Investment Philosophy

Our Investment Recommendation to You and Your Family

After you have established appropriate cash reserves, invested in money market funds or municipal bonds, we will recommend that you pay down, or better yet, eliminate personal debt.

We will recommend that you invest long-term assets in shares of large, profit-motivated, rationally run, multi-national companies.  Although the future is unknowable, and certainly unpredictable, the investment return to you, from ownership in these companies, should be greater than return from other savings programs.  We expect, but do not know, that the fluctuation in value of your investments in these companies will be significant.  We also expect the fluctuation to be temporary.  A significant part of Our Service to you, and your family, is to encourage you to invest as large a portion of your assets in these companies as you can tolerate.  Then, Our Service to you, and your family, is to encourage you to maintain your investments in the shares of these Great Companies during market downturns.

Only by maintaining your investment during market downturns can you realize the long-term rewards as an owner of the great companies of America and the World.  Read our General Investment Disclaimer.

The following are recent articles that expand on our Investment Philosophy. Please use the search function on your right for older articles.

Attention Business Owners

Paycheck Protection Program

My first analysis of this loan program is that it will be attractive for  small business owner clients –Your business and Mine.

As first time applicants we will have to learn fast. We will tell you what we find as we go along. Please let us know any Best Practices that you discover.

Here is a Summary of the Paycheck Protection Program.    The business  can borrow from the SBA an amount equal to our  monthly occupancy costs-rent, utilities, employee salary costs  and health insurance. Looks like any employee who earns more than $100,000 is excluded from the calculation.

After the monthly amount is determined then the monthly amount is multiplied by 2.5 to equal the amount of the loan. The loan interest rate is 4% and can have terms of up to ten years.

The program has a powerful incentive since the loan is forgiven as you pay occupancy costs and employee costs. Any of these costs incurred between Feb 15, 2020 and June 30, 2020 will reduce the loan balance.  The forgiven loan is not taxable income.

I have introduced myself to the head of SBA lending at Columbia Bank who was with Atlantic Stewardship Bank.

As a Northern NJ Business Owners who has Never Applied for an SBA Loan  we intend to learn with you.

CPAs will have to do a lot of work assembling the data to support the application-in the middle of tax season!

The program appears to be so attractive that the banks who are SBA lenders may be overwhelmed by applications-an advantage to those who are organized and can act quickly.

The Best information that I found so far is from Gibson Dunn law firm. and a memo from Senator Marco Rubio’s office.

Please forward this to any of your Small business Owner Friends and Family.

Regrets We Will Not Have

Four Things Others Will Wish They Had Done – That We’re Already Do

As you know, the coronavirus situation continues to hammer the markets.  All over the world, investors large and small are facing a level of uncertainty we haven’t experienced in over a decade.  But I’m proud to say that, based on the conversations I’ve had with you and my other clients, there may be no group of people in the world who are handling this situation better.  The majority of my clients have all told me some variation of the same thing:

“It’s not fun, but I’m not stressing about it too much.  I know the markets will recover eventually.”

In other words, they know that, while what goes up must come down, what goes down will eventually bounce back up.

I was also proud when a client asked me a very simple, but very smart question the other day:

“When this is all over, what will I wish I had done?”

This question really got me thinking.  Investors are bombarded every day with opinions (informed or otherwise), data (informative or misleading), and news (real or fake).  As a result, many investors have panicked.  When the coronavirus pandemic resolves and the markets rebound, what will they wish they had done?

Here are my answers:

  1. They’ll wish they had focused on the long-term instead of the short.

Investing, by its very nature, is a long-term activity.  Even people who are close to retirement are still investing for the long-term.  That’s why, while bear markets are uncomfortable, they’re also somewhat overrated.  Markets fall over days, weeks, and sometimes, months.  But history has shown that they rise over the course of years and decades, which is good for us, because we’ll be investing for years to come!

Investors who forget this, who think that what’s happening now will happen always, are falling prey to recency bias.  And that never ends well.

  1. They’ll wish they had double-checked our asset allocation before all this started.

Asset allocation – the process of spreading your investments across different asset classes – is one of the most important things an investor can do to balance risk versus reward.  During bear markets, the investors who get burned the most are the ones who “put all their eggs in one basket.”  That’s because they didn’t stop to think what would happen if they let their basket drop.       

Investors who have spread their money across a variety of asset classes – who have truly diversified – know they have plenty of eggs left to cook with.

  1. They’ll wish they hadn’t tried to take shortcuts.

Think of the last time you were caught in a traffic jam.  You’re sitting there, idling in traffic, when suddenly, the lane next to you starts to move.  So, you quickly merge into that lane, only to get stuck again.  Meanwhile, the lane you were just in is now moving…and all the cars that were once behind you are now speeding ahead.

Maddening, isn’t it?

When bear markets hit, investors often panic.  Instead of sticking to their long-term strategy, they sell, sell, sell – at a time when everyone is selling.  This means they are selling low.  In other words, they try to change lanes in the middle of a traffic jam.

But again, we’re in this for the long-term.  The road we’re on stretches for miles.  Sometimes, the speed limit is 75 miles per hour.  Sometimes, it’s only 25.  Trying to take shortcuts just leads to longer delays.

