KFA Blog

2nd Quarter 2015 Market Commentary

 

Trouble Abroad, Strong Dollar, China    

In spite of global uneasiness, the overall US economy continues to chug along. Economic conditions in China have worsened, Greece continues to disappoint, and Puerto Rico faces collapse. Greece and other irresponsible southern European countries continue to act as thorn in the side of the EU’s largest economies in Germany, the UK, and the Netherlands. European leaders have worked tirelessly to limit a Greek contagion effect that would infect Europe with sluggish growth.

The US economy has a thorn of its own, the territory of Puerto Rico faces a $72 billion debt that Puerto Rico’s governor has admitted cannot be paid. Much of that debt is held in the US, over 20% of bond funds own Puerto Rican bonds which have been downgraded to junk status. In effect, Puerto Rico is America’s Greece. Although Greece and Puerto Rico don’t hinder European and American growth, there are much larger problems.

The same man in China that sells you eggs is giving you stock tips. The Chinese middle class has been coerced from every direction to buy into China’s closed market. Two-thirds of Chinese investors have not finished high school and are trading on margin. Trading on borrowed money has artificially pumped the Chinese market to new highs. This is an attempt by China to build their own market to meet their own consumption and to strengthen their middle class.

The Chinese dragon was able to take flight and lead the world in growth for much of the past decade based on a manipulated and devalued currency that made exporting easy. China’s miracle years have played out and the government cannot control the reality of economic gravity. Furthermore, China is running out of money to artificially stimulate its economy. The country’s corporate and local government debt totals an extraordinary 280% of GDP, the Chinese market has been growing twice as fast as its economy for more than a decade. We are keeping a close eye on the 2nd largest economy in the world and have made adjustments to offset risks.

Despite trouble abroad, American corporations are enjoying large cash balances and balance sheets are positive. Corporate earnings are looking positive in 2015 and the S&P 500 is nearing an all-time high. We anticipate earnings will continue to look good in the following weeks. There has been speculation that China will call US debt in order to cover its own debt, we do not expect that to be the case. China will not call US debt because they need the US to continue to feed their production and exports, the US may serve as China’s lifeline in the future.

As the dollar continues to strengthen, imports will rise and inflation will be held in check.  A stronger dollar and US economy will continue to boost exports internationally which will lead to a healthier global economy. This seems to be a good time to travel, you will find that your dollar is going farther internationally and airlines are saving money on lower fuel costs – leading to better deals and more weekend getaways. Oil prices are forecasted to keep dropping and consumers will find extra money in their pockets leaving more extra cash for discretionary spending.

What does all of this mean for your portfolio? There have been some adjustments made in the past few weeks and days to account for changing economic climates abroad. As need be, we will continue to make minor adjustments to put you in reach of your financial goals. Our confidence in the US economy remains strong and our investments reflect that.

We are looking to add positions in consumer discretionary funds and we are also looking at alternative investments for risk management purposes. These new investments will be funded from positions previously held in volatile international markets. In order to serve you best, we are always researching domestic holdings, other regions, and other countries that are growing and on the rebound.

As always, should you have any questions regarding your portfolio or a life changing event, please feel free to contact any member of the KFA Team.

Your Friends,

Kabarec Financial Advisors, Ltd.

 
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What If....

By:  Lisa Thuer - Senior Trading and Research Specialist

No one ever wants to talk about the day your loved one passes away and what needs to be done when the day comes.  It is the “elephant in the room”. Everyone knows they will be faced with it one day, but how many times have we said “We will talk about it tomorrow”.  Then it happens, now what?? We never had“the talk”. What do I do? Who do I call? Is there a Trust? Is there a Will? Who are the beneficiaries? Who gets the house? What happens to the investments? Why did we not have “the talk”?

Make one phone call to Kabarec Financial Advisors, Ltd.; we should be the first call before you call an attorney.  We deal with these questions on a daily basis and will help you every step of the way. Our clients are not only our customers but they are part of our family. We know more about our clients than just their investments and will be able to guide you through this most difficult journey. The majority of the time we will know who the beneficiarie(s) are and who the successor trustee(s) are on the account(s). Once this is established, the rest is routine paperwork as long as we have a certified death certificate. If there is an investment, life insurance policy, etc. outside of our office, KFA will be able to point you in the right direction.

