Taking Stock of U.S. Stocks

You’ll often hear financial advisors say the biggest investment risk is not having enough money accumulated by the time you retire. That’s all well and good, but it’s not really actionable advice. On the cusp of our nation’s recovery, there are strong reasons to view U.S. equities as the key to the future – both in leading economic growth worldwide and in helping each of us meet our retirement goals.

Warren Buffett certainly thinks so. Fortune magazine has published an adaptation of his most recent letter to Berkshire Hathaway shareholders. It offers a fascinating discussion on how the concept of risk is largely misunderstood – and how he views risks when it comes to making investment decisions.

In a provocative statement, Buffett claims that, “Investments that are denominated in a given currency include money-market funds, bonds, mortgages, bank deposits, and other instruments. Most of these currency-based investments are thought of as ‘safe.’ In truth they are among the most dangerous of assets.”

He goes on to explain that the combination of personal income taxes and the ‘invisible inflation tax’ (not to mention investment expenses) can strip an investor’s return to the point of little to no real purchasing power. Buffett also takes aim at investment in assets that will never produce anything, but rather rely on the hope that someone else will pay more for them in the future. He asserts that fear of currency collapse is what motivates investors to move to sterile assets, such as gold (which he likens to the widespread investment in Tulips in the 17th century).

An outright fan of long-term equity investing, Buffett presents a strong case for productive assets, such as businesses, farms, or real estate. He believes that in the future, the U.S. population will “move more goods, consume more food, and require more living space than it does now. People will forever exchange what they produce for what others produce.”

[CLICK HERE to read, “Warren Buffett: Why stocks beat gold and bonds” at; February 9, 2012.]

Dividend Aristocrats

In its “Investment Ideas for 2012,” Morgan Stanley Smith Barney’s Global Investment Committee (GIC) reinforces Buffett’s position with an endorsement of U.S. large cap growth stocks and ‘Dividend Aristocrats.’ These aristocrats are represented in the S&P 500 Dividend Aristocrats Index, comprised of 42 large-cap, blue-chip companies that have raised dividend payouts annually for at least 25 years. According to the latest GIC report, “In a period of record-low money market and bond yields, dividend-paying equities can offer an attractive source of income.”

[CLICK HEREto read Morgan Stanley Smith Barney’s latest “On the Markets” market commentary; February 2012.]

Tech on Track

One sector on track for stable growth in the near term is information technology. SmartMoney recently posted an article offering four reasons why even risk-averse investors may find this sector more stable than other options. One reason: Since many companies have deferred technology investments since the 2008 financial crisis, they’re ready to increase spending now. According to the article, “Technology has become more of a necessity, and companies can only delay investments for so long. That helps make the sector more stable.”

While you’re at the SmartMoney website, check out this fun tool that gives you an at-a-glance, comparison view of sector performance through various visual filters.

[CLICK HERE to read, “Tech Stocks: Safer Than You Think” at; January 30, 2012.]

[CLICK HERE to tool around with the “Map of the Market” at; February 2012.]

If you’re interested in strengthening your U.S. equity allocation for 2012 and beyond, please contact us to schedule a portfolio review and consultation.


*This information is not intended to provide actual investment advice. It is important that your unique situation, goals and objectives be evaluated before such advice can be offered. Please seek a professional specializing in these areas regarding the applicability of this information to your situation.



Annuities Anew: New Proposals, More Options

According to a 2011 Retirement Survey from Wells Fargo & Company, 25% of middle class Americans say they will need to work until at least age 80 to live comfortably in retirement.1

With fewer companies offering pensions in this day and age, there is more reliance on money saved through 401(k) plans to provide income during retirement. However, since defined contribution plans didn’t become mainstream until the 1980s, we are only now witnessing the first wave of retirees expected to draw significantly from this type of plan – and it remains to be seen whether they will provide adequately for today’s longer life spans.

