Make Markets Great Again?

Happy New Year Dear Friends and Financial Partners!

With the new President of the United States, namely Donald J. Trump, substantial changes may be coming our way. Below is a compilation of optimistic perspectives on the incoming administration.

Corporate Tax Cuts: Maria Bartiromo of Fox Business Network posed the following question to House Majority Leader, Congressman Kevin McCarthy, (R-CA). Maria Bartiromo: “One of the analysts that I had on the morning show the other day on Fox Business Network said, ‘A drop in the corporate tax rate from 35 percent to 15 percent will equate to a 20 percent increase in corporate earnings.’ Do you agree with that?”

Congressman Kevin McCarthy: “I do agree… and when you look at what we’ll do in the House, our number one focus is jobs. We need growth in America. Growth in America will solve so many problems. You won’t be able to stop this deficit unless we grow” (Sunday Morning Futures with Maria Bartiromo, December 11, 2016, Fox News Network).

Tax Repatriation Plan for Cash: Many corporations have chosen to keep their foreign profits overseas rather than pay the U.S. corporate tax rate–one of the highest in the world. Bringing these funds–estimated to be $2.6 trillion–back to the United States with only a 10 percent tax payment versus the current 35 percent rate could create hundreds of thousands of jobs. But its impact totally depends on how the money is deployed.

On Bloomberg Television, Goldman Sachs Senior Investment Strategist Abby Joseph Cohen addressed the repatriation of cash. “In 1999 and 2000, 70 percent of the cash, by companies in the S&P 500, went back into the company for things involving growth: capital spending, R&D (Research and Development), even cash acquisitions from operating assets. That 70 percent number is now 42 percent.

“If that money comes (back to the United States) and there are no restrictions in terms of how that money is used, one of the things I worry about is a good deal will go for… share repurchase alone or dividend increases, and so on, and not into growth, the benefit to the nation will not be there.”

Regulatory Environment: American businesses claim to be smothered by new rules and regulations, thus holding back Gross Domestic Product (GDP). Congressman Kevin McCarthy: “The Obama Administration has just put all of these new regulations on us, kind of just pushed the economy down, pushed investment out. Why? Because the new people being hired were hired to carry out new regulations, instead of more output.

“The Obama administration, in just the first six years, proposed more than 500 major rulings. And this is really important because you do not become a major ruling unless it gets scored that it’s going to cost $100 million (or more) to business” (Sunday Morning Futures with Maria Bartiromo, December 25, 2016).

In 2017, we may see common sense changes in the law that will create greater check and balance among the branches of our Federal Government. The Regulations from the Executive In Need of Scrutiny (REINS) Act states that no major ruling of new regulation that costs more than $100 million can be imposed without a passage of the House and Senate. The Sue & Settle Reform states that you cannot have a new regulation until any previous lawsuits are settled.

Economic Growth: Abby Joseph Cohen: “GDP growth in the United States is very likely up 2.2 percent, something along those lines. If we look for ways in which that number would be wrong, it’s probably more likely to be stronger, rather than weaker, in part, because the economy is ending 2016 on an accelerating note.”

Know this, what presidents propose and what actually takes place may be two different things. President Obama had this to say about our next president: “I…think that (Trump) is coming to this office with fewer hard-and-fast policy prescriptions than a lot of other presidents might be arriving with. I don’t think (Trump) is ideological. I think ultimately, he is pragmatic in that way. And that can serve him well as long as he has got good people around him and he has a clear sense of direction” (November 14, 2016).

At Smedley Financial we have only been able to harvest what the stock market is willing to deliver. If the market gives a little more to your portfolios then you will be closer to reaching your financial goals. To us, investing is about meeting your personal financial goals in a careful and prudent manner, and not necessarily meeting or beating a benchmark.

Finally, the most important thing to remember is this: Always call us if you have any questions or concerns. We mean it. Don’t be hesitant to contact us. We are your financial advocates and financial bodyguards.

Have a Most Prosperous New Year!
Roger M. Smedley, CFP®

The Attitude of Gratitude

Season’s Greetings Dear Friends and Financial Partners,

Recently, I heard a man talk about being cut off in traffic. Rather than complaining, the man surprised me by saying that less than one percent of the world’s population will own or even be in a car. He had the attitude of gratitude. Now, I don’t know how to test the veracity of the man’s statistic, but his point was well received by me.

