July 22, 2014

TDG News: Sean Dowling in the Greenwich Times

This past weekend, Greenwich Point hosted their annual one-mile swim. Sean Dowling has been participating in the swim for eight years as a competitor and member of the Greenwich Swim Committee. Joe Dowling has also been involved with the swim since its inception 27 years ago as both an organizer and competitor. This past Saturday, Sean placed first in his age group. Special thanks to Jon Harnett and the rest of the Greenwich Swim Committee for putting together such a wonderful event once again!

View the article (and quote from Sean) at Greenwich Times: Greenwich Point One-Mile Swim.

Fallout from the Malaysian Air Tragedy

Events of the last week could have been plot elements in a Tom Clancy novel. Tragically, they were real and ratcheted geopolitical tensions higher around the globe.

On Wednesday, the United States toughened sanctions against Russia. Bloomberg.com reported the new sanctions prevent specific Russian companies from "...accessing U.S. equity or debt markets for new financing with maturities longer than 90 days. They don't otherwise prohibit U.S. companies or individuals from doing business with the Russian firms." The European Union also introduced new sanctions although theirs were more modest than those of the United States. Russian bond and stock markets tumbled on the news.

Soon after, The Washington Post reported the new sanctions were likely to have a more profound affect on Russia. "While earlier sanctions, primarily against individuals, have been largely brushed off as an inconvenience by their Russian targets, the new round appeared designed to cause significant blows to the Russian economy and fundamentally alter its global financial relationships."

On Thursday, an international commercial airliner carrying hundreds of passengers was shot down over Ukraine by a surface-to-air missile. No one has acknowledged responsibility; however, Ukrainian officials labeled the event an act of terrorism as it happened in an area of Eastern Ukraine plagued by violence associated with a pro-Russia separatist uprising. When this commentary was written, it remained uncertain whether the crash was an act of aggression or a tragic accident.

Understandably, investors took the news poorly and fled to 'safer' investments. The Standard & Poor's 500 Index lost 1.2 percent for the day - its biggest one-day drop since April. Ten-year U.S. Treasury yields also dropped and the rate on Germany's 10-year bond closed at a record low. Stock market losses also reflected Israel's ground offensive in Gaza.

American markets rebounded on Friday although geopolitical tensions continued to shadow economic and earnings news.

Data as of 7/18/14 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 0.5% 7.0% 17.1% 14.9% 15.8% 6.0%
10-year Treasury Note (Yield Only) 2.5 NA 2.5 2.9 3.6 4.4
Gold (per ounce) -2.1 8.8 1.9 -6.5 6.5 12.4
Bloomberg Commodity Index -0.7 2.8 -0.2 -7.6 1.2 -1.3
DJ Equity All REIT Total Return Index 1.3 18.6 9.6 12.1 23.3 9.5

S&P 500, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

Insight on Taxes

As you're plunking bait, lolling on the beach, or paddling a stream, let your thoughts turn to... taxes. Sure, it's a lot easier not to think about taxes until you have to, but by then it's usually too late to do anything that might make a difference. Late summer, when your blood pressure is nice and low, is the perfect time to decide whether you need to take any steps to prepare for this year's taxes. Consider Forbes' assessment of top tax brackets for 2014 before you stop reading:

Single taxpayers earning:

  • Over $36,900 up to $89,350 may owe $5,081.25 plus 25 percent of the excess over $36,900
  • Over $89,350 up to $186,350 may owe $18,193.75 plus 28 percent of the excess over $89,350
  • Over $186,350 up to $405,100 may owe $45,353.75 plus 33 percent of the excess over $186,350
  • Over $405,100 up to $406,750 may owe $117,541.25 plus 35 percent of the excess over $405,100
  • Over $406,750 may owe $118,118.75 plus 39.6 percent of the excess over $406,750

Married taxpayers filing jointly and earning:

  • Over $73,800 up to $148,850 may owe $10,162.50 plus 25 percent of the excess over $73,800
  • Over $148,850 up to $226,850 may owe $28,925 plus 28 percent of the excess over $148,850
  • Over $226,850 up to $405,100 may owe $50,765 plus 33 percent of the excess over $226,850
  • Over $405,100 up to $457,600 may owe $109,587.50 plus 35 percent of the excess over $405,100
  • Over $457,600 may owe $127,962.5 plus 39.6 percent of the excess over $457,600

Apologies if your blood pressure just jumped higher. Take a deep breath and decide whether these tips, offered by The Fiscal Times, can help.

  1. Manage your taxable income effectively. It may be possible to reduce your taxable income by deferring it, making contributions to pre-tax investments (like retirement accounts), and making gifts of income producing investments or cash to family members.
  2. Generate investment losses. Selling depreciated assets can help generate losses and losses may offset capital gains.
  3. Accelerate income if you are subject to the alternative minimum tax (AMT). Forbes offered additional insight to this suggestion. "While a taxpayer's regular taxable income is subject to graduated rates with a low of 10 percent and a high of 39.6 percent, AMT income is taxed at a flat 28 percent rate... And where I come from, 28 percent is less than 39.6 percent. And it's this variance that gives rise to an often-overlooked planning opportunity."

None of the above should be considered tax advice for your situation, but hopefully it's food for thought. Before you do anything, call us to speak with one of our tax professionals about your specific financial situation.

Weekly Focus - Think About It

"A closed mouth catches no flies."

—Miguel de Cervantes, Spanish novelist

Best regards,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management

Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.
  • The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
  • Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
  • Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
  • The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
  • Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
  • The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
  • The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
  • Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
  • Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
  • Past performance does not guarantee future results.
  • You cannot invest directly in an index.
  • The S&P 500 is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
  • Consult your financial professional before making any investment decision.
  • This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
  • Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
  • Stock investing involves risk including loss of principal.











IRS Circular 230 Disclosure: Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any tax-related matter. Please contact us if you wish to have formal written advice on this matter.

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