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Ok, now people are getting jumpy. The market being down more than 1,000 points in one day gets people's attention. That's happened twice in a week.

Many people are asking whether they should pare back their stock holdings. We generally avoid switching gears too much for several reasons I will describe below. I do agree that equities are at the high end of their valuation range after a decade of decent returns. Several clients also thought that was the case 4000 Dow points ago when I talked them in off the ledge. Clearly that was premature, and I believe remains so today. But let's discuss perspective. Many indices have just recently eclipsed their 1999 highs (i.e.NASDAQ 100; symbol QQQ) taking 17+ years to recover. The Dow Jones 30 traded at 11,130 on 12/30/1999. It was still at that same level in 4Q 2011, twelve years later. That's because two 50% drops applied in the meantime; a feat only seen four times in history. Many say 50% drops are now common, which surely contribute to investor jumpiness. I believe in reversion to the mean, and it's unlikely I will see such abrupt...


As 2018 gets going and the recently passed new tax rules apply, I'm considering how things will play out. The new tax law is a veritable smorgasbord of new rules, some with far reaching impacts.

The increase in the lifetime estate exemption amount from $5.6mil to $11.2mil per person ($22.4mil per couple) is just such a game changer for many high net worth clients. This new, higher exempted amount has a sunset provision to limit its effects after 2025. Yet, with the exemption amount having risen multiple times in the past decade, the original $600k exemption from a decade ago is nearly twenty times that today. The direction is clear toward larger exempted amounts, and, as is often the intent, the backlash from taking away a benefit in the future sometimes results in a permanent codification. This happened when IRA gifts to charity (capped at $100,000 annually) became a temporary provision that renewed year after year, until it too was codified as permanent in 2015.


Many articles are starting to surface acknowledging and critiquing the groundswell movement to passive investment strategies and near-wholesale movement to Exchange Traded Fund (ETF) investing. Several of these articles take the position that this portends doom of one type or another. For the reader's edification, passive strategies are generally mutual fund or managed account investment services where the mandate of the strategy is to match the holdings of a benchmark, like the S&P 500, versus a typical active strategy of picking stocks. The ultimate active manager is typically a hedge fund, so it's no wonder that the threat of low-cost passive investing has raised a few of their hackles, since typical hedge fund fees are many multiples higher. Passive strategies are often accessed via ETFs. Due primarily to lower costs, ETFs have an impressive track record of beating their active brethren; but there are also tax benefits to ETFs as well. Since active managers view this trend as a threat to their livelihood, understandably not everyone is a fan. Will Rogers once said, "Don't...


Bitcoin is all the rage with prices up a whopping 900% for 2017. One bitcoin breached the psychologically important $10,000 mark Tuesday for the first time and then shot up to $11,000 by Wednesday.

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Can you believe it's November already? As the end of the year approaches, some tax tips may be helpful. There are two primary categories I'd like to discuss: Tax neutrality on gains and losses and charitable giving.

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October 9th, 2017 marked the tenth anniversary of the stock market peak in 2007. In the months that followed this peak, the market plunged deeper and deeper until the week ending October 10, 2008 became known as the worst stock market week on record. I took a moment to reflect on the damage this event inflicted.

Since I'm a cynic at heart, of course I thought about the worst that could have happened. Most would say the worst would have been if you invested your nest egg on the day of the peak, October 9, 2007. But really, the worst thing would have been if you had liquidated your investments in March of 2009, after the market had already fallen -57%. Unfortunately, this is precisely the move millions of investors made.

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As people work through the wreckage of Hurricane Harvey, more damage may be on the way, and it won't come in the form of more rain. Investors in municipal bonds may be in for a surprise if they see credit ratings begin to downgrade and the potential for default appear in their portfolios. It's too early to know the extent of the damage and how far the tentacles will reach, but investors should be aware of how these vehicles operate and the possible implications.

The Texas municipal market in general will not feel the effects of Harvey. It is specific municipal utility district bonds and water control and improvement district bonds (MUDs & WCIDs) that are likely at greatest risk. These bonds provide financing for new subdivisions to install roads and various underground utilities. The principal is repaid over time with interest as part of MUD taxes levied against the home and shown on the owner's annual property tax statement.

Homes with outstanding mortgages that are in special flood hazard areas are generally required to carry flood insurance, which helps soften...

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The devastation from Hurricane Harvey is widespread and disheartening. However, the outpouring of aid and the community spirit that have arisen in the face of the tragedy are inspiring, and they seem to be born of the famous, independent, hardscrabble Texan mindset.

As I ponder ways this calamity will play out in the financial markets, I see plenty of silver linings in the storm clouds. I started with the most obvious targets, such as insurers like Allstate, and their stocks have barely flinched. Surely this event will also benefit home improvement stores, such as Home Depot and Lowes, at least on a regional level.

The credit ratings of municipalities in the hardest-hit regions may play out more gradually, though I don’t anticipate long-lasting devastation here, either. The municipal market has endured many similar hits before, and it has proven its buoyancy each time. Galveston municipal bond prices hit the skids after Ike, but they have rebounded nicely. This storm likely won’t leave areas devastated for long, and because homes with mortgages almost always require...

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I have written many past musings on the topic of investor behavior. I point out these human idiosyncrasies and how they play out with the hope that some investors will spot within themselves the issues I raise and possibly make wiser decisions going forward.

One of the topics we have not written about before is the topic of "framing" or "anchoring." These are terms psychologists use to describe a decision process in which what we perceive about a situation today is based on a frame of reference or anchor point in the past. This "anchoring" concept often manifests itself with investors who acquired employer stock while working for the company. It could also be inherited stock where the company's shares might even be considered a family heirloom. One way or another, these factors contribute to an emotional attachment that goes beyond the math of ownership.

In and of itself, an emotional attachment to a stock is not a bad thing. This natural bias toward wanting to keep particular shares can have some positive side effects. The most notable positive is that it increases...

Segment Wealth Management Blog Going Off Half Cocked

That old saying was one of my Dad's favorites when he was describing taking on a task for which one is ill prepared to complete. Such is the case with former President Obama's prodding the DOL to pass the so-called "Fiduciary Rule" requiring brokerages to adopt a fiduciary level of care for clients, but only for retirement accounts.

This is a great idea in concept, and one I embraced as the exclusive way we do business starting nearly seven years ago. Let me be clear, I run a fiduciary-only practice and am subject to a full fiduciary level of care for all client assets, not just retirement accounts. Clearly I think it's a great idea, but then why not all accounts? Why just retirement accounts? That leads me to a question on this hypothetical situation: let's say you inherited some shares in an IRA and you need some general advice on selling it and taking a distribution. What broker would take the risk to advise you when this arrangement oozes fiduciary liability for him and there is no long term advantage for him in an ongoing relationship? What happens if his advice turns...


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