The Cost Of Business Just Went Up

The cost of business just went up. Literally.

Long-term interest rates reached a level not seen in over 4 years this past week. The 10-year U.S. Treasury bond yield hit 3.00% for the first time since Dec. 2013. Take a look:

(chart created in

As you can see it has been a long time coming, but something that has seemed inevitable since the start of this year when rates really started to trend higher. You can also see how low rates remain compared to 10 and 20 years ago (or 30 years ago when the 10-year yield exceeded 10%!).

What this means is that the costs to finance have gone up. Mortgages, car loans, student loans, lines-of-credit, etc. are all getting more expensive. This is a big reason why I recommended refinancing debt in 2016 and 2017 because this day would eventually come. Higher rates are not a bad thing -- actually the opposite. But it does mean we are now seeing real inflation take hold.

For years we have heard that inflation is a problem and that interest rates were about to skyrocket. Those have been utter myths. But today they are more of a reality. It is natural for inflation and rates to rise as the economy expands. The key is containing both so that they rise at a steady, sustainable pace. If they rise too quickly that is when we see shocks to various markets, as we did with housing in 2008.

Home prices rise: Speaking of real estate, home prices forged higher in February, rising by an average +0.4% nationwide during the month and +6.5% over the past year. Seattle impressively continues to lead all major cities, up +12.7% annually. Seattle homes also rose the most in February, up +1.7%. Six other cities saw home prices rise by more than +1.0% as well in February alone, including Denver, Detroit, Las Vegas, Los Angeles, San Diego and San Francisco. On a yearly basis, Seattle leads Las Vegas (up +11.6%) and San Francisco (+10.1%).

Here is a complete city-by-city look at the S&P/Case-Shiller housing report:

In The Market...

The S&P 500 was essentially unchanged this past week. Let's look under the hood:

(price data via

This past week was pretty dormant considering the biggest companies – Amazon, Google, Facebook, Microsoft – all reported first-quarter earnings results. In fact this time a quarter ago stocks began what resulted in a -10% market decline. The S&P index continues to float between the January record high and the February low.

It was a defensive week, with dividend-paying sectors leading the way (Utilities, REITs) while the more economically sensitive sectors (Materials, Industrials) were the worst performers. Long-term Treasury Bonds gained as well, despite the 10-year Treasury yield hitting 3.0%.

This type of activity is what I would expect to see amid stock market volatility. The overall market outlook did not change much from the previous week. I remain cautious, particularly as we get closer to the summer months, which tend to be bumpy for stocks. We are days from May, which carries the moniker “Sell in May and Go Away” for the tendency by investors to sell stocks and wait until the Fall to start buying again. There is some precedent for this looking back over the years, however last year bucked that trend as the market plowed higher throughout the summer.

We sold our Financials sector position (XLF) across all accounts that owned it. I do not like the movement within Financials over the past two months, which has been relatively weaker compared to some other sectors. To that end I believe there are better sectors to own, namely Energy, which we are looking to buy but will be thoughtful in doing so. We are content sitting on a cash position right now given how choppy the overall market has been. We will be patient and reinvest those funds in the future.

In Our Portfolios...

In Financial Planning...

As Summer nears and the housing market heats up, I know a lot of people who are revisiting the same conversation from a year ago:

Do we sell our house and buy something new, or, do we remodel?

Many of these people are in a better financial situation than they were a year ago, so in a vacuum it may be enticing to buy a more expensive home or to pump money into their current one.

But should it be?

Consider some key differences from a year ago. Unless you are downsizing the next home is only going to be more expensive, so any additional equity you have built up over the past year will be necessary toward the new home. Second, as mentioned, interest rates are higher today. So if you end up with a mortgage balance that is bigger than what you currently have, not only will your monthly payment be bigger but your interest payments will increase. Finally, if you go the remodel route, be aware that contractors are likely more expensive and less available than in recent years. Also, unless you are paying for the remodel with cash, your line-of-credit will come with the same aforementioned financing costs.