In the United States of America, so many of us are blessed to live like kings and queens. A little over one hundred years ago, our forefathers did not enjoy the conveniences of indoor plumbing, hot water on demand, carpeting, microwave ovens, refrigeration or air conditioning. These modern-day conveniences are quite remarkable and only made possible by the hard work and sacrifice of those who have gone before.

Perhaps you are familiar with this phrase by the English mathematician Sir Isaac Newton some 340 years ago in 1676: “If I have seen further than others, it is by standing upon the shoulders of giants.” Sir Isaac Newton was just 34 years old when he uttered those words.

What Sir Isaac Newton meant—while pondering his life as a physicist, astronomer, alchemist, inventor, natural philosopher, and mathematician—was that by using the understanding gained by major thinkers, who had gone before, he was able to make the intellectual progress that he did.

In a similar way, each generation of Americans has sought to make the lives of their children and grandchildren better than their own. Today, we are the beneficiaries of those who have gone before. (FYI: From Latin, the prefix, “bene,” means well or good.)

We have all heard of someone who has survived a horrific disaster, such as an earthquake, flood, major automobile accident, or household fire. It is not uncommon to hear him or her say, “Thankfully, I have my family and what else matters?”

Everything that is ultimately important comes back to our family and friends. It all comes down to our personal relationships with each other. At Smedley Financial, you become not only our friends, but more like family. We are so grateful for you.

Please have a safe, wonderful Thanksgiving and Christmas, and a Happy and Prosperous New Year!

Bullish Best Wishes,

Roger M. Smedley, CFP®

A Lesson from the Decathlon Gold Medalist

Greetings Dear Friends and Financial Partners,

During this year’s Summer Games, I watched an interview with Ashton Eaton. At the time of the interview, Eaton was the reigning Gold Medalist and world-record holder in the decathlon from 2012. Eaton stated that he had a different mindset today than he had four years ago.

Eaton said his main goal four years ago was just to be there at the Summer Games. To get there, he did everything right physically. He was ready to go.

During the last four years, Eaton believed he had become smarter. This time around Eaton focused on preparing himself for all of the things he would not be able to control—the unknowable. He didn’t want to be surprised. As a result of his efforts, Ashton Eaton once again became the Gold Medalist by winning the decathlon competition in 2016.

What can we learn and how can we benefit from the paradigm shift in Eaton’s mindset?

Eaton’s 2012 training can be compared to our retirement planning. In our preparation we may focus on a financial number and like Eaton we may just be glad to be there. However, retirement is really just the starting line of another race—a race that may be different than what we expected.

There will certainly be unexpected expenses and unforeseen health challenges. Your investments will rise and fall daily in the commotion of the financial markets. How can you manage your assets in a world with so many things you cannot anticipate, let alone control?

Your investment results may ultimately be determined by how you psychologically prepare for the ups and downs of the market. It’s not the stock-market action that you should worry about. It’s your reaction to what’s happening!

At SFS, we can help you identify unforeseen events that may impact your financial well-being. We will create a plan that will help protect your assets and create an income designed to last throughout your retirement years. When the unexpected happens, you can feel confident. You have prepared. Call us.

Bullish Best Wishes,

Roger M. Smedley, CFP®

It’s All about Energy, Your Energy!

Greetings Dear Friends and Financial Partners,

Today hundreds of presentations, books, articles, and seminars exist and are focused on to-do lists, productivity, efficiency, time management, and so forth. But little is said about energy—your personal energy.

At an Investment Company Institute (ICI) Conference I attended in Washington, D.C., Maddy Dychtwald from Age Wave was one of the featured speakers. (FYI: Age Wave is the nation’s foremost thought leader on population aging.)

With more than a thousand people present, Maddy asked the audience this question: “What distinguishes an older person from a younger person?” After several guesses, someone called out, “Energy!” “That’s right!” Dychtwald enthusiastically responded.

Some of us have more energy in the morning. (To quote Lucy from the Peanuts cartoon series, “Morning people are hard to love.”) Some of us have more energy in the afternoon. And some of us may have more energy in the evening. Personally, my best creative energy is in the morning. On the other hand, some moms I know perform routine tasks in the morning to save their best energy for the afternoon when their children come home. Besides homework, children often have dance and music lessons, sports’ practices, and many other extracurricular activities.

