Permanent Value

President’s Message

Bruce Doole
October 3rd, 2014

October 2014

Closing Out the 4th Quarter

Just as the San Diego Chargers seem to be finally closing out games in the 4th quarter, we hope the economy and the markets finish with a strong 4th quarter as well. Below, we will discuss some of the factors that could impact your portfolio through the end of the year.

Deficits and Debt

Internationally, we have seen an increase in volatility and violence in the Middle East. The United States may be withdrawing most of their troops from Afghanistan this year, but it could be just the beginning of additional turmoil in Iraq and Syria. This could have serious ramifications on the U.S. budget deficit as the government was counting on a decrease in defense spending by not having to fight two wars. Over the last 10 years, the growth of the U.S. federal debt is up by $10 trillion with 80% of this due to three main areas – defense spending, Medicare, and Social Security. The federal government has to keep interest rates extremely low in order to pay the over $200 billion in yearly interest on the debt. Due to the uncertainty of our military spending, and continued involvement in the Middle East, the U.S. needs to start focusing on ways to get the $500 billion budget deficit under control by addressing the issues surrounding Medicare and Social Security. When the Baby Boomers started reaching the age of 65 in 2011, the severity of our Medicare/Social Security crisis became evident. There are only a couple alternatives to stabilizing and balancing the federal deficit, these include:  increasing the eligibility age and/or taxes for Medicare and Social Security as well as potentially offering current incentives for individuals to wait to collect until the age 70.

Job Growth

In regards to the economy and job market, we are experiencing slow growth, but growth nonetheless. Current GDP economic growth is sitting at 2.5%. Unemployment rates are continuing to decline, for September 2014 they were 5.9% but they are flattening out. These growth rates could be much more significant if the government lowered corporate tax rates. Currently there are trillions of corporate dollars overseas because corporate taxes are significantly higher than most other countries. Lowering corporate taxes could bring hundreds of billions of dollars, and hundreds of thousands of jobs, back to the U.S. thus providing both economic stability and growth.

It is important to understand the potential impact of these economic events in relation to your financial plan as we help you reach your financial goals. Your financial strategy is subject to economic adjustments but it does not change its foundational goals. With every conversation, we build upon your financial foundation to ensure your goals are achieved. We look forward to speaking with you as we continually make the necessary adjustments that will make your financial strategy more effective.

President’s Message

Bruce Doole
January 2nd, 2013

Fiscal Cliff

Over the past two weeks you have probably seen a lot of information in the news regarding the “Fiscal Cliff.”  This was term coined by the Federal Reserve Chairman, Ben Bernanke, to describe the laws affecting tax rates and government spending going into effect at the beginning of 2013. The resulting laws to avert the “Cliff” were passed as a result of the negotiation between Congress and the Administration on New Year’s Eve a week or so ago.  

The original Fiscal Cliff resulted from negotiations between Congress and the Administration in 2011 regarding raising the debt ceiling when a newly elected Congress with a House Republican majority was looking to cut spending to prevent ballooning deficits. The debt ceiling needs to be re-negotiated again this year. The compromise addressed taxes and the expiring Bush Tax Cuts, but not spending cuts. The compromise bill extended the pending spending cuts by two months to give Congress more time to negotiate and avoid sequestration, the process where Congress holds back money appropriated by the Treasury to Federal Agencies. Below we have detailed some of the key points of this deal.

A Few High-lights

  • The Fiscal Cliff bill indexes the alternative minimum tax to inflation, which is geared to help millions of middle-class taxpayers avoid being hit with a higher tax bill averaging to be roughly $3,000.
  • College tuition has a five-year extension on up to a $2,500 tax credit while earned income and child tax credits will also be carried-out for five years.
  • Families with taxable earnings under $450,000 have an extended tax rate.
  • Tax-free distributions from an IRA account to a charity fund, consisting of $100,000 or less, is being extended. Some featured provisions include that individuals may use their December 2012 IRA distributions for a charity and appropriate it as a charity distribution, and that individuals are allowed to create a tax-free charitable IRA distribution during January of 2013 and treat it as if it was prepared in 2012.

Low-lights

  • Race track owners, including NASCAR, will receive approximately $78 million in tax breaks.
  • Lower payroll tax rates have been extended.
  • Reduce government spending.

Investor Advice

  • Spend more focus on buy-and-hold investment strategies and on your harvesting losses.
  • Consider tax-advantaged investment strategies.
  • Pay down mortgage.
  • Consider investing in annuities and life insurance.

We hope you and your families have enjoyed your holidays and we look forward to seeing you and discussing your goals for the New Year with you.

Sincerely,

Bruce W. Doole, President

Quarter 3 President’s Message

Bruce Doole
October 18th, 2012

PRESIDENTIAL ELECTION

Though you may have already made up your mind about who you are voting for on November 6th, the debates and political ads will continue to increase in urgency and frequency. This election will affect this country economically for years to come so we thought it might be helpful to give a rundown of the economic issues you will be deciding on:

Barack Obama:
• Focus on key areas in rural communities to help businesses access capital and expand rural job search and training
• Double exports to foster job creation
• Provide tax cuts for middle class and working class Americans
• Set and enforce clear, consistent rules for the financial marketplace to protect American families from manipulation
• Support bipartisan plan to reduce national debt

Mitt Romney:
• Ensure the long-term solvency of Social Security without raising taxes and encourage individuals to create private accounts
• Return fiscal power to states and the people
• Expand the tax deduction to also include those who buy their own health insurance to empower individuals to purchase their own health insurance, 
• Make American businesses competitive in the global economy
• Cut federal spending and bring reforms to entitlement programs
• Balance the budget by reducing the size and reach of the federal government.
• Open markets abroad, on fair terms, for American goods and services

Whether you are Republican or Democrat, we hope you and your families are enjoying the autumn season and we look forward to seeing and talking to you as we review your 2012 budgets and plans for 2013.
 
Sincerely,
Bruce W. Doole, President