D3 Business Update:
Taxes: We are seeing the light at the end of the tunnel for the tax work that we do for our family office clients. Unless we are waiting for information from you, we should have all returns back to us by April 10th. As a reminder to everyone, the IRS requires documentation for all tax deductible expenses; i.e., receipts for all charitable contributions, copies of checks paid for estimated taxes and property taxes, etc.
We also wanted to share with you some of the background on Greg Binder, the CPA who reviews our work and who signs your tax returns. Greg is an Eagle Scout with 2 palms and has worked at as tax accountant at Unocal, Exelon and HSBC plc. We are lucky to have Greg, with so much tax experience reviewing our work and your tax returns.
Plan Update Season: After April 17th, we will move into plan update season for our family office clients. This process helps us determine if your investments are structured appropriately to meet the goals of your financial plan; as well as, helping you determine if you are comfortable with the amount of risk in your portfolio. We will email or mail to our family office clients a questionnaire that helps us update the changes in your lives, from a financial perspective, so that we can incorporate those changes into your financial plan. If you are not a family office client and want your financial plan updated, please call Don.
June 2nd at the Morton Arboretum: We will again sponsor our Bring Spring event at the Morton Arboretum. All clients and their friends are invited to visit the world class Arboretum as guests of D3 Financial Counselors. We will again be providing lunch. It is our hope that you will bring a family member or friend, whom you think might benefit from our services. This is not a sales pitch, just an introduction and another way of saying thank you. Please bring a friend.
D3 Investment Insight:
2012 first quarter performance for the S&P 500 was the best since 1998 (up 12.59%). The Barclays aggregate bond market index was up .87% for the first quarter and the Morgan Stanley EAFE international index was up 9.97%. Small Cap Growth was the best performing asset class and Financials were the best performing sector. Equities were the place to be for the first quarter of 2012.
Don, returned from the Barron’s Winner Circle, Top Independent Advisor Summit with the following consensus economic analysis: the U.S. economy has turned and is in a self-sustaining, although fragile growth phase. This year is different from last year because liquidity at European financial institutions has not be an issue, there also hasn’t been a disruptive event like the Japanese tsunami and the U.S. doesn’t face another debt ceiling debate until after the November election. The biggest wild card that could throw a monkey wrench into U.S. expansion is a flare up of the Iran, Israel conflict.
We continue to be more confident in our expectation of slow and slowly accelerating economic growth. This economic evidence reinforces the portfolio asset allocation changes that we made this past February.
D3 Investment Outlook:
Another observation from the Barron’s Conference, is an election handicapper’s projection that Barrack Obama has a 66% chance of winning a reelection. The biggest negatives to Romney are that he makes populist statements inferring that we should have a trade war with China and that Ben Bernanke should be removed as head of the Federal Reserve Board. Most economists and business people would disagree with those two statements.
We read a recent report from the New York Federal Reserve Bank that applied historic economic expansion experience to our current economic expansion. The conclusion was that the unemployment rate could decline faster than currently forecasted because the employment reports focus primarily on big businesses to the exclusion of small businesses. In an economic expansion, small businesses create more jobs than big businesses. A surprise on the upside may be that the economy expands at a faster annual rate than 2.5%.
Generally a growing economy leads to rising interest rates. This may not be the case this time around because of the excess supply of labor and the baby boomer demand for fixed income securities for retirement funding purposes. It remains clear that the Federal Reserve will not let interest rates rise until we see actual inflation, or the unemployment rate drops below 7%.
D3 Investment Strategy:
As portfolio managers focused on risk, we forecast the most likely scenario for the markets, but also look at those catalysts that could potentially derail our expectations. This is the primary reason we always recommend a portfolio of diversified asset class investments. We continue to focus on diversifying the list of investment products for your portfolios.
Look for our financial planning questionnaire. By updating your financial plan we will be able to determine your investments Required Rate of Return (RRR), so that we can help you achieve your goals with the least amount of risk possible.
We are required to offer you the most recent ADV on file with our regulator. Please call Patty if you would like us to email you our most recent form ADV.
Thank you for your business.
Don Duncan MBA CPA CFA™ CFP® Neil LeFort, MBA J.D. CPA
Michael Meyers MBA CFP® Patty Shipinski Office Manager
Adam Glassberg CFP® Ryan Pace Jr. Financial Planner