It is important to know how the different markets have evolved, especially at a time when housing values are slowly leveling off and financing costs are really starting to rise.

What's New With Us?

As a reminder, I will be out of the office on vacation Monday through Wednesday next week. If you need me I will be available remotely, but may not be quick to respond.

Have a great weekend!

Brian E. Betz, CFP

Four Things That Could Hurt The Housing Market

I found myself talking real estate a lot the past few days. With the Spring season heating up for the housing market, the inevitable question becomes:

"Will 2018 be just as hot as last year?"

The latest housing data gives a peak into how home values are trending entering Spring/Summer. Housing logged another strong, yet steady month in January. Prices rose by an average of +0.3% across the 20 major markets. Seattle homes gained +0.7% monthly and are up +12.9% over the past year. Seattle maintains its top spot nationwide, but cities like Las Vegas and San Francisco (up +11% and +10% year-over-year, respectively) have chipped away at that lead.

Here is the full city-by-city look:

This should be an interesting year for real estate. Housing demand remains red-hot, especially among first-time home buyers. I was speaking with friend/Realtor Ryan Halset, who said that competition for homes listed in the $500,000 to $700,000 range are going for more than +$100,000 above listing. That range is so significant because it is roughly where most first-time home buyers fall (at least in Seattle).

Overbidding, waived inspections and guaranteed appraisals remain the norm, but there are four factors I believe could slow housing prices following what I sense will be a Spring boom:

  1. Stock market volatility -- Stocks have not been this choppy since early 2016. Back then stock market losses did not prevent home-seekers from buying. It might not again this time around either, but if market volatility drags on or worsens, it could cause buyers to pause.
  2. Rising interest rates -- Interest rates are much higher today than they were two years ago. Back in early 2016 long-term rates were still falling, as the 10-year Treasury yield was below 2.0%. Today the 10-year yield is creeping up toward 3.0%, which means pricier financing. This may not deter first-time home buyers but should make real estate investors less willing to use debt to leverage property purchases. That would mean reduced overall housing demand, which means flattening or lower prices.
  3. More home seekers left in the dust -- I have no data to back this up, but I have a theory based on conversations I have and comments I overhear. There are a lot of home seekers who say they are waiting for prices to cool off before buying. As risky as that is, it might work IF they are investing the capital they would otherwise use to buy a home. My sense is they are not. So while home prices plow higher their cash is sitting idle in the bank and actually losing value when you account for such housing inflation. If that capital is not keeping pace with inflation, their home buying options narrow.
  4. If the economic cycle turns -- I am not saying the economy will turn this year, but it could. Looping back to #1, if stock prices were to fall that would cause employers to cut their workforce. That would immediately stunt the housing market because those without jobs are not going to buy homes. I do not think this will occur, but cyclically speaking we are inching closer to the point where I would expect unemployment to rise.

I say all this living in the bubble that is Seattle, realizing that housing prices are not surging anywhere else like they are here (sans maybe San Francisco). Nonetheless, it is all relative, as cited in #4 above.

In The Market...

The S&P 500 gained +2.1% this past week. Let's look under the hood:

(price data via

Every stock sector was positive, rebounding from consecutive weekly losses. Volatility has really ramped-up though, so give it one more day and the above picture could have looked a lot different. This past week was shortened as the market was closed in observance of Good Friday. I suspect that the market will continue to be choppy and that any rallies could be short-lived.

It was nice to see the bond market rally and record its best week of the year. Long-term interest rates fell, with the 10-year Treasury yield dropping from 2.83% to 2.74%. When the 10-year Treasury rate rose near 3.00% a few weeks ago I said then that I thought interest rates would fall before eventually moving higher. That is precisely what has happened. I think they will fall a bit further before subsequently surging higher and seeing the 10-year yield cross 3.00%. Take a look at the 10-year Treasury bond rate here:

(chart created via

A wild quarter comes to a close: Remember that stellar January we saw to start the year? Seems like a distant memory. The S&P 500 snapped its 9-month quarterly winning streak, falling -0.9% in the first quarter. March was the second-straight monthly decline, down -2.5%. Stocks fell in back-to-back months for the first time since Dec. 2015/Jan. 2016.

