A single word defines the stock market right now…and that same word defines the stock market all the time.

“The macro environment continues to be defined by uncertainty,” Goldman Sachs’ top stock market strategist David Kostin said in his latest note to clients (emphasis added).

And he’s right. In recent days, we’ve seen oil prices spike after a drone attack, funds rapidly rotate out of one sector and into another, the Fed cut rates, something called the repo market go haywire… yeah, that sure feels like “uncertainty.”

But isn’t it always the case that the markets are defined by uncertainty? After all, uncertainty characterizes the risk investors take when they go long stocks. It’s that uncertainty that commands a premium, which is why the rewards of investing in stocks tend to be higher than risk-free assets.

I’m reminded of a comment made three years ago by Bank of America Merrill Lynch economist Ethan Harris: “It’s always something.” Back then, Harris pointed to turmoil in Europe, the threat of Britain exiting from the euro area, and anti-trade rhetoric picking up in D.C. Not only is there always something to be worried about, but ironically the stuff that was making investors nervous back then are very similar to what’s making investors nervous today. Though the S&P 500 was trading at about 2,000 back then and it’s at about 3,000 today.

I think my favorite musing on the permanence of uncertainty came during the darkest days of the financial crisis. It was Warren Buffett for the New York Times op-ed section.

“Over the long term, the stock market news will be good,” Buffett said. “In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”

Buffett’s reflection is worth remembering. Because not only is there the risk of bad things happening, but worse, bad things actually happen. And yet time and time again, the markets sort it all out.

By Sam Ro, Yahoo Finance managing editor.

This question is one of the most common ones we hear from both clients and prospective clients. And as most of you know, the answer is “it depends.”

There was a recent article written by Craig L Israelsen and published by Financial Planning which attempts to apply data and science to this question and the answer – all of which we love. If you love the data and science too, a link to the article is included. For the rest of you, just read on….

As many of you know, the standard wisdom has said that, based on historical market returns, the average retiree can withdraw 4% per year from a retirement account and not risk running out of money in the account in the average 25 years of remaining life.

The study described in this article took a much deeper dive:

• considered 34 25-year time periods between 1961 – 2018 with a starting portfolio value of $1MM
• used a standard portfolio mix of 40% large cap U.S. equities/20% small cap U.S. equities/30% bonds/10% cash
• assumed no required distributions (i.e. Roth IRA)
• looked at 15 different withdrawal rates from 1% to 15%, withdrawn at end of year

And the results:

• in no scenario studied, was the portfolio at 0$ (or less) at the end of 25 years, even with a 15% withdrawal rate. Obviously, that doesn’t mean it can’t happen – it just didn’t in the years studied.
• Not surprisingly, the sequence of “good” years vs “less good” years matters. Portfolios which have the good years at the beginning of the 25 years did markedly better than those which had the good years nearer to the end of the 25 years.
• At the standard 4% per year withdrawal rate, the average ending portfolio balance was just over $4 million with a range of $1.8 million to $9.4 million!
• The optimum annual withdrawal rate for the scenarios studied was 8%. At this withdrawal rate, the average ending portfolio value was a very healthy $1.5 million and the highest annual withdrawal.

This is a good read! Our answer after reading… “it depends”.

Lori

https://www.financial-planning.com/news/the-ideal-annual-withdrawal-rate

As Marci and I celebrate birthdays (well really it’s just one birthday) this week, we thought we would share the following information to help you plan for your upcoming “milestone” birthdays, compliments of Brighthouse Financial and Investment News.

And no, this is not a milestone birthday for us but we can still help you with each of yours and we will remind you of your options as you approach these BD’s! Remember that all of these milestones are subject to change.

Legislative milestones:

Age 50: You may be able to increase your retirement plan contributions to IRA’s, 401K’s and 403B’s

Age 59 ½: You may be able to take distributions from your eligible plans without a penalty. Depending on the type of account, you still have to pay taxes though.

Age 60: Widows and widowers may be able to collect Social Security benefits

Age 62: You are likely eligible for social security benefits

Age 65: You may be eligible for Medicare health coverage

Age 70 ½: Depending on the type of retirement account you have, spend down is required (RMD’s) and taxes must be paid.

ALPHARETTA August 1, 2019 — Linder Financial Services has been selected for the 2019 Best of Alpharetta Award in the Financial Advisor category by the Alpharetta Award Program.

Each year, the Alpharetta Award Program identifies companies that we believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and our community. These exceptional companies help make the Alpharetta area a great place to live, work and play.

Various sources of information were gathered and analyzed to choose the winners in each category. The 2019 Alpharetta Award Program focuses on quality, not quantity. Winners are determined based on the information gathered both internally by the Alpharetta Award Program and data provided by third parties.