Given the ongoing state of our slow economy, we’re approaching somewhat of a crisis with millions of baby boomers standing at the precipice of retirement. As such, policymakers are thinking the employer plans could use a little tweaking to become a more viable – and reliable – source of income.

The U.S. Departments of the Treasury and Labor recently proposed new rules to boost the potential for employer-sponsored plans to last throughout retirement. There are three specific guidelines:

1.   Make it simpler for defined benefit pension plans to offer a combination of lifetime income and a lump sum distribution – or “partial annuitization.” This would allow retirees to maintain a portion of their savings invested should they need an emergency sum, while at the same time convert the balance to an annuity stream of income that may continue paying out as long as they live.

2.    Make it easier for retirees to convert part of their 401(k) plan to purchase an annuity stream of income starting at age 80 or 85. This is called a “Longevity Annuity.” The reason this matters is because, when assured that you’ll have enough money to last throughout your most senior years, you can use your other assets to budget for a shorter period of retirement – with perhaps a more robust lifestyle.

3.   The guidance defines plan and annuity terms designed to automatically protect spousal rights without requiring spousal consent before the annuity begins. To date, how spousal protection rules apply has been unclear when an employee selects a deferred annuity within a 401(k) plan – and this has discouraged plan sponsors from offering annuity options before now.

[CLICK HERE to read the Treasury Fact Sheet, “Helping American Families Achieve Retirement Security by Expanding Lifetime Income Choices” from the US Department of Treasury; February 2, 2012.]

There are a wide variety of annuity contracts on the market – and none of them are simple. This is one product where the advice, “do not try this at home” may be prudent. To determine if an annuity is a good fit for your situation, and to figure out which one to choose – whether as part of an employer plan or one you own independently – it’s important to consult with an experienced advisor. Choices include immediate annuities (start paying out right away), fixed annuities (guarantee a fixed interest rate), variable annuities (rely on investment growth over time before paying out), and indexed annuities (earn a percentage of indexed returns with a guaranteed minimum2).

[CLICK HERE to read “Designing a Monthly Paycheck for Retirement;” from the Society of Actuaries; 2012.]

[CLICK HERE to read “Don’t outlive your savings: How annuities can help” at; February 2, 2012.]

If you’re interesting in learning more about how to convert your retirement savings into a reliable stream of lifetime income, please contact us.


1 Wells Fargo; Wells Fargo Retirement Survey, November 16, 2011.

2 Guarantees are based on the claims-paying ability of the issuing insurance company.




A New Era of Manufacturing

 “We bet on American workers and, tonight, the American auto industry is back.”


That’s a quote from President Obama’s State of the Union Address on January 24, an hour+ plus speech that spanned the scope of America’s critical issues. One of the big messages was his support for a renaissance in domestic manufacturing to revitalize job growth. In his address, the President stated that General Motors is back to being the world’s number-one automaker, Chrysler has grown faster in the U.S. than any major car company, and Ford is investing billions in U.S. plants and factories. All told, over the last three years, the domestic auto industry added nearly 160,000 jobs.


[CLICK HERE to read more about manufacturing-related the tax breaks proposed in the President’s address: “Blueprint for an America Built to Last;”; January 24, 2012.]


Industry Recommendations

The Council on Competitiveness recently published a report in support of its U.S.  Competitiveness Initiative that provides a wide range of recommendations and specific measures policymakers can implement to support the revival of U.S. manufacturing in America. The report offers recommendations on how to:


·         Fuel an innovation and production economy with start-up and scale-up initiatives (includes fiscal, tax, and regulatory reforms)

·         Expand U.S. exports and reduce the trade deficit (includes liberalizing trade with select emerging market countries)

·         Harness the power and potential of American talent (includes immigration reform to attract the world’s brightest to the U.S.)

·         Achieve “next-generation” productivity through innovation in manufacturing

·         Create competitive advantage through “next-generation” supply networks and logistics (includes developing a national strategy for reducing energy demand)


[CLICK HERE to read “Make: An American Manufacturing Movement;” a report from The Council on Competitiveness, December 2011.]


