Quarterly Economic Commentary
Inside this issue Quarterly Commentary
Teaching Heirs: “Passing the Torch...”
HM News After the Closing Bell Upcoming Events
Summer is often the time for
families to head to amusement
parks, to eat lots of food (with
questionable nutritional value) and
to seek body-jarring thrills on the
latest “bigger, better, scarier” roller
coaster. If you happened to miss
your chance to catch a thrill ride at
the park this year, then you were in
luck, since the world stock and
bond markets provided their own
wild ride for investors this summer,
and we all had a ticket to ride!
For stocks, July saw the markets
rally as they bounced off the June
lows that resulted from the
Fed-induced “panic attack”, or as
one analyst creatively called it, the
Taper Tantrum we experienced at
the end of the second quarter.
August and September, by contrast,
saw significant volatility brought on
by the risks of a military strike in
Syria and culminating in a tense
buildup to the September 18th
Federal Reserve meeting. It seems
the majority of market forecasters
were expecting a reduction in the
$85 billion per month bond buying
program, which the US economy
has been relying on as its life’s
blood for months. As it happens,
the Fed chose not to taper its bond-
buying program at this time, which
was not a surprise to us at Hudock
Moyer at all. We felt that Chairman
Bernanke had fairly clearly laid out
the conditions which were
necessary for the “taper” to begin,
and that those conditions had not
yet been met.
As with so many things, we
found much more clarity in the
hard facts than in the press’
interpretation of those facts, and
that is perhaps one of the best
mantras for investors in this time of
global economic uncertainty. The
media profit from sensationalism.
The hard facts may be less
fascinating, but they can reflect the
true reality. After swinging back
and forth in a five percent range for
two unsettling months, the S&P
ended September almost exactly
where it had ended July. It was a
tense, two-month roller coaster
ride to nowhere.
Issue 5 October, 2013
"Follow effective action
with quiet reflection.
From the quiet reflection
will come even more
effective action."
- James Levin
Our core purpose, our passion, is to make a profound differ-
ence in the lives of our clients, in the lives of our teammates,
and in our communities.
If you have any suggested topics for or feedback about the Hudock Moyer Newsletter please feel free to call us and share!
Commentary continued on next page
Commentary continued below
Bonds have presented a real
challenge for investors throughout
this year, which was not unex-
pected. Very early this year, we
shortened the bond duration of
the Hudock Moyer portfolios, in
an attempt to reduce downside
risk and volatility in that part of
our investment strategy. We
expected that changes in
economic conditions and certainly
in Federal Reserve policies and
programs in 2014 would put some
downward pressure on bond
prices.
The month of June showed us
downward pressure even on
shorter bonds, which was stronger
than we were expecting to see,
even with the threat of Fed
tapering. We believe this price
action demonstrated greater fear
in the bond market than we
thought was present, and June
may well have been a warning
shot for the price action we’ll see
over the next few months when
the Fed really does get ready to
taper. With that in mind, we felt
it appropriate to really batten
down the hatches on our bond
holdings to ride out that storm
and preserve capital for later
buying opportunities, while still
getting at least a little yield, versus
sitting in cash. To accomplish
that, we needed to shorten our
bond durations even further, and
we revised our portfolio strategies
to implement this change.
As we move into the fourth
quarter, markets are trying to
digest a government shutdown, a
need to increase the debt ceiling,
a handover of arguably the most
powerful leadership position in
the economic world and the
likelihood of a fifth year of
government operations without
an approved fiscal plan or
budget—and this is all just in the
US. Overseas, we have continued
sluggishness in emerging market
economies, fractured government
coalitions in several European
countries and continued unrest in
the Middle East. As advisors,
these conditions bring trepidation
but also at times excitement. As
we have repeatedly said, volatility
frequently brings opportunity, and
we are always watching for ways
to capitalize on the potential that
comes with the uncertainties, to
keep ourselves in the front seat of
the roller coaster.
–Jason Moyer, Chief Investment Officer
Book Corner.. “Raising Financially Fit Kids“ by Joline
Godfrey, CEO of Independent Means Inc,
is highly recommended for helping
young children or grandchildren
become financially fit. What I really like
about this book is that it takes age
groups starting with ages 5-8 and I
believe gives you specific tools, ideas,
and techniques for working with and
helping to develop each age group. In
the next column is an excerpt from the
book:
(Continued →)
“In times like these, it helps to recall that there have always been times like these.” - Paul Harvey
“Now, pay attention. Here is an
important mantra, best learned when the
child is at his or her youngest and cutest
stage (and when you are most susceptible
to clever manipulation by the little sweetie):
An allowance is not an entitlement or a
salary. It is a tool for teaching children how
to manage money. It’s money that gives
children an opportunity to practice the Ten
Basic Money Skills.
