Energy Sector Outlook

The recent fall in gas prices has been a direct effect of supply and demand trends in global crude oil markets.  A recent oversupply has been caused by the emergence of fracking in the U.S. and Canada.  This problem has been compounded due to the fact that OPEC (the Organization of Petroleum Exporting Countries) has been adamant about maintaining their current levels of production.  Some say they are choosing to do this in order to squeeze out some U.S. suppliers and uphold the market share of oil coming from the Middle East.  Slowing economies in the Eurozone and China are also causing many to believe that there will be pressure on the global demand for oil.

As for the effect on oil companies, this recent drop has caused broad negative performance in the sector.  During oil’s 47.8% tumble since 06/30/14*, the SPDR Select Energy Fund (NYSE:XLE), which broadly represents U.S. oil companies, has fallen 19.1%.  Moving forward, however, some companies will be able to adapt to these changes much better than others.  For example, smaller players in the U.S. fracking revolution are now being squeezed the hardest, as many did not anticipate selling crude oil at these levels.  Wade Financial Group has owned a number of energy related stocks in 2014. Recently, we transitioned out of some of these smaller, more volatile companies, into larger and more stable names in anticipation of further trouble in energy markets.  We continue to selectively hold some energy companies in our Paid to Wait® and Paid in Advance® strategies due to their strong financial position and durable competitive advantages. 

Moving forward, it would be nearly impossible to try and predict an exact bottom for oil prices.  We feel strongly, however, that current prices cannot be maintained for the long-term.  Some financial pundits have already declared that oil prices are nearing a trough.  We would need to see some stability in the oil markets first, but there will be a time when many of these companies can be purchased at a true bargain. Until that time, we have positioned our accounts to hold only companies that we feel are best suited to ride out the most recent wave of volatility.

Commodities are in bear markets.  No one can predict where the top is for the U.S. market or where the bottom is when an asset class like energy is in a bear market.  While self-directed investors are typically afraid to buy asset classes when they are on sale, 2015 may be a time that they should consider breaking their own rules and buying beat up asset classes at bargain prices.  Most notable to consider are commodity and energy sectors--emerging markets as well, but energy may potentially snap back quickly.

Bear markets are typically shorter than bull markets.  By many measures, oil is currently priced under the cost of production.  On a short term basis, this may continue (6-18 months).  On a longer-term basis, oil is potentially destined to rise significantly from current levels.

Over the short term, such contrarian investment positions still may experience further downside momentum and works against investors.  Our allocation to energy and commodity sensitive investments and asset classes may grow further as we enter 2015, as opportunities present themselves.

* As of 12/26/14

Jerry Wade Invites You to the Movies!

Twin Cities Film Fest - Kick Off 2014 Video from Jerry Wade on Vimeo.

Fall is Tax Time

It’s the end of summer, the best time of the year to think about your income taxes. Seriously! 

Granted, there are some last minute moves that can and must be made at year-end, by December 31. Why wait until December?  More than halfway through the year is great for planning. You have a good idea of what your earnings will be, and you have time to take steps that could cut the taxes you will have to pay.

If you have not filed your 2013 tax return because it is on extension (you have until October 15, 2014), get it done now. Rushing through it in October is not a positive move.

For 2014, will you owe or get a big refund? You probably should adjust your withholding if either is the case.  Payroll withholding should provide “just enough,” not too much and not too little. Changing your withholding is easy. Just submit a new W-4 to your payroll office.

Do you pay estimates?  Now is a great time to reassess your estimated tax situation. You can adjust your 3rd quarter, (due September 15) and 4th quarter payments.

Is your 2014 tax-filing material building up in a pile? Straighten it out now. It will make it filing your return next year much easier.

Your favorite non-profit organization will happily pick up unwanted household items and clothing any time of the year. So help out the charities now. Just be sure to get a receipt and put it in your newly created tax filing system. Household goods, furniture, clothing and nick-knacks can add up to very meaningful contributions. List them out with the following information:  Description of item, approximate acquisition date, original purchase price or original value, date of donation, organization receiving donation, condition of item, (excellent, good, fair, etc.), estimated value (10% - 30% of original).  You will be surprised at the amount of the donation. If any item exceeds $5,000 in value you must obtain an outside, independent appraisal.

Earlier is better when it comes to retirement plan contributions. 