About Alpharetta Award Program

The Alpharetta Award Program is an annual awards program honoring the achievements and accomplishments of local businesses throughout the Alpharetta area. Recognition is given to those companies that have shown the ability to use their best practices and implemented programs to generate competitive advantages and long-term value.

The Alpharetta Award Program was established to recognize the best of local businesses in our community. Our organization works exclusively with local business owners, trade groups, professional associations and other business advertising and marketing groups. Our mission is to recognize the small business community’s contributions to the U.S. economy.

SOURCE: Alpharetta Award Program

CONTACT:
Alpharetta Award Program
Email: PublicRelations@localrecognitions.org
URL: http://www.localrecognitions.org

Hello, it’s Bradley, Marci’s older son again (with a little light editing from my aunt and mom). All the differing definitions of “jobs in this country” among the Presidential candidates interest me, so I looked at the statistics, what they mean and why we care.

At regular intervals, the US Department of Labor releases data about the nation’s labor market. This evidence is used along with other information to measure the strength of the economy. Below, I’ll define the terms that you’ll probably read in the newspaper and then I will do the hard part – try to explain why any of this actually matters to individual investors like us.

Labor Force: The labor force is defined as all people working or looking for work. The Labor Force Participation Rate is then simply the percentage of people in the United States who are in the labor force (excludes children, retirees, and so-called “discouraged workers” who have given up looking for work). A high labor force participation rate is generally linked to a strong jobs environment, because discouraged workers will re-enter the labor force if they believe they will be able to get a job. Sometimes, if the labor force participation rate increases due to discouraged workers re-entering the labor force, the unemployment rate will increase a bit due to more people counted as unemployed until they actually find jobs.

Unemployment Rate: This is probably the most commonly quoted statistic by both media and politicians. The unemployment rate is the percentage of people in the labor force (defined above) who do not have a job. The reason why the unemployment rate is important is because when most people have jobs, they will buy things, and this requires the production of more things, which creates more jobs, and so on in a virtuous cycle. Economists often talk about something called the “Natural” rate of unemployment, also called “Full” employment, which is the rate at which essentially everyone who wants a job has one. Most economists believe that the natural rate of unemployment is around 4-5% (meaning that the current unemployment rate of 3.7% is full employment).

Non-farm Payrolls/New Jobs: One of the most anticipated monthly reports is the new jobs report. Obviously, the more jobs created, the better. In a growing economy, jobs are created every month. In order for the unemployment rate to decrease, the economy generally needs to create at least 150,000 jobs per month. It’s also worth noting that the initial estimates from the Bureau of Labor Statistics are often way off month to month and can change by hundreds of thousands of jobs in “revised” estimates.

New Jobless Claims: The Department of Labor releases weekly reports of how many new workers have filed for unemployment benefits in the past week (the rest of the reports are released monthly). This is a reasonably good leading indicator of the behavior of the labor market.

As you can see, there are always enough different (and conflicting) statistics for pundits (and politicians) to tell whatever story they want about the economy. As investors, these statistics are important because they are among the major factors that the Federal Reserve takes into account when determining short-term interest rates. These short-term interest rates obviously impact bond pricing, but they also have a very significant impact on the equity market due to the corporate cost of borrowing for business operations or expansion.

As we’ve seen over the last six months or so, the different and conflicting statistics, (along with Presidential tweets) are making the Fed Reserve job more challenging as well but that’s a Blog post for a different day.

We want to share some good news from Vanguard for all of you who own Vanguard Index funds in your Ameritrade accounts.

As of the end of July, Vanguard is eliminating the Investor share class of all index mutual funds. That is the share class that most of you own currently. That share class will be replaced with the Admiral share class, Vanguard’s lowest expense share class available outside of employer-sponsored plans. As an example, Vanguard Index 500 (their largest index fund) carries an expense ratio of .14% for the Investor share class and .04% for the Admiral share class. Obviously, that’s not a huge dollar difference since Vanguard Index funds are already very inexpensive, but in percentage terms, it’s a huge discount!

If you own a Vanguard Index fund at Ameritrade, some time the week of July 22, you will see a new mutual fund in your account. Then the week of July 29th, your current index fund balance will be transferred to the new mutual fund. This is a tax-free conversion and any Ameritrade commissions will be paid for by Vanguard.

For those of you who have automatic purchases or redemptions of Vanguard Index funds, we will ensure that they are reset to the new funds and that your transactions continue with no interruption.

Competition in the index fund market is very intense and expense ratios are dropping in response. Some good news for us as investors!

As always, if you have any questions, don’t hesitate to call or email us.