New Article on 529 Plans

I just had a new article on the draw backs of 529 Plans published at Crains Wealth website:

While 529 Plans do offer some tax advantages, they do come with restrictions. For some families a portfolio of good old fashioned high quality stocks might offer a better alternative.

Big Down Day Today – But Still in “Normal” Range

Blaring headline from the business news talking head, “Market is now down more than any day since May 5th!!!!!” Geesh, that’s only 3 weeks ago!  In fact, between then and now we enjoyed the third-longest streak of gains and losses of less than 0.20%, in other words extremely low volatility. With the summer doldrums already here, what does that mean for the stock market? Well, all other periods on the list happened in the middle of bull markets. In other words, today means nothing by itself. Greece is making noise that it will not put up with more “austerity” imposed by the ECB. That is enough to cause some jitters in the market. We’ll see what they say by the end of the week. Our strategy is unchanged – be invested, be cautious.

“Quote of the Day”

The markets are getting interesting, I plan to update the blog soon with new analysis. Until then, here’s a thought…

“To succeed in the markets you need to make your own decisions. Numerous traders cited listening to others as their worst blunder.” – Jack D. Schwager (Investment manager, author, Stock Market Wizards: Interviews with Top Stock Traders, b 1948)

Opening Remarks for 2015


I recently had a conversation with a client about the strategy for his account in 2015. He indicated that since the market is at an all time high, he expects the market to crash by the end of summer as the Fed raises interest rates. And he would like to adjust his holdings accordingly.

Many of you are probably nodding your head in agreement with this sentiment.

However, please let me remind everyone, that if it was that simple and obvious to predict the economy, let alone the market with that much accuracy there would be many more rich people walking around than there are today! The only thing that is certain, is that what seems “certain” rarely is!

Case in point is a part of an email I received from Fuller Treacy Money, their comment of the day. For those who want the short version it is this: the article sites two economists from Harvard. They are very well known and respected economists. They have nearly opposite opinions.

The point I hope is obvious, if such esteemed economists with the same background, see the world so differently, how can any of us, without the resources and time to study these things as professionals do, be so sure that our opinions will be the ones that in fact pan out in the year ahead?

We just don’t know what the future holds and the best investment strategy is to listen to what the market tells us as we go along, use tried and true investment strategies, and always be aware…and have a strategy…for when things do change!

Below is the piece from Fuller Treacy.

A standing-room only crowd packed a hotel ballroom on Jan. 3 to hear…Professors Lawrence Summers of Harvard University and Robert Gordon of Northwestern University in Evanston, Illinois, defend their views.

“Just because we have 5 percent growth doesn’t mean we are out of the woods,” Summers, a former Treasury secretary and senior White House official, told the American Economic Association meeting in Boston, alluding to the U.S. economy’s pace of expansion in the third quarter.

He rattled off a variety of reasons for caution. Among them: the risk of financial bubbles, the difficulties the Federal Reserve may face in raising interest rates back to more normal levels, and continued excess capacity in Japan and Europe.

Summers also compared the euro area’s situation today with that of Japan in the late 1990s, before it slipped into a deflationary funk, and warned that the U.S. could be in for an extended period of a “dismal growth rate below 1-1/2 percent.”

Fellow Harvard professor Greg Mankiw took issue with that gloomy prognosis as far as the U.S. is concerned. In particular, he highlighted the improving labor market, where unemployment is at a six-year low and wages have begun to rise.

“We are returning to normalcy,” said Mankiw, who is also chairman of the economics department at Harvard in Cambridge, Massachusetts and a former chief White House economist.

Market Update

With oil crashing and the worst week for the DOW in two years behind us, I thought I’d weigh in on our market outlook. Especially after reading an article last week titled “This is What a Market Crash Looks Like.” Geeesh, let’s not over react!

Below is a graph of the SPY, the S&P 500 Index ETF since January 2013. Each little bar represents a day – green meaning the market was up for the day and red the market was down. Overall the market has moved up in a rather orderly fashion between the two white lines for two years now. The exception being, a little dip this past October below the bottom white line.


In traders’ parlance the bottom white line is termed “support”. Meaning it represents a price level where buyers tend to come into the market and bid prices back up. Looking at the chart above, we are clearly headed down to support – but we aren’t there yet. So we are still in the “normal” range for stocks to move in. In other words, we are not yet at panic mode.

Below is another perspective. In this chart each block (we actually call a “candle”) represents a week’s change in the market’s price. So a green box means the market was up from Monday through Friday, and a red candle, that the market was down.


I like this view as it takes some of the daily “noise” out of the picture. Going from right to left you have two red boxes – the first just represents the current week – so at the time of this writing Monday the 15th from open until 11:54 AM. The next red box is last week. But preceding this was seven consecutive positive weeks. That is unusual. A down week or two at this point is not just expected but would be a bit reassuring that we are not entirely in “bubble” mode.

Bottom Line

The markets’ may be a bit unsettling for the next week or two, but hold on until January. In fact go tend to your shopping or put a few extra lights up outside, but ignore the market noise and enjoy a happy and blessed Holiday and New Year. I’ll be here watching the market for you!



