Elections and the Markets: Landslide victories and divided governments

 While I was only in grade school at the time, many of you may remember the landslide victory of Ronald Reagan in 1984.  He not only won 59% of the popular vote, he also had the highest number of electoral votes (525) over Walter Mondale.  If you were lucky enough to be an investor at this time, you will remember this was the start of a strong bull market run for domestic stocks.  But are landslide victories always this good for investors? 

The short answer is “no,” but there have not been enough landslide victories to get a good sample set to draw conclusions.  The markets don’t necessarily like them because overwhelming victories by either party means the politician could have more power to invoke change and that could mean potentially higher economic policy risk resulting in higher inflation or interest rates on the horizon.

A divided government can alleviate much of this concern as it brings with it the benefits of legislative check and balances.  During Reagan’s era, Democrats controlled the House while Republicans were the majority in the Senate for 6 of his 8 years as President. All parties had to work together to create the successful policies like the 25% across the board tax reduction, deregulation and corporate tax cuts that stimulated the economy and markets onward and upward.

So how does this play out in the 2012 election?  It may feel like the election is close, but consider that the GOP still hasn’t officially nominated a candidate.  Polls tend to favor Obama against presumptive nominee Mitt Romney, but there are still four important months left of campaigning.  It doesn’t appear, at this point in the race, as though a win will be a Reagan-like landslide.  What it will mean for the markets remains as much of a mystery as which candidate will win on November 6^th.

Source: FederatedInvestors.com

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The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Any opinions are those of RJFS or Raymond James.  Past performance may not be indicative of future results.

Angela Palacios's First Triathlon Experience

 Earlier this year, I decided I wanted to get into a sport that would increase my athletic abilities and give me more incentive to work out on a daily basis throughout the summer, which is usually filled with indulgent summer BBQs.  I decided a triathlon was what I wanted to try.  Prior to training, I had not run more than a mile or two in more than 10 years and had never swam any distance. 

Juggling a career, 5-6 days of training per week, and a family, I learned to plan my workout efficiently and stagger them to avoid injury.

I trained for 5 months and about a week before the race on June 20^th I was going nuts with anticipation for the race.  Race day came faster than I could’ve ever imagined. I arrived at the event two hours early to register and get my gear set up. Honestly, I had no idea what to expect. I knew I could do each event by itself with relative ease or even two of the events back-to-back. The big question was how my body would respond to all three bricked together. Especially on a day when it was over 90 degrees at the 6 pm start time.

I did a short swim to shake off the nerves because you start in the water. With less than a half an hour to start, I was suited up and waiting in a huge line to jump into the 80 degree lake for my first triathlon!

The swim started with chaos. I decided to ease off and let everyone get situated. After about three minutes, I found myself in a steady pace.  From that point on, the swim was comfortable besides getting hit in the head once. I finished the swim with plenty of energy and made the dash through the transition area to get set for the bike. When I got all my gear on, I took off.

It was hot, so our trainers instructed us to hydrate well on the bike. I was surprised that the bike racers were pretty spread out; you weren’t competing for space on the road like I thought you would be. I finished the bike with enough energy to make the transition into the run.  Going into the transition area I realized I forgot to leave my running shoes untied so I lost time getting the knots out before I could put them on.  I bet I will never do that again!

I realized shortly after the adrenaline abated from running through the crowd and high fiving my daughter and husband that my legs felt like cement.  I really started struggling with the run around mile two and a teammate noticed. She ended up slowing down to encourage me onward for the rest of the 5k, making me run faster than I ever have to finish the race strong despite having the urge to throw up (thanks Nancy)!  I finished in 1 hour 37 minutes.

Looking back at week one, I couldn't believe how far I'd come. It seems amazing that I had just completed a triathlon when just a few months ago I couldn't even keep a jog for more than 2 miles.  Not only have I accomplished something that once seemed daunting, but I’d learned that I’m often capable of much more than I think I am, I only need to try! Despite the grueling work it takes to get ready for a triathlon, I’m already looking forward to my next one in July!

Want Another Reason to Consider Keeping Your GM/Ford Pension?