There are many other moves and ideas you can make or do. Contact your Wealth Advocate for more tax planning ideas.

Wade Financial Group is on your side for tax planning.

Reminder: Third Quarter Tax Payments Due

The 3rd payment of your estimated individual income tax is due on September 15, 2014.

If you mail your payment and it is postmarked by the due date, the date of the U.S. postmark is considered the date of payment.  If your payment is late or you did not pay enough, you may be charged a penalty for underpaying.

If you are paying an estimated payment based on your prior year total tax, you are paying a “safe harbor” estimate.  This safe harbor estimate allows you to have significant increases in income and will not incur a penalty if all your estimates are paid on time.  If you are not paying an estimate based on your prior year tax and if you need to change your estimated tax payment we are available to assist you or you may call your tax preparer for assistance.

There are several methods to pay your estimated income tax:

• Pay by check using the US mail.  Be sure to enclose the estimated payment voucher with your check and write your social security number on your check and note that it is for the 3rd quarter of 2014 taxes.  The IRS prefers you to not staple your check to the voucher.  The mailing address for Minnesota residents is:
• Internal Revenue Service
• P.O. Box 802502
• Cincinnati, Ohio 45280-2502
• Pay online at www.irs.gov/e-pay.  You can pay using either of the following electronic payment methods:
• Direct transfer from your bank account
• Credit or debit card
• Pay by phone: for the latest details on how to pay by phone, go to www.irs.gov/e-pay
• To pay by phone by direct transfer from your bank account call EFTPS Customer Service at 1-800-555-4477
• When paying by phone using a debit or credit card the IRS charges a “convenience” fee which varies by provider, card type and payment amount.  The providers to call for paying by debit or credit card are:
• WorldPay  1-888-972-9829 or www.payusatax.com
• Official Payments Corporation  1-888-872-9829 or www.officialpayments.com
• Link2Gov Corporation  1-888-729-1040 or www.pay1040.com 

Covered Call Writing

When reading articles on the topic of covered calls, talking to others and analyzing various options, be sure to really understand the pros and cons of your decision.  Below we discuss several of the most important topics.

Shorter Term or Longer Term?

Like most topics, there is often lively debate as to which is better: longer or shorter calls. We generally prefer writing options that have a shorter time to expiration; usually a year or less.  We do this for several reasons.

When you write covered calls further out in expiration, you lose control over your money.  It gives you much less flexibility if something in the marketplace or the company changes.  What if volatility changes, the stock market crashes, the company does great or terrible?  If any of these scenarios occur, you are “locked” in to that expiration date.

Additionally, the benefit of receiving more income by going further in expiration decreases exponentially. When you sell an option, you want the price of that option to decline.  Because time decay happens more quickly closer to expiration, we prefer to sell shorter term calls to take advantage of this.

Here is a chart and link that explains the issues with using longer-term options.

Take a look at this article, which goes on to further explain that for each option a “sweet-spot” exists with the optimal time to expiration/option price. We agree!
 

What is the Best Strike Price to Go After?

Answering this question is more of an art than the previous question.  A very generic answer depends on how much income you want from the covered call and at what price are you comfortable “selling” the stock if the stock did go above your strike price.  The more complex answer may start to sound Greek to many investors.  That is because options have various metrics which they are measured by: Delta, Vega, Gamma, Theta, and Rho.  All of these are important for different types of options. Some of our clients receive ongoing solicitations from other advisors who do not understand these concepts. We do! This knowledge and experience is why it is great to have WFG as your advisor! We analyze all that for you before we make a suggestion.

Timing

The last issue is timing.  Think back to the day you met your significant other.  How amazing was that timing? We all know, timing is everything. Though it is nearly impossible to predict accurately, the best time to write options is when volatility is higher relative to its average.  Option prices are directly related to the volatility.

For example, this Bloomberg graph shows the historical volatility for CHRW (C.H.Robinson) over the previous year (this graph is for illustrative purposes only).

The yellow line is the volatility over 30 days and the white line is over 10 days.  This type of graph helps to determine the best time to write covered calls, regardless of expiration or strike price.

Summary

Although writing covered calls are an easy exercise to execute, it still requires a lot of attention to detail. Make sure you are analyzing these variables when you write calls.