  1. They’ll wish they had positioned themselves to take advantage of when the markets rebound.

It happened after the Great Depression.  It happened after the stock market crash of ’87. It happened after the dot-com bubble burst.  It happened after the financial crisis of 2008.  It happened after the fourth quarter of 2018.  The markets recovered – and climbed to new heights.

Just as bear markets are inevitable, so too are bull markets.  Investors who don’t think long-term, who try to take shortcuts, who don’t try to balance risk and reward, will not be positioned to take advantage of the next one.  Which means that when this is all over and the markets rebound, when they look over at the lane next to them and see people zooming ahead, they’ll be wishing they had done things differently.

But here’s the good news. When this is all over, we won’t be wishing we had done these things.  Why?  Because we’re already doing them!  So, while headlines probably won’t be pleasant over the next several weeks, we can take comfort in this very simple fact:

When this is all over, we won’t need to look back and regret.  All we’ll need to do is keep looking forward.

No matter what headlines you see over the coming weeks and months, always remember that my team and I are here for you.  We’re here to answer your questions.  We’re here to keep an eye on your money.  We’re here to help you hold to your long-term dreams and plans.  So, if there’s ever anything more we can do, please don’t hesitate to let us know.

Because we’re here.

Coronavirus and Market Swings

An Update on the Coronavirus Situation

The Situation

On Thursday, March 5, 2020, the Dow fell 969 points – just the latest in a week of wild swings.1  While monitoring the situation, a headline caught my eye:

“Dow tumbles nearly 1,000 points again, because stocks can’t figure out coronavirus.”2 

To me, this headline illustrates what the media often gets wrong about investing.  But before we dive into that, let’s review how the coronavirus (COVID-19) is impacting the markets.

A wild week

In terms of pure numbers, the first week of March has been one of the wildest in recent memory.  In fact, the Dow had two of its best days ever on March 2nd and 4th…but two of its worst days ever on March 3rd and 5th. 2  Writers have been comparing the stock market to a rollercoaster for decades, but this takes the analogy to a whole new level.

It's not hard to understand why.  The coronavirus outbreak – which as of this writing has spread to over 100,000 people, with over 3,400 fatalities – is putting a major crimp on business activities around the world.3  Global supply chains, which are the networks between a company and its suppliers, have been dramatically affected. As a result, some of the world’s largest corporations have warned shareholders that they may not be able to reach their quarterly profit estimates.  Industries like travel and transportation, which depend on the movement of people and goods, have seen business plummet.  This in turn has impacted the energy industry, as less travel and transportation mean less demand for oil.

So.  Coronavirus is definitely taking a toll on global markets.  The question economists are struggling to answer is, “How will coronavirus affect the global economy?” 

Here in the United States, consumer spending is one of the main drivers of our economy.  There have been over two-hundred confirmed cases of COVID-19 thus far.  That’s a small number in the grand scheme of things.  Economists’ concern, though, is that the virus may spread, causing people to stay home and consumer spending to slow dramatically.  Nations with far more cases, like China, South Korea, and Italy, are already seeing slowdowns.  The worst-case scenario, according to some analysts, is that economic growth for 2020 could be cut in half if the virus continues to spread.4  Should that happen, some nations may well experience a recession.

The Federal Reserve responds

For weeks, analysts expected the Federal Reserve would act at some point.  That’s exactly what they did on Tuesday, March 3rd, when the Fed announced they would cut interest rates by 0.5%.5  The Fed figured lower interest rates would prompt more spending and lending.  Think of it as giving the economy a dose of Vitamin C.

But the markets fell anyway.

There are a few reasons for this.  While a rate cut was expected, the Fed acted much sooner than many anticipated.  So, rather than prompt enthusiasm, it instead prompted concern.  “If the Fed feels like they have to cut rates to keep the economy going,” the thinking goes, “what does that say about the economy?”

Then, too, there’s only so much that lower interest rates can actually do.  To be frank, the Fed has already spent most of its ammunition on this front.  Interest rates have been low for years and have only gotten lower lately.  Furthermore, interest rates can’t fix global supply chains, or replace lost business.  They won’t fill seats on airlines or keep the machinery running in hard-hit factories.  Nor can they stop coronavirus from spreading.

Viruses are no respecter of borders or laws; they’re certainly no respecter of lower interest rates.

Headline-driven investing

Just typing those words makes me shudder!  Headlines are one of the last things that should drive investing, but that’s where we are right now.  The proof is in what happened on Wednesday, March 4th.

The night before was Super Tuesday – when fourteen states held presidential primaries.  Joe Biden won most of these states, which buoyed investors, as Biden is seen as more centrist than his main opponent, Bernie Sanders.

What connection does Joe Biden winning have on stocks?  None right now.  It doesn’t change anything about coronavirus.  It won’t magically increase economic activity.  The election itself isn’t for another eight months!  And yet, the markets rose over 1,000 points on the back of that headline…before giving most of it back the very next day when the headlines changed.6

Which leads me back to the headline I showed you at the beginning of this letter.

“Dow tumbles nearly 1,000 points again, because stocks can’t figure out coronavirus.” 

Look at those words again: Stocks can’t figure out coronavirus.  Stocks don’t have minds of their own, of course, so my guess is the headline really meant investors can’t figure out coronavirus.

But here’s the thing.  For investors, there’s not much to figure out.

Economists, analysts, and pundits try to divine how today’s news will affect tomorrow.  They create projections to help banks, businesses, and politicians make decisions.  It’s a hard job, there’s no denying.

