November 3, 2018
MARKET WATCH
Records are made to be broken and the third quarter of 2018 certainly made that statement a truism. The various market indices set new records during the quarter and were just slightly lower than their all-time highs at the close of the quarter. The current cyclical bull market became the longest bull market on August 22nd, when it surpassed the 1990’s record. The first week of October started impressively as the markets set new records, then retreated by week’s end. Favorable economic conditions, which are fueling this bull market and economic expansion, continue to be positive. In order for this expansion to set a record and exceed the 1990’s expansion of 120 months, it would need to continue until July 2019.
While October has the reputation of being a spooky month, primarily due to the celebration of Halloween, it has also been the month during which notable market disruptions have occurred including, according to an article by Randall Forsyth in Barrons, which quoted the Stock Trader’s Almanac,” the historic crashes in 1929 and 1987; the swoons in 1978, 1979 and 1989; plus the 18% collapse in the Dow* during the week ended on Oct. 10, 2008, during the financial crisis, the worst week in the publication’s database, which goes back to 1901”. However, Forsyth goes on to note that,” mid-term-election-year Octobers rank tops for the Dow*, S&P 500*, NASDAQ Composite*, Russell 1000* and Russel 2000*. Since 1950, the Dow averaged a 3.1% gain in midterm Octobers, and the fourth quarter of midterm election years kicks off the best three quarter span of the four year election cycle. Combined with the first and second quarters of the third year of a presidential term, that nine-month stretch has averaged a 20.4% gain for the Dow* and a 21.1% rise in the S&P 500* since 1949. For the NASDAQ, which dates back to 1971, the gain over that span has averaged an amazing 32%”. Of course, we must remember past is not prologue.
At the end of the third quarter, the DJIA* posted a 7.04% year to date (YTD) gain closing at 26,458.31, the S&P 500* closed the quarter at 2,913.98 for an 8.99% YTD increase. The NASDAQ* had a YTD return of 16.56% and closed at 8,046.35 making it the best performer of the top 3 indices. As noted earlier during the first few days of October the major indices posted new records, then backed off those levels by late week.
The unemployment rate, according to the latest BLS report released on October 5, now stands at 3.7% and is the lowest unemployment rate recorded since 1967. Real gross domestic product (GDP) increased at an annual rate of 4.2% in the second quarter of 2018, according to the "third" estimate released by the Bureau of Economic Analysis on September 27th. In the first quarter, real GDP increased 2.2%. The Federal Funds Rate was raised 25 basis points to a 2% - 2.25% spread during the FOMC meeting in September. The 10 year bond closed the third quarter at 3.06% while the 30 year bond inched up to 3.21%. This steepening of the yield curve means that the bond market is responding positively to the Federal Reserve Bank’s approach to raising interest rates, as Fed Chairman Jerome Powell attempts to keep employment stable and inflation at bay. The Fed must do this while not slowing the economy too much. If he can achieve the proverbial “soft landing”, perhaps the good times might roll on longer than expected.
Free trade took a leap forward as the NAFTA agreement between the US, Mexico and Canada was renegotiated to a point where all three leaders could save face, which is what all of this bluster about tariffs is all about. I’m sure deals with the European Union and China will be sealed going forward.
With the legalization of cannabis in Canada, stocks which deal with anything marijuana related have been a bit bubbly over the last few months. Some analysts have compared this to the dotcom froth that occurred at the end of the last record setting bull market and economic expansion. With the reality of cannabis being legal in Canada and in quite a few states in the US, this is the dawn of a new industry. With that said, stock selection should be done with careful analysis of the underlying fundamentals of the company. If you remember Bitcoin, less than a year ago, Tilray last month and the dotcom bust, you get my point about parabolic stock price increases! Stay disciplined, diversified and invest long term.
TIME TO REVIEW YOUR RETIREMENT PLAN CONTRIBUTIONS
As we get into the final months of 2018, it is always a good time to take a look at the contributions you are making to retirement plans, in order to take advantage of the various tax advantaged plans available to you. If you have a 401k or 403b plan at work, the maximum employee contribution is $18,500.00 with a $6,000.00 additional catch up contribution available to those who are 50 years of age or older. Employee contributions to a SIMPLE IRA or 401k can be up to $12,500 with a catch up contribution of $3,000.00 for those 50 years old or older.
The maximum allowable contribution to an IRA or a ROTH IRA is $5,500.00 with a catch up contribution of $1,000.00 for those who are 50 or older. There are still income limits for contributing to IRA’s for those with qualified plans at work. For married filing jointly, the deductibility of the IRA contribution phases out between income ranges of $101,000 - $121,000. The phase out range for Single filers is between $63,000 - $73,000. The phase out income range for ROTH IRA’s for Married Filing Jointly is $189,000 - $199,000 and $120,000 to $135,000 for Single filers. If you have any questions about your retirement plans, please contact me to discuss them.
Update on Signator Investors, Inc.’s Agreement with The Advisor Group
As you may remember, Trans-america Financial Advisors, Inc. was acquired by Signator Investors, Inc. in May 2016. Transamerica and Signator had been on a similar journey, evolving from captive life insurance agencies to become one world class independent broker-dealer. Signator Investors, Inc. decided the next step in this evolution would be to partner with an established and well-known broker-dealer network which will take the company to another level in the independent advisor space.