Emerging Market Opportunities

In our continuous search to improve upon our emerging markets success in the beginning of 2014, we would like you to consider another demonstration of country-wide performance, the 2014 World Cup.  The World Cup occurs every four years, and showcases the most talented soccer players from around the world.  For the preliminary round, countries are split into eight groups, each consisting of four teams.  We have taken these same groups, and used them to display financial, rather than physical, performance metrics.  Each group has been sorted by year-to-date return.

To demonstrate present and projected valuation, the current and forward price-to-earnings ratios are also listed.  As a reminder, price-to-earnings ratio is defined as current price divided by trailing 12-month earnings per share.  Greece, for example, would be the only country in this list with negative earnings, given their negative P/E ratio (-3.3). Italy’s P/E ratio is so alarmingly high (287.1) because the country has just recently generated positive, albeit still very low, earnings.

Forward P/E is the ratio of a country’s current price over its projected earnings for the next four quarters.  The best way to use this information is to compare the forward P/E ratio with the current P/E ratio, keeping in mind that lower is better.  Since the bulk* of these countries have forward P/E ratios that are lower than their current P/E ratio, a vast majority would be expected to see increased country-wide earnings over the next year.

As we have recently mentioned, we currently see a much greater opportunity in emerging markets as opposed to developed markets.  Developed markets, for the most part, performed very well in 2013 while emerging markets lagged far behind.  Based on historical evidence, we feel that this performance gap will continue to shrink throughout the rest of the year.  Each emerging market carries with it a different set of economic circumstances, however, which is why we are continuously focusing on selecting emerging market countries for our Alternative (ALT) strategy that we feel are most poised for future off-field success.

*Excluding Belgium, Argentina, Russia, and the special circumstance of Greece.

Summertime is a good time to refresh gift planning ideas

Charitable Trusts

As interest rates change, certain types of trust gift planning change.
Charitable Remainder Annuity Trusts: These trusts pay an annuity to the donor or another person for a set term, with the remainder going to a charity.  The donor gets an up-front deduction for the value of the charities remainder interest, which is larger when a higher interest rate is used.
Charitable Lead Annuity Trusts:  These trusts pay an annuity to a charity for a set term, with the remainder passing to the donor or someone such as a family member.  The donor gets to claim an up-front deduction for the present value of the charities annuity interest, which decreases as interest rates rise. Grantor-retained annuity trusts, where the person who sets up the trust gets an annuity for a set term are also hurt by higher rates.  Any balance left after the term expires goes to whoever the grantor originally named. Higher rates boost the potential gift tax bill.

Other Gifting Strategies

Do not waste the annual gift tax exclusion of $14,000: 
You can give up to $14,000 each to a child, grandchild or other person free of gift tax and it does not count against your “life-time” exemption.  If you’re married, your spouse also can give $14,000, doubling the tax free amount.
The 2014 “life-time” estate and gift tax exemption is $5,340,000.  You will not owe any gift tax on gifts over $14,000 as long as you do not use up your $5.34M exemption.
Pay a Donee’s tuition or medical costs directly:
The payments made directly to the educational institution or medical facility do not count against the $14,000 annual gift tax exclusion.
Give Appreciated Assets When Donating to Charity:
The appreciation escapes capital gains tax and you get to deduct the full value if you’ve owned the asset for over a year.
Keep Receipts and Records for Personal Property Donations:
Donations of gently used household items, clothing, furniture, etc. can add up to a substantial sum.  Keep a list of the items donated and note the condition of the item (e.g. excellent, good, fair).   An acceptable value for most items donated is 15% to 25% (or more) of the original cost.

Tom's Tax Tips: Vacation Property

Renting the Vacation Property:

If you rent your vacation home for less than 15 days a year, the rental income is tax-free and you can deduct interest and property tax payments (and casualty losses) on the house, but not the rental expenses, for the entire year.

You do not deduct the following:

• Personal use days
• Any days that you stayed at the rental property to perform routine repairs and maintenance including:
• repairing the bathroom toilet
• shampooing carpets, floor cleaning
• painting, caulking
• shopping for furniture or supplies 
• décor changes
• Meetings with property managers 
• Meetings with association boards

Maintenance days are not counted as personal days, even if your friends or relatives joined you for recreational purposes. These type of days should not be considered personal days and should be documented on a calendar or written document including receipts.