But no investor can accurately predict how bad the virus will or won’t be.  I’ve seen some commentators make claims about vaccines, or how warm weather will stop the virus in its tracks, or any of a dozen other things.  It’s all speculation.  The fact is, no one knows how long this epidemic will last, or how far it will spread.  No one knows who will win the election in November.  No one knows the future!  We can make educated guesses, but we can’t know with any certainty.  So of course investors can’t “figure out” coronavirus.

Even if we could, the situation would likely change the next day!

To me, the problem with the headline above is that it implies investors should be trying to “figure it out.”  But if we could, there would never be any uncertainty.  Investing would become as predictable as grocery shopping.  But investing doesn’t work like that.  That’s why we don’t make investment decisions based on predictions.  It’s why, during times of market volatility, we don’t chase our own tail, trying to time the markets or make risky bets based on what we guess might happen.

In other words, we don’t need to “figure out” coronavirus.  Let’s leave that to the scientists.  Instead, all we need to do is largely what we’ve already done!  And that is:

  1. Determine what kind of investment return you need to reach your goals, and then choose high-quality investments based on the principles of supply and demand. When demand outpaces supply, buyers are in control, and prices are likely to move upward.  When supply is greater than demand, sellers are in control, and prices tend to go down.  That’s why we don’t buy or sell based on predictions or stories.  We look at what is actually happening by examining trends.
  2. When the market is trending upward, we focus on growing your money. When the market trends down, we focus on preserving it.  This is done by putting strict rules in place that govern your investments.  For example, if an investment moves below a predetermined exit point, we sell.  If necessary, we can move entirely to cash if that’s what it takes to preserve your principal.

In the short term, coronavirus will probably continue to impact the markets.  The global economy will continue having symptoms.  But we don’t need to guess what the effects will be anymore than we need to guess what the weather will be like ninety days from now.  Instead, we determine the rules we need to follow to help you reach your goals, and then follow those rules to the letter.  To me, it’s comforting to know that we don’t need a crystal ball to be successful long-term investors.  We don’t need to be virus experts.  All we need to be is disciplined, informed, and prudent.

In the meantime, I expect volatility will continue.  By the time you read these words, the headlines will have changed again.  That means the markets will have probably swung again.  That’s okay.  Because while volatility is never fun, we don’t need to “figure it out.”  We’ve already done that.

While I’m encouraging you to not stress over daily headlines or market swings, I understand that’s sometimes easier said than done.  After all, it’s your money!  So, if you have any questions or concerns about your portfolio, please let me know. I will always be here for you.

How to Apply for Social Security

Retirement Benefits

To apply for Social Security you can either visit the Social Security Administration (SSA) website which can be found at, call the SSA office at 1-800-772-1213, or visit your local Social Security office at The closest Social Security office is at Continental Plaza, Second Floor, 401 Hackensack Ave, Hackensack NJ 07061. Their hours are 9:00 am to 4:00 pm Monday through Friday. You can stop by without an appointment but we advise you schedule one to save yourself time.

When applying for our Social Security, it is necessary to have the following documents to complete the application:

  1. Birth Certificate: to prove your date of birth and location of birth
  2. Marital Status/ Divorce Documents
  3. Birth Certificate of Spouse
  4. Social Security number for you and spouse

During the application, your spouse should be in attendance and it is always a good idea to bring proof of identification with you. For more information about the documents required please visit If you have questions, need advice or know someone who has questions about their benefit, please contact us.

The Decade In Review: 2010-2019

Every January, I send my clients a letter titled The Year in Review, where together we look back at the year that was.  What were the highlights?  What were the “lowlights”?  What did we learn?

But this January doesn’t just mark a new year.  It marks the beginning of a new decade.  (Unless you are a strict observer of the Gregorian calendar system, in which case the next decade begins in 2021.  But I digress.)  So, for this letter, we’re going to look back at what shaped the markets in the 2010s – and what lessons we should take with us into the ‘20s.

2010-11: Aftershocks of the Great Recession

The best way to see how much can change in a decade is to remember how things were at the end of the last one.  In 2010, we were coming off the worst decade for stocks since the 1930s.  The Great Recession had devastated the retirement savings of millions of people.  Many of the world’s most famous financial institutions had collapsed.  And the national unemployment rate was near 10%.1

It was a scary and uncertain time.  Many investors had fled the markets entirely by 2010, some for good.  As a result, they missed a remarkable recovery that was just around the corner.  Not only that, they missed the longest bull market in history.

In hindsight, it might seem obvious that there was nowhere to go but up.  But just as the start of a recession is very hard to see coming, the ending can be equally hard to wait for.  People can be forgiven for thinking the worst was still to come, because in 2010 and 2011, there were still a lot of ominous headlines to deal with.  Remember any of these terms?

Sequestration   ●   U.S. Debt Ceiling   ●   European Debt Crisis ●   Bailouts   ●   Austerity   ●   The Fiscal Cliff

For the first few years, fear abounded as to whether the global economy would be able to recover at all.  Nation after nation dealt with spiraling debt that couldn’t be paid off.  Remember how often Greece used to be in the news?  Some analysts speculated about the possibility of a second recession. 2011 was an especially tenuous year for the stock market, especially when the United States’ credit rating was downgraded for the first time in history.

