KFA Blog


Senior Trading and Research Specialist

 

Influenced at an early age her father who often talked about investing and actively bought and sold stocks, Lisa developed a love of the markets. This passion lead her to a career in financial services. Lisa started in the financial services industry after college.  She began in 1990 working on the retail side. Today Lisa's main area of focus is researching new investment ideas for clients’ portfolios.  She also maintains the firm’s internal information and communication to ensure we are aware of any news regarding our investments and the impact it has on our portfolios.  Another main area of focus is on placing investment trades as well as maintaining client asset allocations that coincide with the individual objectives and risk tolerance.  She received a Bachelor's degree in Business from DePaul University in Chicago. In her spare time, Lisa enjoys spending time with her children and family, attending sporting events, and volunteering for her children’s activities.  Lisa enjoys doing yoga, walking her dog and skiing. Lisa can be reached by email at: info@kabarec.com  

4th Quarter 2014 Market Commentary

By:  Lisa Thuer - Senior Trading and Research Specialist

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Where have we been – 2014 and where are we headed – 2015?

Continued recovery in the U.S. economy was the theme for most of 2014. Job growth, increased industrial production and strengthening of the U.S. Dollar were the major stories. The U.S. stock markets were the place to be in 2014. Large-cap value led the way until November 30th when large-cap growth took over. Small-caps started out the year weak and had a full turn around when they led us out of the correction in October. The S&P 500 Index was in the black and GDP growth increased in four out of the past five quarters. Usually in such an environment, cyclical stocks are more likely to outperform the noncyclical sectors. However, the leading sectors were utilities, healthcare, consumer staples outperforming cyclical sectors like consumer discretionary and financials. If you followed the “Sell in May and go away,” this year you missed some upside.

Investments outside of the U.S. had a difficult year, especially if timing was wrong. Europe was doing well in the beginning part of the year until it plunged six months later. Japan was the opposite, having a weak economy until there was an announcement of another round of stimulus. Geopolitical events, such as the Russia-Ukraine conflict, sent jitters through the markets along with the threat of ISIS. One also cannot ignore the media overblown Ebola epidemic. A select few emerging markets did prevail such as Japan, India and China.

Let’s not forget the elephant in the room - oil. The drop in oil sent the markets on a temporary downward spiral. Why? With the oversupply of the commodity, will there be bond defaults, layoff of jobs, etc? Falling oil prices will benefit oil-importing countries as opposed to oil exporters, such as Russia, Brazil, South Africa, and Middle East countries. Once all this processes – we should see good news for manufacturing companies worldwide, more money in consumer pockets and oil companies who were rich in cash to begin with, be able to absorb the low oil prices.


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Schwab Impact Conference 2014

By:  Lisa Thuer - Senior Trading and Research Specialist

b2ap3_thumbnail_photo-3.JPGAs the picture says, Empowered! No matter how many times this conference may be attended, there is always something new to learn, something new to see, someone new to meet, etc. It may be the same Mutual fund companies or ETF (Exchange Traded Funds) or new ones trying to gain your business through selling their products. I can never say talking to someone was a waste of my time. Each conversation, whether or not we will use their products or services, was a unique, engaging experience which I will grow upon. It is very enlightening speaking with other individuals and seeing their point of view and how it may pertain to our strategy. 

Pre-Conference sessions opened with Liz Ann Sonders, Chief Investment Strategist, and Greg Valliere, Chief Political Strategist, Potomac Research Group – also known as D.C. Insider. Who better to hear from on the night of the elections with his bipartisan viewpoint. He did predict the outcome of the election for the evening. But did say challenges still remained in Washington. Liz Ann Sonders remains bullish and as always loves to back her views with graphs and charts. So much as to say that year’s ending in “5” tend to be good years. Will 2015 continue this trend? We will have to wait and see.

Breakout educational sessions were attended. Throughout them, I gained deeper insights on International and Emerging Markets along with the ever rising, popular Alternative Investments. Many sessions were market related, but the conference also offered sessions on improving the operations of running our business more efficiently to benefit our clients.

The highlight and keynote speakers which need to be mentioned were Ben Bernake and George W. Bush. Ben Bernake opened and gave us first hand insight on the decisions and what happened and needed to be done to avoid the Financial Crisis. George W. Bush enlightened us with his discussion of the book he is writing about his father, which brought tears to many of us in the audience. He also brought to light what it actually was like for him when the planes hit the Twin Towers. We all see both of these men speak on TV and do not really look at them as real people, rather we see them as people in power. That is true however, they are real people just like you and I. Their speeches and interviews, showed emotion and feelings which are not portrayed on TV. They have to make the best decisions on behalf of the American people. It really did not matter which side of the political party you are on, the two gentlemen open my eyes as to what they really go through being in a position of power.

These are just a few of the many highlights which were touched upon at the Schwab Impact conference. If you would like to discuss any of the above topics in greater detail, please feel free to contact our office at 847-934-7777.