Safety Standards Abroad Lacking

In addition to economic growth, there are other reasons to bring manufacturing jobs back to America. Standards for acceptable worker safety practices are reportedly substantially lower – and life threatening – in many other countries. This was underscored by an explosion at a Chinese Apple iPad factory last year that killed four and injured 18. The cause of the blast was aluminum dust – an issue that the U.S. resolved in domestic plants over a century ago. The pressure on major global manufacturers (such as Apple, Dell, Hewlett-Packard, IBM, Motorola, and others) to improve hazardous conditions could make it more expensive to do business in places like China. Meanwhile, many believe those resources would be better served by transferring them to America to create more jobs in a safer, more stringently regulated environment.


[CLICK HERE to read “In China, Human Costs Are Built Into an iPad” at The New York Times; January 25, 2012.]


The Future of Domestic Manufacturing

The call for “inshoring” manufacturing jobs would mean a change in the skill set of American laborers. Because manufacturing in this country has become leaner and more reliant on technology (hence, the higher cost), tomorrow’s factory worker will require a substantially higher level of skill and knowledge – even advanced degrees – to monitor and modify machine specifications for productivity. Bringing jobs back from overseas is not as simple as it may seem.


[CLICK HERE to read “Will Inshoring Create More Manufacturing Jobs in 2012?” at Manufacturing Executive; December 22, 2011.]


[CLICK HERE to read an in depth study of one manufacturing company that underscores today’s trends, “Making It in America” at The Atlantic; January/February 2012.]


[CLICK HERE to read about one manufacturer’s approach to mentoring skilled workers: “Advancing Manufacturing, Tomorrow and Today;”, January 11, 2012.]


Clearly, the debate for efficiency models in manufacturing and the costs of bringing factory jobs back to America will continue – and the process will be slow. However, many of the companies considering such a move are currently priced at attractive valuations, so – if you’re in it for the long haul – they offer interesting investment options for the larger goal of creating a more self-reliant and sustainable economy. Please give us a call to discuss the potential for incorporating a “Made in America” theme into your portfolio.






Pent-Up Energy

Just recently, the Obama administration rejected the application to build the Keystone XL pipeline, which would stretch 1,700 miles from Canada to the U.S. Gulf Coast. It’s been and looks to continue to be a hot issue, not just for the sake of oil production, but for American jobs as well.

While jobs remain the most significant economic albatross in this country, they probably shouldn’t be the foremost reason for building a cross-country pipeline. But it seems all interested parties have a different agenda. Environmentalists say tar-sands oil production creates more pollution than traditional oil production. Politicians are using the issue as an election-year lightning rod to advance a heated debate over jobs and the environment. The administration says they didn’t have enough time to get all the facts.

[CLICK HERE to read and/or listen to “Rejected Pipeline Becomes Hot-Button Election Issue;”, January 19, 2012.]

But the issue promises to continue, because the production of oil and energy is a mainstay challenge in this country – and all over the world, for that matter. Energy – particularly sustainable energy – is one of the most global issues of the day. After all, there are finite resources on our planet that must be shared by all of its inhabitants.

In recognition of the growing importance of energy resources, the United Nations has dubbed 2012 the “International Year of Sustainable Energy for All.” UN Secretary-General Ban Ki-moon observed at the recent World Future Energy Summit that, “energy is central to everything, from powering economies to combating climate change to underpinning global security.” Stated goals include doubling the rate of improvement in energy efficiency and doubling the share of renewable energy in the global energy mix by 2030.

Interestingly, Nicaragua is committed to reducing its dependence on foreign oil from 80% to 6% within a decade, and wants to become an international leader in renewable technologies by 2016.

[CLICK HERE to read “UN urges achieving sustainable energy for all as International Year kicks off” at; January 16, 2012.]

