YeBu in the Media•
on January 1st, 2012•
The San Francisco Chronicle’s Kathleen Pender offers up advice for financial planning in the new year. Kathleen quotes Dave on the value of harvesting capital gains ahead of a scheduled rise from 15% to as much as 23.8%.
Consider harvesting capital gains. With tax rates set to go up in 2013, many advisers say investors should consider selling stocks, funds and other investments in which they have a gain in 2012 to lock in the tax at this year’s lower rates. If they still want to own the investment, they can immediately buy it back.
This is the opposite of a more common strategy known as tax-loss harvesting, which involves selling assets in which you have lost money to lock in a tax loss. The loss can be used to offset gains in other investments sold the same year. If your realized losses for the year exceed your realized gains, you can use up to $3,000 in excess losses to reduce your ordinary income and carry any remaining losses forward to offset taxes in future years. One hitch with this strategy is that if you sell an asset at a loss and buy it back within 30 days, you cannot claim the tax loss. This wash sale rule does not apply to capital gains.
“I can sell something for a gain and instantaneously go back into it” without impacting the tax treatment, says Dave Yeske, managing director with investment firm Yeske Buie in San Francisco.
But there’s no reason to do it early in the year versus later. “We will wait until it’s pretty unambiguously clear which way (the tax rate) is going to go,” Yeske says.
YeBu in the Media•
on December 31st, 2011•
Dave was quoted in a recent article by Dow Jones writer Daisy Maxey devoted to the virtues of preserving short-term losses for use in offsetting short-term gains (as opposed to “wasting” them offsetting long-term gains). Dave’s comments were more focused on the possibility of harvesting all embedded gains, in light of looming tax law changes:
David Yeske, managing director at financial planner Yeske Buie in Vienna, Va., said that this year and last he was “very aggressive” about harvesting gains to lock in the current long-term gains rate. That will likely dominate his thinking next year, too, he said. With the prospect of the Bush tax cuts expiring at the end of next year, the federal long-term capital gains rate may go up for most taxpayers by a third, “a serious bump,” says Yeske.
“We’re far less concerned with harvesting losses and more concerned with when and how we’re going to harvest long-term gains,” he said. “Most of our people are sitting on embedded gains, notwithstanding the craziness of the last six months. We think resetting the cost basis higher at a low tax rate is going to make sense for our clients in the long run.”
YeBu in the Media•
on October 22nd, 2011•
GETTING PERSONAL
Advisers Nudge Fearful Clients Toward Stocks
By DAISY MAXEY
A DOW JONES NEWSWIRES COLUMN
“Fear is a stronger emotion than greed,” says an adviser
NEW YORK — Some advisers are nudging fearful clients back into stocks–while continuing to calm investors losing patience with the market’s volatility.
“Fear is a stronger emotion than greed,” said Todd Morgan, senior managing director at Bel Air Investment Advisors in Los Angeles, which advises about $6 billion in assets for high-net-worth investors.
Morgan has changed his call since August, when he told clients, “It’s too late to sell and too early to buy.” Now, he said, “the stock market is worse than the economy, and stocks…are very, very cheap.” But he added, “people are frightened.”
Morgan moved his high-net-worth clients heavily into bonds just before the market collapse in 2008 and they never came out, he said. “Our clients went into a bunker, then the storm hit and after the storm people didn’t want to get back in,” he said. He’s just now starting to convert small amounts of bonds into equities, but said, “People have a muscle memory of 2008 and early 2009; it’s hard to get them to put more money into equities.”
Some investors are losing patience with the market’s volatility, he said. “I’m trying to encourage people to stay the course,” said Morgan. “When it’s time to go up, markets go up 2%, 3%, 4% a day for a week, and there’s no time to get in. By the time you say, “I feel comfortable now, everything’s OK,” the market’s up 10%, 15%.”
David Yeske, managing director at Yeske Buie in Vienna, Va., said he, too, is fundamentally optimistic. While the market’s recovery will be slow and choppy, it’s inevitable, Yeske said. However, the recent volatility will be the “nature of the beast” until a more robust recovery takes hold, he said.
The average portfolio at Yeske Buie is around $2 million, and about 80% of the firm’s average preretirement portfolio is invested in stock mutual funds, with the balance in bonds. Throughout the entire economic recession, Yeske said, he’s stuck to his global, diversified portfolio, with a stable bond portion and regular rebalancing.
