Tolerate the Turbulence

wall street

Look beyond this moment and stay focused on your long-term objectives.  Provided by Stan Evans, CFP Volatility will always be around on Wall Street, and as you invest for the long term, you must learn to tolerate it. Rocky moments, fortunately, are not the norm.   Since the end of World War II, there have been dozens of Wall Street shocks. Wall Street has seen 56 pullbacks (retreats of 5-9.99%) in the past 73 years; the S&P index dipped 6.9% in this last one. On average, the benchmark fully rebounded from these pullbacks within two months. The S&P has also seen 22 corrections (descents of 10-19.99%) and 12 bear markets (falls of 20% or more) in the post-WWII era.1 Even with all those setbacks, the S&P has grown exponentially larger. During the month World War II ended (September 1945), its closing price hovered around 16. At this writing, it is above 2,750. Those two numbers communicate the value of staying invested for the long run.2  This current bull market has witnessed five corrections, and nearly a sixth (a 9.8% pullback in 2011, a year that also saw a 19.4% correction). It has risen roughly 335% since its beginning even with those stumbles. Investors who stayed in equities through those downturns watched the major indices soar to all-time highs.1  As all this history shows, waiting out the shocks may be highly worthwhile. The alternative is trying to time the market. That can be a fool’s errand. To succeed at market timing, investors have to be right twice, which is a tall order. Instead of selling in response to paper losses, perhaps they should respond to the fear of missing out on great gains during a recovery and hang on through the choppiness. After all, volatility sometimes creates buying opportunities. Shares of quality […]

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Your Diversified Portfolio vs. the S&P 500

Diversified Portfolio

How global returns and proper diversification are affecting overall returns.   Provided by: Stan Evans, CFP “Why is my portfolio underperforming the market?” This question may be on your mind. It is a question that investors sometimes ask after stocks shatter records or return exceptionally well in a quarter. The short answer is that while the U.S. equities market has realized significant gains in 2018, international markets and intermediate and long-term bonds have underperformed and exerted a drag on overall portfolio performance. A little elaboration will help explain things further.     A diversified portfolio necessarily includes a range of asset classes. This will always be the case, and while investors may wish for an all-equities portfolio when stocks are surging, a 100% stock allocation is obviously fraught with risk.    Because of this long bull market, some investors now have larger positions in equities than they originally planned. A portfolio once evenly held in equities and fixed income may now have a majority of its assets held in stocks, with the performance of stock markets influencing its return more than in the past.1 Yes, stock markets – as in stock markets worldwide. Today, investors have more global exposure than they once did. In the 1990s, international holdings represented about 5% of an individual investor’s typical portfolio. Today, that has risen to about 15%. When overseas markets struggle, it does impact the return for many U.S. investors – and struggle they have. A strong dollar, the appearance of tariffs – these are considerable headwinds.2,3  In addition, a sudden change in sector performance can have an impact. At one point in 2018, tech stocks accounted for 25% of the weight of the S&P 500. While the recent restructuring of S&P sectors lowered that by a few percentage points, portfolios can still be greatly […]

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Why Did Treasury Yields Jump?

A look at the early October selloff of U.S. government bonds.  Provided by: Stan Evans, CFP Investors raised eyebrows in early October as long-dated Treasury yields soared. On Tuesday, October 2, the yield of the 10-year note was at 3.05%. The next day, it hit 3.15%. A day later, 3.19%. What was behind this quick rise, and this sprint from Treasuries toward riskier assets? You can credit several factors.1 One, Federal Reserve chairman Jerome Powell made an attention-getting comment. On October 3, he expressed that the central bank’s monetary policy is “a long way from neutral.” In other words, interest rates (in his view) are nowhere near the point where the Fed needs to stop increasing them. Bond investors found his remark plenty hawkish.2 Two, great data keeps emerging. The Institute for Supply Management’s service sector purchasing manager index hit an all-time high of 61.6 in September. (It should be noted that this index has only been around for a decade.) ADP’s latest payrolls report found that private companies added 230,000 net new jobs last month, a terrific gain vaulting above the 168,000 noted in August. Additionally, initial unemployment claims were near a 49-year low when October started. These indicators signaled an economy running on all cylinders. Further affirming its health, announced it would boost its minimum wage to $15 an hour, giving some of its workers nearly a 30% raise.3 Three, you have the influence of the Fed thinning its securities portfolio. It has been reducing its bond holdings since last fall and is now doing so by $50 billion per month (compared to $40 billion per month last quarter).2     Four, NAFTA could be replaced. Canada, Mexico, and the U.S. have agreed to a preliminary trilateral trade pact designed to supplant the North American Free Trade Agreement. Wall […]

