Oct 302014
 

In light of the recent decisions by the Federal Reserve regarding the end of Quantitative Easing, we are doing a special edition of Investors’ Insights. There are mixed emotions about this decision. There are those who believe that the Fed should continue with Quantitative Easing and there are those who agree that they made the right decision.

Quantitative Easing is the printing of money by the Federal Reserve. It can be compared to a patient getting medication to help them get back their health. In this case, we believe that Quantitative Easing was a good decision by the Federal Reserve.

We explain what Quantitative Easing is in this video but you can also watch a previous and more in depth video blog we posted “What Is Quantitative Easing?” here.

What is the Fed doing and what they aren’t

In Quantitative Easing the Fed was printing money to buy bonds on the open market. As of yesterday, the Fed is no longer buying bonds on the open market. What they are not doing is selling the ones they currently own. It’s important for investors to note that the Fed now owns 50% of the Treasuries that are issued. The Fed was not created to do that.

How could the Fed handle this?

Although the Fed is ending Quantitative Easing, they are not going to start increasing interest rates. As long as they don’t see inflation and job growth, we should not see interest rates rise soon.

The Fed can work their way out of this but it will take some time. One possibility is they could let all these bonds they own mature and not reinvest the proceeds.

Will the end of Quantitative Easing bring volatility?

We are expecting some volatility in the markets because the debate will continue about whether this was a good decision or not by the Fed. We’ve taken a conservative approach because of this along with the upcoming mid-term elections.

We are going to continue to analyze all this, stay conservative and methodically move back into the markets when the time is right and moving other positions to cash.

We will keep you updated as time goes on so keep checking back with us.
End of Quantitative Easing
Greg Powell, CIMA
President/CEO
Wealth Consultant

Franklin Bradford, CMT
Senior Vice President
Wealth Consultant

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fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Oct 202014
 

Deflation causing volatility

Last week’s markets saw more volatility than we have seen in the past three years. The biggest factor causing this has been deflation in Europe which we have consistently been talking about in our past videos. The main driver of this deflation is the fact that Europe is experiencing its lowest level of inflation in years.

Watch Friday’s Special Edition on the current market volatility here.

Potential deflation leads to job loss

We will be watching the economic data that is coming out this week on new home sales and existing home sales because of the rippling effect it will have on consumer retail spending. We are also watching the inflation gauge of the Consumer Price Index. Normal inflation is usually around 3% but the United States has been much lower than that for a while. If inflation continues to decline, we will enter a deflationary period. In a deflationary economy, people stop buying goods and services which leads to people losing their jobs.

Is more volatility on its way?

We saw the problems growing in Europe a couple of years ago. While Germany, in the past, had been doing very well over the other European countries, their exports are now flat. There is an upcoming European Union Summit this week that we are watching closely that has two sides. On one side, Germany’s Chancellor, Angela Merkel, doesn’t want to spend a lot of stimulus money. On the other side, France and Italy want stimulus spending. These two countries seem to have more political and financial problems because they don’t want to solve their deeper problems. This could cause more volatility in the European economy which will have an impact on the United States.

Is there something that you would like us to cover in our videos that we haven’t talked about yet? Send us your comment or call us at (205) 989-3498.

Franklin Bradford, CMT
Senior Vice President
Wealth Consultant

Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant

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fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Deflation

Oct 182014
 

This is a special edition of our vlog because of the current market volatility. We want to help you differentiate between fact and media hype, and let you know how we are maneuvering through this turbulent market.

Market volatility: Three minor causes

  1. The Ebola virus is causing fear not only in the population but also in the markets
  2. ISIS is not contained and current US policy is not working
  3. Greece’s stock market is down 3%. There is potential that they will not be able to function and will need more financial help

Market volatility: The biggest cause

The major issue that is grabbing headlines is deflation. Deflation is where prices are dropping but there are no purchasers for the product. For example: If you are a factory that makes automobiles and there is no one buying cars, you don’t need as much labor force so you lay off your workers. Now those workers don’t have any money to buy other products and services. This produces a deflationary spiral.

We’ve talked about this in previous videos as we have been working hard to stay ahead of the trends. As we have been doing this, we have been looking at what the ramifications are on our clients’ portfolios because deflation always has a rippling affect.

The changing conversation over interest rates

The Federal Reserve has said all along that they are stopping quantitative easing this month. Now the conversation has turned to the idea that they will not stop it and keep interest rates low. When they started quantitative easing several years ago, there was much criticism about it as it pushes a lot of liquidity into the system. This means there is a lot money chasing a small amount of goods, causing rapid inflation. What we are seeing now in the markets is that rates haven’t risen, won’t rise, and some Fed. governors are saying they want to keep quantitative easing going.

A stronger U.S. dollar

If you recall just a few years ago many countries where thinking about switching from the dollar to the Euro. The dollar today is strong and with all that is going on with Greece and Europe, the Euro is now the currency in question. This has become a very political debate which continues to evolve.

Media hype piling on market volatility

We still have issues with Hong Kong’s protests against China, China’s slowing economy, and the Russian/Ukrainian scenario. It’s a pile on of stories that have all come on at the same time and the media hype has been very strong. That hype has caused fear and panic in the markets.

