The SD-PFS*Ticker
Volume 7, Issue 3
September 2016
Dear Clients and Friends:

It is impossible to listen to the news, read a paper or surf the web without being blasted with information about the upcoming elections and the major candidates. It seems everyone we know is anxious to have November 8 behind us so we can all get back to focusing on reality, and not the perceived doom and gloom linked to both parties. Below, David Brinkman has written an unbiased overview of the upcoming election and it's effect on investments. He has attempted to illustrate a few of the differences that could be coming our way.

We hope you'll find something useful in the information that follows. As always, please feel free to call us with any questions or comments at 412-261-3644.

Politics and Investments
...  David C. Brinkman, CPA, CFA®, CFP®

With the upcoming November 8 th Presidential election, we wanted to address investors' questions and concerns regarding the election's potential stock market impact. It is generally accepted that financial markets do not like 
uncertainty, such as who will be the new president, but historical data suggests its impact on markets is minimal at best. While short-term volatility may increase as markets assess the new president's political and economic agenda, capital markets inevitably find their long-run balance as the new president's plans come into focus.
The most frequently cited presidential election study is a 2003 article in the Journal of Finance by Pedro Santa-Clara, professor of finance at the Nova School of Business and Economics, and Rossen Valkanov, professor of finance at the Rady School of Management at UC San Diego. Their research concluded that large capitalization stocks during Democratic administrations experienced 9% higher returns since 1928. However, a 2004 paper by two Federal Reserve economists, Sean Campbell and Canlin Li, disputed these findings when accounting for swings in market volatility and including periods back to 1852, before the Depression when market volatility was lower. Upon making these volatility and timing corrections Campbell and Li found the Democrats higher return dropped to 4% from 9% and concluded that market returns do not track with which party wins presidential elections. Included at right is a link to "A Campaign for Your Future," from the Hartford Funds. We think this well-written piece provides good insight into the effects of politics on investments.
The key campaign investment-related proposals include tax bracket rates, estate and gift tax considerations, and limiting tax deductions, and are briefly summarized below. Also included at right is a link to an informative video providing additional color around each candidate's potential investment tax proposals.
Tax Code
Introduce new 43.6% tax bracket for incomes over $5M
Reduce the number of tax brackets to 12%, 25% or 33%, depending on income levels
Estate & Gift Tax
Raise estate tax rate and reduce estate exemption;
Eliminate step-up in basis at death
Eliminate the estate and gift tax
Tax Deductions
Limit the value of deductions
Investors should recognize that right now all of the above and other candidate proposals are just campaign speech and rhetoric at this point. The checks and balances of a potentially divided government between the President and Congress would likely limit what either President could implement.
We would encourage investors to take the longer view as it relates to the upcoming election and its potential near-term impact on their investment portfolio. Our expectation is that key economic factors, such as sales and earnings growth, dividend yield, current interest rates, GDP growth, unemployment levels, and investor sentiment will continue to be the driving forces behind future capital market returns and not politics. The true winners are the investors that stick to their long-term investment strategy and resist potential urges to flee to safer, short-term investments during the election cycle.
Jason Staley joins the SDWMA team
Jason joined our team last month (just after our team pictures were taken) and has more than 10 years of experience in the financial services industry. Jason comes to Pittsburgh from Chicago, and is a CFA ® charter holder, a m ember of the Chicago and Pittsburgh CFA Societies, and the CFA Institute.  Jason holds a B.A. in Intelligence Studies from the Ridge College of Intelligence Studies and Applied Sciences at Mercyhurst University. Jason's wife, Britt, is originally from the South Hills area, and we understand her family is thrilled to have her, Jason, and their daughter, Caroline, here in The 'Burgh. Please visit our website for Jason's full bio.

Don, Nancy, Beth, Dave, Derek, Jason, Karen, Nick, Theresa and Vicky

 Quotation Marks
"Let us not seek the Republican answer or the Democratic answer, but the right answer. Let us not seek to fix the blame for the past. Let us accept our own responsibility for the future."
... John F. Kennedy
SD Toolbox
  Links to tools, calculators and web apps we like.

Articles of Interest
A Campaign for Your Future (The Hartford Funds)

Tax Changes Video
What We're Reading
by Paula McLain

This is the story of Beryl Markham, one of the first woman horse trainers and an early aviator, who became the first woman to fly solo east to west across the Atlantic in 1936. A remarkable woman with a passion for life, the book opens with her closing in on the Canadian coastline, sleep deprived and experiencing mechanical problems. It quickly shifts to her life growing up in Africa. In a time when women were often ornaments, she challenged and succeeded in male-dominated pursuits. 
Cyber Security Tip
 Cyber Security Tip
October is Cyber Security Awareness Month! Remember, this is not only about your devices. Don't divulge personal information over the phone if you did not initiate the call. Don't respond to inquiries you may receive via posted mail. Cyber thieves will use many different methods to compromise your identity. But, speaking of devices, do change your passwords regularly. A strong password is the first line of defense.