"Helping You Navigate the Course to Financial Freedom"
 January 2017
Looking Forward and Back

 
2016 has come and gone, and I for one am not sorry to see it go. Our memories can be (mercifully) short sometimes, but for those who remember last January, the markets started out in a very rocky fashion. Comparisons to the dramatic drops of 2008 were too numerous to count.
Let's be clear. As I've emphasized in past summaries, markets don't always trade in a quiet and orderly fashion. But just because the markets run into turbulence doesn't mean it's time to retreat into cash. Volatility has been and always will be part of the investment landscape. It's how we manage and mitigate risk that is critical.
I've also talked about the hazards of timing the market in the past. So at the risk of being redundant, let me explain again. In order to successfully time the market, you have to be right twice-getting out near the top and getting back in somewhere near the bottom.
I don't know anyone who can accomplish such a feat and do it consistently. 
Fast forward 12 months, and markets are calm and near all time highs, a complete reversal. This follows a year when the S&P 500 Index rose by 12%, including reinvested dividends, according to Morningstar, with much of that return coming in the last 2 months of the year. It's also the sixth year in eight that the closely watched index of large-company stocks rose by more than 10%.
Clients are already asking me what will happen in 2017.  I am cautiously optimistic that we will see stronger economic and wage growth, but what will actually unfold is anyone's guess, especially with a new, outspoken president in the Oval Office.
However, there is one thing I can promise you-we will continue to run into bouts of volatility.
But we are always here for you. If you see something in print or on the Internet that causes you concern, please don't hesitate to reach out to us. We are always happy to answer any questions or discuss any concerns you have.
Table 1: Key Index Returns
 
MTD %
YTD %
3-year* %
Dow Jones Industrial Average
+3.3
+13.4
+6.2
NASDAQ Composite
+1.1
+7.5
+9.0
S&P 500 Index
+1.8
+9.5
+6.7
Russell 2000 Index
+2.6
+19.5
+5.4
MSCI World ex-USA**
+3.2
-0.1
-4.2
MSCI Emerging Markets**
-0.1
+8.6
-4.9
Source: Wall Street Journal, MSCI.com
MTD returns: Nov. 30, 2016-Dec. 30, 2016
YTD returns: Dec. 31, 2015-Dec. 30, 2016
*Annualized
**in US dollars
 
Looking ahead
The year is starting in an upbeat fashion. The economy is moving ahead at a modest pace, interest rates remain at low levels, and the odds of a near term recession appear minimal.
Moreover, Thomson Reuters forecasts S&P 500 profit growth of 12.5% this year, and consumer and small business confidence is up sharply in wake of the election (Conference Board, National Federation of Independent Business).
However, the economic skies never fully clear, and I am always monitoring the landscape for looming clouds.
For starters, the forecast for corporate profits is predicated on, among other things, continued economic growth.
The late-year optimism that pushed the major indexes to new highs was aided by optimism that tax reform, regulatory relief, and infrastructure spending are on their way courtesy of a new political administration.
But what shape will tax reform and new spending take? Compromises will be needed and major new initiatives, if passed by the Republican Congress, could have long lead times.
A new recession and bear market are inevitable, as is an eventual economic recovery and new bull market - of that much I am certain.  It's in the timing of these things where my "crystal ball" gets fuzzy.  While changes to your personal situation may cause us to revisit your investment plan, a disciplined approach has historically borne the greatest dividends.  ##


In This Issue


2017 Tax Tips

Due to April 15th falling on a Saturday this year, as well as the celebration of Emancipation Day in Washington D.C. on Monday, April 17th, taxpayers nationwide will have until Tuesday, April 18th to file their returns.  

Form 1099's will be mailed beginning January 31 for non-mutual fund holding accounts.  Mailings will be phased based on account holdings - all 1099's should be mailed by March 15th.

Please retain your December 2016 statements!  Cost basis information not included on your 1099 can be found there.  Call us with any questions.


