Highlights of This Week’s Update:
- Be sure to call and set up your year-end review session now. This is one of the most important times of the year for us to meet or talk by phone to discuss your overall planning and long term goals.
- 2013 Income Tax Information will be available to you online-1099’s by the deadline of February 15th or sooner, and hard copies mailed as well. Don’t forget the “CSV” file to download all transactions to save time and money when preparing your 2013 income tax return.
- K-1 forms will be coming this year as well for 2013 taxes. The deadline for these is March 15th but only a few remain for 2013 based on personal risk level.
- The financial markets have started off 2014 more in favor of our overall portfolio allocations and quite different than how they ended 2013. Stock indices lower, bonds, gold, and silver higher, and interest rates lower. READ on for more details………
Schedule Your Year-End Review Now:
If you have not yet scheduled a time, either in a group setting or private meeting, for your year-end review, please do so today! This is an important time of year to review your overall situation, discuss last year, and provide you with our detailed outlook for 2014 and what it might mean for your overall planning. Available times are filling up fast, so be sure to call today to reserve a spot that fits your schedule in the coming weeks.
2013 Tax Information:
The deadline this year for financial institutions to issue 1099’s providing 2013 tax information is February 15th. As with last year, the Trust Company of America will post these online for your account when available and mail a “hard copy” to you as well. DON’T FORGET: There is a “CSV” file that will be available online that can be downloaded and is compatible with most tax preparation software, including TurboTax. Be sure to mention this to your CPA or whoever prepares your personal tax return. We can assist with this as well if needed. This file can save both time and money when it comes to the preparation of your 2013 income tax return.
K-1 Forms:
Some of you will also be receiving K-1 forms in addition to your 1099’s for taxable accounts. These were due to certain investments we still held at beginning of 2013. We have done our best to eliminate this type of investment structure over the past year, and for the most part, there won’t be these tax forms to deal with in 2014 and beyond except in very limited situations. You can expect the following K-1’s based on your personal risk level during the 2013 calendar year:
Capital Preservation, Conservative, and Moderate Risks: WGL Holdings, Linn Energy, and Brookfield Infrastructure Partners. Growth and Aggressive Risk Portfolios: Natural Resource Partners and ProShares Ultra Gold.
Most K-1’s are issued prior to March 15th, so these will come to you normally after you have already received your 1099 forms. We will try to keep you posted as best we can as to the expected dates as we get closer to the deadline of March 15th for K-1’s.
The Markets and Economy:
Stocks have started the New Year off on a negative note, with major U.S. stock indices trading lower than on December 31st. Gold and silver assets are higher in the New Year, as well as bond prices (lower yields). Today’s trading was no exception, with stock indices sharply lower, but a continued rise in gold/silver and bond prices. The year is still very young, and we continue to monitor the overall strategies we implemented last year and will see if they will benefit our portfolios in 2014. We remain underweighted in stocks/equities overall, and have maintained our positions in fixed income/bond funds as well as the “alternative” asset category. We are still expecting to see a stock market “correction” at any point. In fact, we may see a sharper decline when and if it occurs due to the overextension of stock prices that transpired in late 2013. Time will tell and we will keep you updated.
Last Friday the December labor report was a big disappointment. The Bureau of Labor Statistics (BLS) reported employers added a net total of just 74,000 jobs last month, well below the forecast by Bloomberg of 200,000. It’s possible severe weather in December may have nibbled away at the total, but it’s hard to paint December’s number in a positive light. December’s report will get revised again in February and March. Then there are the annual revisions, as models may be adjusted and more complete data are gathered.
In the meantime, the unemployment rate fell from 7.0% in November to 6.7% in December (BLS). But for the most part, the decline wasn’t for the right reasons, as a small increase in jobs was aided by a sizable drop in the labor force (BLS). Likely reason for the dip in the labor force – discouraged job seekers giving up on their search. In order to be counted as officially unemployed, one who is out of work must be actively seeking a job.
Please look at the chart above, which compares the official unemployment rate to an alternative measure of the unemployed call U-6 Unemployment (BLS). U-6 includes the traditional definition of joblessness and adds those who want work but have given up looking (discouraged workers), those who are working below their skill level (underemployed), and those who are part-time workers but want full-time employment. U-6 held at 13.1% in December (BLS). It’s in a downward trend but remains quite elevated.
Q4 earnings about to roll in
Fourth quarter earnings season has just begun and we’ll get a deluge of reports in the coming weeks. Despite economic data that suggest a gradual acceleration in growth near the end of the year, an unusually large number of companies that had previously issued profit forecasts have been revising their expectations downward. According to Thomson Reuters, there have been 108 S&P 500 companies that have cut their profit forecasts and just 11 that have raised forecasts. Divide 108 by 11 and you get a negative-to-positive ratio of 9.8. If it holds, it would be the highest since Thomson Reuters began keeping records in 1995. The current record is 6.9 set in early 2001.
We look forward to either seeing or talking with all of you in the weeks ahead for your year-end reviews. We appreciate the privilege to serve, and look forward to another year of working together towards achieving your long term goals.
God Bless,
Your TEAM at F.I.G. Financial Advisory Services, Inc.
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