[CLICK HERE to read “Nicaragua’s Renewable Energy Revolution Underway;”, January 20, 2012.]

Investment Opportunities

When an issue this large focuses global attention, it generally means there’s an opportunity to make money. Not just for self-serving corporations and governments, but for investors as well. Fidelity recently published viewpoints on opportunities within the energy sector, noting that energy stocks tend to perform best at mid and late stages of an economic cycle. It cites three themes for energy prospects in the coming future: (1) the emergence of more productive new drilling techniques; (2) the growth of the liquid natural gas market; and (3) a renaissance in deepwater exploration.

The positive impact of energy innovation is far-reaching, encompassing a cross section of industries, sectors and countries. This smorgasbord of investment opportunities includes energy producers, manufacturers, transportation companies, engineering, construction, technology, Canada, Argentina, and Eastern Europe, among others.

[CLICK HERE to read “Big energy ideas for 2012;”, December 12, 2011.]

In consideration of increasing global demand for energy commodities and services, let’s take a look at your portfolio to see if a pent-up energy allocation at this stage of the market cycle would align with your risk tolerance and investment goals for the future. Feel free to contact us to discuss further.



*This information is not intended to provide actual investment advice. It is important that your unique situation, goals and objectives be evaluated before such advice can be offered. Please seek a professional specializing in these areas regarding the applicability of this information to your situation.


2012: Pundits and Prognosticators

At the beginning of each year, market analysts and economists publish their outlook for the future. It makes for an interesting mix of bulls, bears, and everything in between. Here’s a handful of these new reports.


Citigroup’s Equity Strategy team presents an upbeat picture for the next few years. It anticipates a number of major influential factors that should support a new secular bull market run. Among these: energy independence, a local manufacturing renaissance, technology-based transformational change, demographics, a housing sector bottom, and fiscal reform.


[CLICK HERE to read Citi’s special report, “The Raging Bull Thesis;” December 2011.]


Analysts from Merrill Lynch Wealth Management believe the key to regained prosperity lies with America’s banks. They assert that if/when there is positive news from the real estate and banking sectors, outperformance will evolve from emerging markets to developed markets, from growth to value securities, from the technology sector to banking, and money will flow from bonds to equities. The wealth manager sees a huge amount of cash on the sidelines that could easily take markets up to double-digit growth.


[CLICK HERE to view video Outlook 2012: Prospects for Growth in the Year Ahead at; January 2012.]


LPL Financial Research maintains that the 2012 elections could have major consequences for investors. It notes that while “the first three quarters of a presidential election year are usually pretty flat, the fourth quarter is not and tends to break out. This breakout was to the upside in 1992, 1996 and 2004 and to the downside in 2000 and 2008.”


[CLICK HERE to read “Outlook 2012;” LPL Financial Research; November 2011.]

Also, check out the USA Today article that corrals industry perspectives on everything from election year wisdom to an analysis that “if stocks follow their normal historical pattern of bottoming in years that end in 2, we could launch into a new cyclical bull market.”


[CLICK HERE to read “10 reasons stocks may rise in 2012” at; January 3, 2012.]


In its 2012 outlook report, Wells Fargo Advisors reflects cautious optimism for slow but steady economic improvement throughout the year. Here’s one of it observations: “Investors are more likely to be surprised in 2012 by better economic performance than continued weak economic activity. Apparently, American investors, consumers and the unemployed/marginally employed/dissatisfied employed are so downtrodden that we don’t even expect good news. Perhaps we would prefer to be pleasantly surprised.”


[CLICK HERE to request a free copy of, “Preparing for Better Days: 2012 Economic and Market Outlook”; Wells Fargo Advisors; January 2012.]


Such sentiments remind us that when it rains, it pours. But history – ranging from world, economic, market, and our personal experiences – also tends to show that when times are good…they’re very good. Between the hopefulness that is generally fueled by an election year and the pervasive feeling that enough is enough (or…it just can’t get much worse), it would appear that 2012 could be a better year for most folks.