At a seminar I once attended, the late Dr. Stephen R. Covey made this observation when asked about “Creative Energy.” “We may not have all of the creative energy we want, but we have enough.”

As you gradually age, don’t think about your life just in terms of time management. At some point you will go through a paradigm shift from time management to personal energy management. Your own energy and drive may need to be front-and-center going forward.

Smedley Financial offers, “Investment Management to Maximize Your Time.®” Perhaps we should consider, “Investment Management to Maximize Your Energy.” With all that is happening in your life, we can help by reducing your financial stress. Call us.

Bullish Best Wishes,

Roger M. Smedley, CFP®

Control is the Operative Word!

Hello Valued Financial Partners and Friends,

Being in control of your own finances is one of the great blessings of living in America. But to make this a reality—and not just a dream—ultimately depends on you.

In life there are things you can control. A physician once explained, “When you are overweight, you can do something about it. Losing weight will enable you to discontinue most, if not all, of your prescriptions. You will have increased energy, greater mobility, and lower medical bills. You will live longer to see your grandchildren grow up. All of the benefits are good. There is no downside risk.”

Continuing, the doctor said, “By contrast, a person with a fatal disease has little or no control over his or her circumstances. There is nothing he or she can do about it. But you can do something, in fact everything, about weight loss.” Wow! Talk about a tipping point.

Again, quoting the physician, “While you may think your diet is determined by major decisions, it is actually made of hundreds of small decisions, basically your everyday decisions.”

Gaining control of your life, whether it is diet, time, or money gives you power! Getting in control of those things you can control is empowering!

For example, consider being free of debt. Being free of debt has at least three tangible benefits. You will have more money for your future days, you will have more money to spend, and you will have more money to give. All of the benefits are good. There is no downside risk.

Being in control of your retirement is crucial. You want your money to last as long as you do! (That, of course, includes your spouse as well.) What is your plan for living longer? Who will help take care of you?

Many vital decisions await you. Decisions about Social Security benefits, pension plan options, 401(k) plans versus IRA, health insurance, life insurance, long-term care insurance, and so on…

We can help you. You don’t have to go it alone. Call us. Your financial success is our passion!

Bullish Best Wishes,

Roger M. Smedley, CFP®

Complacency through Success, Be Warned!

Dear Valued Financial Partners and Friends,

Managing your retirement dollars is truly a two-stage process. During your accumulation phase—in your younger years—your saving and investing process is pretty much on automatic. You sign up for your employer’s 401(k) plan by marking a few boxes and signing a few forms. You basically set it and forget it. Right or wrong, your 401(k) is on autopilot without you making many adjustments.

The accumulation process can be dangerously deceptive. The years of automatic saving and investing could set you up mentally and emotionally for something we affectionately call the “Complacency through Success Syndrome,” exactly at the wrong time.

At retirement, complacency through your savings success may lull you to sleep. Like many people, you may suffer from financial hypothermia. At retirement you have to wake up from your successful accumulation days and become actively involved. Specifically, you have to take your retirement funds off autopilot and switch to being proactively involved in making multiple and intertwined financial decisions. For many people this is very uncomfortable and not easy. It is fraught with so many moving parts and numerous and dangerous landmines and booby-traps. And, you don’t get a do over!

For you, your retirement distribution phase doesn’t have to be ominous and painful. Because helping you succeed financially is what we do. And we’ve done this for 34 years. Believe it or not, protecting clients from themselves in making unwise and imprudent financial decisions is one of the most important things we do!

Here are some of the landmines that can blow up (or undo) your lifetime-savings nest egg: elections and timing on pensions, Social Security, Medicare, IRAs, and 401(k)s to name just a few.

Other potential problems include not dealing with a fiduciary (not all financial professionals are required to put your interests first), promises of high returns, meaningless guarantees, and so forth. Smedley Financial Services, Inc.® has been a fiduciary since our first day in business, June 4, 1982. We can help you avoid financial landmines and scams. We put your interests first and are bound by law to do so.

