Market Update Through 3/14/2014

as of March 14, 2014        
  Total Return
Index 12 months YTD QTD MTD
Russell 3000 21.45% 0.57% 0.57% -0.85%
S&P 500 20.28% 0.07% 0.07% -0.88%
DJ Industrial Average 13.21% -2.53% -2.53% -1.47%
Nasdaq Composite 31.98% 1.90% 1.90% -1.41%
Russell 2000 25.60% 1.75% 1.75% -0.06%
EAFE Index 10.26% -3.54% -3.54% -3.78%
Barclays US Aggregate 0.56% 2.01% 2.01% -0.01%
Barclays Intermediate US Gov/Credit 0.60% 1.31% 1.31% 0.00%
Barclays Municipal  0.76% 3.34% 3.34% 0.19%
    Current   Prior
Commodity/Currency   Level   Level
Crude Oil    $98.89    $102.59
Natural Gas    $4.43    $4.61
Gold    $1,379.00    $1,321.60
Euro    $1.39    $1.38

Mark A. Lewis

Director of Operations

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Market Update Through 2/28/2014

as of February 28, 2014        
  Total Return
Index 12 months YTD QTD Feb
Russell 3000 26.74% 1.43% 1.43% 4.74%
S&P 500 25.37% 0.96% 0.96% 4.57%
DJ Industrial Average 19.01% -1.07% -1.07% 4.34%
Nasdaq Composite 38.10% 3.36% 3.36% 5.15%
Russell 2000 31.56% 1.81% 1.81% 4.71%
EAFE Index 18.48% 0.26% 0.26% 3.74%
Barclays US Aggregate 0.15% 2.02% 2.02% 0.53%
Barclays Intermediate US Gov/Credit 0.31% 1.31% 1.31% 0.38%
Barclays Municipal  -0.21% 3.14% 3.14% 1.17%
    Current   Prior
Commodity/Currency   Level   Level
Crude Oil    $102.59    $100.30
Natural Gas    $4.61    $5.21
Gold    $1,321.60    $1,318.60
Euro    $1.38    $1.36

Mark A. Lewis

Director of Operations

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Market Update Through 2/15/2014

as of February 14, 2014        
  Total Return
Index 12 months YTD QTD MTD
Russell 3000 24.29% -0.08% -0.08% 3.18%
S&P 500 23.45% -0.26% -0.26% 3.31%
DJ Industrial Average 18.46% -2.19% -2.19% 3.16%
Nasdaq Composite 34.42% 1.76% 1.76% 3.52%
Russell 2000 26.06% -1.14% -1.14% 1.67%
EAFE Index 17.62% -1.57% -1.57% 1.85%
Barclays US Aggregate 0.02% 1.45% 1.45% -0.03%
Barclays Intermediate US Gov/Credit 0.39% 1.01% 1.01% 0.09%
Barclays Municipal  -0.87% 2.21% 2.21% 0.26%
    Current   Prior
Commodity/Currency   Level   Level
Crude Oil    $100.30    $97.49
Natural Gas    $5.21    $4.94
Gold    $1,318.60    $1,239.80
Euro    $1.36    $1.34

Mark A. Lewis

Director of Operations

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Market Update Through 1/31/2014


as of January 31, 2014    
     Total Return
Index 12 months YTD/QTD/JAN
Russell 3000 22.60% -3.16%
S&P 500 21.52% -3.46%
DJ Industrial Average 16.07% -5.19%
Nasdaq Composite 32.33% -1.70%
Russell 2000 27.03% -2.77%
EAFE Index 16.31% -3.36%
Barclays US Aggregate 0.12% 1.48%
Barclays Intermediate US Gov/Credit 0.41% 0.92%
Barclays Municipal  -1.07% 1.95%
  Current Prior
Commodity/Currency Level Level
Crude Oil  $97.49  $94.17
Natural Gas  $4.94  $4.33
Gold  $1,239.80  $1,238.30
Euro  $1.34  $1.35

Mark A. Lewis

Director of Operations

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I Want it All

My husband and I are planning a trip to celebrate our 30th anniversary this summer. We love to travel, and we are fortunate to have taken some wonderful trips over the years. But, when it comes to planning a new trip, I have a weakness: I want it all. You see, there are many places still on my list to visit, and yet there are others we have visited and enjoyed so much, we want to return. It can take weeks for us to pull the trigger and settle on an option. I want it all and I want it right now.

So, it was with great amusement when I read the most recent blog post by the NY Times “Sketch Guy,” Carl Richards You see, having few options is bad, but having too many options can be debilitating.

In the world of financial planning, we most often see this debilitation when people try to time the market. When the market is up, people want to wait for a correction. When it is down, they think it hasn’t gone down enough. Just when they think it is safe to go back in the water, they have missed the biggest part of the upswing. The cycle continues.

