The year 2011 could be remembered for the unsettling volatility seen in the S&P 500 index, a measure of large company US stocks. January offered a promising start with a 2% gain and by April, the S&P was up 8%. Wobbling followed during May and June, and volatility really began in mid-July with the index diving 17% in just 11 days. In August, the index rose or fell 4%+ on 5 of 6 consecutive days.
Stocks hit their bottom in October (down 13% at that point) as the WALL STREET JOURNAL ran an article citing a number of professional advisors who recently sold all their stocks and did not expect to repurchase them anytime soon. This article appeared on the second day of a powerful rally in stock prices, with the market moving into positive territory again in 19 days.
In the end, stock investors around the world saw disappointing 2011 returns with 37 of 45 tracked markets ending in negative territory. The US was the only major market with a positive return, with the S&P 500 ending 2011 up 2.1%.
With 2011 fresh in our minds, it’s easy to remember the volatility and below average investment returns. A thought is “are these the right things to remember for your investment management over the years?” After all, volatility and below average return years do happen and will, no doubt, happen again.
I suggest the right thing to remember now is that, while it’s emotionally difficult to ignore market volatility, doing so by remaining invested per your diversified investment strategy will serve you very well. Some of the coming years will be difficult (as was 2011), others good or great; however, over those years, you can expect better investment returns than those who give up during volatile times.
William M. Thompson, CFP®
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Thursday, January 19, 2012
Wednesday, January 4, 2012
New 1099 Schwab Reports
Happy New Year! We hope you and your family had a wonderful holiday season.
With the New Year comes along new reporting from Schwab for taxable accounts. The purpose of this posting is to address some new IRS tax reporting requirements and to explain how the changes might affect you.
The goal of the Emergency Economic Stabilization Act of 2008 is to make sure that investors accurately report gains and losses of securities in their annual tax filings. This year will be the first time that custodians like Schwab will report cost basis information to the IRS, as well as to you, the taxpayer.
For tax year 2011, Schwab will report cost basis for equities acquired on or after January 1, 2011. Next year Schwab will report cost basis on mutual funds, ETFs, and dividend reinvestment plan (DRIP) shares acquired on or after January 1, 2012.
To help facilitate the reporting process and make your tax preparation easier, Schwab has redesigned its Form 1099 Composite to include cost basis and gain/loss information. Now the Year-End Summary, Form 1099-B, and other 1099 forms you might receive will be consolidated into one report, which will indicate cost basis for both covered and uncovered securities. Please note that cost basis will be reported to the IRS only for covered securities, but Schwab is providing cost basis on uncovered securities as well, as a courtesy, because you are still required to report this information to the IRS.
The Form 1099 Composite has a new layout to allow for additional data fields. The date in the Year-End Summary (formerly Account Summary) is now grouped by Form 1040 schedules. The summary includes a table of contents to help you locate information you need.
New Information on Form 1099-B
• Cost basis
• Date the security was acquired
• Holding periods –assets are grouped by short-term and long-term to make it
easier to identify holding periods
• Wash sale information
• An indication if the cost basis provided is not covered by the legislation
New Information in Year-End Summary
• Realized gain/loss calculations
• Summary of management fees
With all of your tax information sent in one report, you’ll no longer receive a separate Year-End Gain/Loss Report from Schwab.
These reports will be arriving from Schwab starting in early February and will be mailed out in phases.
If you have any questions, please feel free to contact our office.
With the New Year comes along new reporting from Schwab for taxable accounts. The purpose of this posting is to address some new IRS tax reporting requirements and to explain how the changes might affect you.
The goal of the Emergency Economic Stabilization Act of 2008 is to make sure that investors accurately report gains and losses of securities in their annual tax filings. This year will be the first time that custodians like Schwab will report cost basis information to the IRS, as well as to you, the taxpayer.
For tax year 2011, Schwab will report cost basis for equities acquired on or after January 1, 2011. Next year Schwab will report cost basis on mutual funds, ETFs, and dividend reinvestment plan (DRIP) shares acquired on or after January 1, 2012.
To help facilitate the reporting process and make your tax preparation easier, Schwab has redesigned its Form 1099 Composite to include cost basis and gain/loss information. Now the Year-End Summary, Form 1099-B, and other 1099 forms you might receive will be consolidated into one report, which will indicate cost basis for both covered and uncovered securities. Please note that cost basis will be reported to the IRS only for covered securities, but Schwab is providing cost basis on uncovered securities as well, as a courtesy, because you are still required to report this information to the IRS.
The Form 1099 Composite has a new layout to allow for additional data fields. The date in the Year-End Summary (formerly Account Summary) is now grouped by Form 1040 schedules. The summary includes a table of contents to help you locate information you need.
New Information on Form 1099-B
• Cost basis
• Date the security was acquired
• Holding periods –assets are grouped by short-term and long-term to make it
easier to identify holding periods
• Wash sale information
• An indication if the cost basis provided is not covered by the legislation
New Information in Year-End Summary
• Realized gain/loss calculations
• Summary of management fees
With all of your tax information sent in one report, you’ll no longer receive a separate Year-End Gain/Loss Report from Schwab.
These reports will be arriving from Schwab starting in early February and will be mailed out in phases.
If you have any questions, please feel free to contact our office.
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