So don’t self-sabotage what you have worked for all of your financial life. If you think financial planning is expensive, try ignorance! None of us can afford to make financial mistakes at retirement. Your financial success is our passion!

Bullish Best Wishes,

Roger M. Smedley, CFP®

The Irony and The Ecstasy

Dear Valued Financial Partners and Friends,

The evening news often features the familiar image of the New York Stock Exchange (NYSE). It typically shows a group gathered on the balcony overlooking the trading floor ringing the opening or closing bell.

The irony. I’ve always shared a chuckle with Sharla’s husband, Rich, for his astute observation: “When the stock market drops significantly, why do the people on the balcony clap so enthusiastically during the closing bell?” Great question. (Actually, it’s because their company is being featured or recognized.) But the celebrating of a down day is truly ironic!

More irony. The stock market dislikes uncertainty. However, it is that very uncertainty that creates the opportunity for profits over the long run. The irony: The stock market, or more correctly, the market of stocks, thrives on uncertainty.

The ecstasy. Here’s what Jeremy Siegel, PhD, said in the foreword of the 5th edition of his book, Stocks for the Long Run: “…there is overwhelming reason to believe stocks will remain the best investment for all seeking steady long-term gains.”

Most of us are worried about our money lasting as long as we do. If we are too conservative or if we are too aggressive in our investing, we could easily end up with the same outcome—not having adequate funds. If we are too conservative and are averse to taking any risk, then our investments cannot keep up with inflation. If we are too aggressive and take too many chances, then we may forfeit what we have because we have risked too much.

For most of us seeking stock market gains, the stock market could be considered boring. It’s like watching paint dry or grass growing. However, time and patience work wonders. Keep Jeremy Siegel’s professional research and expert opinion in mind.

The ecstasy can come from sound investing and prudent financial planning. Remember, as a nationally recognized wealth manager, Smedley Financial’s motto is, “Your financial success is our passion!”

Bullish Best Wishes,

Roger M. Smedley, CFP®

Worst-Case Planning May Be Your Best Financial Tool

Dear Valued Financial Partners and Friends,

You may profit by learning how we, as wealth managers at Smedley Financial, engage in two different processes on your behalf. Both on the financial planning side and on the investment management side, we strive to turn the tables upside down by asking the tough “What if” questions.

Regarding your financial planning with us, we first look at the positive side of helping you plan your financial future. But then we flip things upside down and strive to plan for worst-case scenarios as well.

What if you needed more money in your emergency fund? Where will the money come from? What if you or your spouse became disabled? What if you or your spouse died prematurely? What if the younger or healthier spouse dies first? Would you or your survivors be financially okay? What if one or both of you lives 10 or 15 years longer than you expect? What if one or both of you have to go to an assisted living facility? Where will the funds come from? What if you die without a will and possibly a trust? What will happen to your estate?

We hope you can see how this type of reverse thinking in your financial planning is not only beneficial, but essential.

Regarding our investment management philosophy, we strive to emulate this same type of reverse thinking. Rather than being persuaded by best investment case scenarios, the Smedley investment management team continually seeks to ask
itself the tough questions. Over the past 34 years, we at Smedley Financial have seen many people make financial mistakes–some serious and some not so serious.

What if high returns, you know, too good to be true, are promised? Many people lose much of their life savings and perhaps their homes because of the promise of high returns. What if you change your mind and want your money back the next day? Can you get your money back without severe penalties? What if something goes wrong in the future with a proposed investment? What if an investment stops performing? What if an investment drops in value? Who is minding your portfolio and continually looking out for your best interest? When someone boldly states how much money he or she made on an investment ask, “How much risk did you take to get that return?” Are you properly diversified and allocated?

Keep in mind the Will Rogers adage, “I am not as concerned about the return on my money as the return of my money.”
As a nationally recognized Wealth Manager, Smedley Financial’s motto is, “Your financial success is our passion!”

Bullish Best Wishes,

Roger M. Smedley, CFP®

You Need a Wealth Manager—Now More Than Ever

Dear Valued Financial Partners and Friends,

Now more than ever, most people need a Wealth Manager. While financial conditions are constantly changing, your own financial goals do not. Remember our two guiding principles: “Protect what you have. Then seek to acquire more.” As your Wealth Manager, here are some of the roles Smedley Financial can play for you.

