Andrew Millard's Blog

2012 TD Ameritrade Institutional National Conference

2012-02-06T20:06:00.000-08:00

1 - Lady clients: time is running short! Please be our guest at a special Valentine's Day Ladies' Tea to be held next Tuesday, February 14 at 3:00pm in the Depot Room. Please click here for more information and to RSVP.

2 - I told you this was conference season: Juliet and I spent much of last week at the TD Ameritrade Institutional National Conference in Orlando. A video report is included below.

3 - Although I sent this next item in last week's update, I think it bears repeating, so here it is: Clients may be dismayed to receive a second or third "corrected" 1099 on your account. This has been an issue for clients for several years, and so I have written an explanation that I urge you to read. Scroll farther down the page to the article entitled "What's the Deal With 1099s?"

Have an excellent week!

-Andy

What's the Deal with 1099s?

by C.A. Millard

Every year, our clients receive 1099 forms from TD Ameritrade. The 1099 is an IRS form on which a financial institution reports taxable events that have occurred within the client's account. The client or her tax preparer utilizes the form in preparing her tax return.

All that is straightforward enough. But just about every year, some clients are caught off-guard (and taken aback) by receiving a second (and sometimes a third) 1099 from TD Ameritrade. If you receive one of these "corrected" 1099s, you may understandably get the impression that Ameritrade "didn't get it right the first time" and now has to re-issue the form to correct its mistake. That impression would be wrong.

The 1099 issued by TD reflects the information provided to it by the stocks, bonds, mutual funds and ETFs that are represented in your account; each fund and ETF contains at least one additional layer of holdings, each of which reports its own info to the fund, which in turn reports to TD, which finally compiles everything and reports to you on the 1099. As a result, your 1099 may represent information provided by literally thousands of financial institutions.

Sometimes, one or more of those institutions needs to change its information. This could be the result of new information that was reported to it, a change in the way the IRS views a particular transaction that took place during the year, or the occasional (and inevitable) human error.

Corrected 1099s are a fact of life. The changes are almost always minor and have very little if any effect on the client's tax liability. My advice is this: If you receive a corrected 1099 before you have filed your tax return, discard the old one and use the new one. If you get a corrected 1099 after you have filed your return, compare it to the original and ask your tax professional if it is worth filing an amended return.

Here is TD Ameritrade's schedule for distributing corrected 1099s this year:

1st Correction Cycle - February 24, 2012
Reports reclassified income (not captured on Consolidated 1099 Forms to be issued in mid-February, 2012) that was reported to TD Ameritrade between February 1, 2012, and February 15, 2012.

REMIC cycle - March 15, 2012
To be completed no later than March 15, 2012. The precise date will be determined after the necessary data has been furnished to TD Ameritrade by the issuers. **This cycle also reports reclassified income not captured in previous cycle(s).**

2nd Correction Cycle - March 9, 2012
Reports reclassified income that was reported to TD Ameritrade between February 16, 2012, and February 29, 2012.

3rd Correction Cycle - March 21, 2012
Reports reclassified income that was reported to TD Ameritrade between March 1, 2012, and March 14, 2012.

4th Correction Cycle - April 11, 2012
Reports reclassified income that was reported to TD Ameritrade between March 15, 2012, and April 4, 2012.

5th Correction Cycle - April 25, 2012
Reports reclassified income that was reported to TD Ameritrade between April 5, 2012, and April 18, 2012.

6th Correction Cycle - May 23, 2012
Reports reclassified income that was reported to TD Ameritrade between April 19, 2012, and May 21, 2012.

Andy's Report from "Inside ETFs" Conference

2012-02-06T20:02:00.000-08:00

1 - Last Sunday through Tuesday, I attended the Inside ETFs conference in Hollywood, Florida. This particular conference is all about the nitty-gritty of investing, and this year's event didn't disappoint. For a two-minute video report, click on the image below. A little further down, following This Week's Economic News, I have also included a video synopsis of our March 17 panel discussion, New Realities: The Global Economy.

2 - With tax season comes the all-important Form 1099, on which financial institutions such as TD Ameritrade report taxable income to clients. You may be dismayed to receive a second or third "corrected" 1099 on your account. This has been an issue for clients for several years, and so I have written an explanation that I urge you to read. Scroll farther down the page to the article entitled "What's the Deal With 1099s?"

3 - Reminder for lady clients: Please be our guest at a special Valentine's Day Ladies' Tea to be held on Tuesday, February 14 at 3:00pm in the Depot Room. Please click here for more information and to RSVP.

Have a productive week!

-Andy

What's the Deal with 1099s?

by C.A. Millard

Learning New Realities

2012-01-24T07:56:00.000-08:00

1 - Our New Realities panel discussion on Tuesday was loaded with meaty content. Between the insights of the panelists and the probing questions of the attendees, there was a lot to think about. Erik Olsen is preparing a video synopsis; we will include it in next week's newsletter.

2 - On Thursday I took part in a conference call with Mohammed El Arian and Bill Gross of PIMCO. As an indication of the respect the investment world has for these two, the call included participants on four continents. My semi-raw notes from the call are assembled in an article below:

Andy's Notes from PIMCO conference call, 1/19/2012:

Participants from North America, South America, Europe and Asia.
Mohammed El Arian discusses microeconomic conditions:

Global markets and economies are seeing a morphing of expectations. Flatter bell curve with fatter tails - both on the positive and negative sides.

