Important 2012 Tax Information Update:

We were just informed by National Financial Services (NFS) that a “corrected” 1099 was issued for certain taxable accounts and mailed out to accountholders at the end of last week.  This will affect some of you and the changes appear very slight in comparison to the original 1099’s that were sent out the end of January.  Also, many of you could receive a “K-1” form for 2012 tax reporting from investments that were held last year in your accounts that have a structure or business form other than common stock such as a “master limited partnership”.  This might include EV Energy Partners (EVEP), and Brookfield Infrastructure Partners (BIP).  The deadline for mailing out K-1’s is March 15th.  These are all mailed directly to account owners and we do not receive a copy of the specific K-1 in our office.   Also, don’t forget, there is a “CSV” (Excel) file available to help simplify tax reporting last year that can be downloaded to various tax reporting software programs such as TurboTax covering your Trust Company of America account(s).  This can be accessed online under the “Tax Documents” section when you go to the “About Your Account” tab at the top of the page when you log in to view your account.  As always, don’t hesitate to call us if you have any additional questions.

 Spring Break Vacation Ahead:

I wanted to let you all know that I will be out of town for vacation the week of March 15-22nd.  This is the first real vacation I have taken since the summer of 2011 and I am looking forward to some needed time off.  We are blessed in that my wife and I will be spending this week away with our youngest daughter during her spring break from college.  Chris and Sam will both be here to assist you in my absence as usual, and I will be in touch with the office on a regular basis while I am gone.  If you need me for anything at all prior to next week, please don’t hesitate to call.  I will be here through Thursday.

 The Markets:

The bulls have been aiming for the Dow’s all-time high for several weeks, and last Tuesday, positive sentiment finally helped drag the oldest and best known of the major market averages above a threshold that hadn’t been seen since October 2007.  Yes, it may be just a psychological barrier, but it’s one that gets plenty of attention. By the time the week came to a close, the Dow settled at 14,329.49, besting its previous high by nearly 165 points. More impressively, the Dow racked up gains in each of the five trading days last week and turned in its best weekly performance since the beginning of the year (MarketWatch).  Keep in mind, the Dow only includes 30 stocks in the index.

 So what gives? Many retail investors still doubt the durability of the economic recovery, while others are constantly being bombarded by sequester talk and other negative news flowing out of Washington. Also, consumer confidence, as measured by the Conference Board, reveals that sentiment is off the lows seen at the depth of the recession, but still remains well below the highs reached in the middle of the last decade.

We have stated since last year that we expected the major U.S. stock indices to possibly hit or exceed the old highs for the Dow and/or Standard & Poor’s 500 stock index that were reached back in October, 2007 before we might see another decline in stock prices of any magnitude.  The Dow has now hit those new high levels, but the broader Standard & Poor’s 500 stock index is still fighting to get back to its closing high of approximately 1,565.15 reached back on October 9, 2007.  The S&P 500 is currently around the 1,550-1,555 range. (Source: Google Finance)  We have become more cautious at this time and have been in the process of rebalancing our portfolios over the past week or so to reduce some of our overall equity/stock fund exposure in various risk levels, as we do feel some type of decline could occur in the months ahead.  We still hold the view that commodity prices overall could outperform stocks in general over the next 12-18 months.  We will keep you advised.

Themes that have been in place since the beginning of the year that have helped support to stocks so far this year are:

  • Slow but steady economic growth. In fact, some of the recent reports, including a gauge of the service sector, new home sales (Commerce Dept), and business spending (durable goods report) suggest growth has actually accelerated.
  • Corporate profits have topped low expectations (Thomson Reuters).
  • Quieter credit markets in Europe (more of a removal a roadblock), which in turn has encouraged risk-taking, including stocks.
  • A very accommodative Fed policy
  • A sense that China’s economy won’t stall.
  • Europe is expected to exit its recession later in the year.

Of course, there are always risks, including the potential for a flare-up in European credit markets, weakness in the global economy, and another soft patch in U.S. economic activity.  There is also the U.S. debt ceiling that has to be dealt with by March 27th.  Recall the economic slowdowns in the middle of 2011 and 2012?

God Bless,

Your TEAM at F.I.G. Financial Advisory Services, Inc.

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The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.

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1 The Dow Jones Industrials Average is an unmanaged index of 30 major companies which cannot be invested into directly.  Past performance does not guarantee future results.