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News & Views |
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September
2009 |
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In This Issue ·
Market
observations ·
The
broken buck stops here ·
Emotions
and investing ·
But
we will tell you ·
Personal
Finance 101 ·
Medical
travel insurance ·
Charitable
giving declines ·
In
case you forget ·
PFPG
news Contact Us |
Market
observations
It has
been a remarkable rebound! And that’s both bad and good. One of the
measures we track to get a sense of relative stock market valuation comes from
the Value Line Investment Survey, which tracks a universe of 1700 public
companies spanning the gamut from small to mega-cap stocks. Among this group,
the median price/earnings ratio has grown from 10.3 to 16.5 since the market
low in March; the median dividend yield has gone from 4% to 2.2%. Both these
measures suggest caution about further moves upward in the current market
recovery. Furthermore, Value Line’s analysts project a 60% appreciation
in their stock universe over the next 3 to 5 years (a growth rate relatively
small by their standards). Indeed, this number is only marginally better than
what they projected back in July 2007, the time of the last market peak. It
is assessments like these that keep us focused on managing portfolio risk for
clients and making sure that their stock allocations don’t creep up
beyond acceptable limits. The broken buck
stops here
The
temporary money market guarantee program set up by the U.S. Department of the
Treasury has come to an end. Established in September 2008 after a prominent
Reserve money market fund dropped below $1/share, or “broke the
buck,” the guarantee program restored confidence in the safety of such
funds during the worst of the credit crisis. Participation fees paid by fund
sponsors (including Vanguard, Fidelity, and TD Ameritrade) netted about $1.2
billion for the Treasury at no direct cost to taxpayers, according to the
Treasury Department. Emotions and
investing
We’ve
read some fascinating articles over the past few months about how emotions
– and the desire to avoid unpleasant ones – can affect an
investor’s behavior, sometimes in ways that aren’t good for
his/her portfolio in the long run. Understanding how we perceive and evaluate
risk goes hand-in-hand with this topic. What, Me Worry?
Putting Some Perspective on Panic
suggests looking at
the reality behind a risk before reacting to it, and offers some concrete
suggestions about how to respond to the tsunami of information we receive,
since not all of it is clear or reliable. But we will tell you
If you or someone you know is considering working with a
financial advisor, we recommend reading 10 Things
Financial Planners Won’t Tell You from SmartMoney.com. It provides short, to-the-point explanations
about differences among those who offer financial advice, their qualifications,
how they make their money, and what to expect from them in terms of service.
We’re happy to once again see a strong recommendation for seeking out
advisors that belong to NAPFA (National Association of Personal
Financial Advisors) who subscribe to a fiduciary oath and work on a fee-only
basis. Personal
Finance 101
As part of its effort to help Americans become educated consumers of financial planning advice and products, NAPFA is offering a free Web-based education program for consumers covering the basics of a wide range of financial issues. Monthly one-hour sessions will be taught by industry leaders, and are available live online with the opportunity for Q & A. Past sessions are available as audio files. Among the topics covered are investment basics, 401(k)s, women and money, planning for small business owners, and retirement issues. Medical travel
insurance
If you
are traveling overseas, don’t underestimate the value of comprehensive
insurance coverage in case of an injury during your trip. First, check if
your regular health insurance policy covers medical expenses incurred in
another country. A comprehensive policy can add roughly 5 – 7% to the
cost of your vacation, but can include medical and medical evacuation
coverage as well as trip cancellation or interruption insurance. For a
cautionary tale about what can happen to the inadequately insured on
vacation, please take a look at the New
York Times article “Stuck in
Paradise, Needing Medical Help” . Charitable
giving declines
For the
first time since 1987, charitable giving dropped by 5.7% in
inflation-adjusted dollars in 2008, according to a recent study
by the Giving USA Foundation. After a banner year in 2007, donations sharply
decreased in the fourth quarter of 2008 across most sectors, except for
religious organizations, public and society benefit organizations, and
international affairs nonprofits. Organizations meeting basic needs such as
food banks fell by 15.9% for the year, contrary to expectations among fund
raisers. The impact of job losses, declines in endowments, and large-scale
events like the Madoff makeoff will doubtless have a negative effect on 2009
statistics. In case you
forget
Should Facebooking,
tweeting, pinging, and sending messages on your iPhone or Blackberry have you
all atwitter, you can now add a virtual administrative assistant to help you
keep your life in order. A service called ReQall (www.reqall.com) allows you to e-mail
or call a toll-free number to dictate a memo, and ReQall will collate the
messages so you can either check them online, have them e-mailed, or
texted to your cell phone. It will manage online calendars, create shopping
lists, and can alert you with reminders via your cell phone. There is a free
version of Reqall; if you want reminders on your cell phone, subscribe to the
Pro version at $25/year, about three times the price of a calendar notebook
from Staples. PFPG news
Brian was interviewed
extensively by WGME/Channel 13 for a feature story about how people should
respond appropriately to their diminished retirement accounts. In June, Brian took part in the CFA
Institute’s annual examination standard-setting process, which helps
establish the passing score for CFA candidates. He also survived the 25th
anniversary Trek Across Maine, in
spite of the cycling-unfriendly weather. Tom was elected Treasurer of
the Maine Estate Planning Council and explored Our best wishes for a
sunny, relaxed and healthy autumn! Sincerely,
Information
contained in this newsletter does not serve as the receipt of, or as a
substitute for, personalized investment advice from |