Clients have stayed put, but increasing volatility has brought more anxiety, which means he needs to repeat his message. “We’re fielding more phone calls and holding more face-to-face meetings,” he said.
Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, N.Y., said that barring some huge, unexpected global event, another 6% to 10% increase in stock values is not unreasonable based on corporate earnings and a recognition that the U.S. is very unlikely to fall into a recession.
In late May, he shifted about 10% of his clients’ assets into cash from stocks in anticipation of volatility, though he never expected such high levels of volatility. He moved those assets back into the market in the third week of September, adding across the board to his clients’ investments.
At that time, the market was assuming that the U.S. was headed for recession, that China would suffer a hard landing and that Europe would enter a recession in the fourth quarter or 2012, Pursche said. Last week, traders recognized that the U.S. probably won’t fall back into a recession and that “things weren’t quite as dire as was priced in,” he said.
But that doesn’t mean his clients are sanguine. “No one is comfortable with this market.” Clients became more anxious when they received their most recent quarterly statements, he said, but not nearly as fearful as they were at the end of 2008 and in early 2009, he said
YeBu in the Media•
on October 2nd, 2011•
As part of the Financial Planning Association’s (FPA) long-standing relationship with The Wall Street Journal, they teamed up again to produce a special section, “Private Wealth Management.” The section appeared in the September 16 issue of The Wall Street Journal, in conjunction with FPA Experience 2011, and featured a special message from 2011 FPA President Marty Kurtz, CFP, AIFA.
Marty gave Dave a shoutout in his article “Concerned About the Future? Experts Say a Long-Term Plan is Key to Riding Out Short-Term Market Volatility.” Here’s the relevant passage:
“Renowned expert and former FPA national president Dr. Dave Yeske, CFP®, managing director of Yeske Buie, a financial planning firm with offices in San Francisco and Washington, D.C., offers that “The reason for having a financial plan is to make it easier to know what to do in tough times. The way to survive and thrive through all the inevitable storms in the market is to save and invest, diversify and rebalance, and maintain prudent reserves.” I echo that statement.”
View the supplement.
YeBu in the Media•
on October 2nd, 2011•
Dave was quoted in the New York Times on the comparative dangers of short-term market volatility and long-term inflation:
”What changes, and very redically, is risk perception,” said Dave Yeske, a financial planner in San Franciso. “The scariness of short-term volatility disproportionately blinds us to the long-term scariness of inflation.” he added, saying that the recent inflation rate of 3.6% would erode your purchasing power by half in 20 years. (“Long Term Stock Plans Help to Avoid Impulsive Moves,” New York Times, September 15, 2011)
Unfortunately, the article then goes on to quote several people who recommend such low equity allocations in retirement that the retiree would have almost no prayer of overcoming those long-run inflation risks. (see our September 23 Live Big Digest on this topic).
YeBu in the Media•
on August 12th, 2011•
DENVER, Aug. 12, 2011 /PRNewswire via COMTEX/ — The Financial Planning Association weighed in on the volatility of the recent shifts in the financial markets and the resulting effect on consumers, as well as the organization’s 23,800-member base. FPA is the largest membership organization for personal financial planning experts in the U.S.
“As advisors, we help our clients plan for the long run and counsel them to not overreact to fear-based market changes like the ones we are seeing now,” said Marty Kurtz, CFP®, AIFA®, 2011 FPA President and President of The Planning Center. “The stock market roller coaster of the past week and a half is being exacerbated by short-term thinking, as well as political and emotional reactions.”
Other FPA members echo Kurtz’s statement and are finding that while their clients certainly have a growing awareness of the “debt debates” in Washington DC and recognize the depth and severity of the nation’s financial situation, they are not exuding panic or reactive behavior. As one FPA member noted: “Investors hate uncertainty but a key aspect of investing is uncertainty and risk. When these moments of ‘economic reckoning’ occur, those who feel the calmest are those who work with advisors to offset risks with appropriate, prudent and balanced financial plans.”
Noted expert and former FPA national president Dr. Dave Yeske, CFP®, Managing Director of Yeske Buie, adds “The reason for having an investment plan is to make it easier to know what to do in times like these. It’s usually better to be resilient than nimble. The way to survive and thrive through all the inevitable ups and downs in the market is to save and invest, diversify and rebalance, and maintain prudent reserves.”
