Cameron Hendricks

Financial Symmetry recently expanded our Operations Department by adding Cameron Hendricks to our team as our new Data Specialist .

Cameron joins the firm after participating in FSI’s financial planning internship program in the spring of 2010. He recently graduated from NC State University with a B.S. in Business Administration, Finance, with a minor in Accounting.  As Financial Symmetry has continued to grow, so has Cameron’s role within the company.

Cameron’s responsibilities include supervising data collection and processing for our clients’ accounts, developing new processes to manage incoming data, and assisting our advisors with wealth management reporting. Cameron also supports our team’s cost basis reporting and tax preparation services.

He is looking forward to improving and establishing new data processing procedures that will benefit FSI’s clientele in each of their fee-only services- financial planning, investment management and wealth management.

Don't push the panic button

Probably not, even though it may feel like it.

What’s Going On

The financial markets have been hit with a steady barrage of negatives.

Europe is still struggling to address the problems inherent in the Euro — namely that they have a currency union but not a political union.

Here in the US the short term budget deficit caused by the Great Recession is being confused with the long term budget problems.

These long term problems are primarily about rising healthcare costs, tax revenues that are too low by historical standards, and to a lesser extent Social Security.

This confusion, combined with a toxic mix of politicians in this year’s Congress, caused a dysfunctional budget process. And this dysfunctional process caused Standard & Poors (S&P) to downgrade US Treasury debt (though that company’s past performance on debt ratings leaves substantial doubt about whether they should be listened to).

On top of all of this, we were already in a slowing industrial cycle directly related to China tightening their monetary policy to bring their inflation rate down.

Reactions

Fear that these issues could push the US and the world into another recession is causing falling stock prices.

Most tellingly, these issues have actually reaffirmed investors’ faith in US Treasury debt as Treasury prices have steadily risen as the negatives have piled up.

Clearly investors do not believe that S&P was correct with their downgrade, or US Treasury prices would be falling, which causes rates to rise.

In fact, since the beginning of the year, the yield on the ten year Treasury bond has fallen from 3.4% to 2.4% as fearful investors sought a safe haven. And most of this decline in rates occurred in the last two months as the debt crisis manufactured in Congress ramped up.

This Day in History

Our research tells us that it is not uncommon at this point in a recovery to have a slowdown, so the current economic slowing may not lead to a recession.

Furthermore, the current recovery is only a little over two years old, and in the last 80 years there have only been two recoveries that lasted less than 3 years. In both of those previous cases, the stock market did correct, but the decline was less than 20%.

Double Dip?

There are good reasons that this current crisis is not likely to be a repeat of 2008.

Households and corporations alike have spent the past few years rebuilding their balance sheets. Corporations have become leaner and added significantly to their cash positions.

This should enable them to weather an economic downturn without needing to make layoffs on a scale like we saw 2-3 years ago.

More Good News

We are also encouraged by attractive stock market valuations.

The current stock market’s earnings yield is around 7%, which provides a much higher return potential than high quality bonds which are only yielding about 2% to 4%.

We also believe that companies will see rising earnings over the next 5 to 10 years. Even though the decade of the 2000s was a poor one for the US economy, earnings of our big corporations still rose by about 60%.

For the decade of the 1990s, earnings rose by over 100%. So it is plausible to believe earnings will rise over the coming decade at least as much as in the 2000s.

What We’re Doing

As has been our experience with large market drops like this one (and large market rises as well), we have learned not to make investment strategy decisions based solely on short term market gyrations, though they can present opportunity.

Our research lead us to reduce stock allocations at higher stock prices in late 2007 and earlier this year. Conversely we will be increasing stock allocations at these now lower prices.

We are paying close attention to valuations as some sectors are not as reasonably priced as others.

We are continuing to emphasize large-cap, high-quality companies as they are more attractive than smaller stocks at current prices and better equipped to endure difficult conditions.

Our focus on international equities is in developed economies as they too, have better valuations when compared to emerging markets, though we are maintaining a position in emerging markets as we anticipate those countries to be the drivers of growth during economic expansions.

Many high-quality US companies are also uniquely positioned to take advantage of the emergence of a middle class in China and developing economies as they expand their operations into these markets.

Given that emerging market stocks have also declined, we may be bringing up emerging market allocations for the first time in several years.