If you rent your vacation home out for 15 days or more during the year, and personal use does not exceed the larger of 14 days or 10% of the rental days, you must include the rent in income.  You get to deduct 100% of any property management fees in addition to rental expenses and it gets complicated because you need to allocate rental expenses between the days the property is rented and those used for personal purposes.  If personal use is 30 days and rental use is 120 days, 80% (120 divided by 150) of your mortgage interest, property taxes, insurance premiums, utilities and other rental expenses.  You can claim depreciation of 80% of the value of the house (no depreciation on the land part of the purchase).

If you limit your personal use to 14 days or 10% of the rental days, the vacation home is considered a business and up to $25,000 in losses may be deductible in each year.  I say losses “may” be deductible because real estate losses are considered “passive losses” by the federal tax law.  Passive losses can be used to offset taxable profit when you ultimately sell the vacation property.

Selling the Vacation Property:
Although the rule that allows home owners to take up to $500,000 of profit tax-free applies only to your principal residence, there is a way to extend the break to your second home: make it your principal residence before you sell. That's not as crazy as it might sound, nor is it as lucrative as it used to be.

Historically, retirees were selling the family home and moving full time into what had been their vacation home. Before 2009, this had a very special tax appeal. Once you live in that home for two years, up to $500,000 of profit could be tax free — including appreciation in value during the years it was your second home. Any profit attributable to depreciation while you rented the place, though, would be taxable. Depreciation reduces your tax basis in the property and therefore increases profit dollar for dollar.

In 2008 Congress cracked down on this break for taxpayers who convert a second home to a principal residence. Now a portion of the gain on a subsequent sale of the home is ineligible for the home-sale exclusion of up to $500,000, even if the seller meets the two-year ownership and use tests. The portion of the profit that's subject to tax is based on the ratio of the time after 2008 when the house was a second home or a rental unit to the total time you owned it.

This can still be a great deal if you've owned your second home for many years before the law changed. Let's say you have owned a vacation home for 18 years and make it your main residence in 2014. Two years later, you sell the place. Since the six years after 2008 the place was your second home (2009 and 2010) is 30% of the 20 years you owned the home, only 30% of the gain is taxed. The rest qualifies for the exclusion of up to $500,000.

Tom's Tax Tips: Stretch IRAs

What is a Stretch IRA?

A stretch IRA refers to an individual retirement account that is inherited by a beneficiary who is eligible to take the required minimum distributions from the account over the beneficiary's own life expectancy. This includes any type of individual beneficiary such as children, grandchildren, nieces, nephews, even friends, but not charitable beneficiaries since they do not have a life expectancy. It also does not apply to surviving spouses, who can simply elect to take an IRA inherited from a deceased spouse and roll it over into their own IRA.

Benefits of a Stretch IRA

The advantage of stretch IRAs from an estate planning perspective is that if a grandparent leaves the IRA to a grandchild or grandchildren, then the IRA can continue to grow tax-free for the benefit of the grandchildren since the grandchild's life expectancy will require the grandchild to withdraw relatively small required minimum distributions over many years leaving the principal and much of the tax-free growth inside the IRA.

Tom's Tax Tips: Alternative Minimum Tax

How does the Alternative Minimum Tax Work?

The Alternative Minimum Tax (AMT) is a separate, independent tax calculation completed on a separate tax form (#6251).  AMT uses its own set of rates and its own rules for deductions which are generally less generous than the regular tax rules. Because of these separate, complicated rules, the only way to determine if you owe the AMT tax is by filling out the forms (essentially doing the tax calculation a second time).  Thank goodness for professional tax software made available to everyone at an economical cost (and of course qualified professionals who complete your tax return for a fee).

If your gross income is above $75,000 and you have write-offs for personal exemptions, taxes and home-equity loan interest you most likely fall into an AMT tax category.   Ditto if you exercised incentive stock options during the year, or if you own a business, rental properties, partnership interests or S corporation stock. If you earn more than $100,000, AMT calculations are pretty much required.

Alternative Minimum Taxable Income

AMT rules require adding back some tax deductions and income exclusions to your regular taxable income to arrive at your alternative minimum taxable income. Here is where the most everyone making over $75,000 gets hit!

First, add back the personal and dependent-exemption deductions ($3,900 each in 2013).   Then, if you do not itemize, the standard deduction is added back ($12,200 for joint filers in 2013; $6,100 for singles in 2013).  The state, local and foreign income and property tax write-offs, as well as your home equity loan interest, if the loan proceeds are not used for home improvements also get added back.

