Financial Planning

Financial Planning

MacGray Matters – Financial News – Week of August 2, 2010

John Thomas August 3, 2010 Tags:

MacGray MatterTM                                           August 2, 2010

THE ROLLER COASTER RIDE BACK UP:  After a horrible June, the domestic equity markets ended a very positive July.  The Dow Jones Industrials was up 0.40% for the week ending up 7.54% for July.  The S&P 500 was down 0.10% for the week, ending a July that was up 7.23%.  The NASDAQ Composite was down 0.65%, ending July up 7.3%.  All three indices are hovering near break even for the year. Keep Reading...

MacGray Matters – Financial News – July 26, 2010

John Thomas July 26, 2010 Tags:

MacGray MatterTM                                                                                            July 26, 2010

GOOD NEWS DROWNS OUT BAD, EQUITIES RISE:  There was a fair bit of bad news this past week in the unemployment and housing numbers.  In addition, Ben Bernanke’s testimony was far from a Knute Rockne speech.  However, the markets gained.  A big driver for domestic equities was positive earnings reports.  Among the companies that beat quarterly expectations were Caterpillar, 3m, Air Products, UPS, Morgan Stanley, Wells Fargo, Ford, Honeywell and McDonalds.  In addition economic reports showed surprise growth in European manufacturing and United Kingdom retail sales.  German confidence data came out stronger than expected on increasing exports.  The Dow rose 3.24% (down 0.03% for the year).  The S & P 500 rose 3.55% (down 1.12% for the year) and the NASDAQ Composite rose 4.15% (up 0.01 for the year).  We seem to be back to square one again for the year.   Keep Reading...

MacGray Matters – Financial News Update – July 19, 2010

John Thomas July 19, 2010 Tags: ,

MacGray MatterTM                                                                                            July 19, 2010

FINANCIAL REFORM:  Early this week, President Obama will sign the Financial Reform Act passed by the Senate this past week.  What does the bill say?  Once again, it is very, very long and rather confusing.  One of the main reasons I can’t tell you what it all means is that much of the Act simply directs the Executive Branch to do things, like make regulations.  The bill will immediately create a 10-member Financial Stability Oversight Council, a powerful assembly of regulators chaired by the Treasury Secretary to keep watch over the entire financial system.  The Obama administration has one year to create a new Bureau of Consumer Financial Protection.  The Fed has until April to derive standards to measure the fairness of fees charged by banks to merchants for customers who use debit cards.  Regulators also will have to figure out how to implement new standards for how much capital banks should hold in reserve to protect against losses. The legislation requires rules in 18 months, but the U.S. is also part of international negotiations on what global capital standards should be, and those could move more slowly and affect how quickly the regulations are enacted.  As we learn more about this legislation and its implications, we will provide additional information. Keep Reading...

MacGray Matter – Financial News Update – July 5, 2010

John Thomas July 5, 2010 Tags: ,

MacGray MatterTM                                                                                            July 5, 2010

UNEMPLOYMENT NUMBERS ADD TO A NEGATIVE WEEK:  On Friday, the Department of Labor reported that non-farm payrolls dropped by 125,000 jobs due largely to the Census Bureau laying off 225,000 temporary workers.  Private sector job growth was positive by 83,000 jobs, but that was less than “expected” and not near enough to make up for the loss of government jobs.  Manufacturing jobs fell by 8,000 after a three-month positive streak.  I continue to find this particular graph found on (and used with permission) to be a key one to follow:
Keep Reading...

Financial Market Update – July 21, 2008

John Thomas July 21, 2008

THE MARKETS:  Volatility remains the watchword on Wall Street.  At least this week the volatility was the kind people like:  positive volatility.  The Dow was up 3.57% (down 13.33% for the year) and the S & P 500 was up 1.71% (down 14.14% for the year).     

CITIBANK BEATS EXPECTATIONS:  Citigroup lost $2.5 billion and still beat analysts’ expectations.  This amounted to a loss of 54 cents per share, in the April-June period. Analysts were predicting losses in the mid-60 cents per share.   In the same timeframe last year, the bank earned $6.23 billion, or $1.24 per share.    Keep Reading...

Financial Market Update – July 14, 2008

John Thomas July 14, 2008
BEAR MARKETS:  Credit and money supply concerns, plus resurgent oil prices seemed to be the drivers behind further negative movement in the equity markets on Friday.  The Dow Jones Industrial Average traded below 11,000 for the first time since August 2006 but finished at 11,100. The S&P 500 finished the day in bear territory, as well.  There was much reporting about widespread concern that the two U.S. mortgage giants, Fannie Mae and Freddie Mac could fail, despite Bush Administration assurances that won’t be allowed to happen. Over the past 65 years, bear markets have lasted about 10 months on average (some have been considerably longer than the average). The first one of this century was deep and one of the longest on record, from 2000 to 2003. The long bull market that followed reached its peak in October/November 2007, and, in fits and starts, has been turning toward bear territory since then.  Where will the market move next? There’s never a shortage of opinions.  Your overall investment strategy should not be tied to making the right “bet” about where the market is going in the month or quarter. Maintaining a long-term viewpoint is historically the best course. CONSUMER BORROWING:  The Federal Reserve reported that consumer credit increased by $7.8 billion in May.  Most of the increase was in credit card usage rather than auto loans or college loans.  Cearly consumers are using more debt to maintain their “lifestyle” in the face of higher prices, especially for food and energy.  A dangerous trend I just read about is 401k plans that are allowing much easier access to “cash” in the form of loans using ATM cards.  Loans agains 401k plans is very inefficient and dangerous.  If anything, it should be more difficult.  Consumers were using home equity to support expense needs.  Much of that has dried up, and now credit cards are filling the void.  Watch out for 401k loans to be the next area of “ready cash”. CONVERTING TRADITIONAL IRAS TO ROTH IRAS:  The income limit is $100,000 for a single individual, and $100,000 for a husband and wife filing jointly. A taxpayer who is married-filing-separately is not eligible to convert a traditional IRA to a Roth IRA. Both the $100,000 cap, and the prohibition on conversions by married taxpayers filing separately, are scheduled to disappear permanently after 2009. The conversion of funds from a traditional IRA to a Roth IRA is subject to income tax just as if the amount “converted” had been actually distributed to the participant. Thus, the distribution will be taxable as ordinary income just the same as a distribution of the same amount from the same plan would be. For conversions in 2010 only, the taxpayer will have the option of spreading the taxable income over two years, 2011 and 2012; otherwise, the conversion is taxable in the year it occurs.