A New Year's Resolution - Guard Against Fraud

Financial fraud is a reality that we must constantly guard ourselves against. By nature, many of us want to trust and open up to the friendly and seemingly knowledgeable folks we meet. But it's always a good idea to exercise a reasonable amount of caution when discussing our financial affairs.
Seniors can be particularly susceptible to abuse. Many want to trust those that seem willing to provide assistance, and the proliferation of complex products can leave us all open to fraud by those exploiting both our trusting nature and that product complexity.
Even after the exposure of Bernie Madoff, I have seen or heard too many heart-wrenching stories of outright fraud, or financial products that were sold to an individual that simply didn't make sense, except to the dishonest person peddling their wares.
Never hesitate to reach out to us if you ever have any questions about our recommendations or why we believe they are best for your particular situation. Or for that matter, call us if you've come across something that sounds good but you just don't think you know enough about the product to ask the right questions. We are here to assist you in any way that we can.
10 ways to beef up your defensive line
 
Reviewed by the Federal Citizen Information Center and the U.S. General Services Administration, the Certified Financial Planner Board has put together this list of steps which you can implement immediately to alert you to potential fraud red flags and help protect you.
 
  1. Look beyond the designations on a business card.
There are over 170 known designations and certifications used by financial professionals. Some require rigorous testing, such as the CFP® or CFA designations.  Others are little more than marketing tools, with no real education needed-much less an exam.
  1. If you don't understand what is being said, don't buy it.
This one is pretty simple, but we can still fall victim to promises that are really too good to be true. I strive to keep an open line of communications with you. Always feel free to pick up the phone and call me if you come across something that sounds good on the surface but leaves you with questions.
 
  1. There's no such thing as a free lunch - literally.
You may get a tasty meal, but be wary of the pressure to make an immediate buying decision. There's nothing wrong with sleeping on it or getting a second opinion.  Be skeptical of anyone who tries to persuade you otherwise.
 
  1. Just because a so-called expert recommends it doesn't mean it's right for you.
I have repeatedly emphasized that your specific situation and circumstances dictate the best course. Think about it-an aggressive stock fund might be just what's needed for a 28-year-old who is saving for retirement. That same fund might not work for someone who is 90 years old and needs income.  Which is why we don't use "cookie cutter" allocations or a fixed menu of investments for our clients.
 
  1. It's a tried and true axiom. If it sounds too good to be true, it's probably not legitimate or safe.
It's human nature to want to find the magic bullet that easily solves a problem. But be very wary of promises that seem too good to be true - they almost always are.
 
  1. Don't confuse familiarity with trust.
We know plenty of good people in our community, but please do your homework and check anyone out before entrusting your finances to them. 
 
  1. Read anything you sign.
Make sure you read account applications or contracts before signing them.
 
  1. Make sure the money others are making isn't yours.
We've all heard of the classic Ponzi scheme. Be very careful that you don't throw your hard-earned money into a scam.  Our business model, for example, has three pairs of eyes looking at your funds - ours, our independent broker/dealer (SFA), and our custodian (Pershing).  Be wary of entities that manage, hold, AND report on your investments all by themselves.
 
  1. Get the full story.
What is the cost of the investment? Who will benefit from your decision? How is compensation determined, and paid?
 
  1. You have rights as a homeowner. Know them.
Know your rights as a homeowner. For example, if you are considering tapping home equity via a reverse mortgage, mortgage refinance, or home equity loan for investment purposes, let's talk and discuss any possible pitfalls.
 
These crimes are all too common today-please take these steps to heart and protect yourself.  ##

Securities and advisory services offered through The Strategic Financial Alliance, Inc. (SFA), Member FINRA, SIPC. Supervising office at 678-954-4000. Financial planning offered by Compass Wealth Management LLC. Leslie Beck and Martin Siesta are registered representatives and investment advisor representatives of SFA, which is otherwise unaffiliated with Compass Wealth Management. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Please note that individual situations can vary.  Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.  For more information visit www.compasswealthmanagement.net