If you’re feeling that old optimism rising in your gut, contact us. Let’s position your investment both defensively and offensively to take advantage of what lies ahead.





A Positive Start for the New Year

The first employment-related leading indicators of 2012 were above expectations. According to the Labor Department, in December of 2011, 200,000 more jobs were added and unemployment dropped to 8.5% – its lowest level in nearly three years. In sum total, the job market gained 1.6 million jobs in 2011 This report came on the heels of an ADP National Employment Report detailing the increase in nonfarm private business employment by 325,000 jobs from November to December 2011. That gain represented the largest monthly increase in over a year and nearly twice the average monthly gain since May of 2011. 

Following the trend of the past year, private businesses continue adding jobs while the public sector continues to cut back (eliminating 12,000 jobs in December). Government job reductions were 188% higher than the second-ranked financial sector, which saw 63,624 job cuts in 2011, according to a report by Challenger, Gray & Christmas. These two sectors alone accounted for 41% of all the job cuts announced last year.

[CLICK HERE to read the Bureau of Labor Statistics’ news release, January 6, 2012..]
[CLICK HERE to read ADP’s December 2011 National Employment Report; January 5, 2012.]
[CLICK HERE to read the Challenger, Gray & Christmas news release, “Job Cuts Decline in Final Month of 2011;” January 5, 2012.]

Market Reaction
Normally a strong jobs report would trigger a spike in stock market prices, but so far the markets have been mixed. The biggest concern is the re-emergence of the European story, marred by recent debt rating downgrades in Hungary (Fitch: BB+ with a negative outlook) and Belgium (Moody’s: Aa3).Ratings agency Fitch also recently warned Italy, Spain, Ireland, Slovenia and Cyprus of the potential for “near-term” downgrades.

It seems our marriage to the new global market will not let us enjoy domestic good news unless the rest of the world can share in the good fortune. It’s really kind of sweet, when you look at it in a non-economic-albatross kind of way.

[CLICK HERE to read about Belgium’s downgrade from Moody’s; December 16, 2011.]
[CLICK HERE to read about Hungary’s downgrade at Reuters; January 6, 2012.]

That said, there’s no reason not to assess the “what ifs” of recent positive news in the US. What if jobs came roaring – or even just whimpering – back in 2012? What industries would stand to gain? Let’s assume for a moment that anyone unemployed for a significant period of time would not – upon procuring a new job – go on a spending spree with money they haven’t earned yet.

Let’s assume, instead, that such a person might need to buy a car. It’s a reasonable consideration, so perhaps the auto industry is poised to do well. If people who’ve been out of work suddenly have health insurance, it’s reasonable to expect an influx of health care visits, with subsequent drug and vision prescriptions renewed. So perhaps health care is another industry well positioned for increased profits.

We could go on and on. Let’s not be overly exuberant like the newly employed guy who immediately buys a (long overdue) HD flat screen TV to watch this year’s Super Bowl. But let’s do take a look at your portfolio to see if there are sectors where you could shore up while equity prices still represent good value. I look forward to working with you in the New Year!



2012: Deploy It or Return It

Despite the limping economy, corporate balance sheets hold record levels of cash, and interest rates promise to remain low through 2012. Thanks to weakening stock prices, this scenario behooves a “deploy it or return it” mentality from shareholders according to a mergers & acquisition specialist at JP Morgan in a recent cnnMoney article. Thus in 2012 we may see an increase in share buybacks, dividend enhancements, and merger/acquisition activity as a means of generating higher returns to shareholders.


[CLICK HERE to read “Merger 2012: The year of the hostile takeover;” December 30, 2011.]


As corporations look to invest capital they will look to credit vehicles to do so. In today’s environment, coupon yields provide reliable income and are further up the food chain in terms of capital structure – they also tend to offer significantly higher payouts.