This is why the right asset allocation and portfolio diversification play such an important role in your financial success. It may not be exciting and you may not beat the Russell 3000 year after year, or ever. But you are participating in the markets, you have the cushion that fixed income provides and sufficient cash for emergencies to ride out just about any storm. And if you stick with your plan, over the long term, you will be a winner. You definitely won’t get there by sitting on the sidelines.

We all want to make the best decision, invest at the best time, pay the perfect price, plan the perfect trip, etc. But all of the research in the world won’t guarantee success 100% of the time. In fact, waiting for the best often causes us to do nothing.

Richards’ suggestion is to accept that sometimes good enough is better than not at all. And I would have to agree. For now, we have settled on our travel plans. And with any luck, there will be another trip next year.

Tracy H. Allen, CFP®
Financial Planner

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Retirement Plan Savings 101

This time of year there are many employee benefit emails being churned through inboxes. Some of these benefits are time sensitive and can only be changed during qualifying events. Many times these benefits include health insurance coverage, group life and disability insurance coverage, and Health Savings or Health Reimbursement account withholdings. One benefit that is available to many employees, and can be changed at any time, is a retirement savings account. The maximization of these account benefits can result in a large reduction of your year-end tax bill. Let’s take a look at a few of the major plans approved for use by the IRS.

The 401(k):

The 401(k) is the most popular defined contribution plan available. The plan sponsor (the company) sets up the rules for employer contributions, which is approved by the IRS. Participants (employees) also have some decisions to make in regards to contributing to the account. For employees younger than 50, the 2014 maximum funding is $17,500 and for those older than 50 the maximum is $23,000. This employee contribution is subtracted from the employee’s taxable income for the year. This can lead to significant tax savings, but will also reduce the amount of take home pay for the employee. Similarly, some plans allow for a Roth 401(k). This plan functions the same way as the traditional 401(k), except employees do not get to exclude contributions from taxable income. However, once the employee reaches retirement age, all withdrawals from the Roth 401(k) are tax free, unlike a traditional 401(k).

The 403(b):

The 403(b) functions very similarly to the 401(k) but is only offered in certain types of organizations. Primarily, the 403(b) is offered to employees in public education and most non-profit organizations. The contribution limits are the same as the 401(k), with a slight advantage with the “catch up” rules.


SEP IRAs and SIMPLE IRAs are two savings vehicles available to small business owners. These accounts give small business owners and their employees access to tax-deferred savings vehicles with lower administrative costs. The SEP IRA’s contribution limit is similar to the 401(k) and 403(b), but based on the discretion of the business owner. This is different from a 401(k), for which an employer is required to contribute a certain amount. The SIMPLE IRA has a maximum salary deferral of $12,000 for 2014, with a $2,500 catch-up for employees older than 50.

This just scratches the surface of the details involved with employer sponsored savings plans. If you have questions about whether you are making an appropriate deferral, contact your advisor for a review of your situation. If you own a business and are interested in establishing a company plan, contact Neal Nolan, our Director of ERISA for a comprehensive consultation.

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Market Update through 1/15/2014

as of January 15, 2014    
       Total Return
Index 12 months YTD/QTD/MTD
Russell 3000 29.28% 0.24%
S&P 500 28.24% 0.07%
DJ Industrial Average 24.79% -0.50%
Nasdaq Composite 37.28% 0.94%
Russell 2000 34.18% 0.69%
EAFE Index 24.05% 0.90%
Barclays US Aggregate -1.29% 0.60%
Barclays Intermediate US Gov/Credit -0.55% 0.42%
Barclays Municipal  -2.07% 1.19%
  Current Prior
Commodity/Currency Level Level
Crude Oil  $94.17  $98.42
Natural Gas  $4.33  $4.23
Gold  $1,238.30  $1,202.30
Euro  $1.35  $1.37

Mark A. Lewis

Director of Operations

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Market Update Through 12/31/2013


as of December 31, 2013        
  Total Return
Index 12 months YTD QTD DEC
Russell 3000 33.55% 33.55% 10.10% 2.64%
S&P 500 32.39% 32.39% 10.51% 2.53%
DJ Industrial Average 29.65% 29.65% 10.22% 3.19%
Nasdaq Composite 40.12% 40.12% 11.10% 2.94%
Russell 2000 38.82% 38.82% 8.72% 1.97%
EAFE Index 27.46% 27.46% 6.40% 1.41%
Barclays US Aggregate -2.02% -2.02% -0.14% -0.57%
Barclays Intermediate US Gov/Credit -0.86% -0.86% -0.14% -0.63%
Barclays Municipal  -2.55% -2.55% 0.33% -0.26%
    Current   Prior
Commodity/Currency   Level   Level
Crude Oil    $98.42    $96.60
Natural Gas    $4.23    $4.35
Gold    $1,202.30    $1,235.70
Euro    $1.37    $1.37

Mark A. Lewis
Director of Operations

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Inflation Is Definitely Not a Problem

There are many things you might want to worry about concerning the U.S. economy, but inflation is definitely not one of them.  We continue to get nothing but good news on that front.