“FPA is in a unique position to take the pulse on both the advisors, and the advisees,” added FPA Executive Director and CEO Marvin W. Tuttle Jr., CAE. “America is confronting its ‘debt demons’, which bodes well for the long term. In the meantime, our constituents are facing uncertain times with great calm and confidence. Comprehensive, long-term planning is helping planners and their clients navigate the crisis with greater ease.”
What Kurtz, Yeske and other experts describe – the importance of having a long-term plan in uncertain times — is exactly the sentiment expressed by consumers surveyed by FPA just prior to the 2008 recession. Seventy-four percent of those surveyed — who described themselves as actively engaged in the financial planning process through an ongoing relationship with a professional financial planner — were more likely to feel prepared during changing market conditions versus only 54 percent of those who were self-directed and not working with an advisor. When comparing the same groups, 82% of those “involved” individuals were more likely to have confidence in coping with the financial impact of unexpected events vs. 57 percent of those working alone.
About the Financial Planning AssociationThe Financial Planning Association® (FPA®) is the largest membership organization for personal financial planning experts in the U.S. and includes professionals from all backgrounds and business models. FPA members adhere to the highest standards of professional competence, ethical conduct and clear, complete disclosure to those they serve. Based in Denver, Colo., FPA works in alliance with academic leaders, legislative and regulatory bodies, financial services firms and consumer interest organizations. For more information about FPA, visit www.FPAnet.org or call 800.322.4237.
SOURCE Financial Planning Association
Copyright (C) 2011 PR Newswire. All rights reserved
http://www.marketwatch.com/story/fpa-experts-and-survey-cite-reliance-on-long-term-plans-for-consumers-and-moderate-reactions-to-current-market-turmoil-are-best-response-2011-08-12?siteid=nbkh
YeBu in the Media•
on August 7th, 2011•
Candice Choi, AP Personal Finance Writer, On Sunday August 7, 2011, 7:41 pm
NEW YORK (AP) — Investors should think twice before making any rash moves Monday.
Many market analysts expect stocks to fall sharply because of anxiety about the downgrade of the U.S. credit rating, the debt crisis in Europe and last week’s stock market plunge. The temptation to bolt from any hint of risk is understandable. And right now, stocks look risky.
Financial planners say people who stick with their investment strategy will likely see their portfolios recover in the long run.
“The whole reason for having an investment plan is to make it easier to know what to do in times like these,” notes David Yeske, managing director of Yeske Buie, an investment firm based in San Francisco.
Still, that can be difficult to remember when faced with a seemingly endless stream of grim news.
Standard & Poor’s downgraded the country’s top AAA credit rating for the first time in history on Friday. The ratings agency lowered the rating one notch to AA+. It said political fighting in Washington raised concerns about the government’s ability to solve its budget and deficit problems.
Just a day earlier, the Dow Jones industrial average fell 513 points, its biggest drop since the 2008 financial meltdown. The plunge contributed to a nearly 10 percent slide in the Dow over the past two weeks. One reason for the drop: Italy looks like it could be the next European country to need a bailout. And that raised concerns about the health of the global economy.
The swoon in stocks likely knocked many portfolios out of balance. For example, younger professionals might have built a portfolio so it would be 70 percent in stocks. But that share has probably fallen as the market did. These investors should consider shifting more money into stocks to get back into balance, financial planners say.
The prospect of buying stocks, even at cheaper prices, is daunting. The more natural instinct when the market is undergoing turmoil is to sell.
“But if you sell now out of fear that the markets won’t recover, you’ll be selling low and losing money,” notes Ric Edelman, CEO of Edelman Financial, based in Fairfax, Va. “Investors who are fair-weather friends are the ones who lose the most money. Profits are earned when the market is declining.”
The past few weeks underscore the importance of rebalancing regularly and frequently, especially as you get closer to the time when you’ll need your money. Experts say those nearing or already at retirement age shouldn’t have been heavily invested in stocks, and so the recent selloff shouldn’t have had a significant event.
If the thought of buying stocks in this climate is unnerving, keep in mind that the majority of portfolio changes the past two years have gone in the other direction — in other words, portfolios have become stock-heavy because the market has soared. Even with last week’s drop, the Standard & Poor’s 500 index is still up 77 percent from its bottom in March 2009. It’s also down 23 percent from its high set in 2007.
Buying stocks now to rebalance will help you keep your long-term strategy. But it needs to be done carefully. Look for stocks that are expected to do well for the next five to 10 years. Look for stocks that pay steady and rising dividends.