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The Penn Mutual Life Insurance Company Presents Stan Evans with the 2018 Rob Holmes Financial Professional of the Year Award

FOR IMMEDIATE RELEASE      The Penn Mutual Life Insurance Company Presents Stan Evans with the 2018 Rob Holmes Financial Professional of the Year Award Veteran adviser honored with annual corporate recognition for dedication to clients and sales success  HORSHAM, Pa. – June 15, 2018 – The Penn Mutual Life Insurance Company (Penn Mutual) has announced today that H. Stan Evans, CFP, is the recipient of their 2018 Rob Holmes Financial Professional of the Year Award.  Evans is the Founder of Capital Financial Benefit Solutions associated with AspireWealth Planners, Penn Mutual’s Mid-Atlantic office. The award recognizes individuals for their commitment to continuing education and a high standard of ethics and performance in helping clients achieve financial security. Recipients of the Rob Holmes Financial Professional of the Year Award must demonstrate exceptional dedication to their clients and the financial services profession, be members of good standing of specific industry organizations, and have achieved a high degree of sales success. Evans, who recently celebrated his 37th year in the financial services industry, specializes in the small business and professional markets, in addition to personal and business financial planning with clients. Throughout his tenure, he has remained steadfast in his philosophy of advising clients to be prudent in their insurance and investment decisions to maximize and protect wealth management plans. “I am honored to receive this prestigious award,” said Evans. “I am truly proud to be in this business, and I am committed to serving as a lifetime learner in this business as I continually strive to educate my clients and top relationships about the impact of this industry, and open their eyes about the importance of wealth accumulation and preservation.” Eileen McDonnell, Chairman and CEO of Penn Mutual echoes the sentiment and says of Evans, “Stan has dedicated his career to serving the best […]

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Check Your Fiscal Fitness

Presented by: Capital Financial Benefit Solutions How Fiscally Fit Are You?  The beginning of each year is an excellent time to improve those areas of your life that need enhancement.  You may vow to get into shape, lose weight, and eat healthier or some other measure to improve your overall physical health.  While these things will help you to feel better and hopefully live longer, they still require a strong will and self-discipline to meet the goal. Just as physical fitness can renew your vitality and increase your energy, fiscal fitness can help to invigorate your financial future.  Don’t be fooled, because this too takes discipline. The following test will help you measure your fiscal fitness.  If you are one of the fortunate people who have everything well under control – carry on.  If you don’t fall into this category – then it might be time to for a check-up. YOUR FISCAL FITNESS TEST Do you find yourself financially short before each payday? Do you have trouble knowing where your money went? Has a recent change in your job or family status caused increased financial pressure? Are you sure that the life, health and dental insurance that you receive from your employer will be sufficient for your family? Are you saving for your children’s future education? Will you run out of money during your retirement years? Should your current savings be working harder for you? Are your assets positioned properly to pass on to your beneficiary(s)? Do you plan adequately for taxes, or is April 15 disaster time? Lastly, have you established an emergency fund? If so, will it be sufficient for at least 3 months? How did you do?  If you’re uncomfortable with your answers, then it might be time to revisit your plans.  If you need assistance – […]

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Deferred Compensation—Understanding the Options