There are two primary measures of inflation in the U.S.  The one that people are most familiar with is the Consumer Price Index (CPI).  It is based on the prices of a basket of goods using fixed weights and is calculated and reported every month by the Bureau of Labor Statistics.  BLS reported the data for October 2013 on November 20.

Chart 1 shows the pattern for the overall CPI since 1946.


Chart 1

The base for this index is 1982-1984=100.  The index in October was 233.5.  This is the index for all urban consumers, the CPI-U.  BLS also publishes a CPI for urban wage and clerical workers, the CPI-W.

There is also the chained CPI index for all urban consumers (C-CPI-U).  That’s the one that has generated lots of discussion in Washington, D.C. as a candidate to replace the CPI-U in calculating the annual cost of living increase for Social Security benefits and income tax brackets.  If those changes happen, many more people will become familiar with this index. The C-CPI-U uses weights that change as consumption patterns change. That’s why it rises less than the CPI-U.

Chart 2 shows the year-over-year percentage changes in the CPI-U.  You can clearly see the big increases in prices after price controls expired after World War II and during the Korean War.  You can also see the period of the “Great Inflation” of 1965-1980 followed by the “Great Moderation.”


Chart 2

The CPI-U only rose by 1.0 percent in the twelve months ending in October 2013.  That’s mostly because energy prices fell by 4.8 percent, led by a 10.1 percent drop in gasoline prices.

The CPI-U excluding food and energy is called the “core CPI-U.”  It rose 1.7 percent in the year ended in October.

Either way suggests there is not much inflation in the system.  The members of the Federal Open Market Committee prefer to follow the implicit price deflator for personal consumption expenditures.  That’s because it both uses changing weights and measures all goods and services that consumers use. This measure is computed by the Bureau of Economic Analysis and is reported in the quarterly national income and product accounts.  The most recent data came out on November 7, 2013.

Chart 3 shows this measure. Its base is 2009=100.  This index was up only 1.1 percent from the third quarter of 2012 to the third quarter of 2013.  The index excluding food and energy was up only 1.2 percent for the same period.


      Chart 3

The raw material for inflation is the rate of growth of the broad M2 money supply.  This includes currency, demand deposits, savings deposits and time deposits of $100,000 or less.  The late Milton Friedman, recipient of the 1976 Nobel Memorial Prize in Economic Science, devoted much of his life to the study of money growth and inflation.  He taught all of us that “Inflation is always and everywhere a monetary phenomenon.”

The Board of Governors of the Federal Reserve System reports these data every week in its “Money Stock Measures-H.6” release. For the 52 weeks ended November 11, 2013, the rate of increase in M2 has been 6.5 percent.  That’s in line with the past three years and is no reason for alarm.

If you want to worry about the U.S. economy, then worry about how to break the U.S. economy out of the slow growth we’ve been experiencing since the recession ended in June 2009.  This has been the weakest expansion after a recession in over 100 years.  We are now in the fifth year of the expansion and real GDP is only 10.0 percent above where it was at the trough in the second quarter of 2009.

Dr. James F. Smith
Chief Economist


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Small Steps

This morning, I was reading an online article about simple ways to increase retirement savings.  I started thinking about how to express this to our ERISA/401k plan participants and figuring out a new way to educate them on the importance of saving for their future.  I’m fearful that some have determined in their mind that a secure future is something unobtainable, while others realizing that there’s not enough money to live on. 

My desire for our ERISA clients and plan participants is greater confidence in their ability to accomplish their retirement goal.  We’ve attempted to remove indecision that can arise from creating one’s investment allocation from the line of funds by offering mutual fund models.  We have also ensured that there are financial planning tools and calculators on the Third Party Administrator’s website (for our Daily Valuation plans) that helps to inform the participant about how much money needs to be saved each month.  However, these tools and resources will not overcome indecision.  That is why we also go one step further and provide ongoing education to the participants of these plans.  Herein lies my most sincere desire:  That participants make a choice and take action to move one step closer to a comfortable retirement.  Any journey starts with one step and each successive step gets progressively easier. 

Regarding the article: One of the things we have employed in our retirement plan education meetings are “Simple Solutions”.  These are simple ways of carving money out from our household budget to increase our savings rate.  For instance, I frequently tell plan participants about my coffee and muffin run to the local grocery store and how I would share the muffin with my then 3 year old daughter.  As the story goes, I explain that an intern (now full time Financial Advisor at Parsec and CFP® candidate) helped to make me realize how much money I was spending over the course of 25 years.  I was shocked at the expense and immediately changed my spending habits.  What’s interesting to me is that prior to this conversation, I thought it was a nice daddy-daughter treat.  However, I quickly realized two things:  The seemingly small expense added up to significant sums of money over time.  Also, that an extra cup of coffee and breakfast at home would go a lot further for building memories with my daughter. 

I believe we have the capacity to save something.  Often times, a small step in the right direction is all that is needed to overcome the hurdle.  For others, online calculators and financial planning tools are motivating, as they give the sense of speed and direction.

Check out our twitter post:

Neal Nolan

Director of ERISA  

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