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Journey with DWM to
What's Next
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Some economists say "up" and some say "down". The truth is, no one knows the future. But affluent, enlightened investors recognize that DWM strategies perform in up markets and protect in down markets. Regardless of what the future holds, with DWM, savvy investors are ready for what's next. | |
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Fourth of July: Red, White and Cash | |
We hope everyone had a great Fourth of July Weekend. To continue that celebration one more day, we would like to present Johnny Cash singing his "Ragged Old Flag" written by Johnny Cash and copyrighted in 1974 by the House of Cash, Inc.
Here are the lyrics. We like them. Hope you do too.
"I walked through a county courthouse square,
On a park bench an old man was sitting there.
I said, "Your old courthouse is kinda run down."
He said, "Naw, it'll do for our little town."
I said, "Your flagpole has leaned a little bit,
And that's a Ragged Old Flag you got hanging on it."
He said, "Have a seat," and I sat down.
"Is this the first time you've been to our little town?"
I said, "I think it is." He said, "I don't like to brag,
But we're kinda proud of that Ragged Old Flag.
"You see, we got a little hole in that flag there when
Washington took it across the Delaware.
And it got powder-burned the night Francis Scott Key
Sat watching it writing Say Can You See.
And it got a bad rip in New Orleans
With Packingham and Jackson tuggin' at its seams.
"And it almost fell at the Alamo
Beside the Texas flag, but she waved on though.
She got cut with a sword at Chancellorsville
And she got cut again at Shiloh Hill.
There was Robert E. Lee, Beauregard, and Bragg,
And the south wind blew hard on that Ragged Old Flag.
"On Flanders Field in World War I
She got a big hole from a Bertha gun.
She turned blood red in World War II.
She hung limp and low by the time it was through.
She was in Korea and Vietnam.
She went where she was sent by her Uncle Sam.
"She waved from our ships upon the briny foam,
And now they've about quit waving her back here at home.
In her own good land here she's been abused-
She's been burned, dishonored, denied and refused.
"And the government for which she stands
Is scandalized throughout the land.
And she's getting threadbare and wearing thin,
But she's in good shape for the shape she's in.
Cause she's been through the fire before
And I believe she can take a whole lot more.
"So we raise her up every morning, take her
Down every night.
We don't let her touch the ground and we fold
Her up right.
On second thought, I do like to brag,
"Cause I'm might proud of the Ragged Old Flag." |
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Detterbeck Wealth Management
www.dwmgmt.com
220 N. Smith Street
Suite 410
Palatine, IL 60067
847.359.6262
Suite 2A
Charleston, SC 29401
843.577.2463 | 
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Pensions: Problems Everywhere-Can Scotch Plug the Hole? |
 Diageo PLC, the UK maker of Johnnie Walker has a $1.2 billion pension deficit. As part of a 10-year funding deal with the pension plan trustees, it will transfer 2.5 million barrels of aging whisky to the fund. The maturing whisky, with a book value of $720 million represents about 30% of Diageo's total whisky stock. It's enough to fill up 180 Olympic size swimming pools and will be used as collateral to make sure Diageo fulfills its obligations to the pension fund. Diageo will have options to buy the spirit from the pension fund as it reaches three years old and will transfer new younger bottles in to keep its value constant. The plan includes not only the transfer of bottles of Johnnie Walker but payments of $770 million in cash. Diageo is not alone. UK hotel and restaurant group Whitbread, grocer J Sainsbury and the retailer Spencer & Marks have put real property into their pension plans to reduce their pension deficits. Closer to home, many U.S. Pension funds are in bad shape as well. A June 14th article from Pension and Investments Magazine highlights the funding status of the largest 100 largest defined benefit plans. An analysis reveals that there are some very big promises outstanding that have little hope of being paid. The airlines are a good example of big underfunding. American Airlines is underfunded by $5 billion, Delta by $10 billion. GE is underfunded by $6 billion, Lockheed Martin by $10 billion. The largest deficit on the list is still General Motors at $17 billion, even after the US government bailout of $50 billion. We haven't even talked about the state pensions. The Pew Center on the States estimates there is at least a $1 trillion gap between pension assets of the 50 states and the total of their pension liabilities. And, that was before Bloomberg Business Week reported on July 4th that the BP Oil Spill has cost U.S. State pensions $1.4 billion due to loss in market value of BP stock held by the funds. The exploding financial burden could be a bitter pill for pensioners and taxpayers alike. The Pew study estimates that one in five private sector workers have traditional defined benefit pensions, compared with 90% of public-sector employees. Pensioners are likely to be hit with cutting of benefits, increased retirement age, sharing of investment risk and more sharing of contributions. Taxpayers are likely to be hit with more taxes and potentially more bailouts as well to fund some of the large deficiencies. Maybe it's time for a little Johnnie Walker. Straight-up. For more information, click here. |
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Jobs: US Sheds 125,000 Jobs in June | |
The good news is the unemployment rate declined in June to 9.5% from 9.7% in May. Unfortunately, that was largely an illusory decline, as 652,000 Americans abandoned their job hunts and left the work force. Overall, the June report released Friday by the Labor Department was quite grim; further indication that nation's economic recovery has slowed noticeably.