Throughout our relationships with clients, we have made it our priority to give clients piece of mind should something happen to them. We have as much information of their financial life that has been shared with us in confidence. Knowing our clients for their lifetimes, helps us in preparation for when something does happen, we are there for their family in any capacity that is needed. 

Some families may have “the talk” in preparation of the inevitable and some families may not. The time may have come too soon and there was not time for the discussion. In any event, please do not hesitate to make Kabarec Financial Advisors, Ltd. your first phone call when something does happen. We are also available should you need help in preparation of “the talk”, we can also assist with this difficult situation.

 

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Kabarec Financial Advisors, Ltd. Among "Best of Best" Financial Advisors Attending Barron's Top Independent Advisors Summit

Exclusive Conference Hosts Elite Gathering of Nation’s Pre-eminent Financial Advisors and Industry Decision Makers

Michelle Smalenberger, CFP®,Director of Client Services and Financial Advisor at Kabarec Financial Advisors, Ltd., attended the seventh-annual Barron’s Top Independent Advisors Summit, hosted by Barron’s magazine to promote best practices in the industry and the value of advice to the investing public.  The invitation-only conference was held at the Fairmont Princess Hotel March 23 - 25 in Scottsdale, AZ.

Many of the Top 100 Independent Financial Advisors in the U.S., as ranked and published in Barron’s August 23, 2014 issue, were in attendance. This annual ranking is the basis for the Top Independent Advisor’s Summit and the advisors are chosen based on the volume of assets overseen by the advisors and their teams and the quality of the advisors’ practices.  The top 100 Independent Advisors are comprised of Registered Independent Advisors and Advisors from Independent Broker Dealers. A total of 500 elite advisors took part in the event.

“I am thankful for the opportunity to spend a few days with other top professionals from within our industry,” said Smalenberger.  “The chance to network and build relationships with other advisors is unique in that we are all trying to push our profession forward.  Instead of seeing these peers as competitors, we view one another as partners in providing valuable advice to our clients. It was an honor to be invited back for a second year in joining this elite group of Advisors.”

This exclusive conference is designed to promote best practices and generate new ideas across the industry.  Attendees conducted workshops led by the Top 100 Independent Financial Advisors that explored current issues of importance ranging from portfolio construction and management to investing in overseas markets, managing risk, technology applications and client relations.

“Investors today are looking to generate income while protecting their portfolios against downside risk,” said Ed Finn, editor and president of Barron’s. “These top-tier advisors have clients that depend on them to meet critical financial goals for themselves, their families, their businesses or their institutional funds. Advisors will leave this conference better equipped to do just that.”

Smalenberger was one of the 500 financial advisors who were either selected by Barron’s or their affiliated firm to participate in the event.  Associated participating firms included: Advisor Group, Ameriprise Financial Services, Charles Schwab, Commonwealth, Fidelity Investments, Interactive Brokers, LPL Financial Services, Pershing, Raymond James, TD Ameritrade Institutional, and Wells Fargo Financial Network.

For more information about Barron’s conferences, please go to http://conferences.barrons.com

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About Kabarec Financial Advisors, Ltd.

Kabarec Financial Advisors, Ltd. is a “fee-only,” full-service financial advisory firm with more than 30 years experience helping clients to achieve their financial goals and objectives.  It provides portfolio management and financial planning services. KFA’s strategic focus is on preserving, protecting, empowering and perpetuating wealth for the benefit of its clients and its clients’ future generations. The principal of the firm previously has been named by Worth, Money Magazine, Bloomberg Investment Management andMedical Economics as one of the country’s best financial advisors.

Consult Kabarec Financial Advisors, Ltd. at 847-934-7777 or www.kabarec.com for all your financial planning and investment needs.

