“The only imaginative fiction being written today is income tax returns.” Herman Wouk
Now that your taxes are probably put to bed after a special extension to April 17th, it should be time to figure out how to do better next year. My first suggestion is to find a great accountant. Second, take advantage of every legal loophole and use a clever tax presentation. Third, hire a great accountant.
Following their best first quarter in 14 years, the equity markets have settled down a bit. Through the week of April 20th, the S&P 500 is up 10.3% year to date. Even with the noise and hullabaloo overseas, Europe ex-UK (+7.64%), the UK (+8.69%) and Asia-ex Japan (+12.22%) have gained nicely in 2012. The best investment sectors this year have been Technology (+17.3%) and Financials (+17.3%). The worst have been Utilities (-1.7%) and Energy (+0.2%). Last Friday, Gold closed at $1641 and Crude Oil at $103. Year-to-date, Russell 1000 Large Cap Growth (+12.8%) and Russell 1000 Mid Cap Growth (+12.9%) have led the charge. With a 6 month CD now bearing a measly 0.47%, no wonder cash is coming back to the markets.[1]
“The income tax has made more liars out of the American people than golf has…” Will Rogers
Pan Am, Amoco, Levitz, EF Hutton, Oldsmobile and Wang Laboratories…what do these companies have in common? They no longer exist. Do you remember the commercial slogan for the defunct investment house: “When EF Hutton talks…people listen.” In my opinion, these businesses did not listen to their customers and adapt to change. Speaking of adapting to change…women are still not allowed to join the 300-member good ole boys at the Augusta National Golf Club. Bubba Watson showed his championship style there this month, using a pink driver and hugging his Mom after his victory in sudden death. Winning was a very big story this month as the lottery grew to $656 million. Illinois, Kansas and Maryland were the resident states claiming victories. Pacific Sun Financial has been fortunate to serve 3 lottery winners…all from the state of California…but none with a prize quite that big. What would you dream of doing with that kind of money?
The tax rule on millionaires named for him is probably not ready for “prime-time” in Congress. He was recently diagnosed with Stage 1 prostate cancer. Yet, Warren Buffett remains optimistic and realistic: “The good news is that I’ve been told by my doctors that my condition is not remotely life-threatening or even debilitating in any meaningful way,” he wrote in his letter to shareholders. Warren should be feeling good about winning his $1,000,000 bet against hedge funds…at least so far. Four years ago, he placed a friendly wager with Protégé Partners that Protégé’s hedge funds couldn’t beat the S&P 500 represented by Vanguard Admiral. “Hedge funds of funds have underperformed because of high fees and mediocre manager selection,” said Brad Alford, head of Alpha Capital. This year, Vanguard Admiral has pushed ahead with more than twice the gains of the hedge funds.[2]
Two of my credit cards were “corrupted” this month. Has this happened to you? A mobile swiping device was used to copy my cards wirelessly by someone simply walking by me at an airport or restaurant. The fraud department figured out the theft because purchases were made in Michigan, and I haven’t been there since the 60’s. As a result of this inconvenience, I now cover my credit cards with a small piece of aluminum foil in order to “foil” future thieves. It’s easy to do and provides pretty effective protection according to the credit card companies.
In his book entitled “Backstage Wall Street”, Joshua Brown describes many products, pitches and traps that could blow up an investment portfolio. Here is a partial list from Joshua: 1. NASA engineers couldn’t draw up a worse product than SPACS (Special Purchase Acquisition Corporation); 2. Reverse convertibles that pit you against the market and the bank; 3. Managed futures funds with fees over the top; 4. Highly leveraged currency plays; 5. Biotech companies with only one drug, and 6. Anyone who claims to have a ‘system’…because there is no such thing, and if there were, you would be the last person to hear of it.[3]
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take your money and go to Las Vegas.” Paul Samuelson
Today’s the day.
Mitch Fisher
National Asset Management, Inc. (NAM) is a Registered Investment Advisor with the SEC. NAM provides fundamental investment management services. The views expressed contain certain forward-looking statements. NAM believes these forward-looking statements to be reasonable, although they are forecasts and actual results may be meaningfully different. Actual events may cause adjustments in portfolio management strategies. This material represents an assessment of the market at a particular time and is not a guarantee of future results. This information should not be relied upon as research or investment advice regarding any security. One cannot directly invest in an index. Index performance returns do not reflect any management fees, transaction cost or expenses. Indices are unmanaged. Russell 1000 Large Cap Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher than forecasted growth values. Russell Mid Cap Growth Index measures the performance of those Russell Mid cap companies with higher price-to-book ratios and higher than forecasted growth values. Securities offered through National Securities Corporation, Member FINRA/SIPC. Investment Advisory Services offered through National Asset Management, Inc (NAM) SEC Registered Advisor and affiliate of National Securities Corporation. NAM or Pacific Sun Financial does not offer any legal or tax advice. One should consider consulting with a legal or tax professional before implementing investment strategies. National Securities and National Asset Management are not affiliated with Pacific Sun Financial Corp.
[1] JP Morgan Asset Management 4-23-12 [2] Investment News 3-26-12 [3] “Backstage Wall Street ” by Joshua Brown