Europe: The very construct of the eurozone is in play. It's hard to see a repeat of 2011 - this should be a make-or-break year for the eurozone. Need to bring Italy and Spain from the brink. It is a bi-modal recovery: at end of 2012, will have tipped to the left or right tail - either very good or very bad. Europe has great relevance for investors in the US.

US: Encouraging data recently. Evidence of an ongoing healing process. Will it accelerate? There are four primary drivers:

1 - Increase in household savings rate.

2 - Scope for further policy changes is limited to the federal reserve. Over time, the effectiveness of additional measures reduces.

3 - Headwinds from Europe.

4 - Political and social dimensions hinder policy activism out of DC.

Emerging markets: Much better economic conditions, but structurally still catching up.

We are comfortable with the traditional bell-shaped curve - tails are low-probability - this curve guides investors' traditional risk approach. We are moving INTO a bimodal distribution: flatter curve with fatter tails - and need to prepare more fully for both tails. Used two-humped camel (Bactrian, in Mongolia) as an illustration.

Gross discusses investment strategy:

Does not believe success can be found with a little bit of this and a little bit of that, or going to cash and sitting out the year. Must approach with a recognition that the two fat tails would occur in different time periods. Left tail (bad) involves credit destruction, right tail (good) involves successful reflation and economic growth. Left tail would/should come fairly soon (6 mos) while right would be farther out. Try to anticipate policymakers' policies and watch for negative repercussions.

Trillions of $ of checks have been written by the ECB, Bank of England, Operation TWIST, Bank of Japan - everybody's writing checks. Checks are flowing through into financial markets. This reflects "financial repression:" extremely low interest rates and very low real rates for an extended period of time. It represents an effort to prevent the left tail. It is like picking pockets of investors and savers, allowing economies to maintain low rates.

This financial repression could go on for 5 - 10 years, could lead to a left tail. Must anticipate this and invest accordingly. If they're going to write checks, we want them to write them to us. Try to "pick the clean dirty shirts." Greece has the dirtiest shirt around, the US has one of the cleaner dirty shirts - also Canada, UK, and Germany. Go out longer on the yield spectrum by purchasing intermediate-duration securities. Focus on a duration strategy - which is counterintuitive - by going farther out in a environment of low rates. Intermediate, NOT long (10 years and out). Long bonds should be TIPS.

Left tail could occur if the central banks' policies do not succeed. In that case, you don't want a lot of credit. Reduce credit exposure, especially those that are levered to the system, such as banks and financial companies.

Stocks, commodities and currencies: stocks yield more than bonds right now; that's good. A normal distribution to stocks is called for: steady cash flow, highly certain dividends. Commodities: also could go either way. Focus on scarcity and geopolitical considerations. Currencies: the dollar is king in left-tail world; a right-tail world would be dollar-unfriendly. Be careful in terms of any high-percentage weighting in either direction.

Questions:

Q: Implications of a possible default in Greece? A: Depends on whether it is orderly or disorderly. Disorderly would affect our strategy. Orderly: risk-on; disorderly: risk-off.

Q: What about the US? A: There is less liquidity in the system than there has been, and some that is in the system is slanted toward official (government and bank) channels. Too few people manage their risks properly, so when things shift, investors jump to change asset allocation. Make sure you can navigate this volatility - the last thing you want is to be forced into a move at the wrong time.

3 - Attention all lady clients: Please be our guest at a special Valentine's Day Ladies' Tea to be held on Tuesday, February 14 at 3:00pm in the Depot Room. We love being able to show our appreciation to our clients, and the Depot Room setting is the ideal place. Michele and Juliet are still finalizing the plans, so mark your calendar for Valentine's Day at 3:00.

4 - TD Ameritrade recently issued a client statement describing the various levels of protection they use for client accounts. If you'd like to read it, click here to download it.

Have an awesome week!

-Andy

The Importance of Global Economy

2012-01-16T07:14:00.000-08:00

1 - Please remember to attend tomorrow's panel discussion on the Global Economy. Our panelists are Dr. Jody Lipford, chair of the Department of Economics at Presbyterian College; Scott Hamilton, CEO of Advantage West; and Bob Quattlebaum, former VP of Cryovac who travels extensively and does business in China. It promises to be a lively and thought-provoking event. Everyone is welcome (clients and non-clients alike), and no reservations are necessary.

2 - Attention all lady clients: Please be our guest at a special Valentine's Day Ladies' Tea to be held on Tuesday, February 14 at 3:00pm in the Depot Room. We love being able to show our appreciation to our clients, and the Depot Room setting is the ideal place. Michele and Juliet are still finalizing the plans, so mark your calendar for Valentine's Day at 3:00.

3 - January and February constitute conference season for me. First up will be the Inside ETFs Conference next Sunday, Monday, and Tuesday. This conference is tightly focused on investing and features some of the top minds in the investment world. I always learn a lot there, and you'll get a report upon my return.

Have a stellar week!