The Bottom Line

When fear is high and confidence is low, people have a difficult time seeing how things will get better.

But they always do.

* Photo credit: jma.work

Certified Financial Planner

Have you seen the new CFP® TV commercial yet (take a look here)? Pretty Interesting.  The commercial is currently airing on stations that include History Channel, Travel Channel, HGTV, ESPN, MSNBC, CNN and Fox News.

The CFP Board, who issues the CFP® designation, is making a new effort to help define what being a CERTIFIED FINANCIAL PLANNER™ really means.  There are a lot of people that call themselves “Financial Planners,” but only those that have the CFP® designation have satisfied a rigorous set of standards to use the mark.  This includes extensive education, years of experience and a 2-day 10-hour examination covering insurance, investments, retirement, taxes and estate planning.  The CFP Board has also launched a website, www.letsmakeaplan.org,  to help bring clarity to how a CFP® professional can help bring all your individual financial pieces together.  They do a nice job of explaining what you can expect when meeting with a CERTIFIED FINANCIAL PLANNER™ and how you might benefit.

FSI Partner, Chad Smith, with iPad raffle winner.

On Tuesday, September 15th, Allison Berger, CFP® and Chad Smith, CFP®, both partners at Financial Symmetry, Inc., returned to their alma mater to speak to NC State’s Personal Finance Club, which is based in the College of Management.

The club was created for students who are interested in careers in financial planning, who want to expand their networks and their knowledge of personal finance.

Berger & Smith talked to the group of students about how they started their careers, the importance of managing their personal finances, and some advice on finding jobs in a tough economic climate.

“Be creative.” said Berger. “Everyone has to start somewhere. If you are interested in a specific field, be open to taking an internship or part-time position if you are not able to find full-time work. This could always lead to a more permanent situation or provide you with skills that make you a more attractive candidate to other employers.”

They also encouraged students to start a 401k plan at work, citing that “Starting a savings and investment plan early in your career can help you accumulate wealth more easily than someone who doesn’t start saving until their 30’s or 40’s.”

Chad Smith & Allison Berger are NCSU College of Management alumni, both receiving bachelor’s degrees in Business Administration with concentrations in Finance (in 2000 & 2004, respectively).

To read more advice given by Smith & Berger, and learn more about the Personal Finance Club, click here for the full article.

FOR IMMEDIATE RELEASE

RALEIGH (AUGUST 31, 2009) – On Saturday, Sept. 19th from 9 a.m. – 12 p.m., local professionals have combined their efforts to give back to the community by providing free financial, tax and estate planning guidance to the public.

The professionals participating in these one-on-one consultations will include:

• Chad Smith and Allison Berger, two independent Certified Financial Planners® from Financial Symmetry, Inc.
• Zeke Bridges, an Estate Planning Attorney with  Bridges Law Firm, PLLC
• Will Holt, CPA with Financial Symmetry, Inc.

The recent economic turmoil has left many people with hard-to-answer questions like:

• Are my investments properly diversified?
• What does my recovery plan look like?
• How will this year’s losses impact my tax bill next year?
• Should I create an estate plan?
• What’s the best way to budget my expenses?
• Should I be contributing to my 401(k) and a Roth IRA?

This event was designed to help give people guidance about where to find answers in a “no strings attached” environment.  Anyone seeking advice is encouraged to bring documents relevant to his/her situation such as 401(k), IRA and Brokerage account statements, tax returns, and wills and estate related information.

“The last two years have been a wake-up call for people financially.  Our desire with these one-on-one meetings is to help people understand the implications of the economic crisis while giving them some practical advice on how they can improve their personal situation,” said Chad Smith, CFP.

The event will be held in the Financial Symmetry offices located at 1401 Sunday Drive, Suite 115.

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About Financial Symmetry
www.financialsymmetry.com

Financial Symmetry, Inc provides fee-only financial planning, portfolio management and wealth management services for individuals and their families. “Fee-only” means we neither sell products nor receive commissions, which allows us to offer our clients the impartial advice necessary to make effective financial decisions.

About Bridges Law Firm, PLLC
www.bridgeslawnc.com

Bridges Law Firm, PLLC offers clients an integrated approach to legal representation, combining the practical aspects of real estate law and estate planning within a single, personal service oriented firm.

We serve our clients with legal professionalism and a commitment to individualized attention.