Old Towne Investments

Financial Planning Consultants

2010: Off To Another Slow Start

Posted By eddie on February 6, 2010

Today, I would like to share some information and an opinion or two.

The information comes via BTN Research (Behind the Numbers is a financial/political blog, dispatched by staff writers at the Washington Post).  The opinions come from yours truly.

  • The S&P 500 was down 3.6% (total return) in January 2010.  The loss is the 3rd consecutive year in which the stock index has started with a decline in January.  The S&P 500 was down 6.0% in January 2008, and then lost 8.4% in January 2009.
  • The S&P 500 has produced a negative total return for each of the last three (3) Februarys.  The stock index was down 2.0% in February 2007, down 3.2% in February 2008, and then lost 10.6% in February 2009.  February’s average performance over the last 20 years (1990-2009) is a loss of ½ of 1 percent (-0.5%), ranking February as the 10th best month over the two-decade period.
  • The S&P 500 has gained at least 25% (total return) eight (8) times in the last 25 years (1985-2009), including last year (the stock index gained 26.5% in 2009).  In the calendar year following the 7 previous “25% and up” years, the S&P 500 was up 6 out of 7 years, gaining an average of 14.8% annually.

Given the substantial recovery we witnessed in the last half of 2009, it should surprise no one that the first month of 2010 was a slight correction.

If February 2010 continues the recent annual trend, we should expect another slight correction.

Again, if history proves to repeat itself, we can expect six (6) of the next seven (7) years to be very meaningful in our pursuit of wealth building and in recapturing recently eroded retirement savings.  Experience and optimism lead me to expect that at least four of those positive years to come before the next major downturn.

NOW might very well be the time to get as much of your hard-earned money invested into those good mutual fund accounts as possible!

Happy New Year!!

Posted By eddie on January 4, 2010

The following is a copy of the Holiday Greetings letter we sent this past year; I felt it might be appropriate to share it with all, on our website, as an extension of our expression of gratitude.

 

Dear Clients & Friends of Old Towne Investments:

As 2009 rapidly comes to a close, I wanted write a short note to tell you all, once again, how blessed I feel to have a relationship with you — be it as a client, as a really good friend, or both.

I trust you have had (or, perhaps, are still having) a truly great Holiday season, including a very Merry Christmas.  My hopes are that we shall all have a really special New Year as we welcome in the second decade of the new millennium — can you believe how quickly the last ten years have come and gone?!?

As we look ahead to 2010, my sincerest desire remains to continually earn your trust and respect.  For many of you, we are still in somewhat of a “holding pattern,” waiting for the market to recover, before taking the next step; for several more of you, we have much to do to put those plans in place which will help insure we attain all the goals we have set on that road to financial security; for some, we just need to “get started & take that first step.” 

For those of you receiving this greeting that may never become clients, I just wanted, at this reflective time of the year, to let you know that, because of our friendship, you have a special place in my heart.

In the coming months, I look forward to nurturing our relationship and assisting you, in any way possible, with those things that are most important to you.

Sincerely

Eddie Hathcock

Approaching the End of a Decade

Posted By eddie on December 8, 2009

As this year (and this decade) soon draws to a close, I want to say that I believe the worst of this most recent economic downturn and bear market are behind us.  For the past several months, we have seen a steady upward trend beginning to take shape.  I shall close out my published thoughts for this year with a few more observations:

    The S&P 500 gained 6.0% (total return) last month — its best November performance since the stock index gained 7.7% in 2001.  As of the end of November, the S&P 500 was up 24.1% YTD; as compared to 11/30/08, the same index was down 37.7% YTD.  (source: BTN Research)

    Between 10/09/02 and 10/09/07, the S&P 500 gained 101% (not counting the impact of reinvested dividends).  The first correction for the stock index (i.e., a drop of at least 10%) during that 5-year bull market was a 15% decline that bottomed on 3/11/03.  From that point, the bull market resumed, adding +95% through 10/09/07.  (source: BTN Research)

    The best calendar year performance for the S&P 500 during the current decade was 2003 when the stock index gained 28.7% (total return).  The worst performance was last year (2008) as the S&P 500 lost 37%.  With just three weeks remaining in this calendar year, index is up 25.4% YTD, giving it a chance to surpass its 2003 record performance.  (source: BTN Research)

     The four (4) worst total-return years for the S&P 500, in the last 75 years, took place in 1937, 1974, 2002, and 2008.  The stock index gained 31.1% in 1938, 37.2% in 1975, and 28.7% in 2003.  (source: BTN Research)

It appears that, over those last 75 years, history has been an excellent teacher and a quality indicator; therefore, I firmly believe that we are headed for another few years of strong performance.  Perhaps NOW would be an ideal time to get into, or back into, the market by way of a solid mutual fund investment.  (Please let me know if I can assist you that endeavor.)