And don’t try to make a quick buck because prices look low.
Cliff Caplan, wealth manager at Neponset Valley Financial Planners in Norwood, Mass., said those looking to make money in the short term may end up getting burned.
“You can’t assume anything,” he said. “To make a prediction in the short run is fool’s game right now.”
Original article on Yahoo Finance: http://tinyurl.com/3ooattu
In her “Net Worth” column today, Kathleen Pender explores some of the possible explanations for the recent slide in the markets. Our take, as always, is that it’s essentially impossible to identify the right explanation (or even mix of explanations) for any market activity. The main drivers can, at best, be identified only in hindsight, not concurrently. A point that’s often lost in these discussions is that the markets are foward-looking, they’re “leading indicators.” So, by definition, it’s futile to seek explanations in the current round of economic statistics. The markets are distilling expectations for things that are out on the horizon, things that won’t show up in the numbers for many months to come. Here was Dave’s contribution to Kathleen’s column:
“We are waiting with bated breath to see what the intrinsic engine looks like,” says Dave Yeske, managing director with Yeske Buie, a San Francisco wealth management firm. “I think the economy is past the point where it needs to be stimulated in order to avoid falling into another recession. How quickly it’s going to pick up speed, really nobody knows.”
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/06/06/BUGK1JQAUJ.DTL#ixzz1Oc5liJbd
As another week draws to a close, we realized that we had enough news and housekeeping items to justify another edition of the Live Big Digest. We hope you’re doing well and preparing for a restful weekend break.
Client Appreciation Events
We’ll be holding an open house in the Vienna office on March 23 from 4:00 PM to 6:30 PM. Wine, beer, soft drinks and the chance to meet staff from both offices will be on offer. Please go here http://tinyurl.com/5u2vpk3 to RSVP.
Mark your calendar for the San Francisco Open House, which will be held on Wednesday, October 12.
Yeske Buie on Top Wealth Advisor List
The San Francisco Business Times named Yeske Buie a top wealth advisor in its 2011 rankings. The list was compiled by NABCAP, which conducted an independent evaluation of firms based financial planning, investment planning, accountability, education, credentials, cost, disclosure, technology, performance, and client education model, among other things. http://tinyurl.com/4z3jck8
Required Minimum IRA Distributions
If you’re subject to required minimum IRA distributions, you can expect to receive your payout by the end of July. We’ll be raising cash by the end of May, sending you distribution paperwork by the end of June, and processing distributions by the end of July.
Tax Return Request
As always, we look forward to receiving a copy of your 2010 tax return as soon as it’s available.
DFA Tops Barron’s/Lipper Rankings
Dimensional Fund Advisors was ranked number one among US Equity Funds in the annual Barron’s/Lipper rankings. According to Barrons, DFA did well because “the mutual-fund families that delivered the best overall returns for their shareholders didn’t take money off the table, flee to defensive stocks or hide in Treasury bonds,” It also helped that DFA focuses on small company and value stocks. It was nice for once to see a fund topping one of these lists for all the right reason!
http://tinyurl.com/67h7esp
The San Francisco Chronicle’s Kathleen Pender in her Sunday Net Worth column offered tips from 11 financial service professionals, including Dave. Here was what Dave had to say:
Get over it!
Dave Yeske, managing director, Yeske Buie
If it ain’t broken, it ain’t broken.
Too many people are still traumatized by what happened in late 2008 and early 2009. They are saying the system is broken, the economy doesn’t work anymore, the financial markets are dysfunctional, we’re entering a period of diminished economic growth, low equity returns, etc. The evidence for these views ranges from slim to nonexistent.
People were also traumatized in October 1987, in 1991 after the first Gulf War, and again in 2000 and 2001.
My advice is simple: Save at least 10 percent of your gross income, and invest what you save for the long run. This means mostly stocks or stock funds, so if you’re still nervous, get over it! You’ll never reach long-term goals if you stick with bonds or money markets.
Diversify (for most people this means mutual funds including large cap, small cap, foreign and domestic) and rebalance from time to time. This involves selling asset classes that have outperformed and buying those that have underperformed to maintain a fixed allocation to each asset type.
Rebalancing once a year is plenty for most people and can be done automatically in many 401(k) plans.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/01/01/BUH01H12DL.DTL&ao=all#ixzz1AeqycIiy
