actively-managed, in the sense that they move stocks in and out of the index on a regular basis. This became news when the Dow Jones Industrial Average decided to add the biggest company in the world—Apple—to its mix of 30 stocks, replacing AT&T. The Dow has changed slowly but regularly over time; of the 12 stocks in the index when it was announced in 1907, only General Electric remains on the list. Only four companies remain from the 1935 list: GE, DuPont, ExxonMobil and Procter & Gamble. 

Sometimes these changes are dictated by the structure of the index itself. Microsoft and Apple were once small cap stocks appropriate for the Russell 2000. They have long since graduated out of small cap status.
 
Other times, the index is adjusted to more closely represent the overall economy. The S&P 500 famously added tech stocks in the late 1990s in an effort to catch the fever of the times. In fact, many people might be surprised to discover how much the index changes each year. Looking at the 500 stocks in the current S&P 500 list, you find that 159 firms were not included in the 1970 version. More recently, the index seems to be trading stocks in and out at a faster clip, swapping in 10 stocks in 2010 (NRG Energy, Cablevision Systems, F5 Networks, Netflix, Newfield Exploration Co., Tyco International, Ace Limited, QEP Resources, CarMax and Cerner Corp.); 18 in 2011 (WPX Energy, TripAdvisor, BorgWarner, Perrigo Co., Dollar Tree, AGL Resources, Cooper Industries, Xylem, Inc., TE Connectivity, Ltd., The Mosaic Co., Accenture PLC, Marathon Petroleum, Alpha Natural Resources, Chipotle, Blackrock, Edwards Lifesciences, Covidien Plc., and Joy Global, Inc.); 20 in 2012 (AbbVie, ADT Corp., Alexion Pharmaceuticals, Delphi Automotive, Dollar General, Ensco, Garmin, Ltd., Kinder Morgan, Kraft Foods, Lyondell-Basell, Mondelez International, Monster Beverage, Pentair, LTD, PetSmart, Phillips 66, Blackrock, Joy Global, Covidien, Edwards LifeSciences and Seagate Technology): 13 in 2013 (Allegion, Ametek, Delta Air Lines, General Growth Properties, General Motors, Kansas City Southern, Macerich, Nielsen Holdings, PVH Corp., Regeneron, TransOcean, 21st Century Fox and Vertex Pharmaceuticals) and 11 in 2014 (Affiliated Managers Group, Avago Technologies, Cimarex Energy, Discovery Communications, Level 3 Communications, Mallinckrodt, PLC, Royal Caribbean Cruises, Martin Marietta Materials, United Rentals and Universal Health Services). So far in 2015, the index has dropped Safeway and Covidien, and added HCA Holdings, Endo International.

Since 2010, some notable names were dropped: The New York Times Company, Tribune Co, Office Depot, Eastman Kodak, Qwest Communications, Bethelehem Steel, Owens-Illinois, Novell, Radio Shack, National Semiconductor, Janus Capital Group, Sara Lee Corp, Sears Holding Corp., H. J. Heinz, Sprint Nextel, Advanced Micro Devices, J.C. Penney, Abercrombie & Fitch, U.S. Steel Corp., and Safeway, Inc. 

How will substituting Apple for AT&T affect the Dow? Since the Dow is weighted according to the share price of each stock, we can expect movements in Apple stock to greatly affect how the Dow performs going forward. When Visa International undergoes its anticipated four-for-one stock split, Apple’s $100 shares will become the biggest component of the Dow, and a $10 drop or rise could lead to a 100-point movement in the overall index. A $33 stock like AT&T would have been far less likely to rise or fall by that dollar amount.

Bigger picture, when you look at the long-term performance of an index, remember that this is not achieved with the same mix of stocks throughout that history. The indices may “trade” more slowly than most mutual funds, but they’re turning over their portfolios over time as well.

Sincerely,   

Edward J. Kohlhepp, CFP®, ChFC, CLU, CPC, MSPA

Edward J. Kohlhepp, Jr., CFP®, MBA
 
 

http://www.facebook.com/pages/Kohlhepp-Investment-Advisors/143204745739600 

Please contact us whenever there are any changes to your financial situation, personal situation or investment objectives. 

 

 

 

 

 

 

Source:

 

http://www.investmentnews.com/article/20150306/FREE/150309932/apple-joining-dow-could-leave-clients-overexposed-to-tech-giant?NLID=daily&NL_issueDate=20150306&utm_source=Daily-20150306&utm_medium=in-newsletter&utm_campaign=investmentnews&utm_term=text

http://beginnersinvest.about.com/od/marketsexchangeindices/a/dow-jones-industrial-average.htm?utm_term=what%20stocks%20are%20in%20the%20dow%20jones&utm_content=p1-main-1-title&utm_medium=sem&utm_source=msn&utm_campaign=adid-0ab65503-ca11-4a7d-b1d6-cd786bfd6d2c-0-ab_msb_ocode-22879&ad=semD&an=msn_s&am=broad&q=what%20stocks%20are%20in%20the%20dow%20jones&dqi=how%2520many%2520stocks%2520in%2520the%2520dow%2520jones%2520industrial%2520average%253F&o=22879&l=sem&qsrc=999&askid=0ab65503-ca11-4a7d-b1d6-cd786bfd6d2c-0-ab_msb

http://en.wikipedia.org/wiki/List_of_S%26P_500_companies

http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average

 

This material was prepared by BobVeres.com., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. 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. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

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