The AMT also ignores some itemized deductions, such as investment expenses and employee business expenses, and some medical and dental expenses. AMT rules add the interest from some private-tax-exempt activity bonds to income. Finally, AMT rules force you to pay taxes on the “spread” between the market price and the exercise price of incentive stock options granted by your employer. For example, if you exercised an option to buy 1,000 shares of stock for $3 a share and the stock was trading at $15, the spread would be $12 a share, or $12,000. Under the regular rules, you wouldn't pay current taxes on this amount, but under the AMT, it’s considered income.

Alternative Minimum Tax Benefits

AMT rules allow a couple of small benefits you do not receive under the regular tax rules. For example, while you can’t deduct state, local and foreign taxes under AMT rules, you can exclude the refunds, which are considered income under the regular tax rules. And because you’re taxed on the spread on your incentive stock options, your tax basis for the option shares you bought is higher under AMT rules, meaning your future AMT tax bill will be lower when you sell those optioned shares.  This stock basis adjustment, of course, requires good record keeping.

The AMT form has quite a few other rules that are pluses and minuses related to rental properties, partnerships, and other business entities. My intention is to give you a glimpse of the complicated rules so I will limit the rules explanation to the above paragraphs.

Exemption Parameters

Lastly, the AMT exemption is deducted from the recalculated AMT taxable income -- $80,800 for 2013 joint filers; $51,900 for unmarried persons; $40,400 for those who use married filing separate status. However, this exemption is reduced by 25 cents for each dollar of AMT taxable income above the applicable annual threshold. For 2013, the thresholds are $153,900 for married joint-filing couples, $115,400 for singles, and $76,950 for folks who use married filing separate status.  After the exemption (if any) has been deducted, the result is subject to the AMT rates:

1. 26% on the first $179,500 for 2013 or $89,750 for if you are married and file separately from your spouse and
2. 28% on the excess. If the AMT exceeds your regular tax, you have to pay the greater amount. 

Technically, the AMT is shown on your federal income tax return as just the liability over and above the regular tax, and this figure is entered on page 2 of Form 1040.

ALERT:  There may be a recovery of some of the AMT paid.  It’s possible to be eligible for the so-called minimum tax credit, which allows taxpayers to claim a credit on their tax return in future years for some or all of the extra AMT tax you paid.  Another tax form, 8801, is necessary to determine if you are eligible. For whatever reason, the tax rules say that exercising incentive stock options is one of the few things that qualify you for the AMT credit, so if that’s the reason or one of the reasons you paid an AMT tax, make sure this credit calculation form is included in your tax return.

2014 Market Slide - Humbles Aggressive Investors

Just as many people thought it was looking easy and were clamoring for more risk and equity exposure; it seems the market, once again, continues to remind investors it is never as it seems.  Today alone, the S&P 500 fell -2.28%.   The S&P 500 is down approximately -5.66% Year-To-Date, as of February 3rd 2014! 

As we recently published in our emails and The View Forward bulletins, the rocky start that we had predicted for 2014 has come to fruition for the stock market.  We still feel it is a prudent decision on your part, not to get too aggressive with stocks.  As a reminder, at Wade Financial Group, we emphasize diversification along with our Con-Val^® approach.  We feel this approach should help guide you through these turbulent markets.  

As an update, last week we performed the annual rebalance of our Lifestyle Income Bond and Foundation portfolios. 

This week, we will be rebalancing our Paid In Advance^® and Paid To Wait^® model portfolios.

Give us a call if you have any questions. 

2014 Tax Planning

2014 Tax Planning Difficulties

Fifty-five tax provisions expire on Dec. 31, 2013. This doesn't affect your 2013 tax return, but tax planning for 2014 will be a different story. Consideration of extenders has been complicated by possible overall tax reform and budget considerations. Uncle Sam could bring in billions by letting some or all of the extenders fade away. That would mean, however, that individual taxpayers would lose such popular tax breaks as the itemized deduction for state and local sales taxes, the above-the-line deductions for tuition and fees and educators' out-of-pocket classroom expenses. The consensus is that Congress will take up the extenders in 2014, but whether that will be before or after the Nov. 5 midterm election is unclear. The longer lawmakers wait, the harder it will be to plan and implement your 2014 tax strategy.

