Carnegie Wealth Management Blog

Checking in at the quarter mile mark

With about 1/4^th of the year almost over, I thought it would be good to check in on what market sectors are performing the best and worst thus far in 2017. Below is a table that shows the S&P 500 return YTD and each sector of the S&P 500. It is interesting to note that the sector that most Wall Street strategists recommended buying at the start of this year (financials) is underperforming the overall market. Also, other so-called “Trump Trade” sectors such as industrials and energy are underperforming so far. On the other side of the coin, consumer staples and utilities were universally unloved by this same group, yet they are outperforming the S&P 500. We don’t want to draw too much from this but it is nonetheless something to note, especially considering how often we hear about narratives in regards to price action on Wall Street. See the previous 2017 Stock Market Contest Blog
 

About five years ago, “Giving Tuesday” was created and is celebrated the first Tuesday after Thanksgiving. This day celebrates and encourages giving in both monetary and non-monetary ways. Just on that day alone, approximately $117 million was raised online for charities. The increased awareness for charitable giving is a testament to the
good hearted and selfless nature of many individuals and corporations.

We here at Carnegie recently spent an afternoon cooking lunch for those in residence at the Ronald McDonald House in Cleveland. Sometimes it’s best to get away from the grind of “every day” life and give back to those in need and less fortunate. As someone who spends the majority of his days in the office, I really enjoyed preparing a meal together for those in need with my fellow co-workers. 

One of the ways we have helped encourage charitable giving is through the use of Donor Advised Funds.

Is it true?  Can I really?  There must be some catch?

These are some of the questions I received recently to my suggestion of giving taxes to charity.  My answer is a frank, ‘yes’. You can give some of your taxes to any qualified public charity.  The “giving” I am talking about is called Qualified Charitable Deduction (QCD). 

Recent History

Last December Congress made a permanent provision in the tax code.  Please note, there are two catches.  First, you must be age 70 ½ or older, and second, you must make the donation only from an Individual Retirement Account (IRA). 

There is no denying the worldwide wave of populism hit America last night.  The push-back from the common man against the establishment is real.  There is evident global frustration with those in the political class who are viewed to be out of touch with the average person.  It started in the Philippines in May, continued in the United Kingdom in June and now the ultimate insider candidate of Hillary Clinton has been deposed by a candidate never to have held elective office previously, Donald Trump. 

These are political waves though, not economic waves and the lessons learned in the Brexit vote are quite applicable to our own markets. 

The world lost a great man this week with the passing of Arnold Palmer...

We have several connections to the “King” in our firm, not the least of which is our very own Chad Warmbein who had the honor of playing in the Palmer Cup at Latrobe Country Club the past two years. It’s hard to imagine the world without Arnold Palmer; he was such a permanent figure, not only in golf, but as a person and all of the good that he did outside of the game. It is only in Arnie’s style that he would pass on the eve of the Ryder Cup, an event he cherished and is the person who still holds the title of the most match wins at 22. Never one to seek the limelight, he wouldn’t have wanted to disrupt the event.

Many of you from Northeast Ohio area are familiar with “Brady’s Leap,” if only from the eponymous Ohio Turnpike service plaza at mile marker 197. For those of you who are not native to the area or simply need a refresher of this legend, gather round. 

Captain Samuel Brady

Captain Samuel Brady came from a notorious family of American Revolutionary soldiers and fought alongside George Washington with his father and brother. Throughout the Revolution, the Bradys fought in every major battle. By 1778, the Bradys were deployed to man the frontier, then located in Central Pennsylvania as most of the country anywhere West of that was occupied by Indians.

While the recent market headlines have focused on Britain’s decision to leave the European Union, or “Brexit” as it has been dubbed, I came across an interesting news article last weekend. The article from the Wall Street Journal described how a certain robo-advisor froze all trading activity on their platform for two and a half hours after the market opened on June 24^th (the first day of trading after the Brexit results were known). Even worse, they did not even communicate this in a simple email to their users. What would you do in this situation?

We live in an age of amazing technological promise. One where machines and software programs are developing at an astonishing rate, and where the possibility of encountering real-life robots - like the fantasy versions from 1970’s TV shows and film, such as B-9 from “Lost in Space” or C3PO from “Star Wars” - doesn’t seem so other-worldly anymore.  Today companies as different as Google, General Motors and Tesla are vying to develop self-driving cars, and Virtually Reality, or “VR” for short, is for Real.   With self-driving cars literally just around the corner, perhaps it is time to consider the question: are you ready to hand over the keys to your car and trust your life to an Uber machine? 

As a follow up to our previous post "Fiduciary Rules? Or April Fools...", The Department of Labor’s regulations, aimed at curbing abusive fee practices in regards to the management of IRA, 401(k) and HSA accounts, was finally released on April 5^th.  The draft regulations released for comment earlier in the year were tough, substantive and had teeth.

However, the final regulations, just released, are virtually meaningless as a consumer protection and may even be softened. 

This coming Wednesday:  “Hump Day” or “Wacky Wednesday”?

The U.S. Department of Labor has an opportunity to make an historic ruling that will benefit everyone saving for retirement. The final version of the highly anticipated “Fiduciary Rule” is to be announced on Wednesday, April 6.

Why is this important? The fiduciary standard that Registered Investment Advisers (like Carnegie) live by will be forced upon any adviser providing investment guidance to retirement plan accounts. In other words, advisers that are currently permitted to recommend only products that earn them the most commissions will finally be forced to come clean.