Presented by: Capital Financial Benefit Solutions  As American business enters the 21st century, old methods of doing business are quickly being replaced with the new – new technologies, new approaches, and new ideas about attracting, rewarding, and motivating high quality employees. Nowhere is this more evident than in the matter of key employee and business owner compensation, and specifically in the area of Deferred Compensation Planning. A Deferred Compensation Plan (DC Plan) is exactly what its name implies – it’s a plan that allows an individual to defer a portion of his or her current income, and the taxes due on that income, until a future point in time – usually retirement. Because it is a non-qualified plan, employers may select whomever they want to participate from their executive or management team. There are no contribution limits and no significant filing or reporting requirements. On the negative side, contributions are not tax deductible until benefits are paid out to participants and, under the doctrine of constructive receipt, benefits may be taxable to participants when they have the right to receive them – not necessarily when they are actually paid. (Establishing a vesting schedule can help address this issue) DC Plans come in many shapes and sizes. They can be Defined Contribution or Defined Benefit; Salary Reduction or Salary Continuation Plans; and they can be structured to provide disability and life insurance benefits. Choosing the right plan arrangement depends upon a company’s specific goals (e.g. retaining key employees) and upon the goals of the selected participants (e.g. supplemental retirement income, current tax reduction). To help you get a better understanding of the variety and flexibility of the DC Plans, let’s briefly consider each of the above structures: Salary Reduction or Salary Continuation? DC Plans generally fall into one of two categories […]

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Becoming Successful Takes Hard Work. Staying Successful Takes Planning.

Presented by:  Capital Financial Benefit Solutions It used to be that if you had a good product and provided solid customer service, you could pretty much count on being successful. And while product and service are still critical to the success of any business or professional venture, other variables – chief among them increased competition for key employees – can make maintaining and building on that success difficult. Consider your own business. Your success didn’t happen overnight. It most likely took careful planning, attention to detail and a lot of hard work. And if your business or practice is like most, the contributions of a few key employees – yourself included – are probably responsible for the lion’s share of your success. That’s part of the reason why more and more business owners are looking for creative ways to reward and retain their key people. Unfortunately, government regulations can make it difficult for businesses to reward one select group of people without doing something for everyone. So how do you build on your success and reward the people who’ve worked hard, year after year, to make that success happen? One answer may be through the use of a welfare benefit plan designed especially to help small business owners and professionals provide themselves and select key employees with substantial life insurance protection, medical benefits, or other optional benefits. Why life insurance? Life insurance is one of the most remarkable financial tools ever developed.  Life insurance proceeds can be used to: Help families maintain their lifestyle and pursue their objectives following the loss of a major breadwinner. Fund the purchase of a co-owner’s share of the business following his or her pre-mature death. Pay estate taxes and other expenses, allowing personal and business assets to pass to an individual’s named beneficiary intact. […]

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The Financial Stages of Life

Presented by:  Capital Financial Benefit Solutions Abraham Lincoln once said, “If I had six days to chop down a tree, I’d spend five of them sharpening my ax.”  What Lincoln meant by that remark is that sometimes, planning for an event can take longer than the event itself. This is particularly true when it comes to planning for a secure financial future. Many people put off financial planning, especially during uncertain economic times, because they either don’t know where to begin, or they don’t think they have enough money to make it worthwhile. The truth is: there is never an ideal time or place to begin and there is no specific level of income or assets one needs to have to make planning for the future “worthwhile.” You can (and should!) begin planning for the future regardless of which life stage you are in and regardless of how much money you have. To begin the planning process, you first need to identify your present and future financial goals. If you’re like most people, your goals will include protecting your family in the event you die prematurely or become disabled; managing your expenses while paying down debt; buying your first home or helping your children pay for college; saving for retirement; and distributing your assets to your heirs – privately, equitably, and tax-efficiently – following your death. Fortunately, there are steps you can take during each of your life stages that will help you build, and then maintain, your personal financial security. Let’s take a look at them: The Foundation Years:  If you’re in your foundation years, you are probably facing the most difficult times you will ever have financially. You may be newly married or just out of school; you may be taking on debt in order to acquire – […]

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