Threshold BlogFinancial PlanningPosted 02/16/2012 in Financial PlanningFinancial Planning read more »Where's the beef?Posted 02/15/2012 in Investment InsightsIn previous blogs, you have read my advice about “getting paid to ride out the volatility,” and I fully expect we will see similar conditions for years to come. You also have heard me discuss the importance of owning “quality” securities given the belief that quality companies should be able to weather turbulent times better than others. How does one define quality? If you are looking for a high-quality steak, the U.S. Department of Agriculture (USDA) makes it relatively easy. The USDA defines quality beef in eight grades. The grades that really matter to consumers are: Prime, Select, Choice and Standard; once you stray lower than “Standard,” the beef is rarely used in food service operations. In the debt world, bond rating agencies such as Standard & Poor’s (S&P), Moody’s, and Fitch Ratings have created similar rating systems to assess the creditworthiness of debt securities. Since the onset of the credit crisis, these rating agencies have been under fire because many of the securities they rated as high-quality did not live up to that standard (think collateralized mortgage obligations backed by subprime residential loans). One agency, S&P, appears to have dramatically overreacted to its own tarnished reputation as a ratings authority by going to extremes with negative credit ratings. S&P has been on a rampage, downgrading securities on a regular basis and putting itself front and center of the highly visible crisis of confidence involving sovereign bonds in Europe and possibly the U.S. at some point. It was just last August when S&P’s downgrading of U.S. debt from AAA to AA+ put us on par with two British crown dependencies, the Isle of Man and Guernsey, and one step above Belgium, a country whose economy measures 1/30th the size of ours. .. read more »"Future Shock" or "Field of Dreams?"Posted 01/23/2012 in Investment InsightsAs we begin the New Year, I will admit to having had some false optimism regarding a fresh start, a chance for the world to right itself and for normalcy to return. In this temporary fantasy, I saw an environment in which fundamentals would drive asset prices, politicians would make difficult but logical choices for our long-term well-being, and consumers would learn how to balance the desire to spend with the need to save and pay down debt. Even an investment wonk like me can dream, right? Well no, not for long. This piece outlines some of the reality-based market themes we believe will set the context for investment decisions over the next 12-36 months. I am a firm believer that, regardless of negative or positive swings in human sentiment, our markets will present identifiable risks and opportunities. While we will look at many risks and opportunities as the near term unfolds, the accompanying chart summarizes the focus of our attention as we begin 2012. .. read more »Checking your 2011 tax list, twicePosted 12/21/2011 in Investment InsightsThe end of the calendar year is an ideal time to ensure you’ve taken advantage of all the most effective money-saving opportunities for you and your family. This brief financial planning checklist is worth reviewing during these waning days of 2011.
If you have any questions, don’t hesitate to contact your Threshold relationship manager for further details on these or any other planning topics. Taxes • Make charitable contributions with appreciated stock.
• Make annual exclusion gifts before year-end. Investments
• Cull investments for losses or gains depending on tax strategy. Health.. read more »What keeps Charles Dickens awake at night?Posted 12/14/2011 in Investment InsightsLately, I feel like we’ve been sitting through a flawed performance of Charles Dickens’ “A Christmas Carol.” The three haunting ghosts of Markets Past, Market Present and Markets Future are experiencing an identity crisis. The casting is problematic because all three ghosts appear to be behaving as one and the same! Why should 2012 be any different than 2011 – debts, deficits and a dearth of leadership? We’ll undoubtedly see some geopolitical crises and societal unrest just to keep the audience restless. Before we walk out of the theater at year’s end, let’s get some perspective on this confusing show. While ending a calendar year and starting a new one creates no magic clarity in our view of the global economy and markets, the transition is an opportune time to prepare our portfolios for the risks and opportunities we expect to see in the coming year. Despite a year fraught with Black Swans, circus antics in the halls of power, and resulting seismic shocks to markets, we are moderately pleased with our ability to navigate markets amid an abnormally high level of volatility. We remain comfortable with our risk management discipline, which involves leaning toward conservatism as markets and economies around the world remain unsettled and work their way through the collateral damage from the recent crisis... read more »Digesting Europe’s Main Course: “Sovereign Debt”Posted 11/10/2011 in Investment InsightsSome of you have heard me talk about the bad case of debt indigestion being experienced by many of the world’s developed nations due to massive financial liabilities accumulated mostly during the past 25 years. The pains associated with this condition have been wreaking havoc on our global gastrointestinal system (aka, the financial markets). We can expect this condition to continue to plague markets at varying levels of intensity for years to come. Why? There is no economic antacid or soothing herbal remedy to eradicate trillions of dollars of debt.
A View from the ParkPosted 10/20/2011 in Investment Insights
Make no mistake, the credit crisis, aside from its natural evolution into a sovereign debt crisis, has shined a spotlight on wealth inequality in the developed world, especially here at home. Since its initially innocuous and local germination in Manhattan’s Zuccotti Park one month ago, the “Occupy Wall Street” movement has spread globally, fueled by the Internet’s hyper-connectivity. The purpose of this brief missive is to examine its origins and highlight some potential implications to markets.
While widespread, Occupy Wall Street is highly unorganized with an ostensibly fungible and diverse set of identities depending on who is being asked. At first blush, it may be easy for someone in my chair to discount the entire movement’s purpose due to some of the baseless complaints, such as a 37-year-old Columbia University graduate student who expects someone else to pay off her student loans. (Factoid: Students graduating from university are saddled with an average of $24,000 in debt.) However, if we apply credibility filters to the youthful bluster and cloudy logic at some of these gatherings, it’s clear these protests reflect disillusionment with our current socio-economic condition. It comes in response to dysfunctional leadership in Washington and capitals around the world, and from anger at the lack of accountability by global financial institutions (read: Wall Street) in creating the financial crisis and the resulting worldwide economic downturn. A real fear has taken hold of many Americans and that is, the American Dream of upward mobility and personal financial success is seen as a promise of the past. While it is easy to deride the movement for its lack of leadership and absence of a singular demand, we need to pay heed to the amplification of a deepening divide between those perceived as “rich” and everyone else, thus their refrain, “We are the 99%.”.. read more » |
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