Stay In Touch!

april.sqStarting on 17 April 2017 maybe someone you know, or their tax preparer, could be chatting on the phone with a tax collector contracted by the IRS. No kidding:

The calls will not be unannounced, and the contracted collector will offer instructions on how to make electronic payments to an IRS account, or where to send a check payable to the U.S. Treasury. Aren’t you glad you have an advisor to keep you up-to-date?



Down markets are bad, but recovery is worse. It is hard to grasp the fact that a 50% drop in value requires a 100% market improvement for complete recovery. Look at the red curve reflecting performance of an all-stocks portfolio that lost 59% of its value in the 2008-2009 Great Recession; it had to improve by 144% for full recovery and a year later only reached the 90% mark. For contrast, look at the orange curve for a half stocks/half bonds and cash portfolio: within a year it had recovered to values 5% beyond its 2007 peak. Portfolio assets are identical from curve to curve, but equities and fixed-income allocations vary. On the illustration, fixed-income assets (bonds and cash) increase from 0% to 100% from the top down; portfolio curves flatten as fixed- income allocations increase and performance volatility decreases. Conversely, allocations for equities (stocks) increase from the bottom up. The red curve (all-equities) portfolio recovered fully in about 5 years, but the orange curve (50% equities/50% fixed income) portfolio recovered within a year… and the lower blue curve (all fixed-income) portfolio did not lose value at the 2009 market bottom. Which curve would you choose for your portfolio?

Big Budget

2017.02The real mountains represent surplus in the private sector of an economy. The reflected mountains represent government deficit. If the private sector holds a surplus of cash reserves in excess of costs, the government shows an equal amount of deficit because it guarantees the value of the private sector surplus. If private sector surplus disappears, so does government deficit…and the economy enters a recession. Conversely, government deficit reflects private sector wealth. As government deficit shrinks, full faith and credit of the government covers a shrinking amount of currency it can make available to the private sector. The notch between the two major slopes in the photo, and its reflection, represent a recession: no surplus, no deficit… and no normal flows of currency to pay the bills and grow production. If the government prints more money, its guarantees rely upon the private sector to expand and increase surplus.  The photo illustrates an economic theory that says “Private sector surplus and government deficits: you can’t have one without the other in a growing economy.”  Yin and Yang, heaven and earth, positive and negative… pairs of opposing forces that energize life and can move mountains for those who understand.


ArrowGateRegistered Investment Advisors now have to perform as fiduciary professionals, which puts a new strain upon just what constitutes a “fiduciary.” There is no clear guidance other than to put our clients’ interests before our own. The Boy Scout oath and law include the words “mentally awake, morally straight, trustworthy, loyal, helpful, friendly, courteous, kind, thrifty, brave, and reverent…” among others. Then there’s the biblical injunction to “Do unto others what you would have them do unto you.” There is still some wiggle room within these words, so let’s look at “arrogate,” which is the verb upon which “arrogant” is based (from the Latin rogo, rogare which means to ask… like, “interrogate”). The definition of arrogate goes beyond mere ‘asking,’ towards “To appropriate for oneself presumptuously; claim, take, or assume without right.” That could make “fiduciary” clearer if we state that a fiduciary does not arrogate. True, it doesn’t roll off the tongue, but there is more heft in that statement than in our other descriptions of what a fiduciary should and should not do. And it applies to behavior we expect from advisors and politicians alike, don’t you think?

Debt and Taxes

BlogDEBT&TAXES.400wIn our glee at discovering how easy it is to buy things we cannot afford, we tend to overlook a workable strategy for incorporating debt into our financial behavior. When we are young and employed, we can support debt to buy a house, buy a car, or grow a business. When we are old and retired, continuing to support debt closes the doors to more pleasant possibilities. In return for tax deductions of present contributions to our IRA and 401k plans, all withdrawals —principal, interest and capital gains— are fully taxable on our state and federal income tax returns. At age 70, plan owners must begin annual minimum required distributions the rest of their lives. Like debt, this pushes the inevitable cost of a present benefit into the hazy future. For many of us, coupling debt payments to the tax cost on retirement plan withdrawals can become unbearable. In our younger years we tend to assume such things will just work out when the time comes. The real glee is available to people who work this out now, well enough to enter retirement debt free with minimal taxes on investment income… for the rest of their lives.


billards”Pool. It starts with ‘P’ which rhymes with ’T’ that stands for Trouble, right here in River City…” is Professor Harold Hill’s trumped-up but thought-provoking claim in The Music Man. Imagine all 16 billiard balls lying across the surface of a pool table, scattered by the initial “break.” The shots that follow involve aiming a ball to collide with another, imparting the right momentum into the targeted ball to make it drop it into a chosen pocket. Skilled players understand how to plan out multiple collisions to roll the right ball into the right pocket. Sometimes a strategy works out, sometimes it doesn’t. That’s life. The more balls in play, the more options there are available to players. Getting ahead in life is similar: options increase with the number of possible collisions we call experiences. In both games, players need to know the rules and where the pockets are… their goals, if you will. Both are games of skill, and with some study and some practice both can be really, really fun. In either adventure, the right coach can help players to improve their enjoyment of the game… and their scores. Even in River City.