The U.S. Government At Our Side

Posted By eddie on November 12, 2009

Is Congress There For Us?

Unless modified before the end of the year, the Federal Estate Tax will be repealed as of January 1, 2010; that means there will be no federal estate tax levied on any 2010 decedents.  Current law increases the maximum amount a decedent may pass onto his/her heirs, estate tax free, from $3.5 million (for a 2009 death) to an unlimited amount for 2010 deaths; then reduces the exemption to $1 million for 2011 deaths.  (source: Treasury Department)

A person born in 1943 is eligible for full Social Security retirement benefits at age 66 (in the year 2009).  The maximum retirement check that this individual could receive in 2009 is $2,323 per month — equal to $27,876 per year.  (source: Social Security Administration)

Three (3) of the six (6) largest bank failures in U.S. history (based on assets held at time of collapse) have occurred in the last 14 months.  (source: Federal Deposit Insurance Corporation)

DID YOU KNOW??

Posted By eddie on October 8, 2009

Market Watch?

68% of the total return for the S&P 500 stock index generated over the    last 19 years (1990-2008) has occurred during the four-month period of October – January.  (source: BTN Research)

 

DJIA & 9/11?

The DOW closed at 9605.51 on Monday, September 10, 2001 (the stock market did not open on Tuesday, 9/11/01, when the terrorist attacks occurred in New York City); the DOW closed at 9605.41 on Friday, September 11, 2009.  The Dow Jones Industrial Average is a popular indicator of the stock market, based on the average closing prices of 30 active U.S. stocks representative of the overall economy.  (source: BTN Research)

 

Energy?

15% of the world’s electricity is generated by nuclear power plants; 41% of the world’s electricity is coal-generated.  (source: World Nuclear Association)

 

Count me in?

Only 13% of the American workers that have access to an employer-sponsored retirement savings plan decline to participate.  (source: Congressional Research Service, Current Population Survey)

 

How confident are you?

Recent results show that only one (1) out of every five (5) American retirees (20%) are “very confident” that they have sufficient assets set aside, today, to maintain their desired lifestyle.  Just two years ago (2007), two (2) out of every five (5) retirees (41%) were “very confident” that they had set aside adequate retirement assets.  (source: Employee Benefit Research Institute)

 

The road less traveled?

American consumers spent $31.2 billion at gas stations in August, 2009; down $11.4 billion from the $42.6 billion spent at gas stations in August, 2008.  (source: Commerce Department)

 

A home of our own?

The number of properties, nationwide, that were in some stage of foreclosure (i.e., default notice, auction sale notice, or bank repossession) was 240,000 in August, 2007; increasing to 304,000 in August, 2008; and was 358,000 in August, 2009.  (source: Realty Trac)

Deficit Spending?

Posted By eddie on September 16, 2009

Big Brother & Little Brother may share similar DNA

With less than two months remaining in fiscal year 2009 (i.e., the 12 months from 10/1/08 to 9/30/09), the United States government has spent $3.0 trillion — more than the nation has spent in any fiscal year.  The five (5) largest monthly deficits in history have occurred during the current 2009 fiscal year.  (source:  Treasury Department)

Bad Combination:  Tax receipts collected by the U.S. government are down 17% on a year-over-year basis.  Outlays paid by the government are up 21% on a year-over-year basis.  (source: Treasury Department)

28% of American families headed by retired persons do not pay off their outstanding credit card balances each month.  This data is part of the 2007 Survey of Consumer Finances collected by the Federal Reserve and was released in June, 2009.  (source: Federal Reserve)

Credit card defaults — when the lender gives up trying to collect on the outstanding credit card debt — were up 9.4% in July, 2009; the national unemployment rate, in July 2009, was 9.4%.  Does one follow the other?  (source: Federal Reserve, Labor Department)