Moving into the second quarter my message remains the same as last week and the week before. Expect more choppiness. The market needs to hold above a couple key levels and eventually get back to new highs before a meaningful rally will resume.

In Our Portfolios...

In Financial Planning...

As you complete your taxes for 2017, start looking ahead to 2018 and some of the major changes that influence your financial decisions. Your 2018 tax return might not look the same as recent years. Here are some of the notable changes that might affect you a year from now:

  • The standard tax deduction amount will double. This means fewer people will itemize their taxes because the standard deduction ($12,000 if single, $24,000 if married) could exceed the sum of all eligible itemized expenses, such as mortgage interest paid.
  • Only $750,000 of mortgage debt is deductible. This is down from the previous $1 million limit. Any interest paid on up to $750,000 in mortgage debt tied to a primary or secondary residence can be deducted. Any interest paid on debt above that threshold cannot. On the plus side, any pre-existing mortgage debt will not be affected. Only new mortgage debt taken on after April 1st 2018 is subject to the reduced limit.
  • Property tax deductions will be capped at $10,000. Previously, there was no limit on the amount of property tax or state/local income tax deductions you could claim. If you own a nice home or live in a state with high income taxes (cough cough, California...) this will adversely impact you.
  • Charitable donations can be deducted, up to 60% of your adjusted gross income (AGI). This is up from the previous 50% limit. In light of the increased standard deduction though, fewer people will itemize their deductions. This means charities will actually suffer because taxpayers who claim the standard deduction will have less incentive to donate.
  • Unreimbursed medical expenses exceeding 7.5% of AGI can be deducted. This is down from the previous 10% threshold. Let's say your AGI is $100,000 and you have $10,000 in medical expenses. You could deduct the amount that exceeds $7,500 (derived by multiplying $100,000 of AGI x 7.5% threshold). This means $2,500 of your $10,000 medical expenses are deductible. Under the previous 10% cap, none of these expenses would have qualified. (Note: This is for tax years 2017 and 2018 only and is set to go back to 10% in 2019.)

What's New With Us?

We are hosting family this weekend for our daughter's first birthday, which happens to coincide with Easter this year. While celebrating for her I will be watching the Final Four.

Have a happy Easter weekend!


Brian E Betz, CFP®

Do Pregnancy Rates Predict Stock Market Returns?

Before I dive into this week's blog post, I want to let you all know that we are actively looking to hire an Executive Administrative Assistant. The full job posting is available on our site here. If you know someone who might be interested, let me know. They can reach out to me directly with their resume as well. Now on to this week's market thoughts...

Do pregnancy rates predict future economic recessions?

According to the National Bureau of Economic Research (NBER) they sure might. Their study tracked 109 million births that occurred from 1989-2016 and found that the number of conceptions declined ahead of eventual declines in economic growth (GDP) back in the late-80s, then again ahead of the tech bubble in the late-90s and then once more ahead of the subprime mortgage crisis in 2007.

This chart shows the positive correlation between conceptions (solid line) and economic production (dashed line):

(per the National Bureau of Economic Research, via CNBC)

I can get on board with this. When we are financially optimistic we tend to spend more. When we are pessimistic or uncertain we tend to spend less. Kids are expensive, so it is reasonable to assume that couples might think twice about having one or more kids if they are concerned about things like job security, stock market conditions or the U.S. economy in general. There are very few areas that are truly recession-proof and two of them happen to be child care and college tuition. If birth rates decline it is very possible that it is because families consider those costs, at least to some extent.

This hopefully goes without saying but this report should not influence investment decisions, at least not in a vacuum. It is a human interest story more than anything. But it is a pretty plain way of thinking about how we feel about the market and economy.

