Yes, the stock market recently set a new all-time high, but…

Just last week, the S&P 500 Index pierced the 1900 level for the first time in history.  However, some important divergences still exist in the stock market.  For example, small-cap stocks, as represented by the Russell 2000 Index, are down approximately 5% year-to-date.  In addition, technology stocks, as represented by the PowerShares QQQ ETF, are only up 1% year-to-date and are below their all-time highs.  The S&P 500, which represents large-cap stocks, is up over 2.5% year-to-date.  Thus, there has been significant variation in stocks returns across many equity benchmarks leaving investors confused by the volatile market action. The heavy selling in technology and small-cap names over the past few months is indeed making some investors nervous.  While divergences among market indexes typically can be a cause for concern, we believe the market has just been self-correcting the high valuations in some areas of the market.  We are believers in the sustainability of the recent market highs set by the S&P 500.  Indeed, since the beginning of the year, we have been pruning many of the higher valuation stocks in our Portfolios and replacing them with large-cap core and large-cap value stocks.  We are of the belief that these types of stocks will continue to offer a superior risk/reward tradeoff versus the tech-heavy NASDAQ Index and small-cap stocks.  It is all a matter of valuation and fundamental positioning.  While the S&P 500 is not cheap, we do not find it expensive either given the backdrop of low interest rates and signs of an accelerating industrial economy. We believe the importance of being in the right stocks is paramount right now.  This is not a market that is driving all stocks higher.  There are clear fundamental and valuation concerns within some pockets of the stock market.  While we would clearly prefer to see more market breadth with all market averages setting all-time highs, we recognize it has become a stock-picker’s market. … | Read More »

Investment team stays busy during corporate earnings season

What is earnings season?  Every quarter, publicly traded companies are required to file a report stating their sales and earnings as well as to provide a general business update.  For lack of a better description, it is like a quarterly report card.  Typically earnings season starts a few weeks after the completion of the calendar quarter and runs for approximately four weeks.  At Winch Financial, the Investment Team is busy sifting through all of the various earnings reports and listening to management conference calls summarizing the business results of the first quarter of 2014 and analyzing the operating direction for the remainder of the year. Earnings season is an important time in the Investment Department.  It presents an opportunity to analyze the most recent financial statements of a company and get a key read of operating results and direction.  For our stock and bond investments we want to make sure everything is on track with our forecasts.  Earnings season also gives the Investment team the opportunity to evaluate trends in corporate America and reposition our holdings, if necessary, to capitalize on emerging trends.  It also provides the Investment Team with the data it needs to develop new financial models and assess individual company valuations. Just like a child’s school report card, an earnings report provides insight into a company’s strengths, weaknesses and opportunities.  While it is still early in earnings season, our initial read shows companies handled the impacts of a harsh winter effectively. Importantly, corporate America sounds confident a pick-up in economic activity in the developed markets will accelerate as the year progresses.  The one worrisome trend is a general slowdown in activity in emerging markets.  Overall, companies appear well positioned and confident on future business activity.  Winch Financial remains optimistic the bull market for stocks is still intact and we are seeing clear signs of acceleration in economic conditions.  Lastly, Winch Financial is expecting interest rates to start… | Read More »

Say no to just paying minimum balances on your credit card

I have to keep my credit cards hidden. I have very little impulse control when it comes to shoes. I want those beautiful, new boots immediately. So, in order to save myself the agony of getting into debt over a pair of leather riding boots, I keep my credit cards stashed away. At home. In a box that is way up high in my closet. I do it in hopes that I will keep myself from using my credit card willy nilly. If I absolutely must have whatever trinket or bob I desire, I have to leave the store in order to go home and get my card. I would say that about 89% of the time, I reconsider and never go back to get the boots. It is awesome. But, it is not fool proof and I still use plastic from time to time. It is not surprising that most people in the US use credit cards. We like stuff. On average, an American has two credit cards. The American Bankers Association states that 42% of all credit card customers pay off their bill each month. That leaves 58% carrying a balance from month to month. Apparently, most of that 58% pay more than the minimum each month. And you should too!!! After doing a little research for this blog, I found that it is very important to pay more than your minimum balance each month. Paying only the minimum is a red flag to the credit company, according to American Bankers Association’s Nessa Feddis. It appears that your credit card company places you in a higher risk category when you pay the minimum and that can sometimes trigger an interest rate increase, just when you don’t need it. If and when that happens, the minimum payment can also go way up in conjunction with the interest rate. Yikes!!! In addition, if you are ever offered the option to… | Read More »

Prefunding your funeral brings peace of mind

While it is common to set aside funds in advance of major life expenses like adoptions, educations and weddings, it is far less likely that healthy individuals will pre-fund their funeral expenses. This lack of attention may make sense in the short-run, as people work hard to raise their families with the requisite mortgage payments, retirement planning, and daily living expenses this entails. The truth is, funerals are expensive and very few people have the resources to pay for them outright. Lack of planning can cause you to be a burden to the very family you worked your whole life to protect. Without advance planning and funding, some survivors find themselves dipping into savings accounts, using credit cards, taking out loans or even selling personal assets to pay for funeral expenses. Even if you have the money to pay for your own funeral, it may be tied up in probate at the time your grieving family is trying to access it. Obviously, no one wants to be a financial burden to their families, but very few people have access to extra disposable income to pay for a funeral up front. So, where do you get the money to prefund your funeral? Odds are you already have it.  It could be in the bank, money market, or even in another insurance policy.  Different payment plans are available from single pay to multi-year pay.  We can help tailor your policy to meet your specific needs and goals. Examples of vehicles used by many include savings accounts, certificates of deposits (CD), annuities, money market accounts, or mutual funds.  All of these can hold money for the purpose of paying ones funeral expenses, but not all are protected from creditors. Purchasing an insurance policy on yourself to cover the anticipated costs of your funeral and then assigning that policy to an irrevocable funeral trust allows you to enjoy the following advantages: At time of… | Read More »

Old life insurance policies can cost you money

Insurance policies, like other components of a well-designed retirement plan, require diligence both prior to their purchase and after their activation. The dangerous, though common, practice of purchasing Variable Universal Life and Universal Life Policies and then ignoring them through the years, can result in a significant loss of money. If you are not careful these policies can actually eat themselves from the inside, when the cost of insurance rises above the planned premium payments.  It is best to catch this as early as possible.  A telltale sign of this happening is when your cash value on the most recent annual statement is lower than the cash value on the previous year’s annual statement. This means that the planned premiums going in are not enough to cover the cost of insurance and the difference is being pulled from the cash value. We help people in this exact situation come up with the best solution to their insurance requirements all of the time.  Because we are an independent firm and not tied to a single insurance company, we can work with you and your insurance company to adjust premiums to carry your policy to a desired age, or we can look at alternatives with other insurance companies. Not all permanent policies get into trouble like this.  Sometimes Variable Universal Life and Universal Life policies are performing well and still growing cash value.  In general Whole Life Insurance will not run out of cash value.  Whole Life is designed to be more expensive up front with premium dollars, and they can return some of the unused premiums in the form of dividend payments.  This is a more expensive way to purchase permanent coverage. If you have a permanent policy (either Whole Life, Variable Universal Life, or Universal Life with cash value in it) you need to ask yourself one question: What is the purpose for this coverage?  If your goal is strictly… | Read More »