By Edward Leone Jr. DMD MBA CFP RFC
Contact Information:
leonee@vzw.blackberry.net
We are one month into the year 2013. It will be a very interesting and somewhat challenging year. Equity markets are off to a great start. Is this sustainable? The politics out of Washington is dramatic and unpredictable to say the least. Such issues as fire arms, immigration, debt, budget and new Cabinet appointments have occupied the media.
Positive influences on the economy and financial markets are as follows:
expansionary monetary conditions due to actions by the Federal Reserve Bank, respectable corporate balance sheets, fixed income market yields which are very low due to actions by the Federal Reserve Bank, a stable inflationary environment, prospects for positive future corporate earnings and respectable equity valuations. PE ratios at 13.5 for the S&P 500 are below historic averages.
The potential negative pressures on financial markets and the economy rest with the following in my opinion:
global unrest geopolitically which could put added pressure on US resources and perhaps interrupt energy supplies along with depressing global demand for US and other products and the very actions which our own US Congress may or may not take this year regarding fiscal policy matters and budget issues. Health care reform is very much in the mix since we are seeing the beginning elements of implementation.
Will investors’ sentiment be a factor? The trend over the past few years to adopt a posture which is risk averse seems to be shrinking with better equity performance and low fixed income yields. Will the volatility we have been experiencing the past few years in equity markets continue and be a factor in investment decisions?
Only time will tell the vitality of the economy, GDP growth and equity market advances. I’ll be watching and reporting what I see and find to you monthly.
Regarding tax issues, become familiar with the structure of phase-outs on personal exemptions and itemized deductions. Learn about the AMT fix and gift tax increases and for estate taxes .
For The Record:
DJIA 14,009.79
NASDAQ 3,979.10
S&P 500 1,513.17
Suggested Reading: “Golden Dawn” by Kostigen
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