Corporate earnings boom: It was a solid quarter for large publicly traded companies. Revenue growth was terrific and the overwhelming majority of companies surpassed earnings expectations. Here are a few of the highlights (per FactSet):

  • Earnings grew nearly +15% in Q4, which was the most for any quarter since 2011.
  • All 11 stock sectors experienced profit growth. So unlike prior quarters, positive earnings results were not limited to a handful of sectors.
  • Sales increased +8.2%, which was also a high dating back to 2011.
  • Compared to estimates, 77% of all S&P 500 companies beat their sales targets. This is the highest percentage since FactSet started tracking data in 2008.

Because we emphasize sales over profits, here is a sector-by-sector look at revenue growth in Q4:

(source: FactSet)

Housing prices inch higher: Home values appreciated by an average +0.2% in December nationwide (per the S&P/Case-Shiller report). Seattle real estate beat that average, rising +0.6% during the month, and continue to lead all major cities on an annual basis as Seattle homes have risen +12.7% in value over the past year. Las Vegas continued to narrow that gap, up +11.1% annually, followed by San Francisco (up +9.2%).

Here is a complete city-by-city look at housing price changes:

In The Market...

The S&P 500 rose +3.6% last week. Let's look under the hood:

(price data via

Last week's surge came on the heels of the S&P falling -2% the week prior, so some context is needed. Nonetheless, following a week where all 10 stock sectors were negative it was good to see all 10 sectors rally back. As a whole the S&P 500 index still remains 3% below its previous peak set back on Jan. 26th. In my view that peak needs to be surpassed soon in order to sustain this rally in the weeks ahead. Or I sense market conditions will remain choppy.

If this rally is to sustain across all/most sectors of the market, I still think Technology will lead the way. Tech continues to look the healthiest among all areas of the market, on all timeframes we analyze. This past week it was Tech and the other growth-oriented sectors that performed the best, namely Financials and Industrials.

We continue to own Financials as well as a tech-heavy index fund (SPYG) across most accounts. I have been looking to add the Tech sector fund (XLK) for a couple weeks but am still weighing whether to cut bait on our Utilities position or wait for a potential rebound in the Utilities sector. This is getting in the weeds a bit, but I am happy to share more if you're interested in my thought process.

Since I didn't send out a blog last week I didn't get to mention that the U.S. market snapped its 15-month winning streak, as the S&P 500 fell -3.9% in February. So far March is starting out much better than did February.

In Our Portfolios...

What's New With Us?

I will be sending you our updated Form ADV 2A, which is disclosure information pertaining to our firm. This is a form you received when you first became a client and is something we update at least annually. If you have any questions about its contents, please ask. However, no action is required of you. It is purely for your information.

I am hoping the sunshine lasts through the weekend so that I can mow our yard for the first time this year. I will also finish getting settled in to our new office at 2nd Avenue and Columbia St. If you happen to be in downtown Seattle please stop by and say hi!

Have a great weekend,

Brian E Betz, CFP®

Is The Worst Stock Market Week In Two Years A Sign Of Things To Come?

Top Of Mind...

There is almost too much to cover from this past week:

Earnings season.
State of the Union Address.
January Jobs report.
Housing report.
The worst week for stocks in more than 2 years.
Groundhog Day.

I won't cover them all, but I do want to give my thoughts on what was the worst-performing week for the U.S. stock market since Jan. 2016. It was an ugly week all around. Most stocks were down. Bonds were down. There were few places to hide. The S&P 500 tumbled -3.8%, losing half of the previous 2018 gains that occurred in January.

Is this the beginning of the big market decline that those who have been sitting on cash for years have been waiting for? Unlikely. Could we see more losses next week and the week after? Entirely possible. But here is some perspective, consider the following:

  • Dating back to Aug. 2017 the S&P 500 index had gained approximately +18% coming into this past week. As bad as the past few days were, only one-quarter of that rally was lost.
  •  A week like this was somewhat inevitable. If you have seen some of the statistics I have shared here in recent weeks, stock price momentum was unusually high, dating back two generations.
  • It is a minor consolation, but two of the stock sector funds we own -- Utilities and Financials -- had the slimmest losses among all major sectors.
  •  In the case of the Financials sector fund we own, I still believe that is among the strongest areas of the market. More often than not, the strongest sectors are the ones that lead when the market rebounds.
  • The long-term trend of the broad stock market remains up. Of course that could change, but for now these pullbacks represent buying opportunities more than selling opportunities.

