Annual Client Appreciation Dinner: For all those who attended, thank you for helping D3 celebrate another successful year. In March of 2016, D3 will be celebrating 19 years of serving you, our clients. As always, thank you for your confidence in D3.
Estate Document Review: For our Affordable Family Office (AFO) clients, we will be emailing you this week our estate plan review summaries. Our objective is to review your current documents and identify potential gaps. If anyone wants to review their estate planning, please call Don.
Estimated Tax Review: Again, for our AFO clients, we will be completing our analysis of your taxes taking into account estimated mutual fund distributions. We look to have that project completed by December 15th.
D3 Breaking News:
Please forward this link to anyone you believe could benefit from the help of a fee-only, independent financial planner: Five Star Announcement
Unfortunately we are in a time period that will be dominated by geo-political risk. Internationally the focus will be on how to fight terrorism, especially ISIS. Domestically the focus will be on who the next President will be and what impact he or she will have on the economy. So, unfortunately, we anticipate that until November 2016, economic fundamentals may not carry as much weight as current headlines.
Ignoring headlines and looking at the markets from a fundamental perspective, we can sum them up as follows:
- The U.S. stock market, based on historic price/earnings metrics, looks to be fairly valued.
- The U.S. bond market, based on historic inflation adjusted interest rates, looks expensive.
- International markets, based on historic price/earnings and dividend yield metrics, look inexpensive.
- Emerging markets, based on historic price/earnings metrics, look cheap.
We look at historic relationships to give us a perspective on relative valuations. We also incorporate new information, such as economic forecasts and trends. One trend that cannot be ignored, because it will have a significant impact on historic relationships, is the fact that 10,000 baby boomers in the United States are retiring every day. The reason why this has such a significant impact is because the economic behavior of retirees is significantly different from the economic behavior of people still working (I am speaking from direct experience). We have been and will continue to incorporate this into our investment thesis.
During December we will be reviewing the asset allocation models we use to manage your portfolios. We are still confident that slow and steady economic growth in the U.S. will continue and will not generate a sudden rise in interest rates. This should continue to make the U.S. an attractive place to invest. When interest rates do rise (even if just by a small amount) this will continue to strengthen the dollar and potentially increase the attractiveness of U.S. assets.
The biggest short term risk to our investment perspective is volatility caused by geo-political events. As always, a good financial plan should incorporate this from a cash flow perspective.
By focusing our efforts on investment reviews and the financial planning process, we can overcome volatility in the short term. We want to make sure your portfolios are designed to achieve their long term objectives. If anyone is concerned about how this volatility affects your plan or if your goals or cash flow needs change, please give us a call.
We hope everyone had a great Thanksgiving and we are thankful for your confidence in our ability to serve your financial planning and investment needs. We look forward to the December holidays.