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Regularly reviewing existing estate plans is a good financial practice, and the looming change to the lifetime estate/gift tax exemptions at the end of 2025 makes now an opportune time to review your plans. Two powerful tools in estate planning are time and interest rates. With time, the more you have remaining, the greater the number of estate planning options available to you. With interest rates, the lower the prevailing rates, the more likely investments can achieve excess returns, thus the more attractive many strategies become. The ultra-low interest rates of the past decade were a boon for many estate planning strategies, but the increase in interest rates does not mean the end of effective estate planning opportunities. Indeed, there are a handful of strategies that become even more attractive in a higher interest rate environment. Rising interest rates influence the effectiveness of various estate planning tools. Leveraging these tools...
09.18.2023
The year 2022 was a bloodbath for both equity and bond markets–the S&P 500 was down 18% and the Bloomberg US Aggregate Bond Index had its worst year ever, down 13%. This year, 2023, began with the US debt ceiling standoff, followed by a banking crisis, and continued rate hikes by the major central banks. The economy seemed like it would get worse before it got better, and the consensus was calling for a near-term recession. However, the stock market quickly shrugged off many of these concerns. Year-to-date as of August 31, the S&P 500 is up approximately 17% and NASDAQ is up approximately 34%. The S&P 500 is officially in a bull market (i.e., up at least 20% from its recent lows in October 2022). With the Federal Reserve and some economists no longer forecasting a recession[1], it makes one wonder what has changed in the last few months....
Following the collapse of Silicon Valley Bank and Signature Bank, banking regulators appeared on Capitol Hill last week. Fed Vice Chair for Supervision Barr and FDIC Chair Gruenberg testified before the Senate Banking and House Financial Services Committees about the recent bank failures. The Federal Deposit Insurance Corporation estimates it will cost $22.5 billion to backstop both Silicon Valley Bank and Signature Bank, guaranteeing all deposits. After the initial shock of these bank failures and the heightened sensitivity around bank holdings, the market rapidly adjusted to the new risks with the quickest monetary tightening in 44 years. Still, banks face several headwinds. First, the yield curve remains inverted—longer-term interest rates are lower than short-term rates. For example, the 10-year Treasury is yielding 3.38%, while the Fed Funds rate is 5%. This inversion is the largest in 42 years. It is generally viewed as a bearish signal for the economy,...
Little Edward pulls out his 4th grade homework after a long day of practicing spelling and drawing chalk-art flowers. Tonight’s assignment: write a computer program in JavaScript to track his friends’ birthdays. Easy. Edward sits down in front of his PC, opens his Chat GTP app and speaks into the microphone. Thirty seconds later, the program is compiled and on his schools’ share drive, ready for his teacher to grade. If you’ve been listening to the news, apps like ChatGTP, Bard, and Jasper are conversational Artificial Intelligence (AI) programs that are already editing research papers, passing business school exams, creating paintings, and composing music. One simply speaks (or types, for those of us so inclined) our request into the program and in short order the AI produces whatever end result we desire, from writing computer programming language to composing a sonnet. The pace of change in the technology space can...
Frequently misunderstood elements of homeowners’ insurance and structural problems in the homeowners’ insurance industry can create problems for an unwary consumer. Several of the families we work with in California and Florida have received letters from their insurance providers informing them that the companies will no longer provide them with insurance. Additionally, in performing risk reviews for new client families, we often find gaps in coverage related to common misunderstandings. To illustrate how these insurance concerns might arise we dive into the fictional tales of woe of siblings John and Jane Doe, both of whom received such non-renewal letters. John Doe lives in California, the golden state and land of wildfires, mudslides, and earthquakes. John paid high homeowners’ insurance premiums to protect him from these risks and even understood that earthquakes were excluded from most policies and required separate coverage. John had learned that lesson the hard way, having moved...
At the beginning of the new year, we asked colleagues to reflect on the good and the bad of 2022. A diversity of obvious answers came flowing in – pandemic retreats, Ukraine war begins, markets decline. But we also recognized some larger trends were developing that promise to impact the future. Our limited survey revealed challenges, innovations, failures, and accomplishments that are bound to make an impact for years ahead. We wanted to share several of the insights and encourage readers to reflect on their own. Negative Trends in the last year: FEDERAL DEBT HELD BY THE PUBLIC, 1900 TO 2052 Percentage of GDP Positive Trends in the last year: GAME STOP PRICE CHART | 5 YEARS There are many other equally, or more important, trends that can be identified. 2022 was a historic year that will leave its impacts for many years. 2023 promises to present new challenges with...
"There is no official formula that defines a recession. A common rule of thumb is two consecutive quarters of negative gross domestic product. The actual determinants are more intricate."
“If you mix politics with your investment decisions, you are making a big mistake. Each generation of Americans has been, and will continue to be, better off than the previous generation.” - Warren Buffet
"The Federal Reserve, after delaying for more than a year claiming inflation was 'transitory,' has finally embarked on a serious course to bring inflation under control."
"Transferring wealth during periods of depressed asset values, like coiling a spring, allows for the passing of assets with the potential to expand when the market recovers (as markets have historically always done)."
"Although the current market correction is unsettling for investors, it also presents opportunities for long-term investors who can stay invested and adjust as the cycle changes."
"No matter the asset class, returns will be influenced and impacted by a multitude of factors. Some are within an investor’s control, while many are not. Commercial real estate is no different."