On June 21, 2018, it was reported that Signator Investors, Inc. entered into an agreement of sale with The Advisor Group, Inc. Under the agreement The Advisor Group will assume all aspects of Signator’s business and merge operations into Royal Alliance Associates, Inc., one of their existing broker-dealers. The deal is expected to close in November of 2018, subject to final regulatory approval.
By affiliating with Advisor Group and Royal Alliance Associates, our company will be part of one of the
most highly-regarded broker-dealer networks in the industry. They share the same values that Signator has come to embody, offering an entrepreneurial and independent business model emphasizing the personal service you’ve come to expect, and the substantial broad based operational support necessary to service our clients.
Beyond the increased products and services which will be available to our clients, the combination of Signator and Royal Alliance creates a broker-dealer with almost 3,600 advisors and just under $120 billion in assets under manage-ment. Since both companies have clearing relationships with Pershing and Fidelity’s National Financial Services, the only real change for current clients will be the name change from Signator to Royal Alliance on statements. The combined entity will have more clout in the industry, and hopefully will reduce costs for all involved.
As we close the books on the third quarter of 2018 and plow headlong into the holiday season, I’ll continue to keep you informed regarding the agreement between Signator and The Advisor Group, but as with the deal between Transamerica and Signator, the transition should be quite simple for our clients. The biggest nuisance for you will be the “negative consent letters” you have received from the broker-dealer advising you of the deal and your rights.
Just a reminder in regard to those “negative consent letters”, they are basically designed to let you know you don’t have to do anything. I will still be your advisor, my company will still be called Jersey Benefits Advisors, and my telephone and email will remain the same. What will be different, when the deal closes, is the company through which I offer securities will change from Signator Investors, Inc. to Royal Alliance Associates, Inc.
If you have any questions or concerns, please don’t hesitate to contact me. I look forward to the new partnership with Royal Alliance, as well as my continued relationship with each of you.
COMPANY INFORMATION
John H. Kaighn offers various products and services under the trade name of Jersey Benefits Advisors.
PO Box 1406
Ocean City, NJ 08270
Phone: (609) 827-0194
Fax: (856) 637-2479
Email: kaighn@jerseybenefits.com
http://jerseybenefits.com
John H. Kaighn is an Investment Advisor Representative and Registered Representative with Royal Alliance Associates, Inc. Securities and investment advisory services are offered through Royal Alliance Associates, Inc., Member FINRA/SIPC.
10 Exchange Place
Suite 1410
Jersey City, NJ 07302
Royal Alliance Associates, Inc. is separately owned and other entities and/or marketing names, products or services referenced here are independent of Royal Alliance Associates, Inc.
Insurance Services and Third Party Administration offered through Jersey Benefits Group, Inc., a licensed Insurance Agency in the State of New Jersey.
PO Box 1406
Ocean City, NJ 08226
Phone: (609) 827-0194
Fax: (856) 637-2479
Email: kaighn@jerseybenefits.com
http://jerseybenefits.com
All opinions expressed in this newsletter are independent of Royal Alliance Associates, Inc. and solely those of John H. Kaighn and Jersey Benefits Advisors.
*The S&P 500, the DJIA, the NASDAQ and others referenced are unmanaged indices that are widely used as indicators of market trends. Past performance does not guarantee future results and the performance of these indices does not reflect the fees and charges associated with investing. It is not possible to invest directly in an index.
*Dollar Cost Averaging through a systematic savings plan is an excellent way to build an account without a sizeable initial investment. Saving a portion of our pay each month is very important. Company sponsored pension plans are one method to save and should be used for retirement. Other systematic investment accounts, such as ROTH IRA’s, Traditional IRA’s, Coverdell Accounts, 529 Plans, Brokerage Accounts and Annuities can also be opened, and debited directly from checking or savings accounts. For more information, just call to set up an appointment. Referrals are always welcome.
John H. Kaighn
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*Jersey Benefits Advisors is a trade name for J/M Kaighn, Inc. a corporation registered in the State of New Jersey, and Jersey Benefits Group, Inc. is a corporation registered in the State of NJ.
*John H. Kaighn is a Registered Representative and an Investment Advisor Representative of Osaic Wealth, Inc. Securities and investment advisory services offered through Osaic Wealth, Inc. member FINRA/SIPC. Osaic Wealth, Inc. is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth, Inc.
*Insurance services provided by Jersey Benefits Group, Inc., a Licensed Insurance Producer in the State of New Jersey.
*John H. Kaighn is licensed to offer securities through Osaic Wealth, Inc. in the states of DE, FL, IL, MD, NC, NJ, NY, and PA., as well as investment advisory services in NJ. This Website should not be considered a solicitation for securities business or investment advisory services in any other state.
*This web page offers links to other companies. Once a hyperlink is activated, you will be leaving Jersey Benefits Group, Inc., and operate outside Jersey Benefits Group, Inc. Website. Jersey Benefits Group, Inc. is not responsible for the validity, completeness or accuracy of any information provided on those sites to which you may link. Furthermore, Jersey Benefits Group, Inc., Jersey Benefits Advisors and Osaic Wealth, Inc. shall not be liable for any direct or indirect system damage or other problems you may incur as a result of linking to any other website, including any consequences arising from your accessing third party technologies, sites, information and programs made available through Jersey Benefits Group, Inc.
*Click here to view Form ADV Part 2
*Click here to view Form CRS for Osaic Wealth, Inc.
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