Portfolio Advisors, Inc. Blog

What Will You Remember From 2011?

2012-01-19T14:29:00.000-08:00

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®

New 1099 Schwab Reports

2012-01-04T08:56:00.000-08:00

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.

A Perspective for the New Year

2011-12-30T15:14:00.000-08:00

I was listening to a news commentary on PBS last night and the discussion revolved around the state of the economy, 8 to 9% unemployment and the housing and financial mess that we continue to face. All agreed that these are indeed tough times. However, one of the guests reminded the others that tough times are not new and that over time we have always worked our way through seemingly impossible situations. She took the conversation back to the year of 1980 when a guy by the name of Paul Volcker was in charge of the Fed. In an attempt to control rampant inflation, Mr. Volcker hiked the prime interest rate to a staggering 21%. I remember feeling fortunate to have secured a 10 ¾% mortgage rate at the time. Unemployment that year was at 12%, and the Dow was at 800. Who would have dreamed then that we would be talking about a 10,000 Dow today, much less a 12,000 Dow? And for those of us old enough to remember, who can forget those horrible gas lines that were a result of turmoil in the Mideast? She was right. We have indeed faced tough times before, and we will work through them again.

Her view gave me pause, and I thought that perhaps there was reason for us to all be a little more optimistic as we celebrate the New Year.

--Ken Hatfield

A Word about Referrals

2011-12-08T14:12:00.000-08:00

When you refer someone to us, we regard it as a sign of trust and a compliment of the highest order. Referrals, after all, are the lifeblood of our business and are the largest source of new business for our firm. As such, you should know that we will do everything we can to meet and exceed the expectations of people you refer to us.

We have found that often referrals are a result of a “life change” which someone either anticipates or is currently experiencing. These “life changes” can be complex, and professional guidance is often helpful. They can include retirement planning, job transitions, inheritance, college and education planning, or the sale of a business or residence, just to mention a few.

It is at these times, when friends or an associate is experiencing a “life change,” that a referral to Portfolio Advisors may be of valuable service to them. We will do everything we can to make sure that your referral will be happy that you did.

Thank You For Attending

2011-11-21T10:03:00.000-08:00

Thanks to all for attending our “Investment Strategies in Turbulent Times” presentation held on Nov. 14 at California State University Fresno, University Business Center. There were over 90 in attendance.

Highlights of the evening included the honoring of Portfolio Advisors Inc. founder, Gary Leffler. Gary was presented with a custom made framed piece that included memorabilia from throughout his career. The presentation was made by Michael Leffler (Gary’s son) who is the principal and owner of Portfolio Advisors. The featured speaker from Dimensional Funds was Regional Director Jay Totten who talked about the importance of a diversified portfolio in weathering the economic storms that inevitably occur.

See pictures from the event below

Market Turbulence

2011-11-16T15:33:00.000-08:00

October was quite a month from an S&P 500 standpoint. The index grew 10.9%, its largest growth month since 1991. This growth spurt followed, as you may recall, 5 consecutive months of decline.

We’re certainly seeing big daily, weekly and monthly swings in stock market indices…. turbulent times indeed. But, with stock markets, shouldn’t we expect a degree of turbulence? Since 1980, for example, the average intra-year (that is, during each calendar year) S&P 500 decline exceeded 14%. Restated, the average high-to-low decline during those calendar years exceeded 14%.

Calendar year returns since 1980 were positive 24 of the 31 years, despite those intra-year declines. And, the average annual return for the S&P 500 for the 1980 through 2010 period was 11.4%. So, a level of stock market turbulence seems to have always been with us, and the long-term stock market return was attractive despite it.

It is our belief that a properly diversified investment portfolio remains an effective strategy for dealing with rocky and uncertain markets in the future. Your advisor is best suited to help you navigate through these turbulent times.

Changes Made to Website and Blog!

