Financial Markets and Presidential Elections

There’s a saying that with enough prodding, you can make statistics say whatever you want.

We believe this is especially true for the loads of data surrounding presidential elections. It’s possible to use the data to say two different things about the economy, depending on the point you’re trying to make.

For example, one analyst reported that since 1929, the S&P 500 gained an average of 1.58 percent in a president’s first year in office. Another claimed that since 1928, the first year of a new presidential term sees “the markets” rise by an average of 6 percent. Citing different indexes and years can change the story.

[CLICK HERE to read the article, “Why markets tend to fall during a presidential election year,” from CNBC, Jan. 13, 2016.]

In our opinion, the important thing to remember is that investing is personal. Trying to predict market performance based on the direction of prices, interest rates or presidential elections is not a sound long-term strategy. If it was, more people would be successful at doing it. Please remember that investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

This election year promises to have even more fireworks than usual, but don’t let national matters distract from your personal long-term financial goals. We’re help to help you stay on track. With that being said, take a look at what different analysts say about the financial markets and presidential elections.

[CLICK HERE to read the article, “What Investors Need to Know About the 2016 Election,” from Oppenheimer Funds, Jan. 8, 2016.]

[CLICK HERE to read the article, “How Do Stock Markets Perform during a Presidential Election Year?” from Yahoo Finance, April 1, 2016.]

If there’s one thing that is for sure, it’s that a presidential election year creates more market uncertainly than non-election years. Most analysts agree that markets tend to be calmer when an incumbent president is running for re-election, because one known entity is more reassuring than two unknowns. The same seems to hold true if the incumbent wins re-election. However, the stock market may trend downward in the first year of a new party taking over the White House.

It’s also probably true that, depending on which party is in control, certain industries may be positively or negatively affected. For example, if the next president successfully repeals the Affordable Care Act, the health care industry would be poised for changes.

[CLICK HERE to read the article, “How the Presidential Election Will Affect the Stock Market,” from Kiplinger, February 2016.]

At least one analyst has considered how a Donald Trump administration would impact the markets, ranging from higher import tariffs, which would make some products more expensive, to lower income taxes, which could prompt higher household spending in the consumer discretionary sector.

At the end of the day, it’s important to remember that dozens of factors impact the performance of the markets — and most investors have absolutely no control over any of them. What’s important is that you stay focused on your long-term  financial strategy with regard to whether it’s on track to meet your retirement goals.

[CLICK HERE to read the article, “How would a Donald Trump presidency affect the stock market?” from Los Angeles Times, March 7, 2016.]

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives.

This material has been prepared for our firm and contains general information to help you understand basic financial planning strategies that may help you work toward your financial goals. Please understand that we cannot make any promises or guarantees that you will accomplish such goals.  All investments are subject to risk including the complete loss of principal.

Throughout, we may generally discuss different financial vehicles; however, nothing contained herein should be construed as a recommendation to buy or sell any financial vehicle, nor should it be used to make decisions about your investments.

The information contained in this material has been obtained from third-party sources believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.

If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

The Art of Intelligence Open to Interpretation

Albert Einstein once said, “The true sign of intelligence is not knowledge, but imagination.” People may have different views on that point. Would someone with an MBA from Harvard be considered more intelligent than a painter with an art degree?

Certainly, it’s an open discussion. Regardless of who attends college or what profession they pursue, intelligence is not relegated to the well-off. Doctors and lawyers have earned the right to be highly respected and paid, but they may not necessarily be more intelligent than someone who couldn’t afford that caliber of education.

We believe that keeping their children on track for a dream profession or education is a top priority for parents, but perhaps enrolling in full-day kindergarten or an overly structured preschool may be a step too far. Lego recently conducted a study placing more importance on creative play than receiving formal education at a young age. It’s an interesting concept, as it weighs more toward Einstein’s theory of intelligence than we generally associate with our common core standards and higher-learning institutions.

One of the biggest concerns for many who do attend the finest educational institutions is often affordability, but the challenges don’t stop there. Some may hesitate to venture out of their comfort zones, asking what they may consider “stupid” questions in front of their peers. However, the main purpose in the classroom is to learn. We believe learning doesn’t stop in the classroom; some experts believe that a willingness to admit what you don’t know is the mark of a good manager.

[CLICK HERE to read the article, “Children Should Learn Mainly Through Play Until the Age of Eight, Says Lego,” from The Guardian, March 15, 2016.]

[CLICK HERE to view the video, “Are Good Managers Born or Made?” from Knowledge@Wharton, March 15, 2016.]

Without proper guidance, the financial industry can be one of those areas that make people feel like they’re not that smart. The truth is, you can spend a lifetime in this field and still not know everything. It evolves, and there’s always some new trend, product or phenomenon that we must analyze and figure out how it may impact our clients’ financial goals.

We want you to know that we’re here to help do that. You can come to us, regardless of your education on the matter, and we will help find answers to your questions based on your individual needs and objectives.

[CLICK HERE to read the article, “5 Reasons You Need a Financial Advisor in 2016,” from Guide Vine, Jan. 6, 2016.]