2012-14: The Federal Reserve intervenes

During this time, however, the world’s largest central banks were working behind the scenes to keep the recovery going.  In the United States, for example, the Federal Reserve embarked upon a massive bond-buying program, to the tune of $85 billion per month.  This accomplished two things.  First, it flooded the money supply and kept interest rates historically low.  Lower interest rates made borrowing less costly, which meant businesses and individuals could borrow and spend more, thereby pumping more money into the economy as a whole.  This, of course, equaled growth.  Slow growth, but growth nonetheless.

The second thing the Fed’s bond-buying did was drive more investors into stocks.  Low interest rates often lead to lower returns for fixed income investments, so it was into the higher risk, higher reward stock market that investors went.  All this had been going on for years, but the results were only then becoming apparent.  So, it came almost as a surprise when the markets reached new highs, even though the economy still seemed to be licking its wounds.  It was in mid-2013 that the Dow hit 15,000 for the first time, rising to 16,000 by the end of the year, and then 17,000 the year after.

2015-16: Waiting for the other shoe to fall

But that didn’t mean the markets were immune to volatility.  Despite the economic recovery, many experts spent the decade in near-constant fear of another bear market.  Every wobble, every market correction, was watched with fearful anticipation.  It was like standing next to someone’s hospital bed, thinking every next breath will be their last.  Some of this was probably a form of post-traumatic stress caused by the Great Recession.  The rest came from the spasms of an ever-changing world.

Oil prices plunged dramatically around this time, hurting both oil-producing nations as well as the energy industry.  China’s stock market crashed.  The Greek debt crisis reared its ugly head again, prompting fears that “financial contagion” would spread and create another global recession.  And then came Brexit.  The news that the United Kingdom would leave the European Union sent shockwaves around the world.  And here at home, one of the most bitterly contested presidential elections in U.S. history had both sides of the political aisle forecasting economic ruin if the other side won.

But despite the dire predictions, these developments only slowed the recovery’s march rather than derailing it completely.  In fact, by July of 2016, the Dow once again hit new heights.

2017-19: The longest bull market

While most of the decade had seen slow-but-steady growth, the horse started picking up speed as it neared the finish line, buoyed by tax cuts, increased government spending, and corporate earnings.  Nowhere was this truer than with the Dow.  Comprised of thirty of the largest publicly-traded companies, the Dow hit 20,000 for the first time early in 2017 – and closed well above 28,000 on December 31, 2019.2

Exactly ten years before, the number was only 10,428.  That’s an increase of over 170% - the culmination of the longest bull market in history.

Of course, it wasn’t all smooth sailing.  The trade war with China is an ever-present concern, with rising tariffs often leading to brief, but dramatic downswings in the market.  2018 was actually a down year for the S&P 500, the only one of the decade.  And as the 2010s drew to a close, many economists warned of a slowing economy – with maybe even a mild recession in store.

Despite these warnings, investors did what they had done for most of the decade: Act startled, and then head right back into the markets.  Some pundits call it a market “melt-up” instead of the usual meltdown.

What have we learned?

So.  A remarkable decade filled with twists and turns.  But what did we learn? 

When I looked back at the last ten years, one thing that struck me was how interconnected the world has become.  So many of the storylines that drove the markets originated far beyond our shores.  We truly live in a global economy.  We invest in other countries, buy products in other countries, loan money to other countries (or apply for loans, as the case may be) and trade with other countries.  We might be separated by the world’s biggest ponds, but the ripples near one shore are always felt near the other.

That means two things.  One, for an advisor like me, it means there’s more than ever to keep track of.  But two, it means we should react less and less to the headlines of the day – or to each individual ripple.  A butterfly might flap its wings in Beijing and cause a hurricane in Topeka, as the saying goes, but there are butterflies flapping their wings everywhere.  That’s one reason why we saw many storms but fewer hurricanes in the 2010s.

Another thing we learned?  Sometimes, most times, slow and steady really does win the race.  We were all taught the truth of this as children when we learned the story of the tortoise and the hare.  The past decade proved it.  Everyone loves growth that comes fast and hot.  But when something burns fast and hot, it tends to burn out faster, too.  One reason we never saw the recession so many people feared is because the economy recovered as slowly as it did.  It’s a lesson we can apply to our own financial decisions.  While it’s always tempting to chase after windfalls and jackpots, it’s so much smarter to prioritize steady progress over short-term whims.  The race to your goals is a marathon, not a sprint.

A third thing we learned is how often things don’t go as predicted.  In 2010 and 2011, many experts predicted a gloomy decade for the stock markets – and they had good reason to think so!  But it didn’t happen.  When, say, Obamacare became the law of the land, many experts predicted economic disaster.  As of this writing, it hasn’t happened. When Brexit became a reality, many experts predicted a global catastrophe.  As of this writing, it hasn’t happened.  When President Trump was elected, many experts predicted a market meltdown.  As of this writing, it hasn’t happened.  We all have our opinions on whether events like these were good or bad, of course.  But it’s a good thing we didn’t base our investment decisions on any expert’s predictions!

Because if there’s one thing we learned this decade, is that a prediction is like a person’s appendix – pretty much useless.