Overall, 125,000 jobs were lost. Businesses added 83,000 workers, but the feds dropped 225,000 temporary Census positions. The Philadelphia Enquirer estimates that the economy needs to add 125,000 jobs a month just to keep up with the growing population of working-age people.
In addition to jobs lost in June, earnings and hours worked ticked down for employees in the month. In addition, May sales of new and existing homes were down; obviously impacted by the end of the federal tax credit for new home buyers. In addition, according to the Case-Shiller home-price index, homes prices have fallen for the last six months. U.S. Factory orders declined in May. Indications are that the economy is slowing. It is very likely these job reports will stoke the fiery debate between deficit hawks and pump-primers in Washington.
There were a few bright spots in the jobs report. Manufacturing continued a modest revival; as plants added 9,000 jobs. Amusement, gambling and recreation businesses added 28,000. Health care inched up 9,000 jobs for a 12-month gain of 217,000 jobs.
All told, 14.6 million people were looking for work in June. Counting those who have given up their job searches and those who are working part-time but would prefer full-time work, the underemployment rate edged down to 16.5 percent from 16.6 percent in May.
White House senior economic adviser Christina Romer tried to focus on the positive aspects in the report, noting the 83,000 private sector jobs added last month and the dip in the unemployment rate. "These continued signs of healing are important, particularly given the recent volatility in world markets", she wrote. "However", continued Ms. Romer, "much stronger job gains are needed to repair the damage caused by the financial crisis."
For more information, click here. |
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Estate Planning: Gary Coleman's Death a Sad Reminder | |
We all remember Gary Coleman, as Arnold on "Diff'rent Strokes", making that unique frown and asking Willis, "What you talkin' 'bout?"
Unfortunately, Gary Coleman is no longer with us. He died on May 28th. His estate is still in turmoil. His ashes are still locked up and won't be put away for several months until the dispute is resolved. There could be as many as three wills; one drafted in 1999 leaving his estate to his former manager, a second version his costar Todd Bridges (Willis) claims was penned in 2007 and third handwritten document handwritten document from 2009 in which everything is left to his ex-wife.
This sad situation brings to light the importance of keeping your wills and all estate planning documents up to date. Have an estate attorney help you to make sure the documents are executed correctly and conform to the laws of your state. Store the originals with your attorney but keep a copy for yourself, perhaps using mysafe.com to electronic safekeeping.
Most importantly, you need to review your overall estate plan on a regular basis. Family circumstances change. Tax laws do as well.
Americans dying in 2010 pay no federal estate tax. However, that all could change January 1, 2011. Unless Congress revises the law by then, the estate tax could be as much as 55% of estates worth more than $1 million starting next year. There had been talk in late 2009 that the $3.5 million lifetime exemption would be extended, but that never happened. And with the federal deficit soaring, it will be difficult for Congress to pass a bill lowering taxes. Hence, many people who thought their estates were safe from estate taxes will not be "safe" come January. And, many states, looking for additional revenue, have increased the inheritance taxes they will extract upon death.
Gary Coleman doesn't have any more time to get his estate matters in order. The rest of us do. We encourage you to work with your attorneys and financial advisers to make sure your estate plans and documents are up to date as soon as possible. Next time we ask you the status of your estate plans, we would hope we don't get the response, "What you talkin' 'bout?"
For more information, click here. |
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