Year In Review & 2016 Outlook
Dear Jason,

During 2015, the markets experienced a number of headlines.  The markets set all-time highs in the first half of the year.  However, uncertainty in China and an expected rise in rates here in the U.S. increased volatility causing the markets to experience the first technical correction (10% or more) in four years.  Markets bounced back somewhat in the fourth quarter, allowing the Fed to raise rates in mid-December.  This marked the first Federal Reserve rate increase in nine years.    Here’s how the markets finished for 2015:
ABLE Account Update

"The IRS recently issued changes to the proposed rules for how states can offer and operate these 529 accounts, known by the acronym ABLE (Achieving a Better Life Experience.) One of the biggest benefits of the ABLE account is that the money held there is exempt from the $2,000 limit on personal assets for individuals who wish to qualify for public benefits."

"It will likely be the first or second quarter of 2016 before any state is making the accounts available, according to Andrea Feirstein, president of AKF Consulting. However, two states, Nebraska and Ohio have already begun soliciting possible service providers. Additionally, more than 40 states have initiated or approved legislation to facilitate the accounts."

Passive Investing & False Claims

"Why do indexing adherents...claim that anything other than indexing is inherently bad, a morally suspect act of folly? Why do so many smart, otherwise honest people perpetuate a position so overstated that it is effectively a lie? Leaders like Bogle chooses to perpetuate an overstatement in order to produce a better investor outcome. Indexing...is not a panacea for all investment problems."

American Funds Feeling the Love

"American Funds... has been building a case, through  white papers and wholesalers, that  the way its managers run money can  and does beat the market.  The company measured its funds'  one-, three-, five-, 10-, 20- and 30-year  performance over each month  between 1934 and 2013. In most  cases, those funds beat their benchmark  indexes, the firm said, including  97% over 30 years."

"The appeal of American Funds is based on its consistent performance, low cost and focus on selling mainly through advisers and professional investors...'They're kind of like Coca Cola,' said Mr. Bigler, whose firm manages $422 million. 'You know exactly what you're going to get. When you buy a coke, it fizzes. It tastes right.'"

Click the link for access to the following article:  Love, American Style

Click here to access the American Funds study on Passive vs. Active Management:  The Active Advantage
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