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Oct 2012
 

Oct 2012

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    Oct 2012 Oct 2012 Document Transcript

    • Volume 6,Number 4Quarterly Newsletter October 2012Quarter IN REVIEW markets have delivered an unexpect-By: Jon P. Yankee, MBA, CFP® ed gift: a steady, gradual rise in stock Asset Class Performance Q3 2012: prices that seemed, week by week,Climbing the Wall of Worry contrary to the mood expressed in the financial press. U.S. Fixed Income 1.58%It seems like every quarter we find (Barclay Capital Aggregate Bond Index)ourselves saying the same thing: Here at the end of the third quarter,what a difference a quarter makes! entering the home stretch for the International Fixed Income 1.78% year, the returns on many of the (JP Morgan GBI ex-US (Hedged) Index)In the first two months of 2012, theU.S. stock market was recording broad stock indices are, surprisingly, U.S. Equities, Large 6.35%excitingly positive returns. The U.S. well into double-digit territory. The (S&P) 500 Index)economy seemed to be back on S&P 500 index of large company stocks gained 6.35% in the third U.S. Equities, Small 5.25%track and there was talk that the Euro (Russell 2000 Index)crisis was finally behind us. Even the quarter, and is up 16.44% so far this year. Small company stocks have International Equities, Large 6.14%pullback in March left the markets (MSCI EAFE Index)in positive territory. Then came a posted returns nearly identical to thedifficult second quarter where the large multinationals. The Russell 2000 International Equities, Small 7.86%indices fell across the board, nearly small-cap index gained 5.25% in the (S&P EPAC Small Index)wiping out the first quarter gains. three months ending September 30, Real Estate Investment Trusts (REITs) 1.03%Now, in the last three months, while and has returned 14.23% for the (FTSE NAREIT All Equity REITs)many investors were still anxious year so far. Continued Pg. 3 Commodities/Natural Resources 9.69%about Europe, deficits, paralysis in (DJ UBS Commodities Index)Washington and unemployment, theGinnie at a GlanceBy: Ginnie F. BakerSome of you may recognize me from the July 2011 newsletter which introduced me as one ofthe 2011 Summer Associates. After my time with FJY ended last summer, I returned to TexasTech University in Lubbock, Texas to finish my Master Degree in Personal Financial Planning. WhenI heard that FJY was looking to hire a new Associate Advisor I was very excited toapply for this opportunity. I met with Jon and Laurie at Texas Tech’s Annual Opportunity Daysand knew that FJY was just what I was looking for in a firm. I enjoyed the people, culture,camaraderie, and experience so much last summer that I knew FJY would be the perfect fit forme. I flew up during spring break to interview with the entire firm for two days. I then spent theweekend enjoying the sights of Washington, DC and Northern Virginia. In July of this year, I joinedFJY as an Associate Advisor.           Continued Pg. 3                                                                sign up for the quarterly fjy newsletter @ www.fjyfinancial.com Quick Planning Question: if you have made any significant home improvements, did you notify your homeowners insurance company?