I realize that during the Holiday season it seems like everyone wants to relieve you of your money from Black Friday sales to multiple charities. So forgive me for jumping on the band wagon! But I am on the board of a wonderful charity, Homefull, right here in Dayton. Homefull not only provides housing for otherwise homeless people, but works to secure meaningful work opportunities to permanently end homelessness. Besides, who couldnt use a little tax deduction for their tax return next year!

#givingtuesday #SpreadtheGood #homefullgt


Do you have Genworth Long Term Care Insurance?

Just a quick warning to anyone that may have purchased a Genworth Long Term Care product. Genworths stock dropped over 30% on Thursday after they reported earnings. Apparently the restated their financials after recalculating the reserves required for their outstanding Long Term Care Insurance contracts. Simply put, they admitted that they grossly underestimated how long clients would live and thus how long they would utilize their long term care insurance.

What does this mean to an insured? Likely premium increases. LTC products guarantee premiums wont go up on an individual basis, but they can increase premiums across all policies of the same class. Based on what Ive read, expect rates to go up very significantly. 

For more information give us a call and we can review your coverage.

Another Raise

One of our more popular holdings, McDonalds (MCD) has come under a bit of pressure lately  both in the media and on Wall Street. After reaching a high near $102 a share in May of this year the stock price has dropped to below $90 a share in October. The media has pounded their menu saying that the younger millennials are avoiding MCD for healthier alternatives. And yet Ive doggedly held their stock in many  client accounts.

While the jury is still out, we are starting to see the reasons for holding and our continued purchase of MCD. First, MCD is held in our Dividend and Growth strategy accounts. Their dividend has been above 3% even at its peak price. More importantly the dividend has been increased for 38 consecutive years and in this area MCD did not disappoint  they announced a 5% dividend increase payable to shareholders at the end of November. This brings their current yield to 3.59% as of market price on 11/6/2014 and annualizing the dividend.

Part II of my thesis is that McDonalds is still a cherry job for anyone in advertising. Their contract has to be one of the largest in the advertising world. Money buys the best and the brightest. MCD will find a way to come back into the good graces of the fast food consuming public. Surveys are already showing some in roads from campaigns such as this social media campaign that coincides with the relaunch of the McRib sandwich.

MCD is a great example of an investing concept I will come back to in future posts: the difference between buying a company and buying a stock. Stock buyers look for price appreciation in the near term. The media is created for stock traders. Investors like the Warren Buffets of the world buy companies.  Companies generate cash flow that is unaffected by stock price that allows them toraise dividends by 5% even when their stock price slides by 12%.

While Im not happy with the stock, I am happy owning the company, mainly because they pay my clients a 3.59% dividend while we wait for their stock to turn around. And next year we will likely get another raise.

Market update

Money pasteThe stock market has had a five week “correction” followed by a one week recovery – that recouped 70% of the corrections losses. While sentiment has seemingly shifted from an extreme doom and gloom outlook over the past few weeks, statistically the stock market retests its lows about 67% of the time. Meaning we will likely give up this week’s gains.

aWhile I remain cautious, we did buy a couple of holdings for our portfolios this week. Notably P&G for our dividend strategies. P&G is THE dividend aristocrat based on its history of paying a dividend every year since the mid 1890’s (that’s not a typo!). P&G just hasn’t been cheap enough to meet my criteria. Yesterday I gave in and took a position across our dividend portfolios. P&G released earnings this morning and we were rewarded with a 3% gain in early morning trading.

Our growth portfolios are also seeing changes. We will focus more on individual stocks as we rotate into the “Buy in October” seasonal strategy.

I’ve also added an article on the bond market that was published yesterday at The main takeaways are 1. While the stock market can’t decide if the economy is too strong (meaning the Fed will start raising interest rates) or too cool (economy drops to recessionary levels) the bond market seems pretty convinced that the economy will continue in the “just about right” pace. And 2.  Even if the Fed raises short term rates, longer term rates aren’t likely to keep pace. While the economy is growing it is too soft to support a sharp rise in long term interest rates. While Fed action could spark a recession it is likey  4- 5 years out. My caveat to that is Europe. Major European bank failures will roil our market and economy. PDF:  Horsesmouth _ Bonds

The take away is this. Many advisors are recommending clients move into short term bonds as a defensive move against rising rates. However, the bond market is telling us that intermediate bonds – in the 8 – 10 year maturity range may actually be affected less if the Fed starts to raise short term rates.

Spooked Markets: Is This the Correction?

Horsesmouth | William DeShurkoHere is an article that posted on today.

One advantage technical analysis has over fundamental analysis is that it should take the emotion out of investment decisions. Graphs and charts don’t lie, they are what they are. And what they are now is pretty darn ugly. For a full review read the entire article can be downloaded: Spooked Markets.

The short summary is that we have been selling our more aggressive holdings for a month now. We will be moving all 401(k)’s 50% into a cash position, raising another 20% cash in our Growth” strategy and will likely look to hedge our Dividend strategies with a “short” ETF. • 937.434.1790

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Charles H. Dow Award Winner 2008. The papers honored with this award have represented the richness and depth of technical analysis.



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