That last point is the most relevant one. We have seen virtually no market volatility since the Summer of 2016 -- and that is being generous. We really haven't seen market volatility since late-2015. Back then I viewed downswings with more of a defensive mindset than I do right now, simply because market conditions were much worse then compared to today. Whereas I looked to sell in 2015 I look at these pullbacks as opportunities to buy.

There is some bad news, of course, given that the market did slide nearly -4% this week. I detail that below in my MARKET commentary.

Seattle's lead in real estate shrinks: Housing prices nationwide rose an average of two-tenths of one percent in Nov. 2017. Prices have risen +6.2% annually. Seattle homes have appreciated +12.7% in the past year, which is still tops among the 20 major U.S. cities tracked, but that lead has narrowed. Las Vegas is closing the gap, where homes have risen +10.6% annually. San Francisco had the largest monthly gain, up +1.4%. A higher-than-usual number of cities (8 of 20) had price declines.

Here is a city-by-city look at the S&P/Case-Shiller housing report:

Despite prices falling in nearly half of the cities tracked, this report was pretty decent considering the time of year. These numbers are not adjusted for seasonality, so it is nice to see any gains whatsoever during the winter months. I am very eager to see whether this upcoming Spring real estate season in Seattle will be as hot as recent years.

To briefly touch on the other topics mentioned in the lead: The January unemployment rate held at 4.1% for the third-straight month... Earnings season had its biggest week yet, as Amazon, Google, Facebook, Apple and many others reported fourth-quarter results. I'll recap earnings season in a future post... I passively listened to President Trump give an uncharacteristically mellow State of the Union address.... And apparently Punxsutawney Phil saw his shadow, which means six more weeks of winter. Or for Seattle, just another February.

In The Market...

The S&P 500 fell -3.8% this past week. Here is how the individual sectors performed:

(price data via

It is nothing but a sea of red in the above image. Every sector was negative, as were each of the major bond categories. The latter is what makes this somewhat unique and concerning. Oftentimes investors will sell stocks to buy bonds, as a means of migrating to safety. Here, both stock and bond investors hit the sell button and moved to cash. Rising interest rates and falling stock prices is a bad combination that often leads to choppy weeks ahead. This alone makes the events of the past few days something to watch. One week does not make a trend, nor break an existing one, so we will just have to monitor how investors behave over the next few weeks while leaning on our process.

Two weeks ago I highlighted that long-term interest rates might finally be primed to spike. In those two weeks the 10-year Treasury yields has jumped from 2.64% to 2.85%. That Treasury rate is closing in on 3.00% for the first time since 2013.

In the short-term I think interest rates pause a bit either now or when 3.00% is reached. The long-term view suggests that the days of ultra-low rates may finally be over. Keep an eye on the below chart. If that falling trend (red line) is broken -- meaning that the 10-year Treasury rate jumps above that level -- bond investing will become more challenging in the months ahead (remember, bond values and bond interest rates move opposite one another).

Let's end on a positive note... The S&P index gained +5.6% in January. Not only was it the 10th-straight monthly gain for U.S. stocks, but it was also the best monthly return for the S&P since March 2016 and the best January to start any year since 1997. So there you go.

In Our Portfolios...

Q&A/Financial Planning...

As you start thinking about completing your taxes for 2017, a quick reminder about IRA contributions before you do.

If you have not maximized your IRA contributions for 2017 but would like to, do not complete your taxes until you have made that contribution. Many of you will be ineligible to make Traditional IRA contributions if you are already participating in a company 401k (or similar) plan. Some of you are eligible to make Roth IRA contributions, provided you still fall within the income limits.

