August 25, 2014

Weekly Market Commentary

August 25, 2014

The Markets

What do Harry S. Truman and Hindu goddesses have in common? Both were invoked to describe Federal Reserve Chairwoman Janet Yellen’s speech at the Jackson Hole Economic Policy Symposium last week.

In her opening comments, Yellen confirmed the economy had improved and suggested more data was needed before the Fed could determine its path. She said:

“…our understanding of labor market developments and their potential implications for inflation will remain far from perfect. As a consequence, monetary policy ultimately must be conducted in a pragmatic manner that relies not on any particular indicator or model, but instead reflects an ongoing assessment of a wide range of information in the context of our ever-evolving understanding of the economy.”

Afterward, some Wall Street professionals empathized with Truman, the 33rd President of the United States and a native of the ‘Show Me’ state, who once lamented the lack of resolute economic advice available. Truman pined for a ‘one-handed economist’ who wouldn’t hedge by saying, “On the one hand… on the other hand…”

Barron’s reported on the speech saying, “In discussing the labor market… Yellen introduced so many qualifications that, instead of the proverbial two-handed economist, she more resembled a Hindu goddess with a half-dozen or more appendages.”

No matter what anyone made of Yellen’s remarks, she was in the catbird seat compared to European Central Bank (ECB) President Mario Draghi who spoke after her. Unemployment in the Eurozone stands at 11.5 percent compared to 6.2 percent in the United States. The range of unemployment across the region is quite significant, from 5 percent in Germany to 25 percent in Spain.

Investors and analysts may not have received the insights they’d hoped to gain about U.S. monetary policy, but it’s important to remember that one person’s hedging may be another person’s careful analysis.

MIND THE GAP. Here in America, some of the most important gaps that need to be filled are in estate plans. It’s not enough to have a plan. You also need to make sure all of the components of your plan – from retirement accounts to investments to property – are properly coordinated. Often the gaps in estate plans are related to:

  • Beneficiary designations: Many financial assets – such as bank accounts, life insurance policies, brokerage accounts, annuities, and retirement accounts – give you the opportunity to name a beneficiary. Typically, assets pass directly to the named beneficiary regardless of instructions in a will. Consequently, it’s important to review beneficiary designations and make sure they align with the intent of your estate plan. It’s also important to know the rules guiding investment distributions to beneficiaries. Generally, there are two possibilities:
    • Per stirpes distribution indicates if a beneficiary dies before the account owner does, the beneficiary’s share will go to his or her heirs.
    • Per capita distribution indicates each beneficiary receives the same amount. If a beneficiary predeceases the account owner, his or her share goes to the other named beneficiaries.
  • Joint ownership of assets: While joint ownership is common for spouses, joint ownership with children and other relatives has the potential to create some estate planning headaches. Forbes.com suggests estate plans should include “a will, revocable living trust (for most people), and financial and health care powers of attorney – which can accomplish all of the same goals as joint ownership, without the risks and complications.”

A 2013 survey of wealthy investors found nearly 72 percent of participants did not have complete estate plans. If you feel you fall into this category, you may want to schedule a meeting with your financial advisor to assess your estate tax liability, determine your most important goals, and structure a plan that fits your needs. Once in place, you may want to review your estate plan regularly to ensure it is in line with current laws and regulations and that it still expresses your goals.

Weekly Focus – Think About It

“No matter what people tell you, words and ideas can change the world.” --Robin Williams, actor and comedian

Best regards,

Suzanne H. Christian, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

Suzanne Christian is a Registered Representative with and securities offered through LPL Financial, member FINRA/SIPC.

  • This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
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Suzanne H. Christian, CFP ®
LPL Branch Manager

phone 909.625.1052

www.suzanne-christian.com

Email: suzanne.christian@lpl.com

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