January  2019
  
MONTH-2-MONTH 
 
  
In This Issue
Welcome to MONTH-2-MONTH, an e-Newsletter from Alexander Financial Planning, Inc. MONTH-2-MONTH is intended to provide you with updates on AFP and timely financial planning and investment information on a variety of topics. You are welcome to forward this e-mail on to others.
AFP UPDATE


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Mid Winter Ups and Downs

The winter flu season is in full swing and the next polar vortex has been forecast to hit mid week. If you live in a cold climate, take steps to keep warm and have a contingency plan for power outages that can occur in extreme cold.  Be  sure to give your vehicle some TLC too making sure your gas and washer fluid tanks are topped off. If thinking about this brings on a bout of seasonal affective disorder (SAD) and you have the means to escape, head over to the travel agency and plan a get-away somewhere warm. If you don't mind the cold, wait for the subzero to subside before heading out for some fresh air. Metro parks offer many options for winter hiking. 

Happening at AFP:

January always keeps us busy with year end reporting to be completed. The majority of work on our new website is done and we will be making final edits before launch. We expect this to occur within the next few weeks and will keep you posted. 

On a Personal Note:
 
Teri's World - Teri spent two weeks in January in Rwanda. It is a beautiful country. She was one of 12 individuals representing US Together, a non-profit organization in Columbus that works with refugees and facilitates professional international exchanges. It was quite an experience learning about the history, culture and healing that has taken place since the genocide in 1994. They have a lot to be proud of. The group toured the country and spent time with 3 non-profit organizations that focus on micro-loans for women starting businesses, another helping street children and the last with refugees fleeing persecution from neighboring countries.  Along the way she did go gorilla tracking with another person in the group and had a gorilla fall on her head. All is good! She also visited several schools and had a following of children where ever she went. 

















There were several notable realizations about this country, but one take away is that Rwanda does not allow plastic bags to be used or brought into the country. This is the same for Kenya and South Africa. It has made her very mindful of how much plastic we use in our day to day lives in the U.S. Maybe we have something to learn from third world countries! 

Wh at a bou t Bob? - Bob & Christine had a great time hosting the Franz Christmas dinner earlier this month. A rousing game of Tripoley started the evening off. Tripoley is a card game that Bob and his 3 brothers played often growing up but haven't played for years. 

Bob and Christine also had a blast on the Trolley ride to see Christmas lights around Columbus and they highly recommend it!!! 

After such a festive start to the month things have quieted down and now they're just hoping spring comes soon!!!

Tracey's Time  T he Guthrie Family is looking forward to a spring break trip to the Traverse City MI area. The plan is a late winter ski week and we are hoping the conditions will be favorable. If not, we will find other things to do. If you've been to this area and have any tips, please share.  The family attended Cirque Du Soleil's "Crystal" last Thursday evening. Tracey ranks this one second only to her personal favorite "Kooza". 
  

POINTS OF REFERENCE
(Current Economic and Investment Information)


  • S&P 500 - The S&P 500 was down 9.0%(total return) in December 2018, the 7th worst monthly performance for the index in the last 30 years, i.e., 360 months.  In the 12 months following the 6 separate months that were worse than last December (i.e., worse than a 9.0% loss), the index was up 5 of 6 times and gained an average of +22.4% (total return).  The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation.  It is a market value weighted index with each stock's weight in the index proportionate to its market value (source: BTN Research).  
     
  • STOCK MARKET- The US stock market was worth $27.4 trillion as of 12/31/18.  The S&P 500 makes up 81% of the total US stock market capitalization as of 12/31/18, equal to $22.1 trillion (source: BTN Research). 
     
  • GAS PRICES - The average price of gasoline nationwide was $2.24 a gallon as of Friday 1/18/19.  The average price of gasoline nationwide in 1969 (i.e., 50 years ago) was 35 cents.  After adjusting for 50 years of inflation, the 35-cent price in 1969 is equivalent to $2.48 in 2019 dollars (source: AAA, Department of Labor). 
     