    • Due DiligenceBy: Lisa Crafford, Office Manager Business and Wealth Management Forum – Dan, Jon, and Lisa attended this forum which has a strong practiceEach year FJY attends industry functions, conferences, and management focus. Part of running a great practice isforums to better equip us to be your financial advisors. providing great service and advice to our clients, anotherOne of FJY’s differentiators is our focus on education; in aspect is running an efficient business. We came away fromaddition to hiring top talent from across the country, we the conference with many ideas for how to improve ourstrive to maintain a competitive advantage through ongo- operations.ing educational opportunities. Below is a summary of ourrecent and upcoming activities. Tamarac – Dan, Tess, and Ginnie attended a training and user conference, and Jon and Laurie will attend trainingDFA (Dimensional Fund Advisors) Financial Advisor – All later this year for our newest software – Tamarac. Tamaracof our advisors attended a two-day symposium to further Advisor Rebalancing is a tool which allows us to moretheir knowledge of the capital markets. Dimensional Fund efficiently monitor, rebalance, trade, and reconcile clientAdvisors manages mutual funds for long-term investors of portfolios.a select group of fee-only financial advisors. DFA provideseducation to advisors about investment philosophy, ap- Steben & Company National Advisor Forum – Jon andproach, and product offering. Laurie attended this due diligence event for the managed futures investments offered by Steben & Co. They heardDFA Applied Communication – This conference is a day- from Ken Steben, President and CEO, members of Steben’slong, interactive experience focused on how to more research department, as well as Winton Capital, a Com-effectively communicate with clients. We came away with modity Trading Advisor (CTA). Laurie also spoke on thegreat examples and ideas on how to best deliver advice advisor panel.to our clients. FPA – The Financial Planning Association’s annual confer-AIF® (Accredited Investment Fiduciary) - Marjorie holds ence focuses on many key issues in our industry, such asthe AIF® designation which requires ongoing education, ethics, compliance, using analysis to guide portfolio man-and a commitment to a code of ethics each year. The agement decisions, how to set client expectations, andAIF® designation identifies advisors who have a thorough how health care reform affects FJY and our clients.knowledge of and ability to apply fiduciary practices. There are many other great learning opportunities comingNAPFA (National Association of Personal Financial Advi- up in 2012 and early next year. We are working with thesors) – Marjorie is speaking on a panel with two experts FCEDA (Fairfax County Economic Development Authority)(an estate attorney and a CFP®/mental health specialist) which provides educational seminars for small businesseson the topic of what to do in the case of a client death. In in Fairfax County throughout the year, and we plan to at-addition, there are several notable sessions; for example, tend training on Portfolio Center, local FPA symposiums,managing conflict, social security, 401k, and continuing and a Life Planning conference. We will continue to sharecare retirement communities. with you during your meetings any takeaways or ideas we gain from these experiences.
    • Ginnie at a Glance: cont Some economists think that the stock rally was a gift from the central banks. For months, it was rumored that the U.S. Federal Reserve BoardI will be supporting all of the advisors with ongoing client services, would engineer another stimulus package, which had already beencomprehensive financial planning, and client asset management. I will dubbed “QE3”--and indeed Fed Chairman Ben Bernanke announcedalso focus on building and maintaining client relationships. I am avail- that the Fed would inject $40 billion a month into the market for secu-able to assist you with client-service related matters, from scheduling ritized home mortgages, adding to the money supply, possibly drivingmeetings to helping with account information. down mortgage rates, and (again possibly) stimulating the housing and homebuilding sectors of the economy into hiring again.I was first introduced to financial planning through an elective coursewhile working towards my undergraduate degree. At the end of that Meanwhile, the European Central Bank has finally announced that itcourse, I knew that financial planning was the career I wanted to pur- would do what economists were calling for three years ago: pur-sue. I earned my Bachelor of Business Administration degree from the chase Eurozone government bonds to reduce the borrowing costs ofRawls College of Business at Texas Tech University. Texas Tech has the countries that are restructuring their finances--notably Spain and Italy.top financial planning program in the nation, so it was an easy decision After press conferences on different sides of the Atlantic, some of ourfor me to continue my education at Tech and work towards my Master worst-case economic scenarios (a 2008-like collapse of the Eurozoneof Personal Financial Planning degree. banking system; a U.S. recession) seem to have become less likely to occur.I was born and raised in Lubbock, Texas. In my spare time I enjoyspending time with my friends and family, baking, watching sports, The U.S. economy is certainly not in danger of breaking any speedtraveling, and exploring the DC metro area that I now call home. records as it continues to climb out of the Great Recession; in the last week of September, the government announced that from AprilI currently serve on the FJY Financial Planning and Investment Commit- through June, GDP grew just 1.3%. Economists remain wary of thetees along with being a member of FPA (Financial Planning Associa- “fiscal cliff” – the simultaneous expiration of lower tax rates and auto-tion), FPA NexGen (an organization of young planners), NAPFA (Na- matic federal