You have until tax day, April 17th, to make IRA contributions of up to $5,500 (if under age 50) or $6,500 (if age 50 or older). The important thing to remember is that you can make those contributions for last year, which means you still leave yourself the ability to contribute for 2018 as well. You can invest the $5,500 into one IRA, or spread that amount across multiple IRAs. Your cumulative deposits just cannot exceed the limit. A quick reminder...

  1. Traditional IRA -- Your contributions get the tax deduction now and the funds grow tax-deferred until retirement.
  2. Roth IRA -- No current tax deduction for contributions you make, but the contributions plus earnings grow tax-free forever.

Let me or Gale know if you have any questions.

What's New With Us?

If you received a "welcome" letter or package from TD Ameritrade that references the transition from Scottrade, you can disregard it (see the image below). For some reason, because we were previously at Scottrade, TD must figure that we are apart of the mass transition that they are undertaking to migrate firms over to their platform. This does not apply to us since we migrated nearly a year ago. But, I can see why you might be confused by receiving such a big letter in the mail. Ignore.

In other news, I am excited for the Super Bowl. I don't care who wins. I just hope for a close game, although I think the Patriots will win by two touchdowns. 32-17, New England.

Have a great weekend,

Brian E Betz, CFP®

What A Year For Stocks... Putting A Bow On 2017

In The News...

2017 is in the books! Lots to talk about so let's jump right in...

Home sales leap: Sales of newly developed homes increased +17% in November. It was the largest volume of homes sold (on an annual basis) since July 2007. It also lowered housing inventory to 4.5 months worth of housing for sale -- the lowest in over 2 years. Development cannot keep pace, either. New construction has surged more than +25% in the past year, yet inventory remains suppressed.

Home prices leveling off? Year-over-year home prices (both new and preexisting homes) rose +6.2% nationwide in October. Prices increased in 16 of the 20 major markets. Seattle, Washington D.C., Detroit and Chicago all experienced minimal price declines. This was the second-straight month that home values declined in Seattle, something I predicted would happen based on prior trends. Seattle still leads the nation with home values up +12.7% annually, but that lead is shrinking.

Here is a complete city-by-city breakdown:

In The Market...

The S&P 500 fell -0.2% last week. Let's look under the hood:

(price data via

The S&P 500 index fell in the final week of the year, yet it was just the second losing week dating back to September. Dividend-paying sectors like Real Estate and Utilities led the way while growth sectors like Technology and Consumer Discretionary slipped. Bonds enjoyed a strong week, with Treasuries rallying +1.7%.

One change you will notice in the above Market Snapshot is that I reformatted the color shading in the "2017 Yearly Return %" column to better highlight which sectors were strongest this past year. As a whole you see the S&P 500 earned +21.8% (including dividends). Here are some high-level takeaways...

  • The +22% yearly return for the S&P 500 nearly doubles the annual average over the 100-year history of the U.S. stock market.
  • This was the strongest year for the market since 2013 and the second-best year since this current bull market began in March 2009.
  • Technology took the early lead in 2017 and never looked back, going wire-to-wire as the year's best sector with its +34% return.
  • Energy was the lone losing sector for the year, down -1%. How it got there was wild though, falling -15% in the first half of the year and then nearly making all of that back in the second half.
  • Amid the terrific year for stocks, bonds were up anywhere from +6% to +9%. This shows that investors kept buying safe bonds despite their thirst for growth via demand for stocks.

In closing, 2017 was a solid year for our investment management process. I believe we achieved strong results while still successfully managing against risk through our bond investments and occasional periods of cash. Let me know if you have questions.

In Our Opinion...

Warren Buffett famously says: Be fearful when others are greedy and greedy when others are fearful.

Is now a time to heed the first half of that quote?