2020 and beyond

With that in mind, I won’t make any predictions for the coming decade.  If history is correct – and it always is – another market correction, another bear market, another recession will come eventually.  Whether it’s this year, or next, or the one after that, I can’t say.  What’s more important is that we remember this: It’s when we fly that we should have the healthiest respect for gravity.  But it’s when we’re on the ground that we should raise our eyes to the skies.

Investing is like trying to find our way in the dark – and our strategy is our North Star.  It’s so much more valuable than any prediction!  We may bump into the occasional obstacle.  Sometimes, we may even trip.  But if we hold to that star, we will keep moving forward in the direction we want to go.

We will make this decade whatever we want it to be.

My team and I can’t wait to spend the next decade with you.

Family Meeting Series Part 1

Dad Needs Memory Care Assistance

Long-time client, his wife and two adult children came to the office recently.  Dad was a long-time corporate executive who ran U.S. operations for a multi-national company.  He handled all of the Family finances.  Mom ran the house and the Family but had no interest in the Family finances.  (My mistake was to allow this situation to continue for too long.  Today, I would no longer allow Mom to be absent from their Annual Meeting.)  The children were unaware of their parents’ financial situation other than to be thankful for the generous gifts to the grandchildren.  Retirement was destructive both financially and physically to this couple.  Health issues and accidents accumulated.  The Big House, the vacations and country clubs were maintained for many years after the couple could no longer afford them.

When Dad started to develop memory issues the financial problems became apparent.  Mom had to learn fast but Dad would not give up control, a symptom of his memory problems.  Although the children were aware of the memory issues, they were not aware of the financial issue.  What should the Family do?

One of the most demanding topics for a family to deal with is the development of a memory loss by the family matriarch or patriarch.  This problem can be compounded in a situation where the memory loss issue develops in the family member who has always handled the family finances, and perhaps even had created the family wealth.  Interestingly, my experience has been that the memory loss can initially develop around financial matters.  The family member has been very strong on finances and was very comfortable maneuvering numbers and financial projections in their own mind.  Suddenly the family member has trouble calculating the tip at dinner.

What should the family do?  How might the family address the matter in a family meeting?  Typically, two related topics.

First, what healthcare services may be needed for the family member? And second, how will the family pay for those healthcare changes?  What changes might take place in the financial and  the family investment program to respond to these needs?  To start, the Family should develop an approach to the medical care that is necessary.  It is common for these problems to linger.  The spouse of the person with memory loss may wait longer than they should before seeking help.   The caretaking spouse can even do some damage to their own health in the caretaking process.   There is a good chance the Family will not agree on what is appropriate.  The Family should have these conversations about managing expectations far earlier than the actual implementation of the strategy.  There also should be some conversation about expected contributions by children in both time, effort, and management of parental health and financial needs.  As always, conversations in advance of the events can be developed before there is an emergency.

The Family should evaluate the circumstances.  If the caretaking spouse is unable to do routine activities, such as make appointments, see friends, take care of their own financial matters.  These are all indications that professional help is needed.  Daycare or home healthcare aids may be necessary.  It is very useful to have family meetings on these matters early in the process.  The cost of home healthcare help can start at a reasonable level.  When the help advances to all day care, you can move into the hundreds of dollars per day cost.

Of course, the cost to maintain memory care is easiest to bear when the family has significant financial resources.  All day care can move from a couple of thousand a month up to a $8,000 or $9,000 per month.  It is important to recall that the care amounts are in addition to ordinary monthly living expenses.

Alternatively, long-term care insurance may have been purchased many years ago.  In many cases, these long-term care policies were issued at very reasonable premium structures, but recently, they have become much more expensive with shorter terms for benefits.  All these programs must be purchased well in advance of any memory issues developing.  If a family does not have the financial resources to address the medical care, then they must immediately begin planning towards less expensive alternatives, such as Veterans facilities, and possibly the use of Medicaid facilities.  It is beyond the scope of this memo to discuss the full range of requirements to qualify for Medicaid.  However, there are elder care lawyers that specialize in this area, and their expertise can be crucial.  Medicaid can be available and will allow the spouse to live in the family home.  Support of the spouse is also allowed by Medicaid.  Assets cannot be transferred from the spouse with the memory issue within five years of eligibility without penalty.  It may be useful for any caretaking spouse who is working to make significant contributions to a retirement plan or 401(k) plan and accumulate assets in their own name.  The joint funds from the spouse's IRA who's having memory issues can be used to support the couple.  Investment strategy, where if the family is concerned about resources, might be changed.  The Family may decide to adopt a more aggressive equity-oriented strategy.  The approach might be that if the markets move against them, their qualification for Medicaid may come sooner, and if the markets move in their favor, the family may be able to pay for the care.

The investment strategy change could apply to the caretaker’s spouse in that she might decide to have a more equity-oriented approach.  Her money has to last a very long time, and Medicaid would not attach her retirement assets.  The family should also keep in mind that the family home is typically exempted from Medicaid planning attachment.  The caretaking spouse may decide to pay down the mortgage.  Expenses of living can come from the parent who has memory loss issues and has  potential medical care.

Our firm has developed a significant expertise in helping families think through these issues on their own.  We also have an extensive relationships with elder care counsel and primary care home healthcare providers that could also assist them, independently of the medical care for the patient.

Please contact us, to setup your family meeting today.