 

 
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3rd Quarter 2014 Market Commentary

By:  Lisa Thuer - Senior Trading and Research Specialist

 

The U.S. economic recovery continues to progress and is further along relative to that of other developed markets.  The Federal Reserve is gradually removing its support, whereas central banks in Japan and Europe are committed to maintaining or even expanding their stimulus efforts. Global central bankers made headlines in August as they met in Jackson Hole, Wyoming for their annual gathering. Federal Reserve Board Chair Janet Yellen’s speech there reaffirmed the Fed’s assessment that with economic growth and employment improving, and in the absence of worrisome inflation trends, the Fed is comfortable reducing its bond purchases even as it expects to keep interest rates low for the foreseeable future, awaiting further improvement in employment. This outlook was also covered in detail at the Fed’s July meeting. The minutes (released in August) acknowledged that growth and employment have in fact improved more quickly than anticipated, which could at some point require a sooner-than-anticipated shift in interest-rate policy.  The pace and timing of the Fed's decisions on rates remain an area of uncertainty, but the market still does not expect to move to tighten before mid-2015.

September came and we hit new highs and then it felt as if any and every bad news that could hit the markets did, according to the media. Geopolitical tensions escalated with the U.S. and its coalitions, extending its air strikes against ISIS from Iraq to Syria. Pro-democracy protests had expanded in Hong Kong and the Chinese government decided not to interfere as it had in the past. China is hoping for the protests to subside and for the media to lose interest. Everyone knows that the Fed will raise interests next year, most likely around mid-year. The first case of Ebola came to the U.S. and the scare of a wide spread disease hitting close to home sent a shrill through the news media which creates a domino effect. All of these concerns, which are brought to the fore front via television, internet, or newspaper, are in front of us and providing the extreme scenario. Along with all this noise brings volatility.

Volatility is the up and down movement of the market measured by the VIX (CBOE Volatility Index). Another way to describe the VIX is that it is an option based measure of market anxiety. It has jumped to its highest level in eight months to 18.66 but to put it into prospective, it still remains below its 20 year average of about 20.8. Throughout history and it does repeat itself, markets have volatility and markets have pullbacks. Two years have gone by and the S&P 500 has not had a ten percent correction. As we get closer to the Fed raising rates, the markets will evaluate valuations as they always have and figure out if they are in line with what companies are telling us. The bottom line is the market should be based on how companies are valued and what they are expecting going forward. Earning season is upon us and it could actually shed some light and settle the volatility as investors focus on companies, valuations and forecasts as opposed to worries about Eurozone growth, the pro-democracy protests in Hong Kong, the Ebola scare, profit taking and the Fed raising rates. (Read More.....)

 
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Daily Jargon

By:  Lisa Thuer - Senior Trading and Research Specialist

Growing up I was always told that no question is a dumb question. We learn by asking questions. It is easy to feel we should know what something means or that we are afraid what someone will think if we do not know the answer or the meaning. For example, we are in the financial industry and deal with terminology every day that others may not know.  We take it for granted others know what we are talking about since it is a daily occurrence for us. Below is a list of vocabulary we use daily, which you may not know, but want to ask.  We would like to offer some simple definitions to help you better understand. b2ap3_thumbnail_Jargon.jpg

Stock - A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings. A holder of stock (a shareholder) has a claim to a part of the corporation's assets and earnings. In other words, a shareholder is an owner of a company. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares.

Mutual Fund - An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus. One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult (if not impossible) to create with a small amount of capital.

ETF (Exchange Trade Fund) A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold. By owning an ETF, you get the diversification of an index fund as well as the ability to sell short, buy on margin and purchase as little as one share. Another advantage is that the expense ratios for most ETFs are lower than those of the average mutual fund. When buying and selling ETFs, you have to pay the same commission to your broker that you'd pay on any regular order.

Dividends - A portion of a company's profit paid to shareholders. Public companies that pay dividends usually do so on a fixed schedule although they can issue them at any time. Unscheduled dividend payments are known as special dividends or extra dividends.

Capital Gains - The profit that comes when an investment is sold for more than the price the investor paid for it.

Unrealized Gain/Loss - An unrealized loss occurs when a stock decreases after an investor buys it, but he or she has yet to sell it. If a large loss remains unrealized, the investor is probably hoping the stock's fortunes will turn around and the stock's worth will increase past the price at which it was purchased. If the stock rose back above the original price, then the investor would have an unrealized gain for the time he or she still holds onto the stock. Unrealized gains and losses are also commonly known as "paper" profits or losses, which implies that the gain/loss is only real "on paper."

Realized Gain/Loss - A gain resulting from selling an asset at a price higher than the original purchase price. A realized gain may lead to an increased tax burden if the asset was held in a taxable account. This also is turning an unrealized “paper” gain into a realized gain.

