Q uarterl y            B E A C O N H I L L I N V E S T M E N T A D V I S O RY                                             ...
Quarterly Economic Perspective• The financial markets heaved           of Labor Statistics said volatile     • The Federal...
Mid-year Portfolio CheckupA slew of economic events has occurred in the first half of 2011, and with it comes portfolio ch...
Strategic Wealth Management Process                                         TM                                           T...
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Summer 2011 Newsletter (Individuals)


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Summer 2011 Newsletter (Individuals)

  1. 1. Q uarterl y B E A C O N H I L L I N V E S T M E N T A D V I S O RY Summer 2011A Review of the Markets This Just In —After strong first-quarter gains in line, though it was negative for the Ohio Estate Tax Updatethe stock markets, it was mostly quarter. The Russell 2000 suffereddownhill from there. Following the most as investors preferred the Governor Kasich signed into lawApril’s year-to-date highs, when reassurance of defensive sectors the State budget which repealed thethe Russell 2000 hit its highest and large caps, while the NASDAQ Ohio estate tax beginning Januarylevel on record, week after week escaped with barely a scratch. 1, 2013. Though you will no longerof declines battered all four U.S. Meanwhile, saddled with Greece’s be required to pay Ohio estateindices. However, a rally in June’s woes, the Global Dow continued taxes after 2012, it is necessary tofinal week left the Dow industrials to stagger. continue reviewing and monitoringthe only one of the four major your estate plan. Taxes are onlyindices with a gain for the quarter, Greece’s debt problems caused one aspect of comprehensive estatetaking the lead from the small caps investors to decide that despite planning to ensure your goals andfor 2011’s first half. the United States’ budgetary woes, objectives are satisfied. Treasuries didn’t look so bad afterAfter breaking below 1,300, the all. As demand pushed prices up,S&P 500 barely managed to claw yields on the 10-year fell below 3%its way back to that level just before rebounding a bit.before crossing the quarter’s finish Market/Index 2010 Close As of 3/31 End of Quarter Quarterly Change YTD Change DJIA 11577.51 12319.73 12414.34 .77% 7.23% NASDAQ 2652.87 2781.07 2773.52 -.27% 4.55% S&P 500 1257.64 1325.83 1320.64 -.39% 5.01% Russell 2000 783.65 843.55 827.43 -1.91% 5.59% Global Dow 2087.44 2186.41 2134.29 -2.38% 2.24% Fed. Funds .25% .25% .25% 0 bps 0 bps 10-year Treasuries 3.30% 3.47% 3.18% -29 bps -12 bps84 South Fourth Street, Columbus, OH 43215 • (614) 469-4685 • info@BHadvisory.com • www.beaconhilladvisory.com
  2. 2. Quarterly Economic Perspective• The financial markets heaved of Labor Statistics said volatile • The Federal Reserve’s bond- a sigh of relief as the Greek food and energy costs were buying program, nicknamed parliament agreed to implement responsible for more than half of QE2, came to an end on schedule. a €28 billion, five-year program that. However, oil prices fell back Fed Chairman Ben Bernanke said of spending cuts, tax increases, to roughly $90 a barrel, helped by the Fed will continue to reinvest and asset sales. European the release of some of the world’s the proceeds of existing holdings, leaders said the measures were a strategic reserves in the wake of and that those efforts will end condition for receipt of the next ongoing conflict in oil-rich Libya. before the Fed raises interest rates. slice of existing aid before key It also forecast slower economic bond payments in July. Despite • The nation maxed out its credit growth (2.7%-2.9%) for the rest differences over whether and how card as it went over the current of the year, but said some of the to let bondholders such as banks $14.3 trillion debt ceiling in causes of the sluggishness should suffer losses on Greek debt, the May. Treasury officials warned be temporary. country’s European colleagues that accounting measures could said Greece would likely receive a postpone the day of reckoning • Unemployment rose slightly to new aid package. until August 2, but that after just over 9% during the quarter, that date the Treasury will face consumers were slower to spend,• U.S. economic growth continued, the question of which bills go housing continued to struggle, but at a much slower pace. The unpaid. As the clock kept ticking, and retail sales were hurt by Bureau of Economic Analysis congressional leaders argued supply-chain problems in the auto said gross domestic product over whether spending cuts, tax industry caused by the spring’s (GDP) rose by 1.9% compared to increases, or some combination of Japanese disasters. the previous quarter’s 3.1%. the two would be required before raising the limit on how much• Consumer inflation over the last the Treasury can borrow to pay year hit 3.6%, though the Bureau existing obligations. Source: Forefield Inc. Summer 2011
  3. 3. Mid-year Portfolio CheckupA slew of economic events has occurred in the first half of 2011, and with it comes portfolio changes. With theend of the Fed’s bond purchases (“QE2”) and the Greek austerity measures behind us (for now), it’s a great timefor a review of your portfolio. A few simple things to look at…1.Your Plan Figure out how much income you’ll need in retirement, A disciplined approach requires the use of an subtract your social security calculation you receive Investment Policy Statement. Even if you’re a Do- annually (with an appropriate discount if you’re It Yourselfer, a written approach to your investment concerned about those benefits being cut) and apply philosophy will help you stay the course. Things that your future portfolio to see if it can fill the gap. Your should be included are future portfolio will be able to create an income stream of about 5% of its principal with inflation adjustments a) your strategic (long-term) asset allocation, if managed properly. b) whether you will make any tactical shifts based on your analysis, While there are many other variables, don’t let the pursuit of the “perfect” plan get in the way of at least c) expected losses during the inevitable downturn, creating an adequate plan. and Hint: if you’re not saving at least 10-15% of your d) your approach to rebalancing (whether you do it current income and you do not have a windfall or through tactical adjustments, on a calendar basis, other assets, it’s very likely you’re not going to make it. or when assets exceed some predetermined level).2.Asset Allocation Your current asset allocation will drive your potential returns and your actual risk. How much do you have in stocks, bonds, and cash? If you do not make tactical adjustments through time, you need to rebalance as growth in one asset class or the other can throw your allocation out of whack. Use of a software system to review this will save you many hours.3. Savings Rate Frankly, if you save $50 per month and have no outside assets, asset allocation and rebalancing strategies won’t save you from being a hostage to social security. If you are in the accumulation phase, are you saving enough to accomplish your goals? w w w. b e a c o n h i l l a d v i s o r y. c o m
  4. 4. Strategic Wealth Management Process TM This Quarter: Protection Protection This quarter’s topic, Protection, uncovers gaps within our clients’ insurance needs. Going beyond a simple life insurance snapshot, Life Insurance we analyze scenarios in which disability could occur or potential longterm care needs arise. As you can imagine, it’s burdensome for Disability the family if these issues are not addressed. If additional needs are required, we coordinate a competitive bid from multiple providers. Umbrella/Liability Next Quarter: Tax Efficiency Long-term Care 84 South Fourth Street Columbus, OH 43215Mark Fissel, RFC Clint Edgington, CFA w w w. b e a c o n h i l l a d v i s o r y. c o m