Our team of seven CERTIFIED FINANCIAL PLANNERTM professionals author many articles and volunteer their expertise to educational and non-profit organizations.
Articles
Calling the Bottom
July, 2008
By Lawrence E. Howes, MBA, CFP®
Sharkey, Howes & Javer
I am going on record this time by espousing that the middle of July could have been
a bottoming or the actual bottom of the S&P 500, for this market cycle. Maybe. The
generally ignored event I refer to was the "$SPX" (the large-cap index) hit 1200.04
or so and then promptly bounced back propelling a pretty good rally. The bounce
was attributed to the price of oil dropping below $130 for the "first time in months"
by the reporting media. They don’t really know of course, but it sounded good and
for whatever reason the market did recover and it recovered with some resolve.
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The Rest of 2008
June, 2008
By Lawrence E. Howes, MBA, CFP®
Sharkey, Howes & Javer
If you are an investor who really follows the markets I don't have to remind you
that so far 2008 has not been boring. Since October 2007, the S&P 500 was down
about 18% and then made a nifty "recovery" in March. However this "recovery"
just didn't last very long. More recently, due to some investor fears, the S&P 500
went down again in May and now a bit more in June and as of this writing it might
be a reasonable buy.
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Following the Decline of the Dollar
June, 2008
By Scott Brookes, AIF®
Sharkey, Howes & Javer
Recent headlines focus on the decline of the US dollar and its effect on the
nation's trade and budget deficits, inflation and the price of oil. Some economists
argue a weak dollar is bad; others argue it's good for the US economy.
Regardless of what side of the debate you are on, it's important to understand
who benefits from a weak dollar and the potential long-term implications.
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A May December Retirement Plan
May, 2008
By Joe Light, Staff Reporter
Money Magazine
(Money Magazine) -- Jana Purdy, 61, jokes that she robbed the cradle when she nabbed
her husband Tim Kramer, 48. The pair met in a volleyball league, and they got married
just before a tournament in 1988.
For the past 20 years, their age difference was
more of an amusement than a challenge. But with Jana hoping to retire soon - in
less than five years - the couple are starting to worry if it might complicate their
plans. After all, when she turns 66, Tim will be only 53.
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Why Keep All Those Papers?
March, 2008
By Eileen M. Sharkey, CFP®
Sharkey, Howes & Javer
If your file cabinets are overflowing, it might be time to shred some paper. Which files
do you need to keep, for how long and why?
- TAXES: Keep tax returns and supporting documentation for seven years.
- INVESTMENTS: Keep trade confirmations of all assets in taxable accounts until they are sold, including details of interest, dividends and reinvested capital gains. For real estate investments keep all documentation on transactions, including receipts for permanent improvements until the property is sold and gains accounted.
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Tax Smart Savings: A New Alternative
March, 2008
By Scott Brookes, AIF®
Sharkey, Howes & Javer
There are plenty of ways to save money for personal and family goals, but one ofthe
newest options to consider is the Roth 401(k). 401(k) programs and Individual
Retirement Accounts (IRA) provide a vehicle to save taxes on your current income and to
defer taxes on growth until you retire. Due to IRS income limits, not everyone qualifies
for a Roth IRA contribution; yet surprisingly, there are no income limits for Roth 401(k)
contributions.
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Market Confidence in 2008
March, 2008
By Lawrence E. Howes, MBA, CFP®
Sharkey, Howes & Javer
"Now that Congress has passed the President's financial stimulus package, all is fine and
the stock market will recover."
One ofthese days I am going to say something really cuddly and simplistic like this - just
to paint a complex subject with a very simple brush. The truth is, the enactment of
spending programs (read financial stimulus package here) just signed by the President, is
testimony that the government believes helping the consumer spend as much money as
possible, whenever possible, is a sure way to get the rest of the vast and mysterious
financial marketplace to feel better and more secure. Sort of a legislative Band-Aid, if
you will, and in many respects this legislation has the right idea. The spending habits of
the US consumer really are the deciding factor in the health of the US economy.
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The Would Be Recession of 2008
January, 2008
By Lawrence E. Howes, MBA, CFP®
Sharkey, Howes & Javer
It is pretty clear to me that the stock market has corrected a little in the first part of2008.
The Dow is down as of this writing about 5.9%. Although this is not good news, it is
certainly not what I would consider bad news or that the US economy is coming off the
tracks. Don't believe the media gloom or that a "bailout" must be engineered by
Congress. The US economy is slowing and it needs to, but it is fundamentally healthy
and will return to prosperity soon.