 Thousands of GM and Ford retirees across the nation are struggling with one of the most important decisions of their financial lives – whether to keep their current pensions or take a lump sum offer.  We support the case for each of these individuals working with their financial advisors to carefully analyze their particular situation.  But, before a final decision is made, recent statistics may give reason to pause and consider one more important factor in the puzzle. 

According to Dr. Michael Finke, professor at Texas Tech University, beginning between the ages of 55 – 59 (and certainly after age 60) we begin to lose our cognitive ability at the rate of about 2% per year.  Professor David Laibson, professor of economics at Harvard University, references research showing that between the ages of 65 and 69, 1.7% Americans are affected by dementia, and this number doubles every 5 years.  Even though financial capacity decreases, Dr.Finke indicates that confidence in financial decisions does not decrease.   So, our decisions aren’t as good as we think they are?

What does this have to do with the GM and Ford pension decision?  The potential for diminished financial capacity, combined with continued confidence in financial decision-making ability, may leave many Americans susceptible to poor future financial decision making and/or financial fraud.  By adding an annuity (a.k.a. the pension) – a monthly income stream that is locked into place – older adults may be hedging against these future dangers to their financial lives.   

If you or someone you know is still facing the GM or Ford pension decision and would benefit from an individual analysis of their situation, contact us for assistance.  And dig a little deeper into making this important decision by referencing additional blogs on this topic.

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The information contained in this report does not purport to be a complete description of the securities, markets or developments referred to in this material.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

Being successful (It’s not the same as being a success)

 One has to do with accomplishment and the other with the ongoing will to improve continuously.  One looks back at what was completed and the other looks forward to what is needed to stay vibrant.

A success is old news!

There is a strong correlation with getting up in the morning and getting up in the world. And nothing that good happens after 10 p.m., anyway.  Or maybe I’m just a morning person.  Much of success is state of mind. In the early ‘90’s, when I entered the business world, I half-jokingly told my parents and family I was one of the best financial advisors in the world. They would look at me and laugh. One of them would say, “Matt you hardly have any clients. You’re just starting out and I know darn well know you are not the best financial advisor in the world.” I would pause and say, “Those are simply my circumstances, but I’m doing everything to be one of the best financial advisors in the world.”

Part of being successful is luck.  Think of Christopher Columbus. Fairly successful, right? Discovered the new world and all, despite the fact that he didn’t know where he was going when he started, when he got there he didn’t know where he was, and when he got back he didn’t know where he had been. Today, he’s a hero.

But luck is also the residue of design. Not to downplay luck, but, successful people develop a plan.  That’s the first step. Here are a few more steps down the path:

• Develop a 5-year plan for your personal and professional life (and update it annually!).
• Have a positive attitude.  Ask yourself  “What’s the most powerful force in the world?” My favorite answer is, “Your attitude”.  That stuck with me. 
• Have a commitment – you will do that which you are committed to.  I think I have always been committed to seeing that clients have a suitable, individual plan in place for reaching their goals.
• Write down 100 things you want to do in your life before you die.
• Join a nonprofit group that you believe in.  Get involved in something greater than yourself.
• Write personal notes to friends, family, and clients whenever possible.
• Find very intelligent people in your life and spend time with them, especially if you don’t always agree with them.
• Take up meditation: Seriously. I love the quote, "Only in quiet water do things mirror themselves undistorted. Only in a quiet mind is adequate perception of the world." Hans Margolius

If you want to be successful, you can wait for luck or you can start to design your plan. I say work hard, have an insatiable focus, never stop learning and growing, and learn from the best mentors. 

Any opinions are those of Matthew Chope, CFP(r) and not necessarily those of RJFS or Raymond James.

How You Can Ruin Your Retirement Plan With Too Much Optimism

 If you ask most folks who are heading for retirement what their major goals are, you will get an answer something like this:  I hope to maintain my current lifestyle and I do not want to run out of money until I die.  And if you ask them if they will make it, they will most likely say, they think they will.

Yet, the decisions people make may be too optimistic and may actually sabotage those very goals. Let me give you some examples.

