Tuesday, November 25, 2014


John Boyd, CFP


The chart shows a divergence between SPY representing the S&P 500 and JNK representing an index of High Yield Corporate Bonds.  Normally these track with the "junk" bonds going up when the stocks go up. 

That makes sense, because higher stocks usually means higher profits and increasing financial strength of the companies.   While that may be true for the large successful companies, the drop in High Yield bonds (below investment grade) shows that the weaker companies are getting weaker while the strong are getting stronger.

If the recovery is broad based and based upon economics of profits you would NOT expect these to be going in opposite directions.

Perhaps the decline in junk bond prices more closely reflect the dropping commodity prices, and the stock are reflecting the effect of printing a lot of money and low interest rates.

There is also a similar divergence between Small US Stocks and Large US Stocks which probably has the same root cause.

At some point these have to resume their relationship by bonds going up and/or stocks going down.

A Common Sense Approach to the Christmas Holiday Spending Dilemma

Rosemarie Boyd, CFP

A Common Sense Approach to the Christmas Holiday Spending Dilemma

This is the time of year that most of us go into a “feeding frenzy” to make sure that we buy our loved ones everything they could possibly want for Christmas!  It is a time when people, instead of being mellow and enjoying the holidays, become significantly more stressed.  Depression sets in because we know we are spending way beyond our means and can’t see very clearly how we will be able to repay the debt we accumulate as we approach Christmas.

The scene for this chaos is set shortly before Halloween.  If you go to the store on Halloween and try to find anything related to Halloween, you find that this holiday has been relegated to a very tiny corner of the store.  In its previous place of honor, we now find…You guessed it!  CHRISTMAS!  To make matters worse, the Christmas music has already started to play and we have barely finished Halloween.   As we move slowly toward Thanksgiving, the intensity for Christmas shopping increases.  The ads shout at us “Bargains, 40% discounts, 2 for the price of one!”  But wait, the incredible marketing machine urging the consumer to buy, sweetens the pot!  Maybe we should wait for “Black Friday” or, wait, I think stores are opening Thanksgiving morning!   Who needs a turkey anyway!!

As this mania continues, we miss all the blessings of the holidays.  Thanksgiving to me is probably the best holiday of the year, at least it used to be.  It should be a time for family gathering around the turkey.  It should be the least stressful of all the holidays.  But it is not!  Consumerism is forcing people to work on the holiday and the rest of us feel guilty unless we are out looking for a bargain.  Here are some humble suggestions from us to you:

1.  Remember the purpose of the holidays and try to honor that purpose.  Nothing is lost if you don’t participate in the “feeding frenzy” of the mob!  Believe me, there will be plenty of bargains after Thanksgiving Day.  Relax and spend the day with your family.  Catch up with the lives of your children.  Help your family create wonderful memories.

2. As you contemplate Christmas shopping, be thoughtful.  Think about what would be a meaningful gift for the people for whom you buy.  If you have small children, check their toys.  Do they really need another Minion?  If your children have lots of toys, but you want the enjoyment of shopping and finding just the right toy to light up their eyes on Christmas morning, clean out some of the old toys.  Donate them to children who have no toys at all.

3. If you are a grandparent, maybe your grandchildren and your children would be just as happy if you were able to supplement some of the expenses of kid sports or dancing lessons.
4. Plan a budget for spending for Christmas.  This is a budget which should have a separate category for gifts as well as a category for other related Christmas expenses, such as food, the tree, parties which you may have planned, etc.  STICK TO THE BUDGET!!

5. Develop a plan as to how you will pay for everything.  Ideally, your budget would be such that you would be able to pay with cash.  If, however, you are planning to charge some of these expenses, make sure that you develop a plan, in advance, as to how you will pay down your charges and over what period of time. STICK TO THIS PLAN AS WELL.

6. Think about what you could give which would not cost a lot of money.  Offering your time to help out with something is a great way to give an elderly person a very meaningful gift.  In

Wednesday, November 19, 2014

John Boyd, CFP


The chart shows the recent price performance of US stocks as represented in the S&P 500 Index (SPY) and compares it to the trend in International Stocks in the MSCI EAFE Index (EFA).  Both emphasize larger companies in these economic zones.

We have been underweighting international stocks in our managed portfolios for some time due to relative poor performance, but the is a major diversion between US and International stocks that has developed over this Summer and Fall.  Part of this is the strength in the Dollar compared with other Currencies.

How to find a good Financial Planner

Rosemarie Boyd, CFP

How to find a good Financial Planner

When I listen to talk radio, I am always amused by the number of “Financial Planners” who are freely advising people on how to invest their money.  That is not necessarily a bad thing, but the question becomes are the people giving advice actually doing financial planning.
The confusion arises from two problems.  First, there are no restrictions as to who can use the term “Financial Planner”.  The restrictions apply only to those people who wish to call themselves Certified Financial Planners or CFPs. In order to be able to use the CFP® designation, one must complete a course of study, pass an intense exam at the end, and adhere to a strict code of ethics, which dictates how the CFP® deals with clients. In order to maintain the designation, one is required to fulfill thirty hours of continuing education every two years.  Two of those credits are ethics related.
The second problem has arisen as a result of a decision made in the late 90s which allowed stock brokers, to sit for the CFP® exam without ever intending to actually do planning.   Instead of helping the public, this further muddied the waters by creating “CFPs” and “CFP® Practitioners.”  If you are looking for a real planner you want the CFP® Practitioner.
If you are looking for a financial planner, the following are some steps to guide you:
1.      Use a referral source.  Talk to your friends and relatives to see whether they have used a planner.  If no one has a name, you might start with plannersearch.com.
2.      Once you have a name, check this person’s credentials through cfp.net.  This is the official web site for the CFP Board of Standards.  Check also with your local Better Business Bureau.
3.      In interviewing a potential planner, ask for the name of referrals.  A good planner will have asked permission of clients to use their name as a referral source.  Try to get references of clients who have been with the planner for ten plus years, and, for whom the planner has done similar work.  If a client has had a long standing relationship with his or her planner, that person must be doing a good job for the client.  If the planner refuses to give references, consider that a BIG RED FLAG.
4.      Call for an initial appointment which should be free of charge.  Make sure that the chemistry between the two of you is working and that you do not feel any pressure.  Listen to your inner voice!  If you do not feel comfortable, that is to be considered another red flag.
5.      Clearly understand how the planner is paid and what the approximate cost might be.  What happens to the fee if you are not satisfied with the work?  The issue is less how the planner is paid, but more that the potential client fully understands where all fees (and any commissions) come from.  Full disclosure is extremely important.

6.      Finally, and most important, look for independence not someone who is working for an insurance company or a particular brokerage firm.