-Andy

Here's a preview of some of the interesting conversation you can look forward to at tomorrow's panel discussion. Panelist and local businessman Bob Quattlebaum -- who travels extesively and does business in China -- sat down in my office last week to talk about some of the factors affecting our economy. As he talked, I pulled out my mini-camcorder and recorded part of the conversation. In this 2-minute clip, Bob discusses just one of many such factors. Please join us on Tuesday, January 17 at 5:30pm.

2012 Walt Disney World Marathon- A Test of Endurance

2012-01-09T09:48:00.000-08:00

1 - Here's a reminder about an important event coming up in just two weeks. We have an outstanding panel lined up for the second in our New Realities series. The topic for this session is the Global Economy. As panelists, we have an economist (Dr. Jody Lipford of Presbyterian College), an expert in Western North Carolina (Scott Hamilton, CEO of Advantage West), and an international businessman (Bob Quattlebaum, former VP of Cryovac who has done extensive business in South America, Europe, and especially China, where he travels frequently for his current business). It promises to be an event you won't want to miss. No reservations are necessary, but mark your calendar.

2 - 2012 started out well for the stock market, with the S&P 500 gaining more in four days than it did for the entire year of 2011. The rub, of course, is that we have another 51 weeks before the tale is finally told on 2012, and there are still a passel of issues to be sorted out in this rapidly changing world. We need to keep a steady hand on the tiller as we steer through these uncharted waters.

3 - In a recent article in Bloomberg Businessweek, MIT economist and Nobel Prize winner Peter Diamond contends that federal policymakers should tackle unemployment before fixing the deficit. As Diamond puts it in the article, "We have an unemployment crisis and a debt problem, and Washington is behaving as if we have a debt crisis and an unemployment problem." Diamond's suggestion for increasing economic activity and reducing unemployment? Government spending on infrastructure and research and development. He reasons that unemployed young people are unable to get the experience they need for long-term meaningful employment, which reduces their income for many years to come, thus hurting the entire economy over the long haul. Putting them to work now would remedy that situation, he claims.

Have an outstanding week!

-Andy

You may know that I enjoy distance running. I'm not fast by any means, but I can go a pretty long way. This past weekend, Sharon and I traveled to Walt Disney World in Orlando with my sister Nancy and her husband Bobby. Nancy and I ran together in Saturday's Disney Half Marathon (13.1 miles), her first distance race. Then on Sunday, I ran in the full marathon (26.2) miles, which was pretty tiring.

Believe it or not, they actually have a name for this two-day self-punishment. It's called the Goofy Challenge, named after the famous Disney cartoon character. You may be surprised to learn that 27,000 runners participated in the half marathon, over 20,000 ran in the full, and a whopping 7,000 did both, thus attempting the Goofy Challenge. So at least I was the only nutcase in the crowd.

In order to get to the starting line for each morning's 5:30 start, we had to get up at 3:00am. The first several miles of both races were run in the dark, but the sun rose on two brilliant Central Florida days. It was a blast!

Above are some photos from the marathon taken on my cell phone. TOP: A typical scene of a river of runners wending their way through the expansive Disney property. MIDDLE: I paused for a snapshot with one of the many Disney characters who placed themselves along the course for photo ops with the runners. (This was one of the plastic toy soldiers from the Toy Story movies.) BOTTOM: This is what one looks like immediately following a marathon, with iced knees and two finisher's medals (one for the marathon and one for successfully completing the Goofy "Race and a Half" Challenge).

I dedicated yesterday's marathon to my friend (and Blue Ridge BBQ Festival Chairman) Chuck Britton, who is recovering from some recent health issues. Chuck is now on the mend and should be back to bossing us all around very soon.

Welcome to 2012!

2012-01-02T05:51:00.000-08:00

1 - A wildly erratic stock market ended 2011 almost exactly where it began. Although the narrow Dow Jones Industrial Average gained a modest 5.5%, the broader S&P 500 ended the year four one-hundredths of a point below where it began the year. If you add in dividends, the S&P finished with a gain of just over 2%. One is reminded of the great Shakespearean phrase: "Full of sound and fury... signifying nothing."

2 - If anything, this year holds the possibility of even more upheaval than last. The presidential election alone should provide ample dramatic interest. Add uncertainty in the eurozone, continuing challenges in the U.S. economy (although there seem to be promising signs in the offing), gridlock in Washington, and the inevitable surprises, and you have the makings of another fascinating year.

3 - Please make plans to attend our January 17 panel discussion, New Realities: The Global Economy. Participating on the panel will be economist Dr. Jody Lipford, Presbyterian College professor of Economics and Business Administration, as well as Scott Hamilton, CEO of Advantage West, Western North Carolina's regional economic development commission. It promises to be a fascinating and enlightening event.

Have a fabulous week!

-Andy

What in the world happened last year? Take about three minutes to review the major global events of the year just past.

Final Week of 2011 & Happy New Year!

2011-12-26T08:06:00.000-08:00

1 - Reminder: Millard & Company will be closed today (Monday, December 26) and this Friday, December 30. We will be open all next week; our main focus will be producing year-end client reports.

2 - Investor jitters seem to be settling down just a bit. While there's still plenty of uncertainty ahead, including a bruising presidential campaign, it's good to see a brief spell of relative calm in the markets -- even if it turns out to be very brief indeed.