  • GOVERNMENT INTEREST RATE- The average interest rate paid by the government on its interest-bearing debt was 2.560% as of 12/31/18, more than one percentage point less than the 3.866% paid as of 12/31/08, i.e., 10 years ago (source: Treasury Department). 
     
  • STOCK PREDICTIONS -In the 12/31/17 issue of USA Today, writer Adam Shell wrote of "18 stocks to Consider for 2018: All of the 18 names are seen rising +25% or more, according to analysts."  Instead 17 of the 18 stocks lost money in 2018, and an equal investment in all 18 stocks fell 26.1%for the year (source: BTN Research).   
     
  • HOME SALES -The median sales price of existing homes sold in the United States in December 2018 was $253,600, down from an all-time peak median sales price of $273,800 from June 2018.  The low point for this statistic during the 200812 real estate crisis: $154,600 in January 2012 (source: National Association of Realtors).  
     
  • JOBS-Iowa had the lowest unemployment rate(2.4%) in the nation as of 12/31/18.  Texas added +391,800 jobs in 2018 (to 12.7 million), more than 3 times the +121,900 jobs added in New York(source: Department of Labor).  
     
  • UNEMPLOYMENT -Initial claims for unemployment benefits were just 199,000(for the week ending Saturday 1/19/19), the lowest level in the nation since 11/15/69.  By comparison, at the depths of the real estate crisis that began in 2008, first time claims for jobless benefits reached 665,000 on 3/28/09 (source: Department of Labor). 
     
TIMELY TOPICS

The 10 Best States for Clients to Retire in 2019
by Diana Britton
Wealth Management.com


These states are the best places for your clients to retire, based on criteria from WalletHub.

As clients come up on retirement, they may come to you for advice on where the best places are to settle into  old age. Retirees are looking for the best combination of tax-friendliness, low cost of living, sunny days,
cultural attractions and access to quality health care.

Some choices, such as Florida, may be more obvious. The state ranks high for affordability and quality of life.  But other states that folks may dream of retiring to, such as California and Hawaii, rank low on the list, with
the highest cost of living in the country.  Other choices, such as South Dakota or Wyoming, may surprise you. They have a lower cost of living, better  taxes and low crime rates. 

WalletHub recently ranked the 50 states on retirement-friendliness across affordability, quality of life and  health care. States were scored across 46 metrics, graded on a 100-point scale and weighted. Click here to learn more details.  


1. Florida
Ranking for Tax-Friendliness on Pensions and Social Security Income: 1
Annual Cost of Adult Day Health Care: $17,550
Ranking for Mildness of Weather: 12
Golf Courses per Capita: 0.3413
Share of Residents Who Do Favors for Their Neighbors (proxy for Neighborhood Friendliness): 57.6%
Life Expectancy: 79.48

2. South Dakota
Ranking for Tax-Friendliness on Pensions and Social Security Income: 1
Annual Cost of Adult Day Health Care: $18,460
Ranking for Mildness of Weather: 22
Golf Courses per Capita: 0.1492
Share of Residents Who Do Favors for Their Neighbors (proxy for Neighborhood Friendliness): 72.2%
Life Expectancy: 79.57

3. Colorado
Ranking for Tax-Friendliness on Pensions and Social Security Income: 29
Annual Cost of Adult Day Health Care: $19,500
Ranking for Mildness of Weather: 14
Golf Courses per Capita: 0.133
Share of Residents Who Do Favors for Their Neighbors (proxy for Neighborhood Friendliness): 68.7%
Life Expectancy: 80.21

4. New Hampshire
Ranking for Tax-Friendliness on Pensions and Social Security Income: 29
Annual Cost of Adult Day Health Care: $20,410
Ranking for Mildness of Weather: 34
Golf Courses per Capita: 0.1066
Share of Residents Who Do Favors for Their Neighbors (proxy for Neighborhood Friendliness): 67%
Life Expectancy: 80.15

