Landmark Wealth Management, LLC
Registered Investment Advisor
Investment Newsletter - Q4 2017
2017 has been quite a year, and much like 2016, has been full of surprises, and we guess we should just learn to expect the unexpected....
In this issue of our Investment Newsletter:
- A brief overview of recent market activity and expectations along with Our Perspective...as well as a link to a fall 2017 stock market outlook.
- A recap of the performance of major market indices from the past quarter and for the year.
- The recent Equifax data breach has rightfully been on the mind of many people and has heightened awareness and concern. We have guidance and information to assist in the various options that should be considered and taken in light of this, and other security breaches.
- Upcoming Economic Calendar
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How To Handle Your Pension Options
Our Perspective on Recent Market News and Activity
Our synopsis of the past quarter, a look ahead, and putting it all in perspective:
The 3rd Quarter of 2017 was for the most part, a good solid quarter for many asset classes. The S&P 500 Index was up 3.96%, the Russell Mid Cap Index was up 3.04%, the Russell 2000 Index (Small Cap) was up 5.33%, the MSCI EAFE Index (International) was up 4.94%, and the MSCI Emerging Markets were up 7.02%. Bonds were basically flat with the Barclay's US Aggregate Bond Index only up 0.17% and the Barclay's Municipal Bond Index only up 0.01%. Commodities lagged with the Bloomberg Commodity Index up 2.25% and REITS down (-0.53%).
Below, are some key points brought out in a recent Charles Schwab Market perspective that we tend to agree with (click here for the full article):
"U.S. stocks remain near all-time highs, but we expect some continued churn as fall is shaping up to bring a series of political, geopolitical, and monetary policy conflicts which could contribute to greater volatility
". The VIX which is a measure of volatility, just finished its calmest quarter ever, averaging just 10.94 over the last 3 months. The gauge has fallen for three consecutive quarters, its longest streak of declines since 2011. Volatility which has remained historically low will not stay this way forever. That is why we often implement hedges to the portfolio to help offset this inevitable volatility which will certainly occur in the future and can be disruptive to a portfolio.
"Ample global liquidity, healthy economic growth combined with a solid earnings outlook should ultimately allow the bull market to continue".
Earnings continue to look fairly strong and can certainly help lead the markets upwards over the short term.
"Global economic growth is looking good and is helping to fuel investor optimism over further gains in international stock markets".
We increased our exposure to International stocks in Q2 2017 and that tactical change in asset allocation has worked out well since that time.
The US stock markets have shown remarkable resilience in the face of numerous "shock" type moments in 2017 with such events as the Russian voting investigation, the destructive and historic forces of hurricane's Harvey, Irma, and Maria, the North Korea situation, and even the recent worst mass shooting in US history. These types of historical shock events have been met so far at least with barely a shrug by the markets. The question is, "For how long does that continue?"
It is our opinion that long-term investors should not get caught up in the headlines of the "Markets hitting new all-time highs". It is important to remember, that in most cases the headline is talking about the Dow Jones Industrial Average. That is different than the S&P 500 Index, which is different than the Total Stock Market index, and so on. Additionally, the headline of the market hitting a new all-time high can at times be misleading as you can see by the following example: On February 15th 2017 the Dow closes at a new high of 20,611.86. The next day it hits a new high of 20,619.77. The next day it closes at a new high of 20,624.05. As you can see the headline each day says, "New High!" In reality, the index only rose approximately 12 points which on percentage basis is about .0005%. So the headline at times can be a little misleading.
Each of these indices will produce varying returns, and in a very well-diversified portfolio, asset returns will be based upon the overall allocation and percentages of the underlying holdings. We always encourage investors to rather focus on "Risk-Adjusted Returns", which refines an investment's return by measuring how much risk is involved in producing that return.
To help illustrate this point we often use the following analogy with clients; "If you could invest your money and get a 9% return but have the traditional risk of the stock market or put your money into a CD and get a guaranteed 8% return, which would you rather do?" Most people will answer, "I would rather get the 8% return and have no risk" Now obviously and to be clear, 8% CD's do not exist right now but the concept is the crucial point meaning how much incremental risk is worth taking for a potential higher return? It is our contention that for most people taking the appropriate level of risk to obtain their financial goals should always be the key driver in determining a proper asset allocation. For investors currently withdrawing from their investments for cash flow or required minimum distributions, there is another type of risk called, "sequence of returns risk". This specific risk revolves around the potential longer-term effects of withdrawal rates from a portfolio vs. when good or bad markets may occur during that timeframe. Those varying factors can have an extremely positive or negative effect on retirement success.
Below is the Q3 '17 price return performance of some of the major indices:
|US Treasury 3 Month T-Bill
|Barclay's US Aggregate Bond Index
|Barclay's Municipal Bond Index
|S&P 500 Index
|Dow Jones Industrial Average
|MSCI EAFE (International Equities)
|MSCI Emerging Markets
|Russell Mid Cap
|Russell 2000 Index (Small-Cap Stocks)
|Bloomberg Commodity Index
|Credit Suisse Long/Short Equity*
*as of 8/31/17
|DJ US Select REIT Index
The recent Equifax security breach and steps to consider
By now, most Americans know that a major security breach occurred at Equifax, the global consumer credit reporting company.
According to news reports and press releases from Equifax the security breach, or leak of personal data, affected as many as 143 million Americans (that is more than HALF of the adults in the US with a credit history). The data stolen in the Equifax hack is extremely valuable to cyber-thieves, as it contains the basics used as identification for U.S. consumers for credit verification online.
More sinister cyber-criminals could use that data to pin crimes on you, according to Eva Velasquez, CEO of the
Identity Theft Resource Center
, a nonprofit that assists fraud victims.