• Taking early retirement packages because they are offered.  If you do this in your 50’s, you have potentially 40 years of income needs. Where is the income going to come from?  Many hope their assets will “hold out”.  Perhaps consideration to sticking with the current job, finding another one for cash flow and knowing if assets will “hold out” is a better plan.
• Thinking you will live well today and cut back when you are really old.  Catch 22 here.   You may be able to work now but that is not the case when you are 8o years old and need the income to cover inflated expenses and health care costs.
• Buying too much house with too big a mortgage because houses always appreciate.  Homes are often the biggest investment consumers make but not necessarily the best investment.   Homes have not appreciated much in the past 15 years and many folks have pulled out the equity like they are a bank account.  When selecting a home as you near retirement, consider if you will be able to continue to afford to live in it. 
• Leasing high priced cars and several of them.  We have been sucked into the “I deserve a nice car” advertisements.   Consumers are enjoying expensive rides, but they are putting out big bucks each month for the pleasure.   Most people know the cheapest way to buy a car is with cash.  If we put on that sensible hat when selecting cars, even when leasing, we might make some very different choices and have money at the end of the month to save toward retirement.
• Being overly generous to family members when you may not be able to afford it. You are kindest to your family when they don’t have to worry about paying your bills.
• “I am in great health!”  I do not need expensive health insurance, long term care insurance or life insurance.  It can’t happen to me syndrome is alive and well.  A little hedging with insurance to cover these potential risks is prudent.
• Last but not least, if I am careful with my investments, I can make at least “X”%. Maybe, but risking your financial future on an overly optimistic number is a disaster. Remember we are talking 30- 40 years of retirement income here.

How do you avoid these pitfalls and yet have a good life today?  You have a financial plan.  A plan is like a road map.  It should help you to get to where you want to go without taking too many side roads.  A plan helps you pick and choose what you want today but plan for tomorrow.  A financial plan is based upon realistic expectations and not hopeful or optimistic expectations.

The information contained in this report does not purport to be a complete description of the securities or markets referred to in this material.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

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Center's Laurie Renchik, CFP® Graduates Leadership Oakland Program

 From the opening 3-day retreat to the graduation ceremony 9 months later, Laurie Renchik's leadership skills were put to the test.  The Leadership Oakland organization is all about growing local leaders and the 49 members selected to join the 2011-2012 Cornerstone program brought a spectrum of corporate, civic and non-profit experience to the group.  "When we started the program last fall, we embarked on a somewhat unknown journey," Renchik explained.  "Many of us had been told about Leadership Oakland and encouraged to apply, while others had heard about it and were simply curious."

They join more than 800 local leaders who have graduated Leadership Oakland since its foundation in 1990.  This year's class delved into important issues facing the region, from the educational system to the justice system and began to envision solutions through in-depth, monthly day-long sessions.  According to Leadership Oakland:

When you take leaders and provide them with a rich network of colleagues, a deep understanding of the regions challenges and the opportunity to achieve value for their own organizations . . . . . you create new levels of leadership. Through Leadership Oakland, today's leaders will shape tomorrow's community.

At the graduation ceremony at the Fieldstone Golf Club in Auburn Hills, the 2011-2012 class was recognized for their new understanding of local issues.  Laurie remarked, "The program was inspiring and humbling at the same time.  I have lived and worked in Oakland County for many years and learned new information at every session."  Renchik said the conclusion was bittersweet.  "As the academic year came to a close, I had a keen sense from the experience what leadership truly stands for, that it comes in all shapes, sizes, and colors, and that innovation and vision can be found in one's backyard."

The graduates' participation links them to one of the most powerful business networks in Michigan. For more information about Leadership Oakland please visit www.leadershipoakland.com

What is Your Greatest Investment in Life?

 A common perception of the phrase “return on Investment” is what you make on your money.  Contrary to usual thinking, I am not talking about monetary investment.  In this case, I am referring to the people we hire to help us achieve the important goals in our lives.  We may not realize how vital this investment is.  After we invest in ourselves, investing our resources in others is the most important thing we can do.  These investments in various relationships come in many forms.

It might be your doctor, a therapist, a trainer, or even a nutritionist.  What could be more important than investing in these relationships to manage your health?   Health is a quintessential asset of life.  Relationships with people are important investments of time and/or money.  The distinguishing factor about money and time are that they are finite resources for most of us. 