3 - New Year's Day has become my favorite holiday. New Year's is about reflection, renewal, and optimism -- each of which is in woefully short supply in the frenetic 21st Century. What's more, because it follows hard on the heels of the massive hype of Christmas, New Year's is largely untainted by the over-commercialization that detracts from so many of our other important holidays.

We can't know what craziness the world will throw at us next year. But we can control our attitude -- and thereby prevent the craziness from taking control of our lives.

Have a wonderful final week of 2011; here's to a stellar 2012!

-Andy

Juliet at the White House

In late September, Juliet attended the TD Ameritrade Operations Conference in Washington, DC. While there, she had the opportunity to spend some quality time with Bonnie Armstrong, our special projects colleague who lives in the DC area. The afternoon before the sessions began, they did some sightseeing, and Bonnie snapped this photo of Juliet in front of the White House.

Holiday Message from Andy

2011-12-19T07:06:00.000-08:00

1 - Despite all the drama in the stock market this year, it really has moved very little. Since the first of this year, the Dow Jones Industrial Average is ahead by 2.5% while the broader S&P 500 is down 3.68%. Many potential pitfalls remain, of course, so we're skewing most clients' portfolios toward the risk-averse end of the spectrum.

2 - Our office will be closed this Friday and next Monday for Christmas.

3 - From all of us at Millard & Company -- Juliet, Michele, Bonnie, Sharon, and me -- we wish you a holiday filled with peace, joy and love.

Have a blessed week and a Merry Christmas!

-Andy

Celebrating Holiday Season Together

2011-12-12T09:12:00.000-08:00

1 - Financial markets spent last week in a bit of a holding pattern as investors awaited the outcome of the European Union summit in Brussels. While most leaders of the 27 EU members reached a tepid accord (Great Britain demurred), they really did not appear to accomplish the big splash that investors had been hoping for.

2 - Economists are now talking openly about (1) the likelihood that Europe is already in a new recession, and (2) the possibility that the eurozone -- the 17 EU members who all use the common currency -- could come apart. The Wall Street Journal reported last week that member nations are tuning up their printing presses -- just in case they need to start churning out currencies of their own.

3 - We're gearing up for the end of the year: making sure all clients with annual required minimum distributions (RMDs) have taken them by the end of this month, clearing up lingering cost basis issues, and making sure client portfolios are properly positioned to ring in 2012. It is a busy time, but you know us: we're having fun doing what we do.

Have a wonderful week -- and please do your Christmas shopping locally!

-Andy

In case you missed it, On December 1 we hosted a holiday event for clients and their guests. We enjoyed a sumptuous dinner by Pat Strother, delectable cheesecake bars by Juliet, and Frank Capra's timeless film It's a Wonderful Life. Michele did a great job planning and setting up. For the privacy of our clients, our videographer Erik Olsen took care not to show faces (other than us worker bees). Enjoy this one-minute video recap.

Replaying The Global Economy's Effects on Investors

2011-12-05T19:56:00.000-08:00

1 - Talk about volatility. Despite the best week for U.S. stocks in almost three years, we are still slightly behind where we were just two weeks ago. This week promises to be just as rocky, as the leaders of the 27 nations constituting the European Union meet Friday to consider binding themselves into a closer political union. If they can do it, it could be an extremely promising signal to financial markets. If they can't, well....

2 - Last night, Bloomberg ran an excellent article outlining the important issues surrounding this week's meetings in Europe. If you have an interest in understanding the situation, I commend it to your attention. Click here to read it. In addition, last week's video commentary is just as applicable this week as it was then, so we're running it again below.

3 - Last Thursday evening, about 55 clients and guests set aside their worries and kicked off the holiday season in the Depot Room. We enjoyed hot cider, a fabulous Pat Strother-catered dinner, Juliet's homemade cheesecake bars, and and It's a Wonderful Life on the big screen. I was taken aback by the large number of attendees who said they had never seen the movie before; of course, they all loved it. Even for those of us who had seen it many times, its theme -- the notion that real wealth lies in doing good for others -- resounded once again. There's something about watching a classic film the way it was intended to be seen -- on the silver screen in a darkened room and surrounded by an appreciative audience -- that makes for a special experience. For those clients who have been unable to attend one of our "dinner and a movie" events, I hope you can make the next one.

Be thankful for our wonderful community. Have a terrific week -- and remember: do your Christmas shopping locally!

-Andy

We ran this video with last week's update, but it applies just as much this week as it did then. And since quite a few readers didn't watch it, we're running it again. It takes a very brief look at (1) the U.S. and European economic picture; (2) its potential implications for investors; and (3) what we're doing about it at Millard & Company.

The Global Economy's Effects on Investors

2011-11-28T10:31:00.000-08:00

1 - The U.S. stock market has lost ground every day for the last seven sessions; according to Briefing.com, those seven days have drained 7.8% from the S&P 500. The latest causes for pessimism continue to come from politicians on both sides of the Atlantic. The situation in this country won't be settled until next November's national elections -- and may not be settled even then. As ugly as it is here in the states, it is much more complicated in Europe, where the leaders of about a dozen countries -- countries with competing interests and grouchy electorates -- must somehow come together on a unified cure to a rapidly growing infection. Bottom line: we don't have a clue as to where all this is going. Hold on to your hat.

2 - To view a 3-minute video about the economic picture and how we're dealing with it at Millard & Company, click here.