How we are handling this for our clients

We’ve sent out a letter to our clients to help them navigate this fear and panic. We believe that most of these stories will pass over and take care of themselves in the coming weeks. We are working to be in a position to move back into the markets with cash that we have on the sidelines. We’ve allocated our portfolios based on individual client scenarios so we can maneuver as these markets continue to change.

It’s much like getting turbulence in an aircraft. When a pilot will turn and try to find smoother air. That is what we are doing but we are approaching it on a client by client basis. We are making adjustments accordingly but we want you to be aware of the media hype that is causing this market volatility.

Could the economy improve?

If interest rates stay low and oil prices continue to come down, we could see the economy improve. These things put more money in your pocket. Ironically, this is coming around the holiday season which could restore consumer confidence. This is also a mid-term election year and both political parties are going to focus on economic stimulus.

We value the trust our clients have placed in us. If you have any questions or concerns we have not addressed, please call me at (205) 989-3498 or email me here.

Greg Powell, CIMA
President/CEO
Wealth Consultant

Franklin Bradford, CMT
Senior Vice President
Wealth Consultant

fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Volatile Market Update

Oct 132014
 

Last week the focus was on just a few things that could affect the market this week. The IMF reported that the world is slowing down in growth. While it is not slowing down by much, we are watching this closely. The Federal Reserve meeting minutes came out with good indications that interest rates will not be going up any time soon but that still depends on what is going on globally. This is important for investors to follow because it directly affects your investments and finances.

This week we are focused on several things that could affect the markets. The Producer Price Index will be reported and this will tell us if we have too many dollars producing too many goods. Retail sales numbers could also affect the markets because 70% of our economy is consumer driven. This covers everything from groceries to auto sales. We are also watching housing starts because of the rippling effect it has on so many other industries in our economy. We are also watching some volatility that has returned to the market.

As we discover other factors that could affect the markets this week, we will be sure to let you know. Follow us on Facebook (click here) and Twitter (click here) for daily updates.

Franklin Bradford, CMT
Senior Vice President
Wealth Consultant
Email Franklin Bradford here

fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Oct 102014
 

What does the economic future of Alabama hold?

Greg Powell talks with Dr. Scott Beaulier, professor at Troy University, about the economic future of Alabama. Dr. Beaulier’s research uncovers some important information for investors as well as small business owners. This information shows not only the economic future of Alabama but also what needs to change to give the state a brighter future.

Scott is the Adams-Bibby Chair of Free Enterprise and Executive Director of Troy University’s Manuel H. Johnson Center for Political Economy, which is housed in the Sorrell College of Business. He is also the Division Chair of Troy’s Economics and Finance program.

Free book on the economic future for Alabama

“Improving Lives in Alabama: A Vision for Economic Freedom and Prosperity”
Find Dr. Beaulier’s book for free here.

Greg Powell, CIMA
President/CEO
Wealth Consultant

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Greg Powell is President and CEO of fi-Plan Partners, an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The Future of The Economy In Alabama

Oct 062014
 

Last week was an eventful week in the markets and Friday we saw it gain some strength back. Unemployment, oil prices and gold came down, along with indications that interest rates will not be going up any time soon.

Geo political events outside of the United States were dragging US markets down last week. The markets are still being affected by concerns over international events like what is going on in Hong Kong. Our research shows that the US is slowly but surely muddling through this economy, which is steadily improving.

Can rising interest rates be a good thing?

This week is a very light week for economic data with the exception of a Federal Reserve meeting. Investors are still concerned about rising interest rates and when they will occur.

The event of rising interest rates does not mean the stock market can not go up. Rampant inflation, on the other hand, is bad for every asset class except for gold. Rising interest rates are actually good for the stock market and the economy. We are watching this closely and will keep you updated.

International economic concerns

The International Monetary Fund (IMF) and the World Trade Organization (WTO) will meet this week. The systematic drag we’ve had this year stems from that fact that export markets around the world are off. Previous forecasts for international growth have been downgraded from 5% to 4%. This is causing many countries to consider devaluing their currency. We are concerned as this does not solve the problem long term. What we do like is that several of these countries, like Brazil are looking internally at new reforms that will make them better in the future.

How this impacts your portfolio

When you look at how many S&P 500 companies actually have international operations, you will see that 192 out of 240 have zero sales outside the United States. Forty-six (46) companies have less than 15% of their sales in the international market. The news media, however, has been focused on reporting that US companies are being hurt internationally.

Investors need to remember that the news media outlets get paid to sell advertising, not sound financial advice. When they report the news in this way, it can cause unneeded concern and stress on investors. If investors dig into the data, they will see that these reports by the news media are skewed. This is why we provide this information here on our vlog and eNewsletter for you and our clients.

If you have any specific questions or comments, please email me here or call me at (205) 989-3498.
Rising Interest Rates
Greg Powell, CIMA
President/CEO
Wealth Consultant

Franklin Bradford, CMT
Senior Vice President
Wealth Consultant

Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant

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fi-Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. fi-Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

Stock investing involves risk including potential loss of principal.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.