Not all of us are academics. With the Internet at our fingertips, there are more methods than ever to gain knowledge without entering a classroom. For some, it’s just a matter of priority and focus. Studies have found that focus is less about zoning in and more about ignoring extraneous distractions. If you can master the art of “blocking out,” your ability to learn gets much easier.

[CLICK HERE to read the article, “Learning what to ignore is a powerful tool for improving your focus,” from World Economic Forum, March 9, 2016.]

Certainly Thomas Jefferson was not fully on board with the idea of formal classroom learning. He advocated education through exploration not confined to a specific major or course of study. After all, students used to go to college to figure out what they wanted to be when they grew up. These days, students are encouraged to declare their major within their first year or two and spend their learning time preparing for a specific occupation.

There’s learning for the sake of information, and then there’s learning for the sake of accomplishing a specific goal. Perhaps Einstein fully explains this best. In his own words: “Imagination is more important than knowledge. For knowledge is limited to all we now know and understand, while imagination embraces the entire world, and all there ever will be to know and understand.”

[CLICK HERE to read the article, “Thomas Jefferson would not have liked this college trend,” from The Washington Post, March 18, 2016.]

[CLICK HERE to read the article, “Creativity and learning for the Conceptual Age,” from The Brookings Institution, March 14, 2016.]

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives.

This material has been prepared for our firm and contains general information to help you understand basic financial planning strategies that may help you work toward your financial goals. Please understand that we cannot make any promises or guarantees that you will accomplish such goals. All investments are subject to risk including the complete loss of principal.

Throughout, we may generally discuss different financial vehicles; however, nothing contained herein should be construed as a recommendation to buy or sell any financial vehicle, nor should it be used to make decisions about your investments.

The information contained in this material has been obtained from third-party sources believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

The Value of Optimism

Anyone approaching the end of their working years can likely list more than a few occurrences in which they’ve experienced a stressful moment or handled a hectic ordeal.

Although retiring may end the need to put out fires in the workplace, stress built up over the years does take its toll and, for some, may contribute to a more negative outlook.

One study of optimism claims that while everyone is born optimistic, 95 percent of adults tend to be pessimists. Perhaps part of the maturation process is to grow more cynical; we know things won’t always work out, so pessimism may seep into our psyche.

[CLICK HERE to read the article, “Are you born to be an Optimist?” from Think Positive! Mag, February 2016.]

We believe one area where it’s important to keep optimism and pessimism in check is in the financial industry. Working with a financial advisor, as opposed to simply following market forecasters, may help ensure your decisions are balanced and on track for your retirement income goals.

While our focus is on helping you create a retirement income strategy you can feel confident about, professionals in other areas are making strides in the research of stress management. One recent study looked into what’s known as the “placebo effect” — when the pain is real, but the cure is fake. Research has shown that chronic stress and depression can contribute to physical ailments, but new theories are now exploring the flip side of that impact: the mind’s potential to heal.

Scientists recently discovered that when trial participants unknowingly respond to a placebo, their easement of pain is not imaginary. The effects are just as real as relief provided by a chemical drug.

Another example involves a study of over 1,000 patients with chronic back pain. One group was given acupuncture, the practice of alleviating pain by puncturing specific areas of the skin with needles. The second group was given “fake acupuncture,” in which the needles were placed in the wrong places and didn’t fully penetrate the skin. No significant difference was experienced between the two groups’ results.

However, a third group in the trial was given no acupuncture; instead they were prescribed conventional treatments of pain killers, physiotherapy and exercise. Interestingly, both acupuncture groups did twice as well as the group that took the drugs.

[CLICK HERE to read the article, “Chronic Stress: A Case of Mind Over Matter?” from Knowledge@Wharton, March 4, 2016.]

[CLICK HERE to read the article, “Positive thinking: Stop negative self-talk to reduce stress,” from Mayo Clinic, 2016.]

Cognitive-based approaches such as hypnosis, acupuncture and distraction have already been proven to reduce pain. Now, new research from a Carnegie Mellon University study shows that “mindfulness meditation” can alter brain connectivity patterns to generate improvements in inflammation.

Alas, everybody gets aches and pains in our bodies. Perhaps a little mindful optimism can help alleviate some of that discomfort.

[CLICK HERE to read the article, “Neurobiological Changes Explain How Mindfulness Meditation Improves Health,” from Carnegie Mellon University, Feb. 4, 2016.]

[CLICK HERE to read the article, “Mindfulness meditation provides opioid-free pain relief, study finds” from Science Daily, March 15, 2016.]

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives.

This material has been prepared for our firm and contains general information to help you understand basic financial planning strategies that may help you work toward your financial goals. Please understand that we cannot make any promises or guarantees that you will accomplish such goals. All investments are subject to risk including the complete loss of principal.

Throughout, we may generally discuss different financial vehicles; however, nothing contained herein should be construed as a recommendation to buy or sell any financial vehicle, nor should it be used to make decisions about your investments.

The information contained in this material has been obtained from third-party sources believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Watching the Markets with Interest

In March, the Federal Reserve decided to reign in its plan for raising rates this year, reducing the expected number of rate increases from four to two.