IRA (Individual Retirement Account) - Traditional IRAs are established by individual taxpayers, who are allowed to contribute 100% of compensation (self-employment income for sole proprietors and partners) up to a set maximum dollar amount. Contributions to the Traditional IRA may be tax deductible depending on the taxpayer's income, tax filing status and coverage by an employer-sponsored retirement plan. eventual withdrawal from an IRA is taxed as income; including the capital gains. Because income is likely to be lower after retirement, the tax rate may be lower. Combined with potential tax savings at the time of contribution, IRAs can prove to be very valuable tax management tools for individuals. Also, depending on income, an individual may be able to fit into a lower tax bracket with tax-deductible contributions during his or her working years while still enjoying a low tax bracket during retirement. eventual withdrawal from an IRA is taxed as income; including the capital gains. Because income is likely to be lower after retirement, the tax rate may be lower. Combined with potential tax savings at the time of contribution, IRAs can prove to be very valuable tax management tools for individuals. Also, depending on income, an individual may be able to fit into a lower tax bracket with tax-deductible contributions during his or her working years while still enjoying a low tax bracket during retirement.

Roth IRA - An individual retirement plan that bears many similarities to the traditional IRA, but contributions are not tax deductible and qualified distributions are tax free. Similar to other retirement plan accounts, non-qualified distributions from a Roth IRA may be subject to a penalty upon withdrawal. A qualified distribution is one that is taken at least five years after the taxpayer establishes his or her first Roth IRA and when he or she is age 59.5, disabled, using the withdrawal to purchase a first home (limit $10,000), or deceased (in which case the beneficiary collects). Since qualified distributions from a Roth IRA are always tax free, some argue that a Roth IRA may be more advantageous than a Traditional IRA.

RMD (Required Minimum Distribution) - The amount that Traditional, SEP and SIMPLE IRA owners and qualified plan participants must begin distributing from their retirement accounts by April 1 following the year they reach age 70.5. RMD amounts must then be distributed each subsequent year. The amount that Traditional, SEP and SIMPLE IRA owners and qualified plan participants must begin distributing from their retirement accounts by April 1 following the year they reach age 70.5. RMD amounts must then be distributed each subsequent year.

Roth Conversion - A reportable movement of assets from a Traditional, SEP or SIMPLE IRA to a Roth IRA, which can be subject to taxes. A Roth IRA conversion can be advantageous for individuals with large traditional IRA accounts who expect their future tax bills to stay at the same level or grow at the time they plan to start withdrawing from their tax-advantaged account, as a Roth IRA allows for tax-free withdrawals of qualified distributions. It is recommended that any such conversions be done following a meeting with a financial planner or personal tax professional, as there may be major tax implications if not done appropriately.

The end of the year will be here before we know it. If you would like to discuss any of these terms or perhaps take advantage of gains or losses or maybe even do a Roth Conversion this year, please give us a call at 847-934-7777.

 

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It's Back to School Time

By:  Lisa Thuer - Senior Trading and Research Specialist

It’s that time of year again where all the kids are heading back to school. For some of us it is that first experience of taking your child to pre-school for a couple of hours a day - a few days a week. This is the start of their school education and letting go of your little one. They may have tears as they leave you for those few hours and venture into the unknown. You may also have tears that are held back as you say, “It’s going to be okay. Mommy/Daddy will be back to pick you up.”.  As you turn away, the tears coming rolling down as you realize how quickly time goes.  It seems like they were just born and you couldn’t wait for them to walk and talk and now they are off to school.

For some others, their children are already in full swing of elementary school and they go reluctantly because they know what lies ahead of them - ab2ap3_thumbnail_back-to-school.jpg structure of nine to ten months with teachers, homework, projects, and learning. But on the other hand, they welcome the structure of learning and the socialization of being with their peers on a daily basis.

And yet for others the first experience of High School is taking place. My second and last child are now in High School. Both she and her brother are at the same school. She relies on her brother by asking him questions like: How is this teacher?, Do I need to do this?, or How do I do that?.

As time goes on, they all find their way and get comfortable once again in their educational environment. It seems as if it comes full circle when I hear people taking their kids to college for the first time. It is almost like pre-school all over again, except this time they are adults; but in your eyes, they are still your little baby. It is now time to let go again and both of you have the fear of the unknown.

They are not just being dropped off for a couple of hours, a few days a week. It may not be until Thanksgiving that you see your little darling again. Tears of joy, fear or happiness may all be shed as your little one is now grown up and you have been successful in getting them this far. Now it is up to them to take their life to the next level and figure out what they want to do.

No matter what stage of schooling you may be at with your child, it is never too early to start educating them about money. Through the course of their childhood, they may receive money for special occasions such as a birthday, holiday, or graduation. This can be a first step of taking responsibility and showing them how to put money aside and watch it grow.  Someday they will need it to go to college, possibly support themselves, and buy things such as a car, house, or even go on vacation.

Even if you are able to provide all of this for your children, teaching them to be responsible with their money is one of the best life lessons you can provide. My son had his first part-time job this summer and when he wanted to buy the more expensive pair of gym shoes, I told him that I would pay a certain amount and if he wanted to buy the more expensive pair, he would have to pay the difference. Since it was his money, he decided he didn’t need the more expensive pair and went home and found a pair online which fell in the budget of what I would pay for.

Children tend to value the price of money when they have to buy something themselves. He also wanted something this summer and I said he could buy it with his own money since he’s working. He replied, “Do you know how many hours I have to work to pay for it?” Lesson learned.

There are many ways to start your child learning about the value of money and putting it aside for the future. Feel free to give us a call if we can help – it is never too early or too late to begin your financial future 847-934-7777.

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