5. Virginia
Ranking for Tax-Friendliness on Pensions and Social Security Income: 10
Annual Cost of Adult Day Health Care: $18,200
Ranking for Mildness of Weather: 44
Golf Courses per Capita: 0.1476
Share of Residents Who Do Favors for Their Neighbors (proxy for Neighborhood Friendliness): 59.7%
Life Expectancy: 79.18

6. Utah
Ranking for Tax-Friendliness on Pensions and Social Security Income: 41
Annual Cost of Adult Day Health Care: $12,090
Ranking for Mildness of Weather: 7
Golf Courses per Capita: 0.0815
Share of Residents Who Do Favors for Their Neighbors (proxy for Neighborhood Friendliness): 77.9%
Life Expectancy: 79.91

7. Iowa
Ranking for Tax-Friendliness on Pensions and Social Security Income: 10
Annual Cost of Adult Day Health Care: $16,237
Ranking for Mildness of Weather: 26
Golf Courses per Capita: 0.2531
Share of Residents Who Do Favors for Their Neighbors (proxy for Neighborhood Friendliness): 71.6%
Life Expectancy: 79.73

8. Wyoming
Ranking for Tax-Friendliness on Pensions and Social Security Income: 1
Annual Cost of Adult Day Health Care: $28,990
Ranking for Mildness of Weather: 11
Golf Courses per Capita: 0.093
Share of Residents Who Do Favors for Their Neighbors (proxy for Neighborhood Friendliness): 64.4%
Life Expectancy: 78.62

9. Pennsylvania
Ranking for Tax-Friendliness on Pensions and Social Security Income: 1
Annual Cost of Adult Day Health Care: $16,900
Ranking for Mildness of Weather: 28
Golf Courses per Capita: 0.229
Share of Residents Who Do Favors for Their Neighbors (proxy for Neighborhood Friendliness): 69.8%
Life Expectancy: 78.76

10. Minnesota
Ranking for Tax-Friendliness on Pensions and Social Security Income: 47
Annual Cost of Adult Day Health Care: $21,580
Ranking for Mildness of Weather: 39
Golf Courses per Capita: 0.2492
Share of Residents Who Do Favors for Their Neighbors (proxy for Neighborhood Friendliness): 70%
Life Expectancy: 80.9



Stocks Start Off 2019 With a Bang
BY Michael Wursthorn and Akane Otani
The Wall Street Journal


Stocks around the world are rallying at the fastest pace in months, the latest sign that the fears investors grappled with late last year have largely subsided. But worries remain that markets still aren't on solid ground.

The Dow Jones Industrial Average has risen for five straight weeks, its longest winning streak since August. It isn't alone: Stock indexes from Europe to Brazil to Shanghai are on track to close out January with their biggest monthly gains in at least a year, a sharp rebound after financial markets took a drubbing at the end of 2018.

Some analysts have credited the rally to bets that the Federal Reserve will slow its pace of interest-rate increases and hopes that the U.S. and China will make progress on trade negotiations. All told, global stocks have reclaimed more than $3 trillion in value after shedding $6.8 trillion last year, according to S&P Dow Jones Indices.

Yet beneath the rally, signs of caution have emerged. Those signs are unsettling investors who believe the gains belie a market that remains on fragile footing.

The last time many global stock indexes rose this quickly was in January 2018-when markets around the world rallied, only to tumble in February as a number of volatility-tied bets collapsed.

Global Rebound
Stock indexes from New York to Brazil are having their best month since early 2018, reflecting growing optimism among investors about the course of monetary policy and trade.