The decision to buy individual bonds or bond funds has a lot to do with your investable net worth. Buying individual bonds requires a higher investment, but the larger the portfolio of individual bonds, the lower the overall cost. However, bond funds offer a viable alternative for investors with fewer assets available for their bond allocation.

[CLICK HERE to read “Corporate bond returns fall short of Treasurys” at; December 29, 2011.]


With earnings growth slowing down, the retail sector will need to do something to attract investors. That something, according to independent retail analyst Brian Sozzi, includes share buybacks and targeted capital investment – such as toward online operations. According to Sozzi, we’re more likely to see what he calls “larger, boring brands” deploying their cash via share buybacks and higher dividends. Companies like Macy’s, Kohls, Home Depot and Gap are all cash flush and pulling back on new store openings, which means they need to look at other ways to improve their return profile.  

[CLICK HERE to view the video report from, “Sozzi Sees Some Retailer Dividends, Buybacks;” December 29, 2011.]


Caution remains for the bank sector. In November, the Federal Reserve published its complete ruling that requires banks with assets of $50 billion or more to submit annual capital plans for the Fed’s review. That includes any plans for capital distributions, including dividend payments or stock repurchases. According to its press release, the purpose of the review is to “ensure that institutions have robust, forward-looking capital planning processes that account for their unique risks, and to help ensure that institutions have sufficient capital to continue operations throughout times of economic and financial stress.”

So far the Fed has denied requests from both Bank of America and MetLife Bank to increase dividend payouts to shareholders, subsequently leading to MetLife’s recent announcement that it intends to sell its bank depository business to GE Capital.

[CLICK HERE to read the Federal Reserve’s press release for their Comprehensive Capital Analysis and Review (CCAR) stress test in 2012; November 22, 2011.]

[CLICK HERE to read “MetLife Ditches Bank Business, Sells $7.5B In Deposits To GE Capital;” at; December 27, 2011.]

If you’re considering adding some income-yielding investments to your portfolio in 2012, give us a call for analyses and recommendations.



401(k) Status Update

The battle rages on. Legislators are loath to extend the payroll tax cut when there is no formalized plan in place to reduce government spending. The fact is, American taxpayers will have to absorb the cost of the government’s excess deficit either through more taxation or reduced entitlement programs…or both.


One area getting a good look is the tax-deferred status of employer-sponsored 401(k) contributions. That’s the bad news – and we’ll get that in a bit. But first, some good news.


Spread the Wealth

There is recent evidence that employers are actively supporting worker’s retirement savings by restoring plan contributions that were suspended or reduced since the beginning of 2008. In fact, about 12% of plan sponsors have increased their employee contribution match or added a matching contribution. Many are revamping or adding to their investment options to strengthen performance potential for their plans’ returns.1


Apparently, this resurgence is unprecedented. So much so that the president of the Plan Sponsor Council of America observed that he has “not seen anything like this in 25 years of working with plan sponsors.”


[CLICK HERE to read a press release on the findings of the Plan Sponsor Council of America’s latest survey: 401(k) and Profit Sharing Plan Response to Current Conditions; November 29, 2011.]


More Good News: The Message to Save is Resonating

According to the same survey, about 40% of employer plans reported an increase in plan participation, up from a mere 3.9% increase in 2009.1 And here’s an interesting tidbit: 23% of Gen X (born 1965-1980) and 25% of Gen Y (born 1980s-90s) and are funding both a 401(k) or 403(b) plan and an IRA – compared to only 16% of baby boomers.2


[CLICK HERE to read more about the results of the TD Ameritrade Survey from; December 20, 2011.]


401(k) Contribution Tax Debate

One of the tax issues up for debate is the deductibility of employee 401(k) contributions. If that were to change, 401(k) investments could be taxed both before and after taxes, just like other taxable investments. Chances are this would apply only to new contributions – so any balance already in your plan would be taxed only at distribution.