Say it again, with conviction:
An allowance is not an entitlement or a
salary. It is a tool for teaching children how
to manage money. It’s money that gives
children an opportunity to practice the Ten
Basic Money Skills.
If you decide to institute an allowance
(and yes, it’s a good idea), this is the
message you must internalize and
communicate. Just as blocks are great tools
for developing motor skills, an
early allowance develops money skills
(saving, sharing, earning, counting) that will
impact the rest of their lives. To help every-
one remember, print this out in large type
and stick it on your
refrigerator. Dear ________,
Your allowance is not an entitlement or a
salary. It’s money you will use to practice
the Ten Basic Money Skills; a tool to help
you learn how to manage money.
Love, Mom and Dad The first allowance begins with short, simple
rules like these communicated often and
clearly:
An allowance helps you become a big,
independent girl/boy.
The better you handle money, the
more quickly you will get additional
responsibilities, privileges, and a
bigger allowance to practice with.
You will practice counting, earning,
saving, sharing, growing, and
spending.
Every few months, we’ll look at how
you’re doing with these skills and see
what changes have been earned.”
Being a parent and/or grandparent is a
privilege as well as a responsibility. The easy
and fun way is not usually the best way.
Barbara
Teaching Heirs
Passing the Torch: Critical Conversations with Your Adult Children By: Bob Mauterstock Since I sold my practice three years ago, I
have taken on the task of helping adult children
open up conversations with their elderly
parents to discuss the critical issues of aging.
Recently after one of my presentations, a
woman approached me and asked a
question: “I had a meeting with my father and
we discussed all the critical issues you suggest
in your book. But after our meeting I realized I
needed to have this conversation with my own
children. But where do I start?” Her question
made me realize that this is an issue for more
than “the greatest generation.” As a baby
boomer myself, I began to think about how
10,000 of us are retiring every day, and most
of us have probably never had a frank
conversation with our own children about long
term care and end of life plans. Just because
we feel like we’re going to live forever, doesn’t
mean we shouldn’t be prepared!
Here are some simple things you can do to
get started; once you have your own house in
order, you’ll be better able to help your clients
do the same. I realize that not all planners are
boomers! Even if you don’t feel these steps are
appropriate for you right now, becoming
familiar with them will certainly help you help
your clients.
First, get your “lifefolio” in order. That’s all
the stuff you need for an orderly financial life.
Gather up your wills, trusts, durable powers of
attorney (POA) and health care proxies and
review them. Is the executor still the right
person to manage your estate? Who are the
trustees for your trust? Have you given the POA
to someone in addition to your spouse? Have
you taken the time to identify a health care
agent?
Next, find your life insurance, disability and
long term care policies and check the
provisions of each. Are the beneficiaries for the
life policies still correct? Are the beneficiary
statements attached? If you don’t have long
term care insurance, obtain it if necessary, my
guess is you’ll find it necessary. Your clients
will want to know that if you’re recommending
they purchase insurance, that you also have it.
One final important item in your “lifefolio”
is a list of all your key online accounts with user
names and passwords. Do you conduct
financial transactions online? Are your
investment and bank accounts online? If you
were incapacitated would your spouse or
children have the information necessary to
access your accounts and act on your behalf?
Now that you’ve gotten the quantitative
stuff out of the way, and before you meet with
your children, ask yourself the following
questions and discuss them with your spouse.
If my spouse or I become chronically ill
what will we do?
Will we move?
Who will take care of us?
How will we pay for our care?
Are there important values that we want
to pass on to our children?
What is our legacy? How do we want our
children and grandchildren to remember
us?
Are there important things we want to
happen whether we are alive or deceased?
How do we intend to pass on our estates
to our children?
Divide equally?
Divide based on need?
Divide based on merit?
What is our plan for our real estate?
Sell?
Retain for family?
Give to a specific child?
What are our end-of-life plans?
Now you are ready to schedule a meeting
with your adult children. There are several key
steps to insure the success of a family meeting.
1. Identify your alpha child (you know who
he or she is). Have them organize the
meeting (time and place) and invite their
siblings. I suggest that spouses and
children not attend.