Take Advantage of Inflation Tax Adjustments

One thing we do know for sure for 2014, inflation had a nominal effect on around 40 tax provisions. Most notable is that income brackets were widened a little, meaning you can earn a bit more next year without being bumped into a higher tax bracket. Most people claim the standard deduction, and those amounts for each filing status in 2014 were increased slightly, as was the personal exemption amount, going from $3,900 to $3,950. However, the amounts you can contribute to your workplace pension plan and individual retirement account in 2014 have stayed the same as in 2013.

New Simplified Home Office Business Use Deduction

The IRS has provided a new, optional, “Safe Harbor Home Office” expense deduction effective for tax years beginning on or after January 1, 2013!

The deduction allowed is $5 per square foot of the “qualified use” space up to 300 square feet.  The maximum deduction is $1,500.  

·    A home office is considered the taxpayer’s primary place in which he or she conducts trade or business.

·    The home office may or may not be part of or attached to the taxpayers residence.  It may be a separate structure on the property used exclusively, on a regular basis, as a home office.

·    A home office is where the taxpayer will meet clients, customers or patients during the normal course of business.

·    Home-related itemized deductions are claimed 100% (without allocation) on Schedule A (for example, mortgage interest and real estate taxes).

·    No depreciation deduction or later recapture on sale of the home is allowed if the “safe harbor method” is used.

·    Of course, even under the simplified method, it is the taxpayer’s responsibility to ensure  good records which prove the exclusive use of the home office continue to be maintained to substantiate the claim.

This deduction is an alternative to the calculation, allocation and substantiation of actual expenses required under the IRS code section 280A.  If the deduction is greater using the 280A method you can still use that method.  Taxpayers are allowed to change their treatment from year to year.

Need for a Will

A will is important because if you do not designate who will inherit your property, a state statute will. The statutory distribution scheme (known as “intestate distribution”) will often provide for results differing from your wishes. If you have property in several states, the rules in each state may be different concerning who will be entitled to your properties.

Typically, intestate law divides the decedent's estate between the surviving spouse and living children; however, many people are surprised by the actual division made by state law. Even if the decedent does not have children, the spouse may not inherit the entire estate.

Perhaps most importantly for those of you with minor children, a will gives you the opportunity to designate a guardian for your children if your spouse does not survive you. You have better understanding than a court as to who of your relatives or friends will best be able to care for your children, both emotionally and financially. Your will can put this designation in place, identifying the best person for each type of function.

Moreover, because your children are minors, the court will require a fiduciary (e.g., a guardian or trustee) to be appointed to receive and manage that property the children inherit. This can be a cumbersome and expensive process, requiring court supervision throughout the time the children are minors.

A will can also simplify the probate process for your survivors. For example, you can designate a personal representative (also known as an executor) to handle the transfer of properties in your estate. You can direct how taxes and debts should be paid. You can waive state limitations on funeral expenses payable from your estate and enable your estate to take maximum advantage of estate tax savings.

We do hope that this explanation is a sufficient beginning to enable you to understand the practical necessity of having a Last Will.

Please contact one of our Wealth Advocates at Wade Financial Group to arrange an appointment to discuss this matter in more detail.

Four 401-K Tips

We recently spoke on WCCO explaining four tips everyone should consider when looking at their 401-K.  As the stock market continues new highs breaking two records today, Monday November 18th 2013, with the Dow Jones hitting a record 16,000 and the S & P 500 hitting 1,800 it is worth checking in on your current 401-K.  Click here, WCCO Interview, to check out the four tips and listen to the interview.

Film Festival Reviews

Wade Financial Group founder Jerry Wade has been attending the Savannah film festival for over 5 years and is an avid film enthusiast.  Because of Jerry's passion for film it was only natural that Wade Financial Group recently helped sponsor the Twin Cities Film Festival.  Below we have an inside look of the top movies from each of these recent festivals.  Jatin Setia’s, the founder of the Twin Cities Film Festival, and Jerry Wade each give their top five movies from this year’s festivals.

Jerry’s Savannah Film Festival Top Five

1.      The Pretty One

When a woman's identical prettier twin sister dies, the woman assumes her sister's identity, moving into her apartment and the big city.

2.      About Tim

At the age of 21, Tim discovers he can travel in time and change what happens and has happened in his own life. His decision to make his world a better place by getting a girlfriend turns out not to be as easy as you might think.

