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Greetings! Last month I turned 50 and I still can't believe it. First, let me thank everyone who made it a memorable birthday--I received a lot of cards and birthday wishes and gifts--my friends trying to make me think 50 is not all that bad. 50 has happened or will happen to all of us--at least we hope so, so it shouldn't come as a surprise, but it came so fast for me that it'll take a while for me to get used to it.
As if on cue, May's edition of SmartMoney's had a short article by Peter Keating, titled "Lessons From Centrenarians," Keating reports that the Census Bureau lists those over 100 years-of-age the fastest growing segment of population. In 1990 there were 37,000 people over the age of 100, in 2008 there were 84,000 people and in 2040 they estimate 580,000 people will have celebrated their 100th birthday.
Perhaps the best line in the article is a quote by Thomas Perls, a professor of geriatrics at Boston University School of Medicine; "Centenarians disprove the perception that the older you get, the sicker you get," rather "they teach us that the older you get, the healthier you've been." So if you make it through the 70 & 80's without contracting Alzheimer's disease, diabetes or cardiovascular trouble, there is a great chance that you'll miss those age related ailments entirely.
Moreover, scientists think that only 30% of longevity is genetics--the rest, or how we live determines how long we live. I remember an old saying, if I knew I was going to live this long I would've taken better care of myself. And of course, I would add, I would've saved more money. Keating says that 20% of 100 year olds need assistance meeting basic costs and that 67% had incomes below the poverty line with 44% having no financial reserves left.
Now, it should be that centenarians spend less than say 75 year olds--and that is probably true--but it sure would be nice to be that guy on the cruise ship who buys drinks for everyone on his 100 birthday! I really have no idea if I can make it to 100, the odds are against it, but the first 50 was so much fun I sure hope to see the next 50.
Marty |
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Concept of the Month: Sell in May and Go Away
May 2010 was just a miserable month for the World's Stock Markets. Here in the US we opened on May 3 with the DJIA at 11,009.60, the S&P 500 at 1,188.58 and the NASDAQ at 2,472.32. When the markets closed on May 28, the DJIA had lost 913.70 points (8.3%) , the S&P 500 103 points (8.7%), and the NASDAQ 215.28 points (8.7%). May 2010 was the worst May since 1940 and the worst monthly drop since February 2009 for the DJIA. (Yahoo Finance)
There were a number of fears that swept through the investment world; the greatest though was still the Sovereign Debt crisis in Europe and specifically Greece (we mentioned this in last month's newsletter). In usual governmental tradition, we seem to have turned a small problem into a big one; European nations agreed to a bailout of Greece to the tune of billions of Euros to keep them solvent for few more years. In the end, I still think Greece doesn't make it and they will default not only on their old loans, but the new ones as well.
A Greek default hurts the holders of that debt which as it turns out are mostly non-Greek Banks and European Governments, and of course it hurts the Greek government employees and Greek social programs. Consequently, the incentives for non-default are again misplaced. It is not in the best interests of most of the Greek people to pay down their debt, rather I think it is in their best interests to default and get it over with. So in the end, I think that is what they will do.
The Greeks have plenty of healthy businesses and some of the world's wealthiest people; it is the government that is disfunctional and broke. Politicians will lose their jobs and public projects will be put on hold but in the end this will just be another government default, not the end of the world. In a few years the banks and private investors will be lining up at their door to lend them more money.
This set of facts serves as a warning to all other politicians and governments and it would surprise me if they all didn't begin to at least give lip-service to reducing their budget deficits. Even here, in the US where we have never been accused of fiscal reponsibility we should expect the November elections to bring a virtual flood of austere-minded politicians to power. From local to national races new-found fiscal-minded candidates are tuning up their speeches to out-cut each other.
All this turmoil and uncertainty in the European economy is seen as a harbinger of what is to come when western governments (US included) need to deal with servicing huge debts with proportions not seen since WWII. For investors, not much will really come from all this handwringing other than higher taxes. The economy is improving and corporate earnings and balance sheets are very strong. I look forward to a better June than May and a better second half of the year.
One last note, as previously mentioned, May 2010 was the worst one-month drop since February 2009. Let's not forget that right after that dismal February we soared. From March 1, 2009 to January 1, 2010 the DJIA jumped 47.7%, the S&P 500 soared 52.8% and the NASDAQ rose an amazing 67.3%. Nothing grows to the sky and sometimes you have to step back before you step forward. I am thinking May was a step back to reflect (on Government Debt for one thing) before moving ahead. We will not see a 2009 kind of year-but I do believe it will be a positive one from here.
Marty |
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Saving for retirement in a 401K, 403B, 457, or any of the employer sponsored and sanctioned savings plan is a great way to put some serious money away--usually before income taxes take their bite. We rarely discourage using an employer's retirement savings vehicle and we even manage a few plans ourselves. When you change jobs however it is usually a good idea to move that qualified plan over to your personal IRA.
Rolling over a 401K is not as easy as it seems--but it is something we have become quite adapt at recently with all the movement of our clients from old jobs to new jobs. That separation from one employer to another is an opportunity to gain greater control of your investments. It also offers the opportunity to update beneficiaries and re-examine your risk tolerance in a new light.
Consolidating IRA's and old 401K's also lets us look at your asset allocation and re-invest appropriately taking the whole retirement plan into consideration. Often just bringing the assets together onto one statement is comforting--making it easier to keep track of, not only for you but possibly for your beneficiaries who may be stuck going through multiple statements trying to figure out just what the heck you were thinking.
Anyway, to rollover a typical 401K takes about three weeks and a few signatures. Once we have the last quarterly statement or printout we can do most of the paperwork and mail it to you with a transfer form. We do the work you just sign your name--simple as pie.
Marty |
Book I am reading now:
All the King's Men by Robert Penn Warren--Originally published, 1947, Harcourt, Brace and Company, San Diego, CA |
Chesapeake Investment Advisors Inc. Martin Knight, MBA CFP®
410-810-0735
800-994-0221
Fax: 410-810-3422
Trapper and Sookie by request.  |
Securities and Advisory Services offered through Geneos Wealth Management, Inc. Member FINRA/SIPC |
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