The Federal Open Market Committee came away from its most recent meeting projecting an interest rate hike of .50 percent, down from the original projection of 1 percent. According to the article’s author, the Fed is waiting for tighter credit spreads and higher inflation expectations before making additional increases.

In the short term, we believe this news could be good for the bond market, permitting income investors an attractive entry point to invest at potentially higher yields. In the domestic credit market, longer maturities in investment-grade corporate bonds offer attractive spreads, supported by both corporate fundamentals and the Fed policy.

Despite the fact that manufacturing in the U.S. has experienced a downward slide in employment numbers, it produces approximately 65 percent of S&P 500 earnings. There are signs that U.S. manufacturing output is growing thanks to domestic demand, touting 3.3 percent growth over the past year. It is our belief that further growth, low unemployment and inflation near the 2 percent target could prove to be a catalyst for the Federal Reserve to move interest rates higher.

For more information on how the latest market trends may impact your retirement income strategy, feel free to give us a call.

[CLICK HERE to read the article, “Looking for yield in all the right places: A post-FOMC playbook” from Columbia Threadneedle, March 21, 2016.]

[CLICK HERE to read the article, “Rumors of the industrial sector’s demise are greatly exaggerated” from Columbia Threadneedle, March 28, 2016.]

We believe markets like certainty, but that’s something we lack in abundance thanks to this topsy-turvy election year. Oil prices continue to fall, and the only certainty is that they can’t keep falling forever.

In the fixed income market, many portfolio managers are recommending that investors resist chasing yield, diversify their holdings and seek out solid, risk-adjusted returns. According to the article, “5 Rules for Avoiding Bond Portfolio Purgatory”, “Consistency of results is far more important than absolute returns in any given year.”

View the provided link to read the article, “5 Rules for Avoiding Bond Portfolio Purgatory” from Forbes, March 23, 2016: http://www.forbes.com/sites/investor/2016/03/23/5-rules-for-avoiding-bond-portfolio-purgatory/#1d9a5fe97029

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material has been prepared for our firm and contains general information to help you understand basic financial planning strategies that may help you work towards your financial goals. Please understand that we cannot make any promises or guarantees that you will accomplish such goals.  All investments are subject to risk including the complete loss of principal.

Throughout, we may generally discuss different financial vehicles; however, nothing contained herein should be construed as a recommendation to buy or sell any financial vehicle, nor should it be used to make decisions about your investments.

The information contained in this material has been obtained from third party sources believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Longer Lifespans Translating to Change of Scenery

Men may now be living longer than ever, but, from a location standpoint, retirees are doing anything but staying put.

Women still live longer than men, but the gap has narrowed, as the lifespan of males has increased consistently over the past few decades. This means the chances are now greater that a married woman will spend more time in retirement with her spouse than as a widow.

Retirees are making the most of their time together by branching out to new territory. It used to be that people up north braved formidable winters throughout their working lives, then retired to Florida or Arizona. Now, there are spots all over the country that attract retirees with affordable living options, in addition to moderate year-round temperatures.

[CLICK HERE to read the article, “Fewer Retirees are Living Alone” from U.S. News & World Report, Feb. 19, 2016.]

[CLICK HERE to read the article, “Americans less prepared for longer lives” from Palo Alto Online, March 4, 2016.]

Wyoming has become a trendy destination for retirees seeking low taxes, good weather, soothing hot springs and a low crime rate — not to mention attracting the grandchildren with trips to Yellowstone and Grand Teton national parks.

On the other side of the country, retirees over the age of 60 in Columbia, South Carolina, can take free classes at the University of South Carolina. Housing is also affordable, costing a retiree with a paid-off mortgage an average of $367 a month.

[CLICK HERE to read the article, “The 10 Best States for Retirement” from Fox Business, March 1, 2016.]

That’s not bad, considering the average Social Security benefit for retired workers was $1,335 per month in 2015. With a well-thought-out retirement income strategy, you could live comfortably. Having time to enjoy retirement with a spouse is great, as is the ability to travel the country together, but couples should still have a contingency retirement income plan for whichever spouse lives longer.

One study concluded that, despite the smaller gap between genders, about half of women over age 65 will still spend at least 10 years without a spouse. We make a point of talking about the potential for this scenario with all of our clients. If you’d like to learn more about retirement income strategies that may be suitable for you, please give us a call.

[CLICK HERE to read the article, “Social Security Basic Facts” from Social Security Administration, Oct. 13, 2015.]

[CLICK HERE to read the article, “10 Best Places to Retire on Social Security Alone” from U.S. News & World Report, Oct. 14, 2014.]

The U.S. Census Department recently released data showing that for people age 55 and older, housing is their greatest expense. It’s important to have a plan to reduce this expense once you’re retired, especially since — at later ages — health care expenses are likely to increase.

Perhaps the most influential factor in retirement today, and certainly in the future, is our longer life expectancy. It’s one thing to talk about longevity in statistical terms, but it’s far more important that we look at this reality up close and personal and create a strategy for it.

[CLICK HERE to read the article, “A closer look at spending patterns of older Americans” from U.S. Bureau of Labor Statistics, March 3, 2016.]

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives.

The information contained in this material is provided by third parties and has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.

If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.