The stock market is on a tear right now… no doubt. As of this morning, the S&P 500 Index is up roughly 25% since September of last year, and boasts an astounding 91% rate of return from the market nadir in March of 2009. It has blown through resistance level after resistance level, eschewing headline risk like Egyptian protesters storming through the US Press Corps.
Part of what has fueled this extended recovery is pent up demand. The US has been tightening its proverbial savings belt over the past few years, and we saw evidence this past holiday season that they are ready to exhale a bit. Further, the Fed’s QEII policy, although not achieving the stated purpose of keeping long-term interest rates low, has definitely kept money supply up in the absence of velocity. However, the question still remains: How can this recovery persist, when unemployment is following suit? Read the rest of this entry »
It’s official. Apple is everywhere… in our homes, our offices, our pockets and purses, and for some diehard supporters, even in their hearts. Over the past decade, the much beloved computer company has single-handedly reshaped the personal device market with an onslaught of everything “i,” from desktops to laptops, tablets to telephones, and the list goes on. In fact, Apple is so ubiquitous, an estimated 1-in-5 US households uses at least one of their game-changing gadgets1. Read the rest of this entry »
This question takes on very different meanings, depending on which group of “investors” you are considering.
Investors in Goldman Sachs, i.e. shareholders, are absolutely smitten. It has been the darling of Wall St. well before its IPO back in 1999. The firm has its hands in virtually every major investment banking deal, consistently reports record earnings, and appears headed right back to its pre-meltdown highs. Even the occasional headline shock or SEC inquiry can’t trump the company’s gargantuan bottom line.
Investors of Goldman Sachs, i.e. clients, may not lean so heavily to the love side of the love-hate continuum, in particular those not governed by a fiduciary standard. For those investors, working with Goldman is a little like juggling torches–you may not get burned, but you’re going to have to pay a lot of attention to avoid it.
Goldman’s recent Facebook dealings are a prime example. Over the past few weeks, the firm has been hocking ~$1.5B of the social-networking stock to its wealthy clientele under a suitability standard, while those clients having their money managed by Goldman under a fiduciary standard are being steered away from the very same deal.
Chris Harper of Bloomberg has the whole story on why one sort of Goldman investor is inherently pitted against the other: http://tinyurl.com/339n8qn
Also, see principal Jonathan Leidy’s recent story on fiduciary duty in the retirement plan market: Click Here
There is a debate raging in the retirement industry, as well as the financial industry at large, and most investors have no idea. The debate centers on whether or not advice-providing investment professionals should be required to adhere to a fiduciary standard. In the simplest terms, a fiduciary standard is one requiring a professional to place their clients’ interests above their own at all times.
On the surface, it’s hard to imagine that this concept would be the subject of debate at all. It is akin to a politician who enthusiastically takes the stage to voice his or her “landmark” opposition to drunk driving, child abuse or world hunger… it’s pretty hard to contradict. In fact, when presented to most clients, they have a hard time even imagining what the other side of the argument might be. Yet the vast majority of Wall St. firms have a significant and vested interest in lobbying for something far less restrictive. Read the rest of this entry »
Up until last Friday, those “fortunate” enough to pass-on in 2010 faced no estate taxation (although capital gains were still a factor), while those passing in 2011 and beyond were confronted with a return to the year 2000, and the associated estate tax exemption of $1MM. However, the Tax Relief, Unemployment Insurance Reauthorization, and Jobs Creation Act of 2010 has changed all that by bringing much needed reform to our seemingly topsy-turvy set of estate tax laws.
Through 2012, the estate tax exemption for individuals has been set at $5MM per person and the top estate tax rate has declined to 35%. This means that a couple, using both of their exemptions, can now shelter up to $10MM of their estate from taxation. Also included in the bill is the concept of “exemption portability.” Portability refers to the idea that, should an individual’s estate be unable to use the entirety of their $5MM exemption, their surviving spouse retains the rights to apply the remainder to his or her own estate.
Previously, exemptions were not portable, which gave rise to the creation of AB trusts as a means of preserving them. With the new portability provision in place, there is a great deal of talk about the potential obsolescence of the AB trust structure. However, as Julie Garber of About.com points out, there are still several reasons why AB trusts will likely persist.
http://wills.about.com/b/2010/12/20/will-portability-of-the-estate-tax-exemption-lead-to-the-death-of-ab-trusts.htm
Santa has put a large gift under the tree this year for taxpayers in the form of the Tax Relief, Unemployment Insurance Reauthorization, and Jobs Creation Act. Carefully sliding off the bi-partisan bow and tearing into this 30-pages of calculated compromise reveals a plethora of goodies including rate cut extensions for ordinary income, dividend, and capital gains taxes; depreciation revisions for business owners; and a much needed retooling of the 2010 estate tax sunset. Although many are referring to these bestowals as “permanent,” the bulk of them are only codified through 2012. Seems even $858B gifts don’t last forever.
For a comprehensive summary of the bill: Click Here
With the recent tax cut extensions and payroll tax freezes, our national debt could easily increase by $1T over the next few years. As troubling as that may sound in isolation, the even more dubious news is that the hole left by this “shadow spending” will almost certainly be filled with dollars slated for future Social Security benefits.
Just exactly what does this mean for the retirees of tomorrow? For some insight on the potential impact of these tax cuts as well as how difficult it may be for the United States to digest the proverbial “pig in the python” that is the Baby Boom generation, read the following:
http://online.wsj.com/article/SB10001424052748704073804576023890972991846.html?mod=sf2tw
The 18-member, bi-partisan committee on deficit reduction: The National Commission on Fiscal Responsibility and Reform, released its recommendations last week, aimed at reducing both the current deficit ($1.3T) and the national debt ($14T). Ominously entitled “The Moment of Truth,” the report included the following suggestions: Read the rest of this entry »
2010 marks a significant change in the rules for Roth IRA conversions, and with the 12/31 deadline rapidly approaching, a review of some of the key points is in order. Read the rest of this entry »
In his Nov 1st Fiduciary News article, Chris Carosa relays insights garnered from a group of industry experts at the recent Art of Indexing Summit in New York. Specifically, he details the top 10 reasons why plan sponsors feel Exchange Traded Funds (ETFs) are not yet appropriate for 401k plans. Although I agree with the conclusion, only one of the ten seems particularly valid in the context of retirement plans. Read the rest of this entry »