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Secure Your Credit Today!
November, 2007
By Mimi N. Hackley, MBA, CFP®
Sharkey, Howes & Javer
9 Million Americans are victims of identity theft each year.
Now there is an opportunity to help safeguard your credit.
Effective November 1st 2007, each Credit Reporting Agency will allow you to place
a SECURITY FREEZE on your account. In the past this was available only in certain
places, or if you had already been a victim of identity theft.
NO CHANGE will occur to any existing credit you have. Unfortunately, this means
that a thief could access existing accounts, but they will not be able to open new
ones in your name. It is good practice to check your credit report regularly and
to close unneeded accounts.
You should contact each agency, separately, to request the freeze. The cost is approximately
$10. Once the freeze is in place, you will need a password and pin to approve new
credit.
You can THAW your account by removing the freeze at any time, either temporarily
or permanently, for a nominal fee.
Contact:
- Experian 888-397-3742 or Experian.com
- TransUnion 800-862-7106 or TransUnion.com, click “Personal” then “Fraud and Identity
Theft” then “Preventing”;
- Equifax 800-711-5341 or Equifax.com, click “Free Report, Dispute and Fraud Protection”,
then “Protect Your Credit, Explore How”
Mimi N. Hackley, MPH, CFP®, is Director of Financial Planning at Sharkey, Howes
& Javer, a Denver based, FEE-ONLY, financial planning and investment management
firm that has been helping people of all levels of net worth since 1978. Visit shwj.com
or call 303-639-5100 for more information and to schedule your complimentary consultation
with the CERTIFIED FINANCIAL PLANNERTM professionals at Sharkey, Howes & Javer.
Information presented is not designed to be tax, legal or investment advice and
is subject to change at any time. All investments contain risks, including the loss
of principal. Past performance is no guarantee of future results. Consult with Sharkey,
Howes & Javer to learn more about the strategies and information presented herein.
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Smart Tax Moves For Fall
September, 2007
By Scott Brookes, AIF®
Sharkey, Howes & Javer
Sometimes a great tax-planning move is spending money on yourself, not at the car
dealership or at a crowded mall, but into your retirement plan account. Recent tax
law changes permit you to start (or re-design) a plan for you and your employees
that makes it easier than ever to maximize the contributions to your personal account.
If you haven’t been getting the most out of your plan - or you presently spend too
much of the practice’s profits trying to do so, you may want to have someone review
your current plan design. Don’t delay too long - an early holiday gift like this
needs planning. Your document changes must be made before year-end to meet the IRS
deadlines for 2007.
This has been a good year for tax write-offs because of recent retirement plan regulations.
Here are the highlights:
- You can take up to three years of tax credits (up to $500) for practices establishing
a plan for the first time.
- Lower paid staff can receive tax credits (in addition to tax deductions) of up to
$1,000 for participating in your plan.
- More good news - an innovative “Roth” 401(k) option is now available that has no
income limits.
- You can establish “default” investment options for your employees that provides
you fiduciary protection when changing plan providers and for current employees
who have difficulty choosing the right investments.
Even more beneficial changes will become available in 2008. Stay tuned
Scott Brookes, AIF®, is Director of Retirement Plan Services for Colorado
businesses at Sharkey, Howes & Javer, a Denver based, FEE-ONLY, financial
planning and investment management firm that has been helping people of all levels
of net worth since 1978. Visit shwj.com or call 303-639-5100 for more information
and to schedule your complimentary consultation with the professional advisors at
Sharkey, Howes & Javer.
Information presented is not designed to be tax, legal or investment advice and
is subject to change at any time. All investments contain risks, including the loss
of principal. Past performance is no guarantee of future results. Consult with Sharkey,
Howes & Javer to learn more about the strategies and information presented herein.
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The Housing Recession of 2007
March, 2007
By Lawrence E. Howes, MBA, CFP®
Sharkey, Howes & Javer
The weak housing market that we have these days has historically meant that the
local, and likely the national economy, are headed for a recession. Housing slowdowns
tend to lead into and become a part of recessions, so having a neighborhood full
of “for sale” signs can be considered a sort of leading indicator.
