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Investment Newsletter - Q3 2015 

We hope you are doing well, and enjoying your Summer. It is time once again for our Newsletter, and we hope that you find it at least somewhat informative. If you have any questions on this or anything else, feel free to reply back.

A brief overview of recent market activity and expectations follows below. Our investment topic for is: Early IRA withdrawals, using IRS rule 72t.  

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.

Investment Topic:
Early IRA withdrawals, using IRS rule 72t
For our investment topic, we focus on a way that people under 59 1/2 can access their IRA without paying the 10% penalty (taxes owed are still applicable), by using IRS rule 72t . The advantages, disadvantages, and factors to consider. To read the article, 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 2 nd Quarter of 2015 left investors with much to be desired.  As the markets took a pause, they have remained in a basic trading range, with much of the concern centered on when the Fed will start to raise interest rates, and the potential effects that it may produce.

History tells us that over the last six decades, the average time from the  first Fed rate hike to the next recession is 33 months, and the median number is 30 months.  The futures markets appear to be factoring in a 20% chance of the first rate hike occurring in September, and with an 80% chance of it starting in December.  That would historically suggest that the economy will not enter a recession for at least another 2 years plus. 


What complicates the situation is that the Fed normally raises interest rates to slow economic growth and suppress inflationary pressures.  There is currently not a lot of evidence of inflationary pressures and economic growth is weak at best. It should be noted that the most recent GDP print was in fact negative.  Should the next GDP report due July 30th produce a second negative number, we would technically already be in a recession.


While we await the next GDP numbers, there are only two points in time over the last 6 decades where real economic growth was below 2% at the time of the first rate hike, 1948 and 1980.  In 1948 the recession followed 4 months later and in 1980 followed 9 months later.  To put that in perspective, if it has normally taken 33 months on average to go from first rate hike to recession at a 3% economic growth rate, then it would take about 11 months on average to go from first rate hike to recession if economic growth was only 1%.  


Ultimately the economy has on average gone in and out of recessions once every four years, so we need not fear their occurrence, but rather just ride through them when they occur. For long term investors, we ride through the good and bad times.  Clearly the good times are a lot more fun, but we must live through those times where returns are less than stellar and not waver from a disciplined long term plan approach.   



Major Market Indices


Below is the Q2 '15 performance of some of the major indices:


Index Q2 2015 YTD
US Treasury 3 Month T-Bill
0.03% 0.03%
Barclay's US Aggregate Bond Index
-1.68% -0.10%
Barclay's Municipal Bond Index
-0.89% 0.11%
S&P 500 Index
0.28% 1.23%
Dow Jones Industrial Average -0.29% 0.03%
MSCI EAFE (International Equities)  0.62% 5.52%
MSCI Emerging Markets -0.69% 2.95%
Russell Mid Cap 
-1.54% 2.35%
Russell 2000 Index (Small-Cap Stocks)
0.42% 4.75%
Bloomberg Commodity Index
4.66% -1.56%
Credit Suisse Long/Short Equity 1.66% 3.53%
Morningstar REIT Index -10.00% -5.75%

Quick Links

Our current  investment topic: 
Early IRA withdrawals, using IRS rule 72t

Recent reports available from Morningstar:

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10 steps for your financial well-being



Assess Your Situation/Portfolio

Are you actively saving and investing to reach your goals? It is not too late to get your savings and investing on the right track. The earlier you start, the better. Do not procrastinate!


Define Your Goals

What are your short and long term goals? Write them down, or at least be clear about what they are. If you cannot list them all or if you feel overwhelmed, start with the most important.


Determine Your Risk Tolerance

Will you be kept awake at night concerned that the stock market had a large decline in one day? The answer may vary based on your age, experience, goals, net worth, and your asset allocation.


Create a Plan

Would you go on a long car trip without a map, directions, or a GPS? A basic plan will include explicit, attainable actions, specifically stating how to get from Point A to Point B. Are you in need of a "co-pilot"?


Implement the Plan

The best plan will do you no good unless you take action and implement it. If that feels overwhelming, at least get started.  "A journey of a thousand miles begins with a single step."


Monitor and Track

"I have a sound plan and implemented it. Can't I just leave my portfolio alone?" You or your advisor needs to make sure that you are proactive and reactive, when needed. A loss avoided can be better than a gain.


Re-Assess Your Situation/Portfolio and Adjust as Needed

The only constant in life is change. Maintaining an outdated allocation is akin to playing the same players, play after play and game after game. We cannot direct the wind, but we can adjust the sails.



Maintain perspective and long-term discipline. Investing can provoke strong emotions. Do not over-react to short-term events. Ignore the temptation to chase last year's winner. 


Minimize Costs and Be Tax Efficient

Research shows lower-cost investments have tended to outperform higher-cost alternatives. In addition, manage your portfolio for tax efficiency. It's not what you make, but what you keep.


Prepare for the Unexpected and the Unavoidable  

Do you have a will, living will, health care proxy, etc.? You've worked hard for your assets; make sure you can enjoy them to the fullest, as well as passing down a legacy if you so desire. Protect and enjoy them!   


A Goal without a Plan is a Wish. A Plan without Action is Futile.


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 July 28 - Wednesday, July 29: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Wednesday at 2PM.
  • Thursday, July 30: GDP announcement at 8:30AM.
  • Friday, August 14: Consumer Sentiment, released at 10:00AM
  • Monday, September 7: Stock market closed in observance of Labor Day.
  • Wednesday September 16 - Thursday, September 17: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Thursday at 2PM. 
  • Thursday, September 17 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

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