For most, time is even more precious than money, and we can’t take it - we can only spend it!  We never seem to have enough time, to do all the things we want to see and do.  After family, work, exercise, and all of our various commitments, there is very little time left.  Therefore, delegation becomes a tool of utmost importance.  Learning how to leverage our time is vital. Focus on giving up almost everything except those components of your life that you consider the most important and fulfilling.

Try brainstorming a list of the top 50 ways to spend your time that are fulfilling, meaningful, and necessary in your work/life balance.  If financial management did not come up or it lies outside your area of interest, consider hiring a specialist. 

Grasping a clear understanding of life goals and the progress made toward achieving those goals is a good “return on investment.”  Holistic Financial Planning is one way to connect your values with your resources. Your time is valuable.  It’s sacred!  Working together, we are determining the roadmap of your life.   

Charting progress toward goals and objectives on an ongoing basis helps keep time, resources and energy working in tandem, so that the financial management piece of the puzzle integrates seamlessly into your life plan.  You desire a return on your time and money.  Know that all of our energy is focused on this being a positive outcome.  Know that our goal for this relationship is to provide value.  Working with The Center, know that we strive to help clients enjoy richer more fulfilling lives because of our discussions and the stewardship of your finances.

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Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Any opinions are those of RJFS or Raymond James.

Happy Fourth of July!

 Declaration of Independence was approved by the Continental Congress. Thereafter, the 13 colonies embarked on the road to freedom as a sovereign nation. This most American of holidays is traditionally celebrated with parades, fireworks and backyard barbecues across the country. As you send out your July 4th party invitations, take a minute to think about how much you really know about what we are celebrating.

4th of July History & Trivia -Did You Know…

• The major objection to being ruled by Britain was taxation without representation. The colonists had no say in the decisions of English Parliament.
• In May, 1776, after nearly a year of trying to resolve their differences with England, the colonies sent delegates to the Second Continental Congress. Finally, in June, admitting that their efforts were hopeless; a committee was formed to compose the formal Declaration of Independence. Headed by Thomas Jefferson, the committee also included John Adams, Benjamin Franklin, Philip Livingston and Roger Sherman. On June 28, 1776, Thomas Jefferson presented the first draft of the declaration to Congress.
• Betsy Ross, according to legend, sewed the first American flag in May or June 1776, as commissioned by the Congressional Committee.
• Independence Day was first celebrated in Philadelphia on July 8, 1776.
• The Liberty Bell sounded from the tower of Independence Hall on July 8, 1776, summoning citizens to gather for the first public reading of the Declaration of Independence by Colonel John Nixon.

Financial Empowerment for Women Today

 How do you keep control and focus in your busy life? For many, the creation of a to-do list and the eventual checking off of items is essential.  Busy multi-taskers (code word for most women) have made lists work for them for generations.  My problem, however, is that I make too many lists and then forget where I put them.  They exist all over – on the back of envelopes, on my smart phone, or zipped securely in a pocket in my purse. 

Whether you have one list or ten, are diligent or more creative with your check list system I think it is fair to say that clearly, to-do lists empower those who partake.  Check!  When I talk with groups of women; either informally with my friends and family or professionally with clients and colleagues, the subject of financial empowerment is a popular topic and many times comes to the top of everyone’s to-do list.  Especially in today’s economy, with new financial realities affecting many families in many different ways.

What does financial empowerment look like for women today?  In my experience there is no single correct answer to this question.   Creating your own financial to-do list is one way to focus your energy and check your progress toward achieving financial empowerment.  Here is a “list” of anecdotal responses, in no particular order, culled from the many conversations I have had with women on this important topic.

What Needs to be on Your Financial To-Do List?

• My decisions about spending money will be made in a way that honors my values and responsibilities
• I will learn from my financial mistakes
• I will understand that taking care of myself financially is just as important as taking care of others
• I will delegate without abdicating responsibility for managing my money
• I will set and make progress toward financial goals
• I will know my value in the marketplace and initiate the compensation conversation

Imagine the satisfaction and confidence you will feel, and the empowerment that will emerge crossing the financial to-dos off your list. 

Want to share your financial to-do list with me?   Send me an email or give me a call! 

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.