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Investment Newsletter - Q2 2016 

Welcome Spring and warmer days ahead (at least, eventually)! 

A brief overview of recent market activity and expectations follows below. Our current investment topic is: "Should I Convert to a Roth IRA?"  

At this time of year, it is an opportune time to remind people to either make retirement contributions if needed, or at the very least review your retirement accounts as the April 18th deadline (for this year) is rapidly approaching . Also, we have our annual Spring Cleanup tips below.  

You will find past investment articles, and recent stock market commentary and reviews, by clicking on the relevant Quick Links on the right, or peruse past investment topics by clicking the Articles tab above or directly on our website. If there is a topic of interest you would like to see covered in the future, please reply back to this email to let us know, or click here. Likewise, i f you have any questions on this or anything else, feel free to reply back.

Our Annual ADV

As per Securities and Exchange Commission (SEC) requirements, attached is our annual ADV form. To access the form, please click here. If you would like us to email or mail a hard copy, please feel free to call or email us to let us know.

Investment Topic:
Should I Convert to a Roth IRA?
For our investment topic, " Should I convert to a Roth IRA?", we focus on some of the details of Roth IRA's, such as the difference between contributions and conversions. In addition, there are a few examples and scenarios to help illustrate the advantage of using a Roth. To learn more, please click here

Our Perspective on Recent Market News and Activity

Our synopsis of recent market activity, a look ahead, and putting it all in perspective:

The first quarter of 2016 was in many ways very similar to the old proverb often used to describe March: It came in like a lion, (or shall we say "bear"), and went out like a lamb, (or dare we say "bull").  For some investors, who had grown far too comfortable with the continuous rise in the markets since March of 2009, it was a harsh reminder that markets can also go down, and when they do it is important not to let fear or emotion take control over your long term investment strategy.  

If one were to review the S&P 500 from 1980 through 2015, they would see that volatility is not new, and can be expected as a normal recurring process over time.  In fact during that time frame, the average intra-year drop in the S&P 500 was 14.2%, yet annual returns were positive in 27 of 35 years. 
 What does that look like?  To help illustrate the point, let's take a look at several of those years mentioned above:
  • In 1980, at one point the S&P 500 was down 17% and yet for the year finished up 26%.
  • In 1982, at one point the S&P 500 was down 17% and yet for the year finished up 15%.
  • In 1998, at one point the S&P 500 was down 19% and yet for the year finished up 27%.
  • In 2003, at one point the S&P 500 was down 14% and yet for the year finished up 26%.
  • In 2009, at one point the S&P 500 was down 28% and yet for the year finished up 23%.
Again, the point is the average intra-year decline was 14.2% and annual returns were positive in 27 of those 35 years. 
As for Q1 2016, Fidelity Investments put out a good review of the quarter which included 6 key takeaways.
In particular in that review, the 6 key themes mentioned are:
1.     Can the world digest Fed tightening?

2.     Economy/Macro: Global economy will muddle through, led by U.S. and developed countries.

3.     U.S. Equities: Mixed 2015, but profits may be less of a drag in 2016.

4.     International equities and global assets: Commodities and currencies detract.

5.     Fixed Income: Modest returns, as rates rose across curve.
6.     Asset allocation themes: eventual shift from mid-cycle expansion to late-cycle phase. 
 To view the article, please click on the following link:

