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3rd Quarter 2018

October 15, 2018

Inside This Newsletter



On September 16, 2008, Lehman Brothers filed for bankruptcy. This was the catalyst that led to the Great Recession. Such financial services companies as Washington Mutual, Wachovia Bank, and Bear Stearns ceased to exist.

While much is being written to commemorate this event, we wanted to discuss the emotional toll that ensued. It is easy to look back and reassess your decisions but in the middle of a crisis, objective thinking can be hard.

If you did not react during the downturn, don’t assume you won’t be overwhelmed in the next downturn. After all, ten years have gone by and you may be at a different stage in life—a good reason to discuss with us the future and how it relates to your investments.

The problem when a crisis ensues is that you have a starting date but no end date. Every day the headlines predict Armageddon and it seems a reality as stocks plunge, ultimately 53% in 2008/09. You watch your hard-earned money decline almost daily.

Since we are financial advisors, clients looked to us to “make it better.” People without an advisor may not have had anyone to talk to. Headlines, being what they are, would always highlight the worst.

Advisors must believe in the system in order to encourage patience: this too shall pass. The investors who were hurt the most were the ones who sold after their portfolios declined, thus securing their loss. And on the flip side, they may not have known what to do with the cash and when to reenter the market.

Since March 2009, the U.S. stock market has consistently climbed. To reap the benefits, you need to be in the market. Everyone has to come to terms with acknowledging that the benefit of investment gains also comes with the pain of temporary loss. Gains and losses are on paper until you sell and “realize” the gain or loss.

We know there will be a market downturn, but no one knows when. Many advisors, Financial Connections included, have experienced clients’ desire to sell because of politics in Washington. An understandable emotional response. Yet the market continues to rise.

Financial Connections does not believe you can time the market—when to get out and when to go back in. We believe your portfolio should reflect your financial plan and risk tolerance.

Money needed in the short term should carry reduced risk while money targeted for later years can assume more risk and grow even with the market fluctuations. Time smooths fluctuations. We encourage you to speak with us about your portfolios, to update us on your circumstances, and make portfolio adjustments as needed. Also available is a risk questionnaire you might find helpful. It takes most people about 7-10 minutes.

At the time of writing the newsletter, the stock market has begun a decline. Declines are normal. A 10% decline, on average, happens every 3.5 years. We haven’t had one for 10 years. We are overdue!


The new Medicare card is sent automatically. It will look like this:


The unique number replaces your Social Security number. We are supposed to destroy the old card. And remember to give the new one to your medical professionals so they can remove the old card in their files.


If you have not received the new card,

call 1-800-633-4227.


It is time to review your Medicare policies. Open enrollment will be October 15th through December 7th.

Our Medicare consultant is available to investment clients to help review drug coverage plans.

For clients approaching Medicare age, please contact Financial Connections if you would like help selecting your coverage. You can begin the enrollment process three months before age 65.


Sheri Remail, our Executive Assistant, retired August 31. Many of you spoke with her when you called in. We miss her.

Kim Wohler, our longest tenured employee (12 years), decided she would like to become a financial planner. She is now our Associate Planner working with Jenny, Brian, and Jill in meeting with clients and developing financial plans.

Kai Bogdanovich is our new Operations Supervisor responsible for our software, TD Ameritrade activity (including deposits and withdrawals), client portal, etc. Please join us congratulating Kai on her promotion.

Please meet John-Paul (JP) Pavao. John-Paul is our financial planning paraplanner (now called a Financial Paraplanner Qualified Professional™). JP assists Jenny, Brian, and Jill in preparing financial plans. He also helps Kai with operations. John-Paul is a foody, enjoys milk tea with tapioca balls, and long drives in his M3. JP is also a huge Warriors fan.

Our new Executive Assistant is Ivana Vande Zande. She recently returned to the Bay Area as her husband completes his final posting in Petaluma for the Coast Guard. They have a 16-month-old son, Lincoln. Ivana is originally from Delaware and loves being back in the Bay Area for its easy access to hiking and the beach. Ivana is a “work in progress” in adapting from an East Coast Type-A person to a mellow Californian.

Please welcome Ivana and John-Paul to our family.


Jill and Brian attended a symposium given by NAPFA (National Association of Personal Financial Advisors, the fee-only organization). One of the presentations sponsored by Hartford Funds in conjunction with MIT Age Lab discussed how technology is helping and will continue to help the aging population.

For instance, Vehicle Technology includes:

  • Blind spot warning system
  • Back-up camera
  • Smart headlights
  • Collision Avoidance Systems
  • Lane Cross Over Warning

When people ask us whether they should buy a new car, we frequently give a resounding YES! The new technologies help older adults drive more safely. A bonus for everyone.

Another option to stay mobile as we age is Lyft/Uber. If we shouldn’t be driving, why should we have to be stuck at home? We can use ride sharing to meet family members and friends.

Do you want to be a student again? Even if you don’t attend a local college, online courses are in abundance. Below are just a few.

YouTube                    EdX                 Khan Academy        AARP              Udacity Webcast.berkeley            Coursera       Road Scholar            Lynda.com   


The U.S. market continued its march upwards with small companies leading the way. The dollar’s strengthening hurt developed and emerging markets. The MSCI Emerging Market Index is down almost 10%. Valuations in the emerging markets are considerably cheaper than in the U.S. or other developed countries.

The American economy jumped 4.2% in the second quarter, fueled by corporate tax cuts that resulted in increased corporate earnings. The additional money available to corporations allowed them to purchase their own stocks. When fewer shares of a company’s stock are available for purchase, the earnings per share make the company’s results look better.

New jobs are averaging 214,000 per month. However, growth is expected to slow down starting the third quarter and more so next year. The “normalized” growth number is expected to be in the 2-3% range.

The Fed continues its slow but steady rate increases, at ¼ of 1% (25 basis points); a rate that is 2 ½ times lower than previous Fed rate increases.

The federal deficit is disconcerting. We currently owe government bond holders $15 trillion. Buyers around the world are willing to finance our debt by buying treasury bonds—in fact foreigners own almost 47% of treasuries. None of us know when they might say enough, and then not buy our debt or demand a higher interest rate. Deficits are projected to continue.

JP Morgan predicts inflation in 2019 will be around 2%—certainly not high by historical standards.

Please don’t hesitate to contact us regarding your investments and/or updating your financial plan.



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