3 - Remember that this coming Thursday (December 1) is our client holiday Dinner and a Movie event. As of this writing, we have received RSVPs from about 50 clients and guests, and we're looking forward to a fun and festive evening. If you haven't signed up yet, click here to do so.

I hope your Thanksgiving was a good one. Have a great week -- and do your Christmas shopping locally!

-Andy

Thanksgiving Message from Andy Millard

2011-11-22T08:38:00.000-08:00

1 - Good news: it looks like the federal government will indeed be able to cut $1.2 trillion from the deficit over the next ten years. Bad news: the reduction almost certainly will not come as a result of the Congressional "supercommittee," but rather as a result of the so-called sequester, a process of automatic across-the-board cuts set to occur in the event of the committee's failure to reach an accord. Indeed, the group's twelve members haven't even gathered at the same table for many days, and members signaled last night that they had failed in their mission. What may be even worse is the very real possibility that Congress could rescind the sequester mechanism and its accompanying deficit reduction. What seems clear is that this problem will once again be kicked down the road, to be settled by next year's presidential and Congressional elections. In the meantime, don't expect the financial markets to be happy about the apparently permanent gridlock.

2 - The combination of deepening European woes and the fading hopes of our country's deficit-reduction committee sent global financial markets gyrating downward last week, and the news doesn't look any better this week. But although last week's losses might well be extended as a result, such an outcome is not a foregone conclusion. If there's one thing I've learned in 17 years of watching this stuff, it's that you usually shouldn't assume an automatic cause-and-effect.

3 - We are especially thankful this year at Millard & Company. We've had an outstanding year in our new home, and as the holidays approach, we count our many blessings. Thankfulness is even more potent when it is applied to the future. We recognize the daunting challenges that surround us in this world. But we choose to see an ever brightening road ahead -- for ourselves, our families, our friends and our clients -- and we will work to make that vision a reality. Some may call it wishful thinking; I call it faith.

Shortly before Thanksgiving last year, my Dad (the Great Bob Millard) and I were having one of our periodic computer lessons where I attempt (almost always in vain) to answer his questions -- questions such as: "Why is my email broken?" and "Where is the Internet?" The video below was my attempt to show him one of the wonders of his home computer: the ability to produce videos. It turned into a spontaneous expression of Thanksgiving for both of us. I sent it last year at this time, and the response was so enthusiastic that I thought I'd share it with you again. Happy Thanksgiving!

Have a wonderful Thanksgiving!

-Andy

How About a Roller Coaster Ride?

2011-11-15T20:01:00.000-08:00

1 - The stock market finished last week strong -- the Dow Jones Industrial Average gained over two percent on Friday. But as has been the case for several months, the real story is daily, stomach-turning volatility based on continuing uncertainty in Europe. The recent habit of stocks to soar or plunge based on a single day's news, only to reverse direction following the next headline, is troubling to say the least. It's starkly obvious that investors know nothing beyond the present moment, so for a while at least, the present moment will dictate the movement of the markets. Clearly, caution continues to be the order of the day.

2 - The latest eurozone country to cause concern is Italy -- and this time we're talking about a major economy, the eighth-largest in the world. World markets reacted favorably to Prime Minister Silvio Berlusconi's resignation and replacement by economist Mario Monti, but that country's troubles are far from over. Read "Uncertainty Over Italy" below for a thumbnail description of the situation and its potential ramifications.

3 - Reservations for our upcoming Client Dinner and a Movie event are coming in fast. We already have about 35 RSVPs, and we're looking for more. You know that we're going to watch It's a Wonderful Life, but here's the twist: we're going to see the colorized version. Like many people, I generally enjoy seeing vintage movies in their original black and white, but I really think you'll enjoy the high-def colorized version. The colors are vivid and natural, and with a film as familiar as this one, the addition of color allows you to experience it in a whole new way. Come with an open mind, and prepare to be amazed. Click here to RSVP if you haven't already done so.

4 - Check out the video below; the topic is change, and it will leave your head spinning.

Have a glorious week!

-Andy

Madoff's other Victims

2011-11-08T21:24:00.000-08:00

1 - Last Thursday morning, I attended a breakfast briefing in Atlanta with Tony Crescenzi Tony Crescenzi, executive vice president of PIMCO and author of the newly-released book Beyond the Keynesian Endpoint Beyond the Keynesian Endpoint. He discussed the European Union economic agreement that had been reached the day before. In the deal, Europe agreed to guarantee the debt issued by European banks, sort of like the FDIC does in our country. But while he praised the spirit and depth of the agreement, he pointed out that it is as yet disturbingly short on details. Crescenzi went on to describe the three major areas of concern for investors: (1) Europe, (2) the possibility of a renewed recession, and (3) the US deficit negotiations. Thursday's agreement went a long way toward alleviating the first worry, and the rising stock market and other indicators have somewhat reduced the second -- although both continue to be real threats. The third is a wild card, with the deadline for an agreement falling on November 23 -- the day before Thanksgiving.