3.      The Book Thief

While subjected to the horrors of World War II Germany, young Liesel finds solace by stealing books and sharing them with others. Under the stairs in her home, a Jewish refugee is being sheltered by her adoptive parents.

4.      Philomena

A world-weary political journalist picks up the story of a woman's search for her son, who was taken away from her decades ago after she became pregnant and was forced to live in a convent.

5.      Nebraska

An aging, booze-addled father makes the trip from Montana to Nebraska with his estranged son in order to claim a million dollar Mega Sweepstakes Marketing prize.

Jatin’s Twin Cities Film Festival Top Five

1.     We Are What We Are

As an unrelenting downpour continues to flood a small town, the local authorities begin to uncover clues that bring them closer to the secret that the Parkers, a seemingly wholesome and benevolent family, have held closely for so many years.

2.     Winter in the Blood

Virgil wakes in a ditch on the hardscrabble plains of Montana, hungover and badly beaten. He returns home to his ranch on the reservation, only to find that his wife, Agnes, has left him. Worse, she's taken his beloved rifle. Virgil sets out of town find her - or perhaps just the gun - beginning a hi-line odyssey of inebriated and possibly imagined intrigues in town with the mysterious "Airplane Man", a beautiful barmaid, and two dangerous Men in Suits. Are they real? Or spirits guiding him away from his true path?

3.     The Armstrong Lie

Four years ago, Oscar-winning documentarian Alex Gibney was commissioned to film Lance Armstrong's second comeback, for the 2009 Tour de France. Years later, following Armstrong's cheating confessions, Gibney returned to his original source material, discovering in the process an electrifying, red-handed portrait of a liar in action.

4.     August: Osage County

A dark, hilarious and deeply touching story of the strong-willed women of the Weston family, whose lives have diverged until a family crisis brings them back to the Midwestern house they grew up in, and to the dysfunctional woman who raised them.

5.     Mandela: Long Walk to Freedom

Based on South African President Nelson Mandela's autobiography of the same name, which chronicles his early life, coming of age, education and 27 years in prison before becoming President and working to rebuild the country's once segregated society.

Who’s impacted by the Fed’s announcement yesterday?

Yesterday, the Federal Reserve announced that it would continue its current policies: buying $85 billion in Treasury and mortgage-backed securities each month, and keeping short-term interest low.

This has the most direct impact on the bond market. Investors of all stripes hold bonds, but particularly retirees who are typically looking for income and relative safety. The irony is, this year the bond market has been anything but safe. It’s been highly volatile as the market contemplates a change in Fed policy. Many bond portfolios have generated negative returns as bond prices have fallen.

What can an investor do? There are some strategies that a professional financial advisor can put in place to help. As we’ve discussed in previous blog posts, our strategy has been to focus on bonds with shorter maturities in order to avoid price volatility.
 
For investors looking for income, we’ve implemented different strategies—beyond bond portfolios—to try to meet that goal. While interest rates are beginning to rise, they’re still extremely low by historical standards, so alternatives such as our Paid in Advance® strategy may offer a more suitable answer for income-seeking investors.

--Nick Asmus, Wade Financial Group Investment Department

Earnings calls—a chance to look under the hood

Yesterday, Apple disclosed its third-quarter earnings…and opinions are all over the map! (Disclosure: Wade Financial Group owns stock in Apple.)

This often happens. Earnings calls give a snapshot of the company, and there’s a lot of different data, that can be interpreted in a number of different ways. It’s a science…and an art.
 
Apple is a case in point—you could look at different aspects of the earnings call and take away completely different stories. 

• Sales of iPhones and iPads are up over last year—great! 
• Guidance on future profit margins did not meet analyst expectations—not so good. 
• What are the possible new products? 
• What are the expectations for holiday sales? 
• What else is the company saying?

Earnings calls like this give investors a chance to “open up the hood and examine the engine” on a company. Individual investors can take the time to investigate fully and form their own opinion, independent of the market. For instance, bad news could send the stock sliding…which could be a buying opportunity, if you’re able to recognize it.
But, it takes a lot of time and energy—not to mention objectivity—to do that thorough work. And not just on one company, of course—on a full investment portfolio.  Just reading the headlines and trying to jump on market bandwagons is not going to cut it.
 
That’s why it’s so important to engage a professional, who is looking at these stocks and companies day in and day out…so you don’t have to.

--Nick Asmus, Wade Financial Group Investment Department