Highlights From This Month’s Newsletter:

  1. Tax Form Update and Reminders for 2013 Income Tax Information
  2. The U.S. stock indices rally off the February 3rd 2014 low, but the Dow still remains negative year-to-date while fixed income/bond assets and alternatives rise.
  3. Economic data mixed so far in 2014-housing down and mostly blamed on weather.  Time will tell.
  4. Our outlook remains essentially unchanged-underweighted in stock exposure while fixed income/bond assets and alternatives help stabilize our portfolios so far in 2014 with positive returns.
  5. Tensions between Russia and Ukraine likely a short-lived concern to financial markets but have added to short-term volatility.

READ ON FOR ADDITIONAL DETAILS………………………………………………………….

Tax Information Update/Reminder:

All 1099 forms have been mailed for client accounts from the Trust Company of America.  The information is also available online as well.  A “CSV” file can be used to download the transaction data from 2013 directly into many tax preparation software programs, and we highly recommend you utilize this service that can save both time and money.

REMEMBER:  For all retirement accounts (including IRA’s), no transactions have to be reported on your annual tax return  If you did not take any distributions from an IRA or other retirement account in 2013, there will be no 1099 and nothing to report for tax purposes.  If you took a distribution during 2013, you should have received a form 1099-R that simply reports the amount of distributions received and any federal and/or state tax that was withheld.

K-1 Update:  K-1’s for 2013 must be mailed out by March 15th to investors.  Your risk level will determine what K-1’s you might expect to receive for 2013 income tax information.  Based on various risk categories, here’s what you can expect:


K-1’s from:     Brookfield Infrastructure Partners:  Expected to be available March 7th

Linn Energy:   Expected mid-March


K-1’s from:     Natural Resource Partners:  Should receive the K-1 this week-in the mail.

ProShares Ultra Gold:   Expected mid-March

Call us if you have any additional questions or if we can be of assistance to you or your tax preparer in any way this tax season.

The Markets:

Despite upbeat predictions to the contrary, stocks limped into 2014.  At the end of February, the Dow Jones Industrial Average was down 1.54% for the year and closed at 16,321.71.  This is up from the 2014 low back on February 3rd, when the Dow closed at 15,372.80. (Google Finance)  So far in 2014, fixed income assets (bonds) and commodity assets have fared well, helping our portfolios perform well relative to risk level.

Economic data out of China continues to be soft (Markit Economics) but emerging market troubles from earlier in the year have receded for the time being.

Meanwhile, housing came under pressure.


Last date: Feb 2014 for the Housing Market Index; Jan 2014 for single-family housing starts

Note: a reading above 50 on the Housing Market Index suggests builders are optimistic; a reading below 50 suggests builders are pessimistic

The Housing Market Index, which measures confidence among homebuilders, stumbled by 10 points in February – largest decline since the survey began in 1985 (National Assoc. of Homebuilders or NABH).  The NAHB cited cold weather as one of the reasons for the steep drop in sentiment. Moreover, the traffic subcomponent fell sharply, suggesting rough weather in parts of the country kept potential buyers out of model homes.

Single-family housing starts also stumbled, falling a sharp 15.9% in January (latest data available from the Census Bureau). Moreover, single-family starts fell by an astounding 60.3% in the frozen Midwest. It’s difficult to push dirt around or set foundations in frigid temperatures. Yet, in the drier and warmer western U.S., housing starts climbed by 10.7%.

Fed Chief Janet Yellen, who replaced Ben Bernanke at the beginning of February, said, “A number of data releases have pointed to softer spending than analysts had expected. That may reflect in part adverse weather conditions, but at this point it is difficult to discern exactly how much (Wall Street Journal).”  She’s not convinced the latest economic soft patch can be completely blamed on Mother Nature

Our Outlook:

We continue to see stocks/equities overvalued in general, and have remained underweighted this year in our equity allocations for all risk levels.  Our positions in fixed income and alternative asset categories have served us well so far this year, and have helped stabilize portfolios in a more volatile stock market environment.  We have made some portfolio changes over the past two months, with limited change in our basic asset allocations.  We continue to monitor the markets and search for appropriate assets that fit our portfolios’ risk levels as well as our current investment strategies.  We will rebalance portfolios this week in order to keep the asset allocations in line with our goals at each risk level.  We will keep you posted should we see any major changes we feel are warranted as we move forward.

Look ahead – escalating tensions between Russia and Ukraine:

Markets loathe unusual amounts of uncertainty, and heightened instability in Ukraine has understandably spooked investors, at least temporarily, because traders sometimes take a “shoot now and ask questions later” approach when a crisis emerges.

From a geopolitical perspective, the situation is extremely fluid right now. But let me quickly add, geopolitical instability has historically created only short-term jitters. The situation in Ukraine appears to most likely be short-lived, as the U.S. stock indices gained back more today (March 4th) than they gave up on fear yesterday.  Markets move on when a crisis does little damage to U.S. economic interests; it’s the devastating humanitarian toll that can be long-lasting.

We truly appreciate the privilege to serve and are here to assist you in any way we can.  If you ever have any questions or concerns, or if we can be of further service in any way, please don’t hesitate to call or email us.

God Bless,

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

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.

It is important that you do not use this e-mail to request or authorize the purchase or sale of any security or commodity, or to request any other transactions. Any such request, orders or instructions will not be accepted and will not be processed.

All items discussed in this report are for informational purposes only, are not advice of any kind, and are not intended as a solicitation to buy, hold, or sell any securities. Nothing contained herein constitutes tax, legal, insurance, or investment advice.

Stocks and bonds and commodities are not FDIC insured and can fall in value, and any investment information, securities and commodities mentioned in this report may not be suitable for everyone.

U.S. Treasury bonds and Treasury bills are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.

Past performance is not a guarantee of future performance. Different investments involve different degrees of risk, and there can be no assurance that the future performance of any investment, security, commodity or investment strategy that is referenced will be profitable or be suitable for your portfolio.

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.

Before making any investments or making any type of investment decision, please consult with your financial advisor and determine how a security may fit into your investment portfolio, how a decision may affect your financial position and how it may impact your financial goals.

All opinions are subject to change without notice in response to changing market and/or economic conditions