The proposal has lots of opponents, as you can imagine. The Employee Benefit Research Institute (EBRI) reports that such a move would cause many lower-income workers to either decrease or discontinue contributions altogether. High-income earners wouldn’t be happy about it, either. It is also commonly noted that while the government may generate short term revenue by removing the tax deduction, it would likely see a decrease in long term revenues because lower contributions are likely to yield lower long-term investment returns (and, thus, taxable amounts) when distributions are made in retirement.


Another proposal recommends making employer contributions taxable and replacing the employee current 401(k) deduction with a flat-rate refundable credit (of either 18% or 30%) deposited directly into the employee’s account. This would save money for the government but cost employers more – many may even stop offering a retirement plan as a result.


[CLICK HERE to read “The Next Big Threat to Your 401(k): A Tax Break Shake Up;” at AOL’s; September 22, 2011.]


[CLICK HERE to read the Brooking Institution’s proposal to Restructure Retirement Saving Incentives; September 8, 2011.]


One of the advantages defined contribution plans (401k) offer over defined benefit plans (pension) is that Americans are better able to control their investments and their future, rather than depending so much on an employer. If you’d like to explore other ways you can save and invest for retirement with less reliance on the government or your employer, please give us a call.



1 Plan Sponsor Council of America; 401(k) and Profit Sharing Plan Response to Current Conditions; November 29, 2011.

2 TD Ameritrade Survey; December 20, 2011.




Getting on with Our Lives

Who would grow up in any other part of the country thinking that what they really want in life is to move to Bismarck, North Dakota? Thanks to a booming oil business fueling the local economy, more than 16,000 jobs were available in North Dakota this fall, paying substantial salaries to attract workers. And that’s just in the oil business. Everyone from truck drivers to fast food servers could get jobs paying $15-plus an hour throughout the western part of the state.

As a result, unemployed Americans flocked to North Dakota in droves – so much so that a new airplane hangar had to be built in Bismarck to accommodate the flight demand. Housing became scarce, leading to a 6% increase in residential home prices while the rest of the country continued its free fall. That’s for those lucky enough to find housing – many people who found jobs camped out in the local Wal-Mart parking lots. Now there’s a lifestyle change you don’t see very often: Cash-rich and homeless.

[CLICK HERE to read the “Unemployed Flock to North Dakota; What’s Their Secret?” at; October 19, 2011.]

[CLICK HERE to read the “Double your salary in the middle of nowhere, North Dakota;” at; October 20, 2011.]

Second Careers
By the time the millenium rolled around, many baby boomers thought they were all set. Then we experienced two recessions in a 10-year period, and that set many people backward on their road to prosperity or, at very least, a comfortable retirement. Due to the recent economic “correction”, nearly one in three 55+ year-old participants in an AARP study said they were currently unemployed or had been laid off in the three years of the study. Thirty-three percent planned to delay retirement.1

It’s not easy to find a job once you’re over age 50. However, sometimes adversity can bring out the best in people. Whether out of financial need or a determination not to finish one’s career with a layoff, many seniors in the US started up their own business in the midst of the recession in order to reboot their retirement resources (and dreams).

[CLICK HERE to read stories about late career entrepreneurs: “Seniors mind their business” at; December 16, 2011.]

Marriage and Children
Pew Research recently published findings that the number of new marriages in the US declined by 5% between 2009 and 2010 – a sharp one-year drop. Disinterest in marriage may not simply be an outcome of the poor economy, since marriage has been on the decline since the 1960s, but as fewer young adults are employed it’s a safe bet that there is some impact. By the same token, the Russell Sage Foundation published a study showing a clear correlation between increases in unemployment and lower birth rates.

[CLICK HERE for a summary of the new analysis from Pew Research Center; December 14, 2011.]

[CLICK HERE to read excerpts from the Russell Sage Foundation study, “The Social Effects of the Great Recession”; December 16, 2011.]