2 - Last night's edition of the CBS news broadcast 60 Minutes opened with an extensive story about Bernard Madoff's wife and remaining son Andrew (the other son, Mark, hanged himself a year after his father's crimes were discovered). If you believe them (which I did, for what it's worth), the biggest Ponzi schemer in history deceived them just as completely as he did everyone else. The interviews were haunting, difficult to watch -- one might even say devastating -- and Sharon and I sat in stunned silence for several minutes afterward. Not only did Madoff ruin his own life and those of his many clients, he also caused one son to commit suicide and shattered the existence of his formerly loyal wife and remaining son. While many viewers understandably will have little sympathy for them, considering their many years of wealth and luxury at the expense of innocent investors, I couldn't help but feel the pain of such an unthinkable betrayal. And the saddest part is this: Madoff left hundreds -- perhaps thousands -- of other, equally shattered victims in the wake of his crimes.

3 - Here's why some people are so pessimistic about our national policymakers' ability to come together on a budget-cutting solution. USA Today reports in a recent article that members of the Congressional deficit reduction committee can't even agree on a proposal to replace the $1 bill with a $1 coin. The switch, which has been considered for years and would save taxpayers $5.6 billion, is the subject of competing lobbying efforts from mining and vending companies (on the side of the coins) and paper and ink producers (in favor of the bills). This issue may be the proverbial canary in the coal mine: if members can't agree on it, how will they come together on the really big ones?

4 - If you love kids, come to downtown Tryon this afternoon at 4:00. There will be hundreds of costumed children (and their parents) collecting goodies from local businesses. If you call Millard & Company after 4:00, don't be surprised if you are asked to leave a message -- we'll probably be with the kids!

Check out our website, www.low-stress-investing.com, for the video on Madoff's other Victims that will leave your head spinning. Have an outstanding week!

-Andy

A Perspective on Global Risk Factors

2011-10-25T20:59:00.000-07:00

1 - Another slight gain in the stock market last week has done little to improve the general feeling of unease regarding both the global economy and the financial markets. There are so many unsettling factors at work that it's difficult to be optimistic, at least for the near term. But it's important to remember that it is during just such times that the stock market historically has had some of its most impressive rallies.

2 - To get a perspective on one of those global risk factors -- the situation in Europe -- I invite you to view the brief video by visiting Millard & Company Home Page (if you can get past the sight of my currently stitched-up face). Below is this week's economic news, is an article describing some of the concerns surrounding the domestic stock market:

Has Wall Street Learned From 2008?

Some market bears think very little has changed. They could be right.

Memories of 2008 are still fresh: The credit crisis; the collapse of Lehman Brothers and Washington Mutual; the federal takeover of Fannie and Freddie; the market downturn. There's little doubt Wall Street would like to erase it all from its conscience, and maybe it has.

Part of the anger of the Occupy Wall Street movement comes from the perception that nothing has changed. While the Dodd-Frank Act (designed to make the financial system more accountable and transparent) is now taking effect, the Volcker Rule (intended to stop banks from trading for their own accounts) may be watered down or put off. Beyond that, the U.S. economic recovery from the Great Recession has sputtered and made people question the recent bullish sentiment.

Stocks have rebounded strongly since 2009, but there are still many factors to worry about; this may lead to a little contrarian thinking.

This bull market may be a diversion from a longer term bear market. For most of 2011, the S&P 500 has been above 1,200 (a great rebound from the March 2009 low of 676). What was behind that? The short answer: a weak dollar. We haven't exactly had a boom economy in that timeframe.1,2

Some analysts look at Wall Street right now and see a rerun of the 1970s, when you had momentous rallies masking a bear market that went from 1967-82. In addition, researchers at the Federal Reserve Bank of San Francisco are concerned about the possibility of a generational sell off; a potential market "headwind" for 10 or 20 years stemming from greying Baby Boomers getting out of stocks as they get closer to retirement, countered only partly by overseas investment.3,4

What has changed on Wall Street since 2008? Perhaps not much. The general perception that the CEOs of the big investment banks and mortgage companies whose thoughtlessness contributed to the Great Recession met with no real consequence seems to be taking hold, as evidenced by the Occupy Wall Street movement.

By the way, remember the furor directed at risky derivatives trading? In September 2011, the Comptroller of the Currency had recorded an 11% year-over-year increase in derivatives investment in the banking industry. Banks now hold almost $250 trillion of the contracts.5

A truly severe punishment of Wall Street would come at a dear price for Washington. Some of the biggest names from Wall Street (and the real estate sector) have also been major lobbyists and campaign contributors. According to the nonpartisan Center for Responsive Politics, the National Association of Realtors has contributed more than $40 million to federal-level political campaigns since 1989; Goldman Sachs has contributed almost $36 million since then, and Citigroup nearly $29 million. The financial, insurance and real estate industries have collectively spent over $4.6 billion in lobbying efforts since 1998.6,7

What is happening with the recovery? Not much. Whileunemployment is above 9%, underemployment is the real story - in September, 16.5% of Americans worked less than 40 hours a week. No wonder homes sit on the market and consumer spending increases mostly in response to rising food and energy prices. Wages even retreated 0.2% in September and incomes fell 0.1% - the first monthly decrease in income since October 2009. Assorted 2012 forecasts see slow or slowing growth in various European and Asian nations.8,9

Is there a bright side for Wall Street? Actually, there could be. The European Union is making decisive moves to address its debt crisis. Indicators still show that our economy is growing, not contracting; September was the best month for U.S. retail sales since March. Many analysts think that the Dodd-Frank regulations will discernibly impact the Wall Street mindset. Lastly, the strength and duration of seemingly every major bull market has been questioned by the bears; history might record that a secular bull market began in 2009, after all.10

Only time will tell. Over the years, the stock market has faced some great challenges - and risen to meet them again and again. This time around, the hope is that Wall Street's behavior (and behavioral assumptions) won't sabotage the rally.