This tepid housing market however is more a result of a “mini-boom like” run-up
in housing prices due in large because interest rates have been coming down since
2001. Prices went up because the cost of money went down and the availability of
cheap mortgages made buying almost anything affordable. Beginning in June 2004,
the Fed began raising short-term interest rates and by June 2006 rates had increased
4.25%. These new higher rates did increase borrowing costs a little for some home
buyers. However, on a relative scale, pushing the 30-year mortgage up another 1%
or so does not drive potential buyers out of the market just because of the “high
cost” of money. What we have is that the recent slowdown in housing is due to high
prices, not high interest rates. Those who bit off a little more house than they
could afford, simply bailed out and hence the foreclosure headlines and “sub-prime
lending” hysteria. Many of the now foreclosed homes were purchased on a 100% loan-to-value
loan and “stated income” -meaning there is no actual verification of income or assets.
Between 2000 and 2006, the value of residential real estate held by US households
rose by some $10 trillion to a total of $22 trillion. The fall in US housing prices
during the last three quarters of 2006 is about 8 percent. If this continues and
home prices fall back to their values of mid-2005, (a drop of about $2.2 trillion
or 10 percent of the current value of residential housing), households will feel
it; and because residential real estate is the single largest asset of most households,
as home prices come down, it will slow consumer spending.The first The first quarter
of 2007 has been an adjustment period for most investors, and as the US economy
slows, the stock market will likely give us more of these 1-3% daily swings. This
market volatility will likely increase throughout the next year or two and some
traditional “safe” assets like Gold and Real Estate are simply going to lose value.
I believe the chance of a recession in 2007, caused by housing weakness alone, is
about 15%. However, there are some other economic drivers lurking out there that
could push the economy in the wrong direction, so a careful review of your asset
allocation is likely in order.
Do not believe that this time is different, because it’s not. Making money in these
markets is simply getting harder than it has been since 2002. The trend toward bigger
market swings and the associated disappointing market results is increasing, and
even a small rate cut by the Federal Reserve won’t help this time.
Lawrence E. Howes, MBA, CFP®, is a principal at Sharkey, Howes & Javer, a
Denver based, FEE-ONLY, financial planning and investment management firm that has
that has been helping people of all levels of net worth since 1978. Mr. Howes is
also one of the “Best Financial Advisors for Doctors” since 1998 according to Medical
Economics. Visit shwj.com or call 303-639-5100 for more information and to schedule
your complimentary consultation with the CERTIFIED FINANCIAL PLANNERTM professionals at Sharkey,
Howes & Javer.
Information presented is not designed to be tax, legal or investment advice and
is subject to change at any time. All investments contain risks, including the loss
of principal. Past performance is no guarantee of future results. Consult with Sharkey,
Howes & Javer to learn more about the strategies and information presented herein.
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Housing Dragging Its Feet
August, 2006
By Lawrence E. Howes, MBA, CFP®
Sharkey, Howes & Javer
Housing is a key component of the US economy. By many estimates, housing and its
supporting industries contribute upwards of 50% of US economic growth. If you are
keeping tabs on the “For Sale” signs these days, housing is slowing. In fact, the
inventory of houses on the market in the Denver/Boulder area is up some 33% in the
last 6 mos. Most neighborhoods have something for sale and these properties are
likely going to be on the market for some time.
Housing’s impact is far reaching and it is a big part of the growth in the economy
because it supports the consumer at the most basic level; one’s home is frequently
viewed as a pot of money ripe for withdrawal. People are willing, if not enthusiastic,
about borrowing against their home’s “value” when an offer from a lender is attractive
enough. Then they take their new found riches ($600 Billion in 2006) to the store.
It’s the American way. The best evidence I have of home equity spending is that
in the first quarter of 2001 total mortgage debt was $4.8 Trillion. By the third
quarter of 2005, it was $8.2 Trillion, or up about 70% and most, if not all, of
that money bought stuff or a second or third home. This phenomenon is known as the
“wealth effect” and this spending is a common substitute for actually having saved
money.
But it’s not just home equity values that are dropping, it is construction as well.
Since the beginning of this economic expansion, about January 2001, the US economy
has added some 2 million new jobs, with 30% of those jobs related to home construction.
That includes construction workers, construction management, office staff, mortgage
brokers, developers, real estate agents, suppliers and all kinds of related support
people. The impact of a severe slowdown is huge, meaning housing prices drop another
20% and the “For Sale” inventory increases another 50%. The impact would be higher
unemployment (5% +) and a recession in 2007.
