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Investment Newsletter - Q4 2016 

A brief overview of recent market activity and expectations follows below. Our current investment topic is: " Proper Asset Titling: What To Do With Your Home".  

The past quarter witnessed continued volatility, and it continued to show resiliency from the Brexit vote that occurred prior to the quarter, and the uncertainty of rate hikes and the upcoming election. For this quarter? We are assuredly looking for more of the same, in regards to uncertainty and possible volatility. We put in our perspective in more detail below

As always, remind yourself that investing is for the long term, and despite the news headlines of today, that time and patience are your best friends in having investing success.  Also, we have some tips to heighten awareness of financial scams that have arisen recently.  

You will find past investment articles, and recent stock market commentary and outlook, 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 . Likewise, i f you have any questions on this or anything else, feel free to reply back.

Investment Topic: Proper Asset Titling: What To Do With Your Home
For our investment topic, " Proper Asset Titling: What To Do With Your Home", we focus on giving an overview of ways that you may consider to protect one of your most valuable assets: your home. We touch upon Life Estates, and Revocable and Irrevocable Trusts. To learn more, 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 markets had a very tranquil summer, with the S&P 500 going 43 days without having a 1% move (up or down).  Looking back at Q3, 2016 the S&P 500 saw a solid 3.31% increase, International stocks were up 5.80% (still -0.85% YTD), Emerging Markets were up strongly 8.32% (13.77% YTD), Mid-Caps up 4.07% (8.77% YTD) and Small-Caps up 8.66% (10.19% YTD).  Laggards during the third quarter were REIT's -2.06%, Long-Short Equity -1.21%, and Commodities -3.94%.   In an eagerly awaited Fed Meeting in September, the Federal Reserve once again voted to keep interest rates the same, seemingly not wanting to get in the way of the upcoming election in November. 
Looking forward to Q4, History has shown that subdued periods often are followed by an increase in volatility and some weakness in returns.  The upcoming election in November followed by a potential interest rate increase in December, certainly has the potential to increase volatility as markets do not like uncertainty.
Below is a link to an excellent article from July's Money Magazine, which takes a good look at "The Election and Your Investments".
Some interesting points brought out in this article:
  • Performance assumptions about how certain sectors will perform based upon Presidential policy quite often go contrary to popular belief.
  • Visualize history, not your worst fears.  Reminding yourself that the S&P 500 has finished up in more than two-thirds of all calendar years since 1926, a period that's seen eight Republican and seven Democratic Presidents. 
  • Stay away from "Confirmation Bias", in which investors seek out only information that reinforces their worldview.  On March 6, 2009 Stanford Professor Michael Boskin argued that Obama's policies, marked by higher spending, taxes, and regulations were "killing the Dow".  If you were already fearful, you might have let this warning send you to the sidelines, and you would have missed out on more than 11,000 Dow points.
  • The President is not a dictator.  Just because he or she runs on a platform, it doesn't mean that agenda will be put in place.  The real economy may not cooperate.  A perfect example is President Obama's push for reducing greenhouse-gas emissions by curbing the country's reliance on fossil fuels.  Yet major advancements in technology to extract petroleum from shale formations led to a doubling of U.S. crude oil production during his watch.  Clean energy stocks have been down 47% under Obama as well. 
  • "It's the economy, stupid".  The average economic expansion over the last 150 years lasts about 39 months. The current upturn which began in June 2009, is now in its 88th month, making it the fourth longest since the Civil War.  This means that Trump or Clinton is likely to confront a recession early in his or her administration.   Bull markets have a finite life, about 4 ½ years on average.  This one is already more than seven years old.  Recessions are part of a normal business cycle, and market downturns are part of the normal investment cycle.  These factors are taken into account when we design and implement an investment strategy for our clients by utilizing a series of traditionally uncorrelated assets that often fare well in market downturns. 

The bottom line to all of this is any attempt to try and adjust portfolios around the election is a historical exercise in futility.  "Market-Timing" is a very common investor mistake and is impossible to get right on a consistent basis as it entails repeating a relatively precise exit and entrance strategy.  Additionally, such attempts can impair a portfolios trading costs and tax efficiencies.  History has shown that simply riding through these periods of uncertainty or heightened volatility are the best plans of action to realizing longer term goals and ensuring that you are not sitting on the sidelines during a potential future market rally.  Studies have shown that people simply place too much emphasis on recent events and disregard long-term realities.  