Adding to the skepticism, many investors believe the recent rebound has been spurred in large part by buyers returning to the market for discounted shares after December's fire sale-not by conviction that the global economy will find fresh momentum this year. Data last week showed that China's economy, the world's second largest, grew at the slowest pace in nearly three decades in 2018. Manufacturing activity has cooled across the eurozone, while the once-hot U.S. housing market has faltered as high prices squeeze buyers.

Investors will get a fresh look at the health of U.S. companies this week when a number of technology giants, including Apple Inc., Facebook Inc. and Amazon.com Inc., report quarterly results. Lukewarm forecasts from the trio in the fall raised fears of a broader downshift in growth. The S&P 500 is up 6.3% for the year, although it remains off 9.1% from its September record.

"The market will probably take another leg down by the second quarter," said Randy Swan, founder of Swan Global Investments, a $4 billion money manager. "We've had this natural reaction after a large selloff, but the economy is slowing down and earnings are weakening."

There are no signs yet that the U.S. is on the precipice of a recession. The domestic labor market remains robust, with a gauge of layoffs falling to its lowest level since 1969. On average, jobless claims have to be rising for more than a year before signaling that a recession is on the horizon, said Steven Chiavarone, a portfolio manager at Federated Investors.

Meantime, wages last month posted their biggest full-year gain in a decade. That sign of a healthy economy suggests to some investors that the bull market has more room to run. And the move Friday to reopen the federal government for three weeks at least temporarily shelved an issue that worried investors about the impact on the economy.

But analysts noted that stocks have historically taken years, not weeks, to fully reverse declines of the scale that they suffered last year.

The S&P 500 came to the brink of falling 20% from its record-the definition of a bear-market-in December. When the broad index has fallen more than 20% in the past it has taken an average of 63 months for it to hit a new high, according to Wells Fargo Investment Institute, an investment advisory owned by the bank.

For the market to defy history, investors would have to feel confident that a number of remaining worries, ranging from trade to slowing global growth to decelerating earnings, are on the retreat, according to the advisory group. It added it believes investors should maintain, rather than add to, their equity allocations in their portfolios.

So far, few investors believe these challenges are going away. In fact, some analysts and investors said the stock market's about-face is surprising, given that many of the problems that contributed to the year-end rout continue to hang over the market.

The Fed has left its rate path open to changes if the economy shifts unexpectedly. The U.S. and China have yet to reach a resolution in their trade fight. And earnings are expected to grow more slowly this year than last, although so far in the fourth-quarter reporting season companies have largely been beating analysts' estimates.

Stock volatility has cooled a bit since December, when thinly staffed trading desks and downbeat economic news combined to produce large swings. Many analysts believe the moves were exacerbated by computer-driven trading, which they said likely automatically issued sell orders as stock declines deepened.

Despite the January reprieve, many analysts believe markets could face further waves of volatility in coming months.

Morgan Stanley analysts say the S&P 500 could still test its December lows, adding that they don't think market valuations and sentiment have dropped far enough to justify a sustained rebound.

Countries around the world also face an unprecedented level of policy uncertainty. The Economic Policy Uncertainty Index, a gross domestic product-weighted average of uncertainty levels in 20 countries, hit its highest level ever last month. Factors such as the U.S. government shutdown and the U.K.'s wrangling over a Brexit deal could deter investors from re-entering the market, Goldman Sachs analysts said.

Even those who remain relatively optimistic expect a bumpy road ahead for markets.

"It'll likely be a volatile year with unquantifiable concerns," said Ron Temple, head of U.S. equities and co-head of multiasset investing at Lazard Asset Management. He said clients should take a second look at their holdings.

The risk of the U.S. slipping into recession in 2019 still looks quite low, he said. But "this is when you want high-quality companies, great returns on capital and strong balance sheets-in case I'm wrong."

QUOTE

"We must accept finite disappointment, but never lose infinite hope. "

-Martin Luther King Jr. 

Enhanced photo courtesy of anonymous client.
 
Alexander Financial Planning, Inc. | | tguthrie@afp-advisors.com