Maximize Your Social Security Benefit

4 Thoughts to Maximize Your Social Security Benefit

How long are you and your spouse going to live?  My clients’ answer, “Forever!”  My long-time client and I were reviewing his investment program when he mentioned that he had just returned from his Aunt’s funeral in Florida.  She lived to age 101.  My client’s mother had also lived to age 101.  His Aunt was actually a Grand Aunt!

Of course, Social Security works best for those who live the longest.  But Social Security Benefits are also maximized for those who wait longer to receive them…Survivor benefits are also maximized.  Consider Social Security as insurance if you live too long!

What will the inflation rate be in the future?  My ability to predict the future is precisely as flawed as your ability.  Recently we have gone through a period of long-term averages of 2 to 3% per year.  Social Security Benefits under current law are increased (but not decreased) for inflation.  Consider your Social Security Benefits as part of your investment plan that will increase with your increasing cost of living.


What will your investment return be in the future on other assets?  The future continues to be unknowable.  It is tempting to look at the past investment returns for guidance.  However, just because the past is measurable does not mean that it is useful to us.  As our disclaimer states, “Past performance does not predict future results”.  However, can you rely on Social Security payments in the future, or at least most of them?  Maybe your Social Security Benefits can be part of your overall fixed-income investment allocation.  This approach may allow for an increase in your stock or real estate allocation.


How long will your spouse live after you are gone?  The survivor of you and your spouse will receive the greater of your individual Social Security Benefits.  Consider making your Social Security Benefit decision with the goal of maximizing the survivor benefit.  This approach might be particularly appropriate for Social Security recipients where the benefits are a small portion of a monthly income.


Jim Vaughan and Vaughan & Co. Securities, Inc. provides individual analysis of Social Security designed to maximize your benefits for your personal retirement income investment plan.  Contact Jim at

What is an Inverted Yield Curve?

If you ask an economist what makes them toss and turn at night, chances are they’ll tell you, “Fear of missing the warning signs of a recession.”  After all, for anyone who studies the economy for a living, few things could be worse than a sudden economic slump catching you by surprise.

That’s why many economists rely on certain indicators to predict if there’s rough weather ahead.  Historically, one of the most reliable indicators is the inverted yield curve.  This is when the yield on long-term bonds drops below the yield on short-term bonds.  Why does this matter to economists?   Because an inverted yield curve has preceded every recession since 1956.1

Long-Term Bond Yield Hits Record Low2
Stocks Skid as Bonds Flash a Warning
The Wall Street Journal, August 14, 2019

On August 14, the yield on 10-year Treasury bonds dropped below 1.6%, officially falling beneath the yield on 2-year Treasury bonds for the first time since 2007.4  That’s an inverted yield curve.  The markets responded the way children do when a hornet gets inside the family car – they panicked.  The Dow, the S&P 500, and the NASDAQ all fell sharply, with the Dow plunging over 700 points.3

The obvious question, of course, is “Why?”

It’s a smart question!  To the average investor, the term “inverted yield curve” probably doesn’t sound very scary.  So, why does it have the markets freaking out?  Let’s break it down by answering a few basic – but also smart – questions.

  1. What’s a bond yield, again?

A bond yield is the return you get when you put your money in a government or corporate bond.  Whenever an investor buys a bond, they’re agreeing to loan money to the issuer of that bond – the government, in the case of Treasury bonds – for a specific length of time.  Typically, the longer the time, the higher the yield, as investors want a greater return in exchange for locking up their money for years or even decades.  That’s why the yield on long-term bonds is almost always higher than on short-term bonds.  When these trade places, we have an inverted yield curve.

  1. Okay, so why have bond yields inverted?

Bear with me here, because I’m about to get a little technical. 

Bond yields have an inverse relationship with bond prices.  That means when prices go up, yields fall, and vice versa.

What do I mean by price?  Well, investors must pay to buy bonds, of course, and when more people buy them, the price of these bonds goes up.  (It’s the basic law of supply and demand: When the demand for something increases, so does the price.)   When that happens, yields drop.

Investors often see bonds as safe havens of sorts, especially during economic turmoil.  Stocks, on the other hand, tend to be seen as “higher risk, higher reward” investments.  In this case, investors are selling their stocks and plowing more and more money into long-term bonds, pushing prices up and yields below that of short-term bonds.  The fact investors are doing this suggests they’re not optimistic about the near-future health of the economy and are seeking safe places to park their money.

  1. Why are investors so worried about the economy?

On the home front, it’s largely because of the trade war between the U.S. and China.  As the two nations engage in an ever-growing battle of tariffs, the fear is that businesses in the U.S. will have to raise prices, thereby hurting consumers.  On August 13, President Trump decided to delay the most recent round of tariffs until December, saying he didn’t want tariffs to affect shopping during the Christmas season.5  Previously, Trump predicted tariffs would not hurt U.S. businesses, so this sudden about-face suggests even he is worried.

Investors are also worried about a slowdown in the global economy.  Two of the world’s most important economies, China and Germany, have both shrunk.  Put all these things together and it’s not hard to see why investors worry about a recession in the near future.

Fears the recent news about inverted yield curves will only stoke.

  1. So is a recession imminent?

As I mentioned earlier, inverted yield curves have preceded every recession since 1956.  This includes the Great Recession of 2008.  But does this mean a recession is just around the corner?