Major Market Indices


Below is the Q3 '16 and Year-to-Date (YTD) price return performance of some of the major indices:


Index Q3 2016 YTD
US Treasury 3 Month T-Bill
0.08% 0.22%
Barclay's US Aggregate Bond Index
Barclay's Municipal Bond Index
-1.32% 0.86%
S&P 500 Index
Dow Jones Industrial Average 2.11% 5.07%
MSCI EAFE (International Equities)  5.80% -0.85%
MSCI Emerging Markets 8.32% 13.77%
Russell Mid Cap 
4.07% 8.77%
Russell 2000 Index (Small-Cap Stocks)
8.66% 10.19%
Bloomberg Commodity Index
-3.94% 8.63%
Credit Suisse Long/Short Equity*
*this data is as of 8/31/16
-1.21% -3.36%
Morningstar REIT Index -2.06% 6.62%

Quick Links

Our current investment topic: 

Proper Asset Titling: What To Do With Your Home

Recent reports and/or articles of interest:

Stay Connected
In the spirit of it being the Fall season, here are some things to make sure you don't "fall" for:

While the internet and email is great for information and communication, it is also a way that unscrupulous people to use these tools and look to take advantage of people. Plus, the "old fashioned" phone calls are also being employed. At times, they can also use the technology of making it appear through caller ID that they are calling from someplace or someone else. 

The latest this year are phone calls from the IRS, warning that there is an issue and they need to be contacted right away as it is a last warning before legal action is taken. If you do fear that it might be even a slight chance it is legitimate, call the IRS directly at their main number: 800-829-1040. For more information on this feel free to read more on this url from the IRS:
Another scam that has been used more frequently of late, has been a next-level where the scammer is pretending to be a friend or relative in need of money due to an emergency. The scammer will look through public Facebook profiles, and will then impersonate someone that may be away or travelling, and that they have had an accident or incident of some kind needing help right away. 

These are only two scams out of a multitude. There are simply too many to list. So what to do? In essence, be doubtful, and wary especially if it is something that an answer is being looked for on the spot, such as needing to verify your Social Security number, bank information, or looking for an immediate payment of some sort. 

One way that the internet is very helpful is to do a search for what is happening, and read to see what comes up. One resource that can be used is a website called Snopes: It is a website that tries to be a fact checker, and especially during this political season, it may be looked at as partisan in one way or the other. However, it is also very handy as people use it to see if what is happening is possibly a scam. Put in a word or a term in their search engine, and it should give you an idea. 

In closing, be careful, and better safe than sorry!

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 10: Columbus Day - Banks are closed, Markets are open. 
  • Wednesday, October 12: Federal Open Market Committee (FOMC) releases minutes of 9/21 meeting at 2PM.
  • Friday, October 14: Janet Yellen to give speech at 12:30PM.
  • Friday, October 28 at 8:30AM: GDP, 3rd quarter 2016 (advance estimate). 

  • Tuesday November 1 - Wednesday, November 2: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Wednesday at 2PM. 
  • Friday, November 11: Veterans Day - Banks are closed, Markets are open. 
  • Wednesday, November 23: Federal Open Market Committee (FOMC) releases minutes of 11/2 meeting at 2PM.
  • Thursday, November 24: Thanksgiving - Markets are closed (and close early on Friday 11/24 at 1PM). 
  • Tuesday, November 29 at 8:30AM: GDP, 3rd quarter 2016 (preliminary estimate). 

  • Tuesday December 13 - Wednesday, December 14: The Federal Open Market Committee (FOMC) meets, and releases their announcement on Wednesday at 2PM. 
  • Wednesday, December 14 at 2:30PM: Fed Chair Janet Yellen to hold her quarterly press conference to explain the FOMC's latest quarterly economic projections. 
  • Thursday, December 22 at 8:30AM: Final GDP results, 3rd quarter 2016. 
  • Monday, December 26: Christmas Day (observed) - Markets are closed. 
  • Monday, January 2: New Year's Day (observed) - 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:; phone: 631-923-2487
Joe Favorito, CFP®; email:; phone: 631-930-5336

Direct office email: 

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