I don’t believe that it will get that bad, but there are several factors hitting
the consumer pretty hard now - gasoline prices and line-of-credit interest rates
at 8.25%. A subtle but pervasive fear is creeping back into consumer spending, especially
for those who purchased a starter mansion with an adjustable rate loan. The US economy
is slowing. Consumer spending is slowing. Credit card use is accelerating. For the
prudent investor today, it’s time to realize that the marketplace is forcing some
changes because interest rates are going to stay close to where they are now for
awhile. If the Fed lowers interest rates in 2007, it probably will not be very much,
maybe a ¼ or ½ percent, and mortgage rates are going to stay close to 6%. Bonds
will be in the 5% range and the stock market might provide another 5 or so percent
gain in 2006. I admit that it’s not great, but it’s not that bad either!
Lawrence E. Howes, MBA, CFP®, is a principal at Sharkey, Howes & Javer,
Inc., a Denver based, FEE-ONLY, financial planning and investment management firm
that has been helping people of all levels of net worth since 1978. Mr. Howes is
also one of the “Best Financial Advisors for Doctors” since 1998 according to Medical
Economics. Visit shwj.com or call 303-639-5100 for more information and to schedule
your complimentary consultation with the CERTIFIED FINANCIAL PLANNERs® at Sharkey,
Howes & Javer.
Information presented is not designed to be tax, legal or investment advice and
is subject to change at any time. All investments contain risks, including the loss
of principal. Past performance is no guarantee of future results. Consult with Sharkey,
Howes & Javer to learn more about the strategies and information presented herein.
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Summer Sunny Weather
June, 2006
By Lawrence E. Howes, MBA, CFP®
Sharkey, Howes & Javer
For the last few years the financial markets have enjoyed relatively sunny weather.
Since 2003 we have experienced minor market swings, but few major changes in market
direction. In many ways these sunny days were a result of a robust money supply
and a Federal Reserve that was willing to make borrowing cheap and easy for businesses
and consumers alike.
The Fed is now removing the excesses in the money supply, raising interest rates,
and embarking on a mission to slow growth, slow consumer spending, and slow the
economy as a whole. I am not suggesting that we are going to have a slump or a recession
any time soon as a result of the Fed’s actions. Just an orchestrated slowdown until
the Fed is happy that inflation and spending are not getting out of hand. The S&P
500 and most of the world’s stock markets are responding to the Fed’s campaign by
corrections that have put a damper on their otherwise positive returns so far this
year. It is a safe bet that this summer will have more volatility and surprises
than we have seen since 2003.
Gasoline prices have returned to the $3 per gallon, or so, price level that we saw
in the aftermath of Katrina. Back then consumers simply absorbed the additional
costs with little or no effect on spending or trips in the RV. This spring was demonstrating
a similar willingness to shrug off the cost of gas but actual summer driving is
beginning to show a change in behavior. A working family now appears to be reconsidering
the wisdom of spending $400 to fill the boat for a cruise around the lake.
Things are rarely ever really different, and basic economics tells us that when
something gets more expensive, consumers will buy less of it. It may take them awhile,
but they eventually get there. The price of accessing easy money from the home equity
line of credit has essentially doubled from the heady days in 2004 when 4% was common.
It is not surprising that the use of credit cards is starting to grow again, so
spending should slow a bit.
The markets will adjust to the higher cost of money and slower spending by retreating
for a summer vacation. Once the Fed is satisfied that inflation and spending are
not overheating, the markets should cheer-up and likely give us a reasonable 2006.
The outlook for the end of 2006 and into 2007 is pretty good. The US economy is
doing well and summertime is, after all, a good time for a vacation. Lawrence ELawrence
E. Howes, MBA, CFP®, is a principal at Sharkey, Howes & Javer, a Denver based,
FEE-ONLY, financial planning and investment management firm that has that has been
helping people of all levels of net worth since 1978. Mr. Howes is also one of the
“Best Financial Advisors for Doctors” since 1998 according to Medical Economics.
Visit shwj.com or call 303-639-5100 for more information and to schedule your complimentary
consultation with the CERTIFIED FINANCIAL PLANNERTM professionals at Sharkey, Howes & Javer.
Information presented is not designed to be tax, legal or investment advice and
is subject to change at any time. All investments contain risks, including the loss
of principal. Past performance is no guarantee of future results. Consult with Sharkey,
Howes and Javer to learn more about the strategies and information presented herein.
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