budget cuts – that will take place, absent Congressionaltional Association of Personal Financial Advisors), and NAPFA Genesis intervention, on December 31. Add in the discouraging (but improv-(an organization for fee-only planners under the age of 33). ing) 7.8% unemployment rate, and there is plenty of reason not to be bullish on stocks for the last three months of the year.I am looking forward to the opportunity to meet all of you. But of course that was also true before stocks went up the past threeQuarter in Review: Cont months. Optimists can point to 114,000 new jobs added in Septem- ber, and the fact that the unemployment rate has been trending down-The next time you read gloomy headlines about the economy, remem- ward from around 10% at this time three years ago. A Bloombergber that every single industry sector in the S&P 500 is posting gains so News survey recently forecast that the U.S. economy will grow 2.1%far this year. over the next three months, and the forecasts from the Federal Reserve Board anticipate 2.5% to 3% GDP growth in 2013. At the upper endInternational stocks have not been as robust as U.S shares, but they, of that estimate, we are talking about a return to economic normalcy,too, are in positive territory. The broad-based EAFE index of devel- and a chance to chip away at the jobless rate.oped economies rose 6.14% for the third quarter, and is now in firmlypositive territory, with a gain of 6.95% so far this year. Who’s right? Who knows? All we know for sure is that the global economy is in a slow-growth recovery, with little indication that growthOn the bond side, those of us who could not imagine how U.S. Trea- will accelerate dramatically or that the U.S. will slide back into reces-suries could possibly offer lower yields are watching it happen. The sion. Buying stocks today is a bet that the hard work of millions of12-month Treasuries are now yielding just 0.15%, as investors seem to people still employed will produce positive results over the long term,be happy to essentially lend the government money with a promise which will ultimately reward the owners who hold their shares. For asthat they will get it back again 12 months later. Locking up your money long as the markets have existed, staying invested has been a goodfor three years gets you 0.31% a year. Ten-year issues yield 1.63%, and long-term strategy--and in the face of so much short-term uncertainty,30-year Treasuries bring a 2.82% annual coupon yield. this is about all we have to go on.
    • should it be necessary, make cash Sometimes this ability to act quickly available if needed (for withdrawals or can be of great importance and value fees), and make investment changes – to clients. However, in no way will 1925 Isaac Newton Square all without having to get prior approval Suite 400 this change our fundamental goal of from the client. having clients educated and informed Reston, Virginia 20190 regarding how we are managing their 1.703.889.1111 phone Sharing discretion does NOT allow portfolios. 1.877.395.7795 toll free FJY to change investment strategy or 1.866.366.9233 fax asset allocation for clients, nor does Why did we do this? The change it change FJY’s goal of continuing to toward sharing discretion with clientswww.fjyfinancial.com focus on educating our clients. was not made without significant discussion and internal debate. In the What is the benefit to our clients? end, we decided that this change is in Shared discretion will allow FJY to the best interest of our clients, which have more flexibility and improve our is always our primary concern. We en- ability to act quickly on our clients’ be- courage you to give us a call to discuss half with regard to investment portfolio this matter if you have concerns or ad- decisions. With any decision we make, ditional questions about discretion.FJY and Discretion FJY’s goal is to maintain the quality of service our clients deserve and have come to expect. Our enhanced abilityAs many of our clients are alreadyaware, FJY is currently taking steps to act for our clients will enable us to FJY Advisors & Staffto move toward sharing discretion implement investment changes, taxon investment portfolios with our planning, and other portfolio service is-clients. This poses several impor- sues quickly, without need to first gain Marjorie L. Foxtant questions. The goal of this approval from our clients. Sr. Financial Advisorarticle is to address those ques- Daniel D. Josstions and provide insight into why Sr. Financial Advisorwe are making this change. Jon P Yankee . Sr. Financial AdvisorWhat is discretion? Discretion Laurie A. Belewcan be defined as the “freedom Marjorie and David at the wedding of their Sr. Financial Advisorto decide what should be done in son, Doug, and Kacie Davis in California. Tess L. Downinga particular situation”. FJY’s dis- Financial Advisorcretion will be limited to trading Ginnie F. Bakerdecisions. Sharing trade discretion Associate Financial Advisorwith our clients will allow FJY the Matthew T. Davisfreedom and flexibility to act on Paraplannerexisting instructions, invest new Lisa J. Craffordcash or rebalance a portfolio Office Manager Sally M. Yankee Administrative AssistantPlease remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the futureperformance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter, will be profitable, equal any corresponding indicatedhistorical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinionsor positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investmentadvice from Fox, Joss & Yankee, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available forreview upon request.Historical performance results for investment indices and/or categories have been provided for general comparison purposes only, and generally do not reflect the deduction of transactionand/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performanceresults. It should not be assumed that your account holdings correspond directly to any comparative indices.