Mid-Year Outlook 2018: The Plot Thickens

Presenting the LPL Research Midyear Outlook 2018: The Plot Thickens, packed with investment insights and market analysis to guide you through all the action we may see in the year ahead.

When we as investors began 2018, we were tuned in to the recent fiscal policy changes that were expected to propel economic activity and the financial markets higher in the coming year. The handoff in leadership from monetary policy to fiscal policy was well underway as a driver of consumer spending, business investment, and corporate profits. Instead of depending on the Federal Reserve (Fed) to move this expansion forward, fiscal incentives are now critical for continued growth, with the new tax law taking the lead.

Although we expect continued growth, there is also the potential for greater market sensitivity due to the late cycle concerns that can emerge when the economy is doing well. So indeed, the plot has thickened. But that doesn’t mean we’ve taken a turn for the worse. The underlying forces are still forging ahead and this expansion and bull market have not been defeated. Right now, there are many positive fundamentals, like business investment and corporate profits, supporting economic growth and potential market gains.

Armed with the investment insights of LPL Research’s Midyear Outlook 2018, and supported by the guidance of a trusted financial advisor, we expect investors can remain optimistic about what’s ahead for their investment portfolios. Read more about our forecasts and key themes to watch in the full publication. This guidance and investment insight can benefit investors in their search for long-term success. Download your copy today!

An Open Letter to Employers

There is a national debate right now on how to make 401k plans more effective for retirement plan participants. The question isn’t “how do we supply the workforce with access to retirement savings vehicles?”, but rather “Why are so few employees taking advantage of these important benefit offerings?” In the end, it’s about a lack of familiarity and trust.

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A Retirement Plan Sponsor is Like the Pilot In Command of An Aircraft

The responsibility of being a retirement plan sponsor is like the responsibility of flying a group of passengers from one location to another. Are you and your team operating like a “pilot in command?”

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The 8th Wonder of the World – Compounding Interest

I would like to take a look at the concepts of compounding and inflation. The principles of the two are identical. One works for you in a positive growing way, the other in a silent negative manner.

Let’s take a look at inflation first.

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My Dad’s Story

I work with people in many different ways, but one of my favorites is helping business owners retire the right way.

When my dad met my mom he told her he would be a millionaire one day.  He knew he wasn’t going to reach that goal by selling pharmaceuticals.  So, at 35 he took a big leap of faith. He left his stable salaried job with benefits to start a business selling used hubcaps to the consumer cheaper than they could buy directly through the manufacturer.

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Patience Isn’t a Virtue, It’s a Necessity

With the increased fluctuations and heightened volatility we have experienced in the markets in the past several months, I would like to share my thoughts and perspective.

I feel the most important point I would like to state is: short-term volatility is normal. We will look at some statistics shortly, but first I desire to express that volatility is to be expected. We do not let volatility sway our opinion of the investments we own.

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Invest in Businesses Rather than Renting Stocks

Most business owners can feel the pulse of their business. If you own a coffee shop for instance, you can go to the location, see and interact with your employees, touch your inventory, and keep your customers happily caffeinated. You can smell the aroma of your business. You can feel it.

What if you had that same feeling as a shareholder of a public company? What if you thought like an owner? Consider one that sells coffee. Yesterday, you did not own any shares of this company, but today you are an owner – a shareholder.  The feeling of being an owner of that company is divorced from owning a percentage or shares in a public company. Some may think those shares represent a lotto ticket that goes up and down every business day on some stock exchange, based on public consensus or what some analyst says or does not say about that company’s future prospects. Some almost consider it like a casino.

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Workshop: What Now?

You’ve maxed out your 401k. You’ve hit the limit on your IRA contributions, ROTH or otherwise. You’re a diligent saver but you still have extra cash each month. So where should it go? What are the right ways to put that extra money to work?

Renegotiating with our Business Partner, Donald Trump

Imagine you have a business relationship with a partner. You work and run the business, and take home 65 percent of the profits for your efforts and your partner received 35%. Last December your partner recognized your hard work and rewarded you with an additional 14 percent of the business, reducing their take to 21 percent. Suddenly you are receiving a much larger portion of the profits.

At the same time your business partner has made an effort to reduce friction in the business and keep borrowing costs low. These are ideal conditions for your business to grow, and they are exactly what the U.S. Government has done.

In short, the tax cuts passed by Congress late last year are a big deal. Corporations are getting around 20 percent more tax relief and reflecting that relief in well-publicized bonuses to workers, increases in earnings, and growing dividend payments to the shareholders. All of that is not just good – but incredibly good for the American economy and citizens.

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From Clutter to Clarity: What to Toss and What to Keep

By Michelle Santaferro, organizing expert and owner of Organomics

Like many during this time of year, you may have found certain documentation painful to retrieve and scattered in several locations.  But there’s good news: you can create a system to quickly file and find anything you need financially. Let’s look at the steps you can take to retrieve things quickly.

NOTE

Michelle will be speaking at our upcoming workshop on Friday, April 27th. Register today and join us!

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