GRANDPARENTS AND 529 (COLLEGE SAVINGS) PLANS:  A 529 plan can be an effective way for grandparents to contribute to a grandchild’s college education, while simultaneously moving assets out of their own estate. Contributions to a 529 plan grow tax deferred, and withdrawals used for the beneficiary’s qualified education expenses are tax free at the federal level.  A grandparent can open a 529 account and name a grandchild as beneficiary, or they can contribute to an existing 529 account.  Grandparents can contribute a lump sum to a grandchild’s 529 account, or they can contribute smaller, regular amounts.  A big advantage of 529 plans is that under special rules unique to 529 plans, individuals can make a lump-sum gift of up to $60,000 ($120,000 for joint gifts by married couples) and avoid federal gift tax.  Another attractive feature of 529 plans is that under current law, grandparent-owned 529 accounts are excluded by the federal government’s financial aid formula–only parent-owned 529 plans count. Keep Reading...

Weekly Financial Market Update – June 30, 2008

John Thomas June 30, 2008

THE MARKETS:  June has been a negative month for the equity markets.  For the month, the S&P 500 is down 8.7% and the Russell 2000 is down 6.19%.  For the quarter, the S&P 500 is down 3.35% and the Russell 2000 is up 1.84%.  The Dow Jones AIG Commodity Index is up 9.59% for the month and 27.8% for the year.  This is a “long only” index which can be volatile and about which many investors are wary (“How high can it go?”).  It has been having an extraordinary run during this bearish equity market. Keep Reading...

Weekly Market Update – June 16, 2008

John Thomas June 17, 2008
NOT MUCH MOVEMENT LAST WEEK:  The markets did not move much:  The Dow was up 0.80% and the S & P 500 was down 0.05%. NEXT INTEREST RATE MOVEMENT WILL BE UP?:  The Fed’s increased public anti-inflation discussion has led to market expectations of one or more rate hikes by the year end. The Fed funds futures market is pricing in 75 basis points by January. The Fed outlook has changed over the last several weeks. In the April 30 policy statement, the Federal Open Market Committee hinted strongly that it was finished with rate cuts, but the market expected that a weakening economy would force the Fed to cut at least once more. Since late April, economic data have been mixed, but not as bad as many feared. The price of crude oil has continued to rise, to a point where the Fed’s concerns about inflation are now dominant.  IN EUROPE: At the European Central Bank (ECB), they have made it clear that inflation is their number one concern and they aren’t thinking about a cut in rates.  Jean-ClaudeTrichet, the ECB Chairman, has strongly hinted that their next move is likely to be an increase in rates. If that happens, and the U. S. doesn’t match the increase, it will put added downward pressure on the dollar and likely cause oil prices to continue to go up.   ECONOMISTS LESS PESSIMISTIC:  This past week, once again, the Wall Street Journal asked a panel of Wall Street economists whether we are in a Recession.  52% say yes.  That’s the bad news.  The good news is that this same group was asked the same question in April and 76% said yes.  It looks like economist opinions are as volatile as the markets. DEBT CAN BITE YOU AT ANY TIME, AND COMPOUNDING WILL KILL YOU:  This past week, Prince Charles paid off a family debt more than three centuries past the statute of limitations.  Charles paid 453 pounds and 15 pence ($885.04) which King Charles II failed to pay to the Clothiers Company in Worcester,  England, in 1651!  Charles II had commissioned uniforms for his troops to fight Oliver Cromwell’s forces that year.  Prince Charles didn’t pay interest, and Clothiers did not insist on it.  If interest was taken into account, he would have owed approximately $90,000 U.S. SIZE OF PROFIT:  According to Fortune Magazine, the average profit margin at the pump for a US gas station is 11 cents a gallon, approximately half the size it was just 1-year ago.  The average net profit margin for the S&P Energy sector, according to figures from Thomson Baseline, is 9.7%. The average for the S&P 500 is 8.5%. Google’s net profit margin in its most recent quarter was 25%.  BANKS MORE PREPARED:  According to the FDIC, US commercial banks and savings institutions set aside $37 billion in loan-loss provisions in the 1st quarter 2008 in anticipation of bad loans that may default.  Banks set aside $9 billion for such loans in the 1st quarter 2007. This is information is provided by good friend and business associate Doug MacGray.  Doug is a certified financial planner.  If you would like a referral to Doug please feel free to contact me (John Thomas) at 302-368-7132 Ext.12 or send me an e-mail to