2011-11-10T15:27:00.000-08:00

Thanks for taking a look at our updated website and blog! We have been hard at work to make the website compelling and relevant. We have also changed the look and functionality of our blog and we invite you to follow us by submitting your email address. When a new item posts, you will receive an email alerting you with a link to the item. We plan to add one or two new topical items per month and hope that you will find them interesting. Some other new blog functions include the ability to easily email an item to a friend, or to post it to your own blog. You will also be able to share the post through your own Twitter and Facebook pages.

We also hope that you spend a few minutes going through our website and checking out all of the content. New to the site, is information related to the client experience, FAQ’s or general questions and answers as well as information about our strategy and philosophy. In the “Client Center,” you are able to access your portfolio documents and can access many tools, such as a 1040 tax calculator and an amortization calculator. In the “Information Center,” you will find Financial Briefs, Featured News and Articles of Interest. You will want to check this area monthly for articles that may be helpful to you.

We hope you look forward to our monthly updates and we look forward to serving you.

Two New Team Members at Portfolio Advisors

2011-08-01T09:36:00.000-07:00

We're very excited to have two new, talented individuals join our team.

Ken Hatfield (a longtime client of the firm) joins us after a career with the Fresno Bee. Ken will act as Financial Advisor and Director of Client Relations.

Amber Curran recently graduated from Fresno State. She will serve clients in an administrative capacity and has a very bright future ahead of her.

We're very happy to have Ken and Amber with us. They will allow us to better serve our existing clients and give us capacity to serve additional clients.

Hero of Wall Street

2011-05-03T09:36:00.000-07:00

A dying man's wish to bring the knowledge of Wall Street to Main Street.

http://abcnews.go.com/Nightline/video/gordon-murray-hero-wall-street-12691101

The Economics of Fiscal Deficits

2011-02-01T09:35:00.000-08:00

The large budget deficits run by the U.S. government are a big concern to many. What does history tell us of the implications? To economic growth? To stock markets? This study by Marlena Lee sheds light on the topic.

http://www.dfaus.com/2010/11/the-economics-of-fiscal-deficits.html

Government Intervention and Stock Returns

2009-07-30T09:34:00.000-07:00

I hear concerns from a lot of people about our current leadership and its impact on the economy and stock performance. A recent presentation by Weston Wellington of DFA addresses this topic head on. Here is a link to the talk: http://www.dfaus.com/library/videos/governme/

Client Education Seminar

2009-06-18T09:32:00.000-07:00

Thank you to everyone who attended our recent client education seminar entitled, "The Tenets of Successful Investing." Except for some difficulties with the venue, I'm very pleased with the feedback from attendees overall. The message was pertinent, and attendees indicated that they left with something of value.

For a refresher or for those who were unable to attend, here is a link to an on-line, recorded version of the talk: http://dimensional.acrobat.com/tenetsofsuccessfulinvesting/ I have some ideas for future client activities, and, of course, we value any ideas you may have for planning future events.

Staff Changes

2009-03-06T09:32:00.000-08:00

We have a new staff member! Jessica Sadredin has joined us as a Portfolio Administrator. Jessica is a recent Finance graduate from Fresno State. She has an impressive background and comes to us highly recommended. Jessica aspires to a career in financial planning.

Also, Tina Mistry has been promoted to Support Advisor. This is a new position in our firm and is a natural next step as she completes the Certified Financial Planner™ program. Tina will join in many client meetings and will be more involved with clients' investment and planning issues.

A Letter on Current Events in the Markets

2008-10-14T09:31:00.000-07:00

To view the letter, please go to the "Client Center" tab and click on "Download Documents."

New Office

2008-05-16T09:30:00.000-07:00

We moved to our new office at the first of the month. It was a big change considering that we have over 20 years of history in the old office. We’ve gotten pretty settled in now though. We’re really enjoying the new environment and look forward to sharing it with our clients.

New Website

2007-09-06T09:29:00.000-07:00

Our website "went-live" this morning. We hope that you find it to be another good means of communication. Your feedback is welcome.