3 - Please note in the "Upcoming Events" that we have two new events on the schedule. The first is a special client dinner-and-a- movie night scheduled for Thursday, December 1, when we will watch the great holiday classic It's a Wonderful Life. (You can sign up for this celebration by clicking here.) The second is the rescheduled panel discussion on New Realities: The Global Economy, which will take place in mid-January.

4 - One week from today is Tryon's annual Halloween Stroll beginning at 4:00pm. Most of the downtown businesses close early in order to host hundreds of costumed children and their parents during the annual trick-or-treat ritual. I am privileged to again emcee the costume contest, which is always a hoot (6:00 in the Tryon Movie Theater). If you'd like to have some fun and help Juliet and me distribute candy at any time between 4:00 and 6:00, feel free to stop by the Depot. (We're racking our brains to come up with semi-healthy treats to give away; if you have any suggestions, let us know soon!)

Enjoy this beautiful fall week!

-Andy

A Way To Re-Set Your Perspective

2011-10-18T19:27:00.000-07:00

1 - The stock market (or at least the Dow and NASDAQ) recovered enough last week to put it back in positive territory for the year. We have some tricky ground to cover between now and year-end, so we shouldn't start counting chickens just yet.

2 - Speaking of the stock market, you may notice that the 10-year total return average of the S&P 500 is only 1.23%. That's what pundits are talking about when they bemoan the "lost decade." Ten years is a long time to go with measly returns. That is why we're always seeking sources of investment returns not tied to stocks. In keeping with that quest, we are adding another asset class: Market Neutral Strategies. Although the name may be unfamiliar to you, it is a strategy I have employed successfully for over a decade. I was under the impression that it had become unavailable, but it turns out we can still access it, so it will be showing up in client portfolios over the next few reporting cycles.

3 - While there are quite a few economists who believe we may be headed for a second recession, the data doesn't completely support that assertion. Read the article below for a few bits of good news.

Double-Dip Recession? Don't Be Too Sure.

Key indicators point to an economy (slowly) on the mend.

This year, assorted economists and journalists have contended that the U.S. is on the edge of a new recession. Yet recent indicators hint that the economy is doing a bit better than some analysts think.

U.S. retail sales were up 1.1% in September. This is the kind of monthly number that you might expect during a typical recession recovery, and it surpassed the +0.7% consensus forecast of economists polled by Bloomberg News. Additionally, the Commerce Department revised August retail spending (formerly flat) to +0.3%. The year-over-year numbers in the September report really impress: we see annual gains of 7.9% for overall retail sales, 10.1% for online retailers, 6.9% for the restaurant and nightlife component, 7.6% for clothing shops and 6.5% for home and garden stores.^1,2,3

As Credit Suisse economist Jonathan Basile told CNBC.com, "The fear of recession recedes when you see a retail sales report like this." Basile said he was revising Credit Suisse's 3Q 2011 GDP forecast for the U.S. north from +2.5% to +2.9%.⁴

GDP did improve in the second quarter. Real GDP was +0.4% in the first quarter of 2011, but the third and final real GDP estimate for the second quarter from the Bureau of Economic Analysis was +1.3%.⁵

"As of today, the recovery is still underway," Berkshire Hathaway CEO Warren Buffett commented at an October 4 Fortune Magazine conference. "Our railroad carried 200,000 carloads last week," he said, referring to the Burlington Northern Santa Fe company. "That's the highest total in three years. And that's stuff moving around the country, supplying merchants and doing all kinds of things."⁶

Other signs of growth & stability can be seen. Here in October 2011, many corporations appear to be in better shape: U.S. non-financial firms have $15 trillion of potentially liquid cash or investments on hand compared to $13.7 trillion a year ago. American residential investment spending is up by $9 billion since a low-water mark last spring; existing home sales rose 7.7% in August and the backlog of homes for sale fell to an 8.5-month supply from the previous 9.5-month inventory. The Institute for Supply Management's twin purchasing manager indexes still show ongoing sector expansion; the service sector has grown for 22 months.^7,8,9

The continued vitality in consumer spending and other encouraging factors points to a recovery. It may seem unimpressive or frustrating, but it doesn't indicate a recession.

Have a wondrous week!

~ Andy

My wife Sharon and I recently visited Yosemite, Kings Canyon and Sequoia National Parks in California where we took these photos. Such timeless majesty tends to place the moment's financial news in its proper perspective.

One of the many breathtaking vistas in Yosemite Valley.

A Giant Sequoia, 30 feet wide, as tall as a 14-story building
and over 3,000 years old.

A sliver of the 360-degree view from Moro Rock.

Fond Farewells

2011-10-11T20:44:00.000-07:00

1 - It was with a mixture of pride and excitement tinged with sadness that we said good-bye last week to our able and fun event coordinator -- and dear friend -- Libbie Johnson. In case you haven't heard or read it in the paper, Libbie was named Executive Director of Polk County's Economic and Tourism Development Department at last week's Polk County Commissioners' meeting. Libbie is definitely the person for that job. I knew when I offered her our position back in May that we might lose her to bigger and better things, and is was definitely worth it to have her with us for a while. Libbie has committed to helping see us through the rest of this year's events, and we will be following her new role with supportive attention.