There are two things to keep in mind here.  First, a brief inverted yield curve is not the same thing as a sustained one.  While inversions have preceded every modern recession, inversions do not always lead to a recession.  Think of it this way: You can’t have a rainstorm without dark gray clouds.  But dark gray clouds don’t always lead to a rainstorm.  Make sense?

You see, correlation does not equal causation.  By this I mean that while inversions and recessions are often seen together, one does not actually cause the other.  An inverted yield curve is like a sneeze: It’s a symptom, not the disease itself.  And while a sneeze can mean you have a cold, it doesn’t lead to a cold.  Sometimes, we sneeze because we got pepper up our nose.

Second, let’s assume for argument’s sake that this recent inversion is a warning sign of a future recession.  That doesn’t mean a recession is imminent.  Some analysis suggests that it takes an average of twenty-two months for a recession to follow an inversion.1  That’s a long time!  A long time to save, invest, plan and prepare.

  1. So does an inverted yield curve even matter, then?

I’ll put it simply: It matters enough to pay attention to.  It doesn’t matter enough to be worth panicking over.

Make no mistake, we’re in a volatile period right now.  There’s a lot of evidence to suggest that volatility will continue.  But while comparing the markets to the weather has become something of a cliché, it also makes a lot of sense.  When storm clouds gather, we pack an umbrella or stay inside.  We don’t run for the hills.

The same is true of market volatility.

Remember, an inverted yield curve is an indicator, not a prophecy.  Economists can toss and turn about such things, but you and I are focusing on something much less abstract: your financial goals.  More important than any indicator, more important than the day-to-day swings in the markets, is the discipline we show.  If you think about it, market volatility is really a symptom, too – a symptom of emotional decision making.  Investors see a good headline, and they buy, buy, buy!  That’s a market rally.  Investors see a bad one, and they sell, sell, sell!  That’s a market dip.

Investing based on emotion leads to one thing: Regret.  Regret that we bought into the hype and bought when we should have waited for a better deal.  Regret that we fell into fear and sold when we should have held on longer.  We invest by being disciplined enough to buy, hold, or sell when it makes sense for your situation.

That’s the best way to stay on track toward your goals.  That’s the best way to not toss and turn at night.  We don’t make decisions based on predictions.  We make decisions based on need.

My team and I will keep watching the indicators.  We’ll keep doing our best to explain the twists and turns in the markets.  And we’ll keep doing our best not to overreact to any of them.  In the meantime, please contact me if you have any questions or concerns.  We always love to hear from you!




1 “The inverted yield curve explained,” CNBC, August 14, 2019.

2 “Long-Term Bond Yield Hits Record Low,” The Wall Street Journal, August 14, 2019.

3 “Stocks Skid as Bonds Flash a Warning,” The Wall Street Journal, August 14, 2019.

4 “Dow tumbles 700 points after bond market flashes a recession warning,” CNN Business, August 14, 2019.

5 “U.S. Retreats on Chinese Tariff Threats,” The Wall Street Journal, August 13, 2019.

General Social Security Rules

General Social Security Rules


Popular wisdom suggests jumping at the opportunity to collect Social Security retirement benefits as soon as possible, which currently is age 62.  About 73% of Social Security beneficiaries collect at 62.  While this strategy may have been prudent for millions of Americans in the past, longer life expectancies have changed the face of retirement planning. Waiting to collect Social Security benefits may well be a more advantageous option. While there is no one-size-fits-all approach, this much is universally clear:


Life expectancy is exploding, particularly for our clientele.


Warning – Social Security has its own language.

DECIDING WHEN TO BEGIN TAKING SOCIAL SECURITY BENEFITS IS AN IMPORTANT AND MULTIFACETED CONSIDERATION that should be factored into each individual’s broader retirement plan.  In order for us to help you decide how and when to take your Social Security, we must go over some basic Social Security concepts.  In the following memo, we review key details to consider in your Social Security decision-making.  Your Social Security strategy must be integrated with your investment plan and your overall retirement plan.

Social Security Benefits-Divorced

Social Security Benefits for Divorced People


When Should I Take My Benefits ?

OVERVIEW:  As an Ex-Spouse you may be entitled to your individual benefits and spousal or survivor benefits.  We will review both sets to decide what decision you should make.


Individual Benefit Collection Decision



Your benefits, known as your Primary Insurance Amount (PIA) is the monthly benefit for which you are eligible at your full retirement age (FRA). FRA varies based on year of birth. Originally age 65, the federal government has increased FRA for anyone born after 1937 in recognition of longer life expectancies.  Life expectancy in 1937 was less than 65.  Today, it is about 78.  We expect our clients to live even longer.


You must have worked for 40 Quarters to be eligible to receive benefits.


Planning Tip:  Social Security aims to encourage you to collect your benefits at Full Retirement Age, known as FRA in Social Security Language.


Your monthly benefit, known as your Primary Insurance Amount (PIA), is calculated based on your highest 35 years of employment.

The Social Security Administration (SSA) uses your highest 35 years of employment to arrive at your Average Indexed Monthly Earnings (AIME).  For more information, please visit to get your Social Security statement. If you continue working after reaching FRA, the SSA will automatically recalculate your benefits each year you continue to work. If your current income is greater than any of your previously calculated “highest 35 years”, your benefits will be adjusted upward. The increase generally will be made in October of the following year, but will be retroactive to January 1.  In addition, Social Security retirement benefits are automatically modified each year for inflation, known as Cost-Of-Living Adjustments (COLAs).


