STOCK MARKET – 2017 has been an excellent year for the stock market and the market’s performance is a reminder that being in the market when it “bulls ahead” is superior to getting in “once the economy looks better.” As I write this, the DJIA is up 24.94% for the year, the S&P 20.16%, and the NASDAQ 29.94%. Many people think the market is high, but we have actually been through a long, slow growth period. Consider that the S&P has averaged 8.29% per year for the past 10 years ending 11/30/2017, a good return but not a high average return. It is lower than the 10.14% median return for ten year time periods going back to 1928. The best 10 year rolling average return is 19.84% and the worst is -1.27%. (S&P500 with monthly dividends 11-30-1928 – 11-30-2017; data from the American Funds’ website).
Of course, we never say the market will continue to go up; we say that your investments are chosen for the perceived ability of the managers to weather “Bear Down Markets” and “Bull Up Markets”. Call us if you would like data on the difference between some managed accounts and the popular ‘indexes’ over various time periods. It’s often not what the media presents.
I have spent the past forty years encouraging people to invest and benefit from the stock market. Sometimes we hear politicians and commentators say the market is doing well but it largely benefits the affluent. I wonder…how do these speakers think the wealthy became wealthy? Do they not know it was the stock market in many cases? Why are they so unwilling to use history to encourage more people to become investors? Many “small” investors are grateful to become millionaires and multi-millionaires by investing a percent of their income over a long period of time. The stock market is the place where the small and the large investor can invest and benefit equally on the common shares they own.
Department of Labor and the law regarding retirement accounts. After years of wrangling and law suits, there is a law affecting much of what we do. Implementation began in June of 2017. Investment advisors and sales personnel must comply. It is a time consuming and expensive proposition. The individual and the firm’s investment expenses are increasing in order to be in compliance with this law. If we have not already discussed the implications of this law and you own a retirement account, we need to talk with you soon. We appreciate calls from you to discuss via the telephone or in person in our office.
Wisconsin Taxes – If you have not had enough fun thinking about the complexity of the federal tax system, perhaps we can discuss Wisconsin Income Taxes. Todd Berry, retiring director of the Wisconsin Taxpayers Alliance, has tried to keep me informed of various Wisconsin Taxes this past year. It is a big job and I would not like to be required to pass a test. The following are facts I gleaned from the many articles and newsletters I have received from the organization this past year.
1.) Wisconsin had a deficit or a surplus in the most recent fiscal year depending on whether someone is quoting GAAP, generally accepted accounting principles, or a state budget recap. GAAP shows a 2016 general fund deficit whereas the state budget recap shows a surplus.
2.) Income tax in Wisconsin began in 1911 and is the nation’s oldest income tax, coming before the federal government enacted an income tax.
3.) It has always been a progressive tax, meaning you pay greater shares of the tax as your income rises. Earners with incomes between $ 40,000 and $ 150,000 pay 1/2 of the total income tax collected.
4.) Property and income taxes are 11% to 12% above the U.S. Average whereas sales taxes are about 17% below average.
Consolidated Account Summaries will be mailed to you in mid-January. We believe comparing your account values twice a year over many years is the best and simplest way for you to see the financial progress you have accomplished.
1099’s will be sent by the various custodians of your investments during January and February. Googins Advisors will send additional tax information in January or early February.
We find responding directly to your tax preparer for additional tax information is efficient and leads to fewer errors in fulfilling requests. Feel free to tell your preparer he/she can contact us directly for the information, and then simply inform us that we have your permission to proceed.
Happy End of the Year Thoughts and Celebrations. We hope it has been a blessed year for you and your loved ones.
Louise Googins, Newsletter Author
Karl Kuelthau, Advisor
Andy Yadro, Advisor
Michael Googins, Administrator
Kim Rankin, Accountant