Politics and Investment Performance
With the Nov. 2 elections come and gone, here’s the
result of an investigation into th...
Dividend Discussion
For many investors, the only reward that matters
is an increase in share price. But if you look beyond...
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November 2010 wesletter

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November 2010 wesletter

  1. 1. Politics and Investment Performance With the Nov. 2 elections come and gone, here’s the result of an investigation into the relationship between the composition of the legislative and executive branches of the U.S. government and market performance. The data table displays the average annual returns for the S&P 500® and a 60% stock/40% bond portfolio in three different situations. The "unified" situation refers to years when the Senate, the House of Representatives, and the White House were all controlled by the same party. The "partially divided" situation represents years when the House and Senate were controlled by the same party, but the White House was held by a different party. The "completely divided" situation uses data from years in which the two houses of Congress were divided. Both the S&P 500 and the diversified portfolio averaged the highest returns during unified years, lower returns during partially divided years, and the lowest under completely divided years. Wesletter November 2010 Vol. 2 No. 11 Investment and Planning Insights from Wesban About Wesban The Wesban Team wesban@wesban.com 205-995-7778 Wesban provides financial planning and conservative investment management designed to help families and small businesses grow, protect, and transfer wealth.
  2. 2. Dividend Discussion For many investors, the only reward that matters is an increase in share price. But if you look beyond capital gains, you might find a dividend offering significant benefits. A dividend can (1) provide regular income, (2) grow over time through reinvestment opportunities, and (3) offer significant tax benefits. Prior to the 2003 Tax Act, dividends were taxed at ordinary income-tax rate levels, which could be as high as 35%. Now investors pay significantly less taxes, ranging from 5% to 15%. Despite these advantages, dividends seem to be an often overlooked component of total returns. The image below illustrates the impact that reinvested dividends have on investment returns over time. These paying investments can add value to a portfolio, but keep in mind that it is possible to lose money by investing in them, and that companies cannot always guarantee their dividend payments. Wesban Financial Consultants, P.C. Investment and Planning Insights from Wesban November 2010 2 ©2010 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is intended solely for informational purposes; (2) is proprietary to Morningstar and/or the content providers; (3) is not warranted to be accurate, complete, or timely; and (4) does not constitute investment advice of any kind. Neither Morningstar nor the content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. "Morningstar" and the Morningstar logo are registered trademarks of Morningstar, Inc. The Wesban Team Wesban Financial Consultants, P.C. 1800 Providence Park Suite 200 Birmingham, Alabama 35242 wesban@wesban.com Tel:205-995-7778

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