If someone gets a driver's license in your name and runs a red light or gets a speeding ticket, you're on the hook. The criminal's not going to pay it, and soon enough there could be a warrant out for your arrest. "This is not hypothetical," said Velasquez.
Of the roughly 17 million reported cases of identity theft last year, about 4% was of the "criminal" variety (assigning speeding tickets, warrants and other violations to fraud victims). It's a small, but not insignificant number. And that was before the massive Equifax hack.
"Data breaches involving Social Security numbers are not rare, but this is the largest ever recorded," said Velasquez. "This is a unique situation because of the quality of data that was stolen along with the scale of the breach."
There are numerous ways to react to this occurrence. But most important, there are certain steps within your control that can be taken to defend against (while not entirely preventing) an identity theft incident happening to you.
1- Assume your data was stolen. This means to take precautions as if your data was stolen.
2- Change ALL of your online passwords related to your banking, PaylPal, credit card and mortgage accounts (or all of your online passwords - period).
3- Regularly check your credit card statements and online banking accounts for any transactions, big or small, that you do not recognize. Just like checking your email, perhaps checking your financial accounts online needs to be done (almost as) frequently. Check it at least when your statement is available in order to inspect charges on your credit card statement so that if they are not yours, they can be disputed in time.
4- Ask your bank and credit card companies what security features they have available (like verbal passwords or monitoring services).
5- Try using a credit monitoring service, free if possible, other than the "Big 3" of Experian, Equifax and TransUnion. Check out reviews for them as often they are mixed (of note - people that do have issues that arise will usually take the time to post negative reviews, so that may skew the ratings). You can/should get your free credit report annually from each of the credit agencies. To order the report, there is one central website, toll-free telephone number, and mailing address through which you can order your annual report. To order, click on
or call (877) 322-8228.
Also, a good resource is the above-mentioned
Identity Theft Resource Center
Through the website there are tools to discover how to defend yourself against identity theft, what to do if a victim, other information about various scams and such, and a phone number to speak directly to someone for assistance: 888-400-5530. The ITRC is a non-profit, and is funded by credit protection companies, such as Experian and LifeLock, it is also done in conjunction with the U.S. Justice Department, and the Federal Trade Commission.
6- Putting a fraud alert is something else that should be considered, although it is only in effect for 90 days, and needs to then be renewed constantly. Freezing your credit is another option. You can freeze your credit through each of the "Big 3" (Equifax has recently announced a complementary service). Freezing comes with limitations such as:
- If you sign up for credit monitoring services before you freeze your credit, the monitoring will most likely not work as they then can not get access to your credit report
- Freezing your credit may or may not be free (it appears in New York it is free).
- UN-freezing your credit may be necessary to get a mortgage or a new credit card, and un-freezing usually has a cost (although currently no cost in New York).
7- Overall, be cautious in how you use online banking, PayPal, money transfer, etc. Change your passwords frequently and monitor your statements.
Online banking, electronic money transfers and accounts are modern conveniences that most of us will use more and more over time. The Equifax breach was not the first, remember:
- the Target debit and credit card breach (40 million accounts in 2013)?
- the Anthem Blue Cross/Blue Shield breach (80 million employee records in 2015)?
- the Ashley Madison breach (33 million user accounts in 2015)?
The latest security breach will undoubtedly not be the last. We go back to the beginning of this - you should either assume your data has been stolen, or soon will be, and make sure you monitor it, in one form or another your credit history and if you do see something amiss, take immediate action.
A benefit of working with a more intimate firm like Landmark Wealth Management is that we know all of our clients well, and are alerted to any transactions on the accounts. This means we serve as a second set of eyes watching over your accounts giving you extra peace of mind and security.
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.
- Monday, October 9: Columbus Day - Banks are closed, Markets are open.
- Wednesday, October 11: Federal Open Market Committee (FOMC) releases minutes of previous meeting at 2PM.
- Friday, October 27 at 8:30AM: GDP, 3rd quarter advance estimate.
- Tuesday October 31 - Wednesday, November 1: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Wednesday at 2PM.
- Wednesday, November 22: Federal Open Market Committee (FOMC) releases minutes of previous meeting at 2PM.
- Thursday, November 23: Thanksgiving Day - Markets are closed.
- Friday, November 24: NYSE early close.
- Wednesday, November 29 at 8:30AM: GDP, 2nd quarter preliminary estimate.
- Tuesday December 12 - Wednesday, December 13: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Wednesday at 2PM.
- Wednesday, December 13 at 2:30PM: Fed Chair Janet Yellen to hold her quarterly press conference to explain the FOMC's latest quarterly economic projections.
- Thursday, December 21 at 8:30AM: GDP, 3rd quarter final.
- Monday, December 25: Christmas Day - Markets are closed.
- Monday, January 1: New Year's Day - Markets are closed.
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: email@example.com; phone: 631-923-2487
This communication is from
Landmark Wealth Management, LLC
, a Securities and Exchange Commission Registered Investment Advisory firm. The information in this email is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax, legal, or investment advice from an independent professional / financial advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Information and use of materials contained in this email, including text and attachments, is confidential and is for the use of the intended recipient(s) only. If received in error, you are hereby notified that any dissemination, distribution, or copying of this communication, or any of its contents, is strictly prohibited. If you have received this communication in error, please reply to the sender and delete the original message and any copy of it from your systems. Be also advised that email communications are not secure. All e-mail sent to or from this address will be recorded by the Landmark Wealth Management, LLC email system and is subject to archival, monitoring, and inspection pursuant to securities regulations. Please direct any matters regarding this policy to firstname.lastname@example.org