COLAs have averaged between 1% and 2% over the past 10 years.  Over the last 90 years inflation has averaged about 3% per year.


Benefits are reduced by about 6% per year for each year you receive benefits prior to your full retirement age (FRA).


While your full benefit, your PIA, is payable at your FRA, you are entitled to  collect benefits as early as age 62. However, if you choose to collect early, you will permanently reduce the size of your benefits. Your benefits will not be adjusted upward when you attain FRA. The amount of your reduction will depend on two factors—your FRA and the number of months before it that you start collecting. If you begin taking benefits on your 62nd birthday, you are subject to the maximum reduction. That reduction will be smaller for each month you delay benefits after age 62 but prior to reaching FRA.




Social Security benefits are intended to supplement retirement income.  There are consequences to collecting your benefits early if you are not retired and are still receiving wages. If you choose to collect benefits prior to FRA, you are subject to an Earnings Test every year until you reach FRA.


If your earnings exceed certain thresholds, the SSA will Withhold part or all of your benefits. The earnings test for individual and survivor benefits looks only at the salary or wages of the individual collecting early benefits. It does not consider any other type of income, nor does it

consider the salary or wages of a spouse. However, the test on spousal benefits (see memo on Married Couples) may take into account both spouses' wages if both are under age 62.


Withheld benefits are different and in addition to reduced benefits.


The Withholding on Social Security before FRA eliminates Benefits for many Employees.


Benefits withheld by the SSA due to early collection will not be refunded. However, your benefits will be adjusted at FRA to account for the benefits that were withheld.  For example, if your FRA was 66 and you began collecting benefits at age 62, the SSA would have reduced your benefit by 25%. Assuming you returned to work at age 64; the SSA may have withheld two years’ worth of benefits by the time you reached FRA. The SSA would then lessen your 25% reduction to give you credit for the two years of lost benefits. Your new reduction would be as if you started collecting benefits at age 64 (13.3% reduction) rather than age 62.


Under FRA

  • $1 of benefits withheld for every $2 in earnings above $17,640
  • Earned $27,640 – $17,640 = $10,000 over x 1/2 = $5,000 withheld


Year individual reaches FRA

  • $1 of benefits withheld for every $3 in earnings above $46,920 for months prior to attaining FRA
  • Earned $56,920 – $46,920 = $10,000 over x 1/3 = $3,333 withheld


Month individual reaches FRA

  • Unlimited





If you elect to defer collecting benefits beyond your FRA, the SSA will give you a delayed retirement credit (DRC) for every month you defer between FRA and age 70, the age at which

your benefits max out. This increase will be in addition to the annual COLA, if applicable. Depending on your year of birth, your increase will amount to 7% to 8% annually


When collecting before FRA, always consider the net (after-tax) benefits you will receive. A working spouse may cause more of your benefits to be taxed, and at potentially higher tax rates.


You should plan on income taxes on Social Security Benefits.  Individuals with high total incomes must include up to 85% of their benefits as income for federal income tax purposes. Special step-rate “thresholds” on Provisional Income determine the amount which you may be taxed. We should plan as if you will pay income tax on your benefits when making the decision.


If you are married to an individual who is collecting Social Security retirement benefits and you are at least age 62, you may be entitled to collect spousal benefits.  Spousal benefits will be equal to 50% of your spouse’s PIA if you collect benefits at FRA or later. If you are entitled to your own benefits and your PIA is less than 50% of your spouse’s PIA, spousal benefits will be paid in addition to your own. These combined benefits will equal 50% of your spouse’s PIA, assuming you start collecting both benefits at FRA or later.



If you collect spousal benefits prior to your FRA, your adjusted spousal benefits (amounts in addition to your own benefits) will be reduced. Your spouse’s collection age has no impact on your spousal benefits.


If you have been married for at least nine months and your spouse passes away, you may be entitled to survivor benefits. If you remarry before age 60, survivor benefits will not be paid unless the subsequent marriage ends.  Remarriage after age 60 does not prevent or stop entitlement to benefits. The amount of your survivor benefits depends on when your spouse began taking benefits. If the death occurs prior to your spouse collecting benefits, your survivor benefits will equal 100% of your spouse’s PIA when you attain FRA. If your spouse was collecting benefits at the time of his or her death, your survivor benefits will equal his or her actual benefits, assuming you have attained FRA.  The only exception is if he or she was collecting benefits that were reduced more than 17.5%. In that case, your survivor benefits will be 82.5% of your spouse’s PIA. The survivor benefits, if higher, will replace your other benefits.


You can collect survivor benefits as young as age 60. If you collect at age 60, your survivor benefits will be reduced by up to 28.5% .




If you are entitled to both individual and survivor benefits, you can choose to begin collecting one and then switch to the other at a later date. It is possible to collect reduced survivor benefits at age 60, and then convert to your own unreduced benefits at FRA or later. You also have the

option to collect individual benefits and then switch to survivor benefits.



If you are not married but previously had been married to the same individual for at least 10 years, you may be entitled to collect spousal and/or survivor benefits based on your ex-spouse’s

work history, as described earlier. To collect spousal benefits you and your ex-spouse must be at least 62. You are not required to wait until your ex-spouse files for benefits.


What decision should you make ?  Please contact us for an appointment.