Investor sentiment has been rising for six weeks. Investors are more confident about the stock market than they have been at any point in the past three years, according to the latest American Association of Individual Investors (AAII) weekly survey. This survey polls investors and asks whether they have a bullish, bearish or neutral outlook for the U.S. market. 52% of respondents are bullish, which is the most since Nov. 2014. Since the market recovery began back in March 2009, there have only been 7 other weeks where investors were more optimistic than they are now. Said differently, investors are more confident today than they have been 98% of the time in that span.

On the other end, the level of investor negativity is also historically rare. Only 20% of respondents were bearish, which is the lowest/best percentage since Nov. 2015 (bearish-ness has not dipped below 15% since 2008). The remaining 28% of respondents were neutral regarding the stock market.

The gap between optimists and pessimists is historically wide, as 52% are bullish and just 20% are bearish. There have only been three instances since 2009 where that gap has been wider -- Dec. 2010, Dec. 2013 and Aug. 2014. On each of those occasions the S&P 500 fell between -5% and -10% in the weeks ahead.

Will history repeat itself? Tough to say.

Market momentum is stronger today than it was at any of those prior points. However, I would expect the market to flatten out a bit. The U.S. market has gained in 14 of the past 16 weeks. The S&P 500 just completed its 14th-straight monthly gain. These are certainly bullish developments, but at some point a breather is likely. It may not be a -20% or even -10% decline, it could be a -5% drop that subsequently allows the rally to resume.

In Our Portfolios...

Q&A/Financial Planning...

You will notice that our PORTFOLIOS section above often references that we buy and sell individual stocks, in addition to owning diversified stock or bond funds. As a result, you may be looking at your account holdings and wondering, why don't I own any individual stocks?

We are willing to buy individual stocks for client accounts that are large enough to make the allocations worthwhile. Ideally that would be accounts above $100,000 but we can do it for smaller accounts depending on your specific situation. Part of the reason we refrain from owning individual stocks in smaller accounts is because it involves increased trading. We only pay for such transaction costs if a client's assets exceed $100,000. So if you are below this we prefer to limit the volume of transactions to minimize your costs incurred.

In addition to the cost factor there is the risk factor. Individual stocks possess greater risk than the funds we use. This disqualifies more conservative client accounts, meaning we as fiduciaries would not recommend stocks at all for those clients. If you would like to discuss whether owning individual stocks is something we would recommend, email me and we can talk.

What's New With Us?

One final, serious matter... One of our clients had his email account hacked last week (GMail, to be exact). As a firm we strive to stay ahead of potential security issues, but it is equally important that you do too. In this case, someone got into his email and sent us a request to wire a large sum of money to an account not in his name or anyone related to him. The nature of the request and the way the email read made it fairly obvious that it was illegitimate. We sniffed it out and ignored the request, but it was jarring to both us and our client, nonetheless.

This is the first time in 7 years where I have encountered this type of security breach. Here is a reminder of the steps we are taking to prevent theft/fraud, followed by some steps you can take as clients.

How WE help combat fraud:

  • If we email you sensitive information (DOB, SSN, account numbers, etc.) we send that information via secure, encrypted email so that it cannot be intercepted during transmission.
  • We also password-protect those emails, such that you must enter a specific code we provide in order to open the contents.
  • Computer devices used by our firm are monitored daily to prevent against viruses and malware attacks.
  • Client files, such as account applications, are saved in cloud storage. Backup files are saved monthly on a USB drive that is locked in a filing cabinet inside our primary office location.

How YOU can help combat fraud:

  • If you need to send us sensitive information, such as a SSN, use the "Send Me A Secure Email" link that is shown in the signature line of any email you receive from me or Gale. That link will allow you to send us such information in an encrypted manner.
  • Avoid having your web browser save your login ID/password credentials for certain websites like your bank account or TD Ameritrade account. If someone gets possession of your computer and is able to use it, they would be able to access your information.
  • If you travel for work, do not use public computers to access certain websites. A hotel lobby computer would be one example of this.

These are a few examples. If you have any questions or want clarification on how we promote client security regarding your personal information, let me or Gale know.

Have a great weekend -- HAPPY NEW YEAR!!!


Brian E Betz, CFP®