Category Archives: Sign of the Times

The Test

By Roger Hewins | President

October 1st was our 15th birthday. Back in 1999, an intrepid little band started a new company with a handful of good clients, a good team of people and a wish and a prayer. We walked right into the 2000-2002 tech bust, a very bad market and a severe challenge for our new business. Some beginner’s luck we had! Geez.

Fifteen years and two bear markets later, we were just enjoying our birthday and appreciating how much our clients have helped us grow over this challenging decade-and-a-half. But we could not help noticing that things in the world were not good, and markets had become jittery by the end of September. We had a bad September and the first negative quarter in a little while. Nothing serious, but…

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Surviving an Unexpected Layoff

By Sergio Campos | Associate Consultant

Editor’s Note:

According to the Bureau of Labor Statistics’ latest report, the unemployment rate fell to 5.9% last month, the first time it’s been under 6% since 2008. Other indicators of joblessness are also falling: The number of long-term unemployed (those out of work more than six months) is now under 3 million for the first time since the recovery, while less than 700,000 people report that they’ve given up looking for work because none is available, down from more than a million in 2010. Plus, layoffs recently hit a 10-year low.1 

While this might be a positive signal, the jobs recovery is still incomplete. Since the height of the Great Recession, layoffs have become less common across the job market, but it’s still important to keep these lessons in mind, regardless of your current employment situation.

An unexpected job loss can be one of the most difficult things to endure, especially from a financial standpoint. If you and your family rely on employment income to pay for living expenses, losing your job can cause drastic changes to your current lifestyle. While you might be coping with feelings of shock or disbelief, it’s important to pick yourself up and face the problem rationally. You’ve lost your job — now what do you do? This article will focus on a few ideas that can dramatically improve your situation.
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Hewins Financial 15 Years

15 Years of Investing

By Martha Post | Chief Investment Officer

Over the next week or so, we are going to be commemorating our 15th birthday with team celebrations across our regional locations. We opened our doors as Hewins Financial Advisors, LLC on October 1, 1999 in Redwood Shores, CA, just south of the San Francisco International Airport. What a 15 years it’s been! We are enormously proud of the firm we’ve built and the work we do with clients. But the markets haven’t always made it easy.

Throughout the lifetime of our firm, we’ve experienced two bear markets, the 9/11 attacks and aftermath, the financial crisis and the Great Recession of 2007-2008 (plus the Euro crisis that followed), wars in Afghanistan and Iraq, and now back to war in Iraq and Syria as well.

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Financing Your Future: Paying for College

By Mark Albers, CPA, MST, CFP® | Senior Associate Consultant

Across the country, many people have started or returned to school over the past two weeks. For those attending colleges and universities, a tuition bill awaited them. The average annual undergraduate tuition, room and board expenses for last school year were $18,391 for in-state students at a four-year public institution and $40,917 at a four-year private nonprofit institution1. Those become significant expenses over the course of a college career, and often leave people wondering, “How am I going to pay for this?”

Thankfully, there are a number of resources available to help students and their families pay for their college education. Each resource has its own benefits and disadvantages that should be considered, and most often a student will end up using a mix of several resources.
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Charitable Children in the Making

By Gretchen Halpin | Chief Strategy Officer

In my last blog post, A Mom’s Money Moment, I reflected on how my children thought about money, saving and investing in their future. For many families, charitable giving also plays a role in the young relationship our kids have with money.

As parents or grandparents, we universally wish for our children to have a sense of empathy for their fellow human beings’ needs, but how do we not only educate but implement charitable giving as a part of money management education?

Raising Charitable ChildrenWith digital currency becoming more and more the norm – gift cards and product code gifts replacing the traditional money in the card – it becomes increasingly difficult to demonstrate an allocation of funds to charity.  However, the same technology that takes away the paper money aspects of giving also creates huge opportunities for young kids to participate in a more sophisticated way.  For example, starting an online fundraiser or creating a social campaign is only a few clicks away on crowdsourcing sites such as Indiegogo, CrowdRise and GoFundMe. These sorts of initiatives, with proper parental supervision and support, show children that even the smallest donation or contribution can make a considerable impact—especially when you work with others.

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Keep It Simple (Revisited)

By Martha Post, CFA | Chief Investment Officer

End-of-year recaps have highlighted the remarkable market advance that occurred despite any number of troubling economic and fiscal events in 2013.  US stocks led the way–the S&P 500 closed out 2013 with its best year since 1997 (+32%).  It hit a new all-time high on the last day of the year, bringing the total gain since March 9, 2009 to 173%. [1]  Investors in broadly diversified portfolios of equity and fixed income assets are gratified to have recovered their bear market losses and more.

keep it simpleWhile the gain last year was outsize, it is not surprising to us that investors would be rewarded by remaining invested (in fact, rebalancing into equities) after the crash.  From our perspective, the basics of investing are pretty simple—choose an asset allocation that is designed to meet your long-term objectives for risk and return, invest in a low-cost, globally diversified portfolio that is managed for taxes, and stay disciplined by rebalancing after significant market movements.

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Our Best Forecast Ever


By Sergey Bubnou | Research Analyst

Economic ForecastIn a recent interview, Jeremy Siegel, the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania and a “Market Master” on CNBC, was praised for his ability to predict the stock market’s gains in 2013.  “Thank you,” he said.  “I’ve gotten quite a few media contacts and congratulations because I said in January 2012 that the Dow would finish this year between 16,000 and 17,000.  I’ve learned that humility, rather than hubris, is the proper response to a good market prediction,” he added.[1]  The Dow Jones Industrial Average closed at 16,020 on Friday, December 6.[2]  This would seem like a rather definitive affirmation of Professor Siegel’s predictive powers.

But a certain amount of humility may be required, as the professor pointed out.  Turn back the clock five years, and here’s what Professor Siegel had to say in February 2008:

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Staying on Course and Out of the Way of the Kicked Cans

By Martha Post, CFA | Principal / Chief Investment Officer 

As expected, lawmakers in Washington took us to the brink but not beyond, ending their standoff Tuesday night in last-minute votes to approve a plan negotiated by Senate leaders from both parties.  President Obama signed the bill, which suspends the debt limit through February 7 and funds the government through January 15, shortly after midnight on the day the debt limit was expected to be reached.  Default was averted, and the government re-opened.

While the immediate crisis was avoided, there was no resolution to the ongoing fiscal issues around the deficit and spending.  Those will wait for another day, as has become habit.  The bill that passed was for spending at the 2011 level, and it included a directive to the House and Senate to negotiate a new long-term budget accord by December 13.  Standard & Poor’s estimates that the shutdown will cost the economy $24 billion and will cut .6% from fourth quarter GDP.[1]

As we suggested in a previous letter, the markets seem to have anticipated the result.  On Wednesday, when it became clear that a deal was in the works, the S&P 500 shot up to close out the day with a 1.4% gain.  We didn’t need the uncertainty and worry, but it turned out to be another example of why we are better off not letting political events intrude on our long-term investment plans.

Sometimes the value of staying the course and maintaining market exposure only becomes apparent over long time periods.  Here was a case where it hit you in the face very fast—over the 16 days of the shutdown, the S&P 500 was up 2.4%.  That’s a number you might expect for a full quarter’s return, not the kind of result fear mongers and market timers like to hear.  Yesterday, the index hit all-time highs.  That’s not to say it will keep going up from here.  It may or it may not.  And we’ll see what the next budget and debt deadlines bring.

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Shut Down: One Week and Counting

By Martha Post | Chief Investment Officer

As a very successful third quarter in the financial markets drew to a close last week, politics reared its ugly head once again.  The federal government “shut down” October 1 after our friends in Washington failed to agree on a resolution to extend government funding into the new fiscal year.  Up next?  The potentially more serious debt ceiling, which is expected to be reached on October 17.

The immediate reaction was a lot of frustration with the dysfunctional group in Washington but general agreement that the partial shutdown itself was not a cause for panic.  Essential services continue.  The market took it in stride on day one, with the S&P 500 actually gaining .80%, and then giving back about 1% over the next two days.  This is not out of line with what we have seen during government shutdowns in the past.  There have been 17 occasions in total before this one, the most recent in 1995-1996.  On average, the S&P 500 has fallen .3% during the shutdowns and gained back .9% in the 10 days following[1].

One of my colleagues was in Washington, DC last week and noted that the most visible impact in the capital seemed to be the inability of visitors to tour the monuments.  Not facetious or insensitive, just indicative of the level of pain most people (aside from furloughed workers) have felt so far.

It was easy to overlook a really strong third quarter amidst the government drama.  The S&P 500 was up 5.2%, small cap stocks almost double that.  International stocks shot up as well, 11.6% in developed markets, and 5.8% in emerging.  That brings the S&P 500’s return to +19.8% for the first three quarters of 2013[2].  Bonds even eked out gains for the quarter as taper talk waned.  It is likely that given the stories on the evening news, most people are unaware of the strong market performance.  And it is a good reminder that economic news is not always market news.  Market prices likely already reflected the notion that there is risk in the fiscal policy.

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Stick with the Intermediate Bond Strategy

By John Bussel | Principal, Regional Director

As we near the fifth anniversary of the collapse of Lehman Brothers and the ensuing financial crisis, it is reassuring that year by year, while slow and bumpy at times, we have a come a long way from the fears of complete national financial ruin and the days when some even feared that ATM machines would not be able to dispense cash.  After years of massive fiscal and monetary intervention by the US Government, the crutches are gradually being taken away and, although very early in this process, so far the economy has not fallen on its face.  A certain normalization in financial markets is taking place as they factor in less intervention.  One result has been a shift upward in longer-term interest rates this year as represented by the ten year Treasury note whose yield has roughly doubled from 1.5% to almost 3%. [1]

What happens next to interest rates?  Should we change our approach to investing in fixed income?  The answer to the first question is that we do not know.  Predicting the direction and magnitude of interest rates is notoriously difficult…it makes predicting the stock market seem easy.  Which makes the answer to the second question a definitive NO.  Intermediate bond strategy managers are generally committed to holding a portfolio of bonds whose average maturity and sensitivity to interest rate changes (known as duration) is neither short-term (with maturities of less than three years) or long-term (maturities of more than ten years).  This approach constrains the managers to not make big bets on interest rate movements but rather focuses on maximizing returns within a boundary that historically represents the best risk/reward profile in the bond market.

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