Our Opinion

February 2019

For 2018, the Dow Jones Industrial Average was down 5.6%, closing at 23,327, the S & P Index was down 6.2% closing at 2506, gold bullion closed down 2.5% at $1279 a troy ounce, silver bullion closed down 10.4% at $15.29 an ounce, and the Consumer Price Index closed the year at 2.4%. Brent crude oil closed at $50.57per barrel, down 24.2% for 2018, significantly off its 2018 high of about $76 a barrel. This decrease resulted from a U.S. oversupply (America is finally now energy independent), while global supply remains robust. Healthcare and technology were the only major sectors that were positive in 2018. This last correction was nowhere near like the 2000 technology bubble, or the 2008 real estate bubble, and there are no credible signs of a recession in the offing. As expected, the broad U.S. stock market has recovered. The socialists in the Democratic Party will continue to obstruct movement back towards capitalism (not Obama crony capitalism or corporatism), but this has not affected the enthusiasm for the capitalistic agenda of this administration that is evidenced by the continued rollback of the regulatory environment.  It is our prognostication that President Trump will be reelected in 2020, giving our country another four years of unprecedented growth that could rival the eight expansive years of the Reagan administration. Of course, the age old problem remains that entitlement spending is too high and is being funded with U.S. government deficits which in the long term, will be problematic for the economy and produce stagflation.

Gross Domestic Product (GDP) is the economic output of the entire country that includes personal consumption expenditures (70% of GDP), business investments, government spending, and net exports. It’s the most widely used economic benchmark, and is a reliable and valid annual measure of the overall growth of the economy. GDP was 1.6% in 2016, 2.2% for 2017, and is tentative at 3.4% for 2018, partly resulting from an increase in job creation, jobs returning to America, a rise in consumer confidence, and business expansion. The administration will help to continue to slowly strengthen the U.S. economy by persisting in negotiations of favorable trade terms which will reduce the economic drag of other nations that have been abusing America’s free trade policy for decades. The Treasury will continue to remove monetary stimulus by slowly unwinding its balance sheet by selling off treasuries and mortgage-backed securities without reinvestment.  But the loss of monetary stimulus has been replaced by the fiscal stimulus of the tailwinds of lower personal and corporate tax rates, and deregulation. Of course, the expected results of an expanding economy will be a rise in interest rates, wages, and inflation. As usual, gold will continue to be a storehouse of value, reflecting the real inflation rate, with the fear and greed factors temporarily dormant.

We ask that you resist the temptation to play investment advisor as this present, rising tide continues to lift all boats. There are two times when people tend to forget their investment principles – when markets are flying high, or falling down. One problem with long-term planning is that our brains are wired to react to immediate dangers, and gratification. Money is intensely impassioned. Short-term emotional responses can sometimes overpower long-term, rational planning when you do your estate planning without assistance, or override objective, professional advice. Growth, recession, and sporadic fluctuation in markets are normal occurrences in the economic cycle. Knee-jerk reactions to current situations can doom long-term financial success, and market timing has proven to be unsuccessful. Constant scrutiny of investment performance leads to unwanted emotion, so let us deal with the market blood pressure. As we all know, plans don’t fail, people fail to plan, and time makes money, not timing. Realizing financial goals relies on adhering to a long-term strategy, tweaked by occasional investment tactics, as well as the implementation of other important aspects of estate planning.  Former Federal Reserve Bank Chairman Alan Greenspan’s view is that the human nature of investors makes markets volatile (with the recent exception of 2017). Only God has the magic wand and the crystal ball!

For your information, section 529 Plan distributions of up to $10,000 a year per student can now be used for tuition in connection with enrollment or attendance at an elementary or secondary school.

 It’s interesting to note that the results of a 2016 Vanguard study indicate that immediate investment in a 60/40 stock and bond portfolio leads to greater portfolio value approximately two thirds of the time. Immediate investment of a lump sum outperforms systematic implementation by  approximately 2 ½ % in as short as 36 months. As the investment time interval lengthens, immediate investment outperforms more frequently. So when financially feasible, fully fund your retirement plan upfront. Also, you may be eligible to directly (or indirectly) contribute to a Roth IRA, in addition to your employer plan. And maximum annual IRA contribution amounts have increased by $500 for 2019.

  Now is an opportune time to review your financial plan with us, and re-evaluate your investment risk tolerance to take advantage of the unexpected opportunity presented by the objectives of this populist administration to make “America great again.” We believe this present, massive bull run will carry the markets higher for years to come. We all know the billionaire, J. Paul Getty’s slogan – buy when everybody else is selling, and hold until everyone else is buying.  The President’s recent State of the Union address indicated that significant political, economic, social and foreign change will continue over the next two years. Even the controlled, biased, radical, mass media won’t be able to gloss over, omit or twist what’s obvious without losing the remaining, tenuous credibility they presently enjoy.

    As you may already know, Steve’s middle son, Anthony, has joined MAP Estate Planning as a full-time partner in our present office location. He may be reached on extension 102, on his cell at (516) 805–6865, or via email at ajziniti@mapestateplanning.com, and has updated our website accordingly.  He has many years of experience in peripheral areas of financial planning, securities and insurance licenses, an MBA with a major in personal financial planning, and three designations, including Certified Financial Planner.  If he hasn’t already done so, Anthony will be contacting you to introduce himself and update your file, encouraging you to meet with us. We’d like to renew our relationship with all of our clients, and we request the referrals of your cronies and trusted business associates to expand our business. Your insurance and investment statements will be reflecting all three of our names, enabling any of us have direct access to your accounts. For the foreseeable future, Anthony and Steve will continue to work full-time with Anthony’s responsibilities increasing, but you’re always free to request any one of us at any time. Our assistant, Nancy Holloway’s office hours are 9 AM to 5 PM Tuesday through Friday, and she may be reached on extension 103, or at nholloway@mapestate planning.com.