From Goldman Sachs:
"We once again expect positive, but below average, returns for global equities in 2016, in light of modest economic growth forecasts and rising valuations in some areas of the market. However, in our view, equities still look more attractive than other asset classes in a continued low- return environment. Importantly, we believe there are many ways to make hay even when the sun doesn't shine".   
  • Grey skies for global growth: economic forecasts are modest but could be enough to sustain corporate profitability and we believe central banks will remain accommodating.
  • The commodity El Niño: low oil and commodity prices continue to depress many emerging market (EM) economies; oil supply has taken longer to correct than anticipated, which is having a more negative effect on the energy industry and US economy than originally forecasted.
  • Change of seasons: late-cycle indicators are emerging in US credit and equities, while rates are finally going up. Low commodity prices could tip the balance into a default cycle, with an impact on EM. Changes in the credit and rate cycles have implications for financials stocks.
  • Climate change: keeping up with the consumer requires looking at more granular data as well as accounting for changes in spending patterns that are both near-term, cyclical (weak currency and economic downturns) and long-term, secular (technology and demographics).
  • Storm warnings: rising geopolitical tensions and political rhetoric across the world increase the possibility of unexpected events and financial market volatility.
  • Developed markets (DM): staying close to home, we believe domestically-exposed companies in the US, Europe and Japan could benefit from increasing domestic consumption.
  • US: the other 496 stocks did not participate in the extreme growth-at-any-price mentality that led to the narrowest trading breadth in 30 years for the S&P 500 Index and significant underperformance of value stocks. We think the US market is full of relative value opportunities.
  • Europe: a little economic growth could go a long way toward helping European earnings and stocks catch up to the US, despite relatively high exposure to EM end-markets.
  • Japan: changing corporate and consumer behavior could be the biggest drivers of Japanese equities, which are also among the least expensive in the developed markets.
  • EM: minding the macro but not mired in it, we continue to believe that India has the best outlook, but mostly differentiate our portfolios through stock picking rather than country selection. We remain cautious on state-owned enterprises (SOEs) and believe many off-benchmark and small-cap stocks present more interesting opportunities. 

Major Market Indices


Below is the Q1 '16 price return performance of some of the major indices:


Index Q1 2016 YTD
US Treasury 3 Month T-Bill
0.07% 0.07%
Barclay's US Aggregate Bond Index
Barclay's Municipal Bond Index
0.62% 0.62%
S&P 500 Index
Dow Jones Industrial Average 1.49% 1.49%
MSCI EAFE (International Equities)  -3.74% -3.74%
MSCI Emerging Markets 5.37% 5.37%
Russell Mid Cap 
1.75% 1.75%
Russell 2000 Index (Small-Cap Stocks)
-1.92% -1.92%
Bloomberg Commodity Index
0.34% 0.34%
Credit Suisse Long/Short Equity*
*this data is as of 2/29/16
1.58% 1.58%
Morningstar REIT Index 4.18% 4.18%

Quick Links

Our current investment topic: 

Should I Convert to a Roth IRA?

Stay Connected
IRA Contribution?

If you are eligible to make IRA contributions for 2015 (Traditional IRA, Roth IRA, SEP-IRA), and have not done so, the deadline for 2016, April 18th,  is fast approaching.  If you are unsure about your eligibility to contribute, or feel that you cannot contribute, please let us know and we will explore your individual circumstance. 

  Spring Cleanup

The Spring is a great time of year to go through your file folders, and eliminate old papers that you may no longer need to hold onto (make sure to shred anything with personal information). For instance, the IRS requires you to k eep records for  3 years  from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. You need to keep records for  7 years  if you file a claim for a loss from worthless securities or bad debt deduction. For more information on this subject from the IRS, click here.

On the Investment Horizon
Upcoming Key Dates on the Economic Calendar 

  • First Friday of each month: Unemployment report for the prior month, released at 8:30AM.
  • Tuesday April 26 - Wednesday, April 27: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Wednesday at 2PM. 
  • Monday, May 30: Stock market closed in observance of Memorial Day. 
  • Tuesday June 14 - Wednesday, June 15: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Wednesday at 2PM. 
  • Wednesday, June 15 at 2:30PM: Fed Chair Janet Yellen to hold her quarterly press conference to explain the FOMC's latest quarterly economic projections. 

If you desire an appointment, have any questions on any of this material, or any other financial subjects may relate to your own financial circumstance, please reach out to us at the contact information below:






Brian Cohen, CCO; email:; phone: 631-923-2487
Joe Favorito, CFP®; email:; phone: 631-930-5336

Direct office email: 

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