We appear to be in one of those situations in which we might ponder whether the chicken comes before the egg. Do we wait for a stronger economy or should we start up a new business, get married, have babies, and just plain get on with our lives? This, of course, would ultimately help stimulate economic growth.

If you’ve been pondering these questions yourself, give us a call to assess your financial situation and see if we can’t get you moving forward with some of your life choices.

 1 AARP Public Policy Institute; “Insight on the Issues” May 2011.



Everybody Wants to Rule the World

Ever since Christopher Columbus discovered and introduced the New World to, well, the Old World, America grew and became a world leader. We lead the world in lots of ways, not just in capitalism. We made blue jeans popular. Rock and roll. And Hollywood is one of our most thriving exports.

So everybody else wants to be just like us – live the coveted Western lifestyle. Though years of late have robbed that lifestyle of some of it allure, it does endure and probably always will but for one simple reason: the grass is always greener somewhere else.

In emerging countries, there are some two billion people who aspire to work the same types of jobs, live in the same kinds of houses, eat the same (albeit unhealthy) food, wear questionably distasteful or inappropriate clothes, and drive the (oft times) gas guzzling cars we own. America is all about excess; the fast food value meal an emblem of the American Dream. Ironic, isn’t it, that one of our most iconic fast food chain symbols is a crown.

Not that aspiring to our lifestyle is a bad thing. On the contrary, demand from other nations will help fuel our economy via our global companies helping to provide new urban infrastructure – roads, bridges, schools, hospitals and energy grids for modern cities in emerging countries.

Rebranding: Growth Markets

It’s been 10 years since Jim O’Neill, then an economist and now chairman of Goldman Sachs Asset Management, coined the term BRIC as a reference to Brazil, Russia, India and China. The term clustered countries he believed offered strong growth prospects, and became a mainstay phrase that focused attention on emerging markets.

Recently, O’Neill published a book (The Growth Map: Economic Opportunity in the BRICs and Beyond; Portfolio Hardcover; December 8, 2011) that provides a BRIC analysis from the last ten years. The book also refers to the “Next Eleven” countries – Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam – to drive global change.

O’Neill also suggests that we should rename emerging countries (or “rebrand” them, as marketing gurus would call it) to call them “Growth Markets.” By this new definition, a “Growth Market” would be regarded as “one that is likely to have favorable demographics and achieve rising productivity going forward.” Furthermore, a Growth Market would include any economy outside the Developed World that is at least 1% of current global GDP.

[CLICK HERE to read the Financial Times article, “Brics at 10: not dead yet”; December 5, 2011.]

[CLICK HERE to read the Goldman Sachs Asset Management fact sheet, “It is Time to Re-define Emerging Markets;” January 31, 2011.]

[CLICK HERE for a video interview with Jim O’Neill of Goldman Sachs Asset Management; April, 2011.]

Perhaps a rebrand is a good idea for emerging markets. For one thing, more than half of the world’s total stock market capitalization lies outside the United States, so eliminating the reference to “emerging” may help mediate the stigma attached to investing in these potentially high growth (and yes, high risk) economies.

But another reason is because these countries – while not full-grown – have certainly emerged from infancy. In fact, the last few years have showed them off, economically speaking, like debutantes. And as teenagers are apt to learn, grownups don’t know everything. There’s a lot we can learn from these countries. Their cultural dishes typically boast more nutrition and less fat than the average American holiday dinner. They tend to drive smaller cars, ride bikes, and get more exercise simply as a means of transportation. And in China, the average household savings rate is up to about 26%.

[CLICK HERE to read an interview with Sheldon Garon, Princeton Professor and author of Beyond Our Means: Why America Spends While the World Saves; December 6, 2011.]

Sure, maybe everybody does want to rule the world, but depending on the way you look at it –  there are no clear winners. You can start by just ruling your own world. Please contact me if you’d like to engage in a full financial review and analysis to help you start off your New Year with a stronger financial plan.