About Barron’s

Barron’s (www.barrons.com) is America’s premier financial magazine, renowned for its market-moving stories. Published by Dow Jones & Company since 1921, it reaches an influential audience of senior corporate decision makers, institutional investors, individual investors and financial professionals. With new content available every week in print and every business day online, Barron’s provides readers with a comprehensive review of the market’s recent activity, coupled with in-depth, sophisticated reports on what’s likely to happen in the market in the days and weeks to come. As a result, Barron’s is the financial information source these powerful people rely on for market information, ideas and insights they can use to increase their professional success and enhance their personal, financial well-being.

The “Barron’s Top 100 Independent Financial Advisors” is a select group of individuals who are screened on a number of different criteria. Among factors the survey takes into consideration are the overall size and success of practices, the quality of service provided to clients, adherence to high standards of industry regulatory compliance, and leadership in “best practices” of wealth management. Portfolio performance is not a factor.

Attendees of the Barron’s Conference were comprised of the independent advisors listed in “Top 100 Independent Financial Advisors”, (August 23, 2014) as well as financial advisors who were chosen by Barron’s or their associated firms. 

 

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Smalenberger Receives CFP® Status

For Immediate Release

Kabarec Financial Advisors, Ltd.:  Smalenberger Receives CFP® Status at Firm

 

 

b2ap3_thumbnail_Photo-Michelle.jpgPalatine, IL, February 3, 2015 – Michelle Smalenberger CFP®, Director of Client Services and Financial Advisor at Kabarec Financial Advisors, Ltd. (KFA) has earned the right to use the CERTIFIED FINANCIAL PLANNER™ and CFP® certification marks by the Certified Financial Planner Board of Standards (CFP Board). Ms. Smalenberger has been part of the KFA Team since 2005 and is responsible for preparing and presenting client financial plans, creating and maintaining client accounts, actively involved in client meetings and ongoing communications, as well as oversees the daily office operations.
 
“It is refreshing to complete the education, examination, ethics, and experience requirements required by the CFP Board,” said Smalenberger.  “Since graduating from the Kansas State University Financial Planning program, I have gained further learning through my experience the past ten years.  There are so many aspects of helping families develop a financial plan that can be implemented to last throughout their future.”
 
“Michelle has contributed greatly to KFA and our clients over the past several years,” said Michael Kabarec, CFP®, CPA/PFS, principal of Kabarec Financial Advisors, Ltd.  “Earning the CFP® designation proves Michelle’s extensive financial planning background and positions her as a professional with a high level of analytical capabilities.” 
 
The CFP® marks identify those individuals who have met the rigorous experience and ethical requirements of the CFP Board, have successfully completed financial planning coursework and have passed the CFP® Certification Examination covering the following areas:  the financial planning process, risk management, investments, tax planning and management, retirement and employee benefits, and estate planning.  CFP® professionals also agree to meet ongoing continuing education requirements and to uphold CFP Board’s Code of Ethics and Professional ResponsibilityRules of Conduct and Financial Planning Practice Standards.
 
“It is critical for individuals to know their financial advisor values further education and learning,” Smalenberger said.  “Obtaining the CFP® designation serves as an important milestone to help serve our clients and individuals within our community.  It truly is a privilege to be part of an organization who recognizes professionals, like myself, as an entrusted advisor for individuals.”
 
About Kabarec Financial Advisors, Ltd.
Kabarec Financial Advisors, Ltd. is a “fee-only,” full-service financial advisory firm with more than 30 years experience helping clients to achieve their financial goals and objectives.  It provides portfolio management and financial planning services. KFA’s strategic focus is on preserving, protecting, empowering and perpetuating wealth for the benefit of its clients and its clients’ future generations. The principal of the firm previously has been named by Worth, Money Magazine, Bloomberg Investment Management and Medical Economics as one of the country’s best financial advisors.
 
Consult Kabarec Financial Advisors, Ltd. at 847-934-7777 or www.kabarec.com for all your financial planning and investment needs.
 
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4th Quarter 2014 Market Commentary

By:  Lisa Thuer - Senior Trading and Research Specialist

b2ap3_thumbnail_4Quarterly-Review.jpg

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.


(Read More.....)

 
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