Financial Bodyguard: As your financial bodyguard, we can help protect what you have acquired. Our goal is to prevent clients from making serious and costly financial mistakes. We can serve as a devil’s advocate and sounding board, thus helping you through the process of making wise financial choices.

Financial GPS: With respect to your personal financial goals, you always need to know where you are. As an integral part of your financial GPS system, we can let you know whether or not you are on track.

Financial Lighthouse: You need to know you are headed in the right direction, particularly at difficult times. We can help you maintain a proper course through good times and bad. Naturally, this includes not only bull and bear stock markets, but through your sunny days and, more importantly, through your rainy days and dark nights.

Experienced Guide: With respect to the thousands of financial decisions made during your lifetime, you need an experienced team of certified investment professionals to serve as your guide. While some financial decisions may be changed as circumstances and opportunities present themselves, some financial decisions may be made only once. We can help guide you through the jungle of important financial decisions in your life.

Risk Barometer: With respect to risk management, you need to know when to take risk and how much risk to take. Both of these points are equally important. As your risk barometer or gauge, we help you determine the type and amount of risk you need and want to take. Investment management is all about minimizing your risk taking.

At Smedley Financial, we can play multiple roles for you in our role as your Wealth Manager. Remember, your financial success is our passion!

Bullish Best Wishes,

Roger M. Smedley, CFP®

Your Most Important Retirement Action Ages

Dear Valued Financial Partners and Friends,

Today is the most important date in your personal retirement planning. Today is the only day you can truly make a change. Yesterday has passed. Tomorrow is elusive. Act today! Here are some ages to help you, your spouse, and your posterity maximize your financial and retirement benefits.

Age 70½: For your 401(k) and traditional IRA accounts, withdrawals are mandatory. If your birthday is on or before June 30th, you must begin taking distributions the year you turn age 70. If your birthday is after June 30th, you must begin taking distributions the following year. (Do not take distributions from your Roth IRA accounts. The balances in these accounts can continue to grow tax-free without required distribution until passed to your beneficiaries.)

Age 70: If you delay taking Social Security benefits until age 70, you will take home 76 percent more money each month than at age 62, and 32 percent more money each month than at age 66. Wow! This is critical to get right because your surviving spouse will be entitled to 100 percent of your benefit.

Age 66-67: You will be penalized if you claim your Social Security benefit before your Full Retirement Age (FRA), which varies depending on when you were born. For those born between 1943 and 1954, it is 66. For those born between 1955 and 1959, your FRA begins at 66 and 2 months and moves in two month increments for each year. For those born after 1959, your FRA is age 67.

Age 66: By the way, I just introduced the term: Full Retirement Age. Your Full Retirement Age is when your Social Security benefit won’t be reduced. Your Full Retirement Age is important because if you claim your Social Security benefit earlier than your Full Retirement Age, you will be increasingly penalized the earlier you claim the benefit.

Age 65: You become eligible for Medicare at age 65 and it is mandatory for you to enroll in Part A. There is a permanent penalty for each month you delay. You may enroll up to three months after your 65th birthday, but to be safe enroll in Medicare during the three months before your 65th birthday!

Age 62: If you qualify, you may sign up for Social Security benefits at age 62 for your own or your spousal (current or former) benefit. You have many options and it can get complicated. As an example, a working spouse can go to the Social Security Administration to “File and Suspend” his or her benefit. This continues to postpone the benefit, while permitting an immediate claim to the spousal benefit. (In some situations this is a brilliant strategy.)

Age 59 ½: Don’t you dare touch those retirement funds just because you can! You may need them later. A husband and wife, both age 65, have a 50 percent chance that one will make it to age 92.

Age 55: During the calendar year you turn age 55 or later and you retire from your job, you may take 401(k) distributions without penalty. IRAs, however, do not enjoy this same tax code protection. Qualified public retirees may begin penalty-free withdrawals in the year they turn age 50 or later.

The date you die: Your assets receive a step-up in tax basis. I recommend completing IRS Form 706—even though it may not be necessary. Filing this will help establish and prove the step-up in basis numbers.

Today: It’s the best day to change your future. Let us help you. Remember, your financial success is our passion!

Bullish Best Wishes,

Roger M. Smedley, CFP®