D3 Business Update:

We completed 3 major efforts this month.

  1. We estimated the total dollar amount and tax consequence of capital gains being paid out by the investments our clients hold.
  2. For all family office clients we incorporated this capital gain information to do estimated taxes and develop tax saving strategies.
  3. For all of our clients we did tax loss harvesting trades in your taxable accounts to reduce the tax impact of capital gain distributions.


From a recognition standpoint:

  1. D3 Financial Counselors was named for the third year in a row, a 5 Star Wealth Manager in the November issue Chicago Magazine.
  2. For the second year in a row D3 was named as a top advisor to medical professionals in the November issue of Medical Economics.
  3. We are changing the tag line on our website to “We help smart people make smarter financial decisions.” To reinforce this theme, we gave all of our family office clients an annual subscription to consumer reports; hopefully, to help them make “smarter” purchase decisions.


Market Year in Review:

As we write this newsletter, the AGG (bond) index is up 5.9%, S&P 500 (U.S. stocks)  index is up 14.9%, and EAFE (international equity) index is down 4.8% year to date.  2014 was a year highlighted by an accelerating U.S. economy that saw:

  1. The unemployment was reduced from 6.7% in January to 5.8% in December 2014.  Non-farm payrolls increased by an estimated 2.65 million workers for all of 2014.
  2. The S&P 500 index and corporate earnings hit all-time highs in 2014.
  3. We saw dramatically increased domestic energy production and dramatically reduced energy prices.  Both of which are good for the U.S. consumers.
  4. The yield on 10 year treasury bonds fell from 3.00% at the beginning of 2014 to 2.27% at the end of 2014. We think this was primarily due to a flight to quality during increased periods of volatility, as well as increased demand from investors looking for high quality yield.


Also during 2014, the equity markets experienced 3 bouts of volatility:

  1. In January due to U.S. economic growth concerns as a result of the polar vortex.
  2. In October due to a resurgence of global growth concerns and fears of an Ebola outbreak.
  3. In December due to the dramatic drop in energy prices.


With 20/20 hindsight, it is easy to say that these three periods of increased volatility were not significant long term threats to the equity markets.  We would like to take this chance to remind you that, unless we see significant long term threat to markets, we will continue to stay the course during these times of volatility. This philosophy continued to reward our clients in 2014.


Investment Outlook/Strategy:

We continue to see a growing divergence in growth between the U.S. and other developed countries. The U.S. grew at a 5% rate in the 3rd quarter, while Europe, Japan and China all experienced slower 3rd quarter growth compared to their 2nd quarter growth.  Consequently, the Federal Reserve (Fed) ended its quantitative easing (bond buying program) and the European Central Bank is considering expanding its quantitative easing.


We expect to see the Fed begin to increase short term borrowing rates in in 2015.   Our expectation of higher interest rates and moderate U.S. equity performance has not changed since January of 2014.  Conversely, due to weak international growth, the markets are anticipating quantitative easing from the European Central Bank.


Because of the growth, and political uncertainty in many countries, equity valuations are much more attractive overseas than in the U.S.  Although growth concerns are present overseas, the prospect of consistent dividends and attractive valuations are reason to maintain our international weightings.


Investment Strategy:

We are still operating with a steady growth thesis.  Inflation is currently not an issue. Our product research continues to be focused on risk management.


We are currently reviewing our asset allocation models, and will make any necessary changes in January.  At this point in time, we will also reinvest any excess cash in client accounts due to the large capital gain distributions in December.  We will likely wait to see if there is any selling pressure on the markets due to traders recognizing capital gains in early January.


As a reminder, if any of your goals or cash flow needs have changed, please contact us.


Last Thoughts:

Thank you for your confidence in D3 Financial Counselors and share with your family and friends that “We help smart people make smarter financial decisions”.


May 2015 be as prosperous as 2014. Happy New Year!


Don Duncan MBA CPA CFA™ CFP®                    Patty Shipinski, Office Manager RP®

Adam Glassberg CFP® CIMA®                             Sharon Wallyn, Business Development

Ryan Pace CFP®                                                   Michael Meyers MBA CFP®