2009: A Look Back at the First Seven Months

Posted By eddie on August 18, 2009

A Few Facts Recently Uncovered:

  • After seven months, the S&P 500 finished the month of July up 11% YTD (total return) — it’s best January-through-July performance since 2003.  One year ago, the S&P 500 was down 12.7% after the first seven months of calendar year 2008.  (source: BTN Research)
  • The S&P 500 gained 7.65% (total return) in July — it’s 5th consecutive “up-month” after losing ground in January and February, earlier this year.  The stock index’s latest 5-month performance is up 35.6%.  That 5-month run is the S&P 500′s best streak since the index advanced for eight (8) straight months through January 2007.  However, the index only gained 14.6% over that 8-month stretch.  (source: BTN Research)
  • “Baby Boomers” are traditionally thought of as the 78 million Americans born between the years 1946-1964.  Of the Boomers born in 1955 or earlier (i.e., the group turning age 54-63 in 2009), only 31% are financially prepared for retirement as of today.  (source: McKinsey, Business Week)
  • To rank in the top 5% of all U.S. taxpayers required an adjusted gross income (AGI) level of at least $160,000 based upon calendar year 2007 tax data.  This group earned 37% of all AGI nationwide and paid 61% of all federal income tax in the country.  (source: Internal Revenue Service, Tax Foundation)
  • Milestone Revisited:  The S&P 500 closed above 1,000 on Monday, August 3, 2009 — the first time the stock index had done so since November 4, 2008 (the day Barack Obama was elected the 44th President of the United States).  The first time the S&P 500 closed above 1,000 was on February 2, 1998 — 11 1/2 years ago.  (source: BTN Research)

America Speaks Out On Retirement

Posted By eddie on July 16, 2009

Every year, this Advisor follows and tracks the annual survey conducted by Harris Interactive and sponsored by SunAmerica.  The purpose of this poll is to “uncover the most important financial concerns and priorities of American investors as they approach or enter retirement.”

 

Highlights of America Speaks Out 2009 include:

 

  • 81 % of respondents believe that today’s economic conditions will negatively impact their standard of living in retirement.
  • 80% are concerned about having enough money to last through retirement.
  • 78% expect their taxes to increase over the next five years.
  • 78% say having a guaranteed source of rising income during retirement is important.
  • Only 34% are confident they have a good retirement plan in place.

 

If this survey reflects your situation, and you would like to learn more about how Variable Annuities can provide the type of retirement income solutions Americans say they need, please contact me for a personal conference.

 

The information and data presented here were provided by SunAmerica, The Retirement Specialist.

Market Predictions?

Posted By eddie on June 18, 2009

I am asked, at least once a week, “What is the economy (or the markets) going to do?”  “What is going to happen over the next 6, 12, 18 months?”  “What should I do to protect my investments, while positioning my assets to grow?”

 

No matter whom you watch on TV or listen to on radio, most everyone has a prediction for what may happen and/or how they feel the markets will perform over a specified period of time.  While these predictions, projections, and hypotheses may be interesting and fun to hear, we all know that no one has a crystal ball with which to deliver accurate future scenarios.

 

What a good financial advisor should be telling you (especially during times like we have recently witnessed), is that you should base all investment decisions on sound investment principles – not on predictions!  For example:  1) identify (or revisit) your goals & objectives; 2) focus on quality investments with proven track records; 3) protect against risks and unforeseen market events by diversifying your portfolio; and 4) maintain that long-term perspective that you began with.

NOW, More Than Ever . . .

Posted By eddie on May 13, 2009

NOW, More Than Ever . . . We Need PROVEN, EXPERIENCED LEADERSHIP to keep us MOVING FORWARD while PROTECTING Olive Branch’s way of life.

A faithful Olive Branch resident for over 35 years, Mayor Sam Rikard has been a tested and proven leader of our city’s administration for the last two decades – 8 years as an alderman & 12 years as mayor.  While fighting to keep our city taxes low and our commuity safe, he has provided a forwardly progressive vision for the future of Olive Branch.

It is extremely imperitive that we return to our respective voting polls on Tuesday, May 19th, and mark our ballots to RE-ELECT Mayor Rikard.

For more information about our leader, his family life, his accomplishments, and his position on various issues, please visit:  www.samRikard.com.

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