2 - Steve Jobs died last week. What an amazing mind he was. He was one of those rare creative geniuses who was able to marry art, functionality, and good business. As chairman and CEO of a company that made just a few products, all of which worked seamlessly together, he demonstrated how focusing on doing one thing extremely well can lead to great things, both for the creator and for the user. And he was an example of the great American comeback story: after being kicked out of the company he co-founded, he was invited back 16 years later. Applying the wisdom of age and experience -- and defying plenty of naysayers -- he turned Apple into the powerhouse it is today. He was a very special man, and he will be sorely missed.

3 -Last week, iIn keeping with its recent roller-coaster pattern, the stock market again reversed its pattern of the prior week, this time gaining a couple percentage points. The market is always unpredictable, and we won't be surprised if the topsy-turvy disorder continues for some time to come.

Enjoy your week!

-Andy

Stepping into the New Normal

2011-10-05T19:26:00.000-07:00

1 - The third quarter of 2011 has mercifully come to a close. The U.S. stock market (as measured by the Russell 3000) fell more than 15% during the months of July through September. Other ownership asset classes performed poorly as well, while bonds came close to breaking even--and in some cases even managed a small gain. As is usually the case, things are not quite as bad as they may seem, despite what you may hear on TV. We are preparing quarterly client reports and will be sending them out later this week.

2 - One of the interesting speakers at the recent FPA Charlotte Symposium was Rod Greenshields of Russell Investments. His talk, entitled "Investors Behaving Badly," explored the reasons that cause smart investors to make not-so-smart decisions. My report on the session is below:

Investors Behaving Badly

An executive summary of Rod Greenshields' talk at the FPA Charlotte Symposium

At the Financial Planning Association of Charlotte's annual two-day symposium last week, Rod Greenshields of Russell Investments gave a timely presentation entitled "Investors Behaving Badly." Here are some of the highlights from the notes I took during the talk:

Investors consistently underperform the markets. The problem is in their decision making.

Human beings are wired to detect patterns even when they don't exist. We are psychologically wired for a world of limited and poor information. Example: a simple coin flip. If I flip a coin five times and get 5 heads in a row, what do I expect next? Of course I expect tails. But in reality, the chance of tails is still only 50/50. I want to make a pattern where there isn't one.
Another example is the lottery, which Greenshields calls "a tax on the mathematically challenged." The odds of winning the PowerBall are 1 in 80 million. Although you're much less likely to win than you are to die from flesh eating bacteria, a dog bite, or a lightning strike, people still keep playing, expecting their chances to improve with each ticket purchased.
Over short periods of time, great strategies can deliver losing results; that doesn't mean that we should abandon the strategy. Even rats and pigeons understand this concept better than humans do. Studies have been performed using a simple system whereby the subject can push a red button or a green button. The red button results in a reward 80% of the time, the green button only 20% of the time. The rats and pigeons learn quickly to simply select the red button every time, thereby "winning" 80% of the time. The humans, on the other hand, try to guess which button will give the next reward, reducing their success rate to around 64%.
Consider the problem of soccer goalies and penalty kicks. Goalies almost always dive for the ball because they don't want to look stupid standing still, but they stop the ball much more often when they do stay still.
Despite what many people think, a long-term investment study shows that it doesn't make a tremendous amount of difference whether you invest at the bottom of the market, six months before the bottom, or six months after. Your long-term rate of return is about the same.

Greenshields gave the advisors in attendance the following suggestions as to how to improve investor behavior:

The first thing to do, according to Greenshields, is to clarify some definitions. Define what "success" means. In reality, it means achieving your goals. There are plenty of books purporting to tell investors how to "beat the market." Likewise, CNBC and other news outlets create a lot of drama with which to fill their air time. But you need to resist letting these strangers define success for you. In other words, successful investing is not the same as beating the market.
Here's another important term to define: Risk. While we may be tempted to define risk as the short-term loss of principal, a bigger-picture definition is more meaningful and realistic: running out of money before running out of life. Surveys indicate that 61% of baby boomers are more afraid of running out of money than of dying. That brings the concept of risk down to a very concrete and personal level.
The speaker recommended setting up systems that make it easier to make good decisions, and he used the concept of a diversified portfolio as an example. Greenshields recommends a portfolio based on a rigorously diversified investment approach. As asset classes and percentage allocations have evolved over time, the concept and practice of diversification has changed. (As you might suspect, I very much agreed with this part of the presentation.)
An investor should look at their advisor as a personal trainer for his or her financial life. He emphasized the familiar (and true) precept that meaningful financial planning involves making sure the client is advancing toward his/her goals.

As he closed, he made the important point that staying the course is not the same as doing nothing. And he illustrated it with a quote by Edward Gibbon: "The winds and waves are always on the side of the ablest navigators."

3 - As mentioned last week, Juliet and Bonnie spent two days last week in a TD Ameritrade Operations Workshop in Washington, DC. They learned a lot, and Juliet reports that the trip was very much worthwhