02/26 2014

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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02/19 2014

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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12/17 2013

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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10/18 2013

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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10/7 2013

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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