2. Designate a facilitator. It could be you,
your spouse, or someone outside the
family such as your own financial advisor.
3. Nominate a scribe who will keep track of
what everyone says, promises made and
actions scheduled.
4. Open the meeting up with some of the key
issues you want to cover, including how
you want to be remembered (your legacy)
and what you want to happen whether
you are alive or deceased.
5. Share as many answers to the qualitative
questions as you can and ask for your
children’s feedback.
This meeting may be emotional and difficult to
have but once it is complete you will notice a
new level of communication and intimacy with
your children. You can feel confident that you
have communicated your wishes to your
family, and that they have been involved in the
process. Your discussions now will alleviate
stress during future difficult times. Schedule
your meeting with your children, maybe on
your next birthday, and see how it goes.
"Coming together is a beginning. Keeping together is progress. Working together is success."
- Henry Ford
HM News:
On July 26th, we held the 8th
Annual Hudock Moyer Charity Classic Golf
Tournament. It was a beautiful day and we
had a 100% turnout of golfers. This year’s
donation went to the Community Arts
Center (CAC) and with the generous
contributions of so many people, we raised
over $17,000. This takes the cumulative
total raised from this annual golf tournament
to over $100,000. We are very proud of this
event’s success and its impact on our
community. Thanks in large part to the
participation and contributions of so many
of you! (Pictured from left to right, Michael
Hudock Jr. & Jeri Sims, CAC).
© Bob Mauterstock, CFP Author of "Can We Talk, A Financial Guide for Baby Boomers Assisting Their Elderly Parents" available at www.giftofcommunication.com.
Holiday Event—Athens
December 3rd
Holiday Event—Williamsport
December 6th & 7th
Medicare Educational Event—Athens
November 7th
Medicare Educational Event—Williamsport
November 12th
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Upcoming Events
Please see our website (www.hudockmoyer.com) for updated event information or call our office at 866-855-0569 or 570-326-9500.
400 Market Street Suite 200 Williamsport, PA 17701 509 S. Main Street Athens, PA 18810 By appointment
Phone: 570-326-9500 Toll Free: 866-855-0569 Fax: 570-326-9577
www.hudockmoyer.com
Please remember that past performance may not be indicative of future results. You should not assume that any discussion of infor-mation contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Hudock Moyer Wealth Resources. Hudock Moyer Wealth Resources is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be constructed as legal or accounting advice. Securities offered through Comprehensive Asset Manage-ment and Servicing, Inc. (“CAMAS”), Member FINRA/SIPC (800-637-3211). Hudock Moyer Wealth Resources is independent of CAMAS.
“The arts are the best insurance policy a city can take on itself.”
(former mayor of Baton Rouge)
The Woodcock Foundation for the Appreciation of the Arts, Inc. was
honored as the recipient of the Director’s Chair at the Community Arts Center in Williamsport on Sunday, September 22, 2013. Lynne Gale of Lewisburg
and Lorrin Watson of Jacksonville, Florida, are the original creators/founders
of the WFAA, Inc. The money for the Foundation came from art their father,
Lyle S. Woodcock, collected during his business trips during the ‘50s, ‘60s, and
‘70s. “When his colleagues were becoming material for the “Mad Men”
writing staff during the cocktail hours, he was taking in paintings and making
friends at museums and galleries.” (Josh Brokaw, Williamsport Sun Gazette
9/16/13) This magnificent art collection was sold by his daughters to create a
dynamic, creative way of making a difference in the lives of people like you
and me. The mission statement of the Woodcock Foundation for the Appreciation of the Arts, Inc. is: “So long as there are little children to be introduced to the
creative arts and harried adults who missed exposure to great art and literature
and timeless music to be shared across all age groups, there will be a need for
efforts to encourage the Appreciation of the Arts.”
Over the last seven years, the Woodcock Foundation for the Appreciation
of the Arts, Inc. has contributed over $1,800,000 to the arts and related
organizations in the sisters' home communities of Lewisburg/Williamsport and
Jacksonville, Florida. I believe this generosity has given those communities
many amazing benefits making our community richer beyond words. Harried
adults, children, as well as countless others have been blessed by the beauty of
the moment that art and music provide. As a citizen of our community and a Director of the Woodcock Foundation
for the Appreciation of the Arts, I am grateful for their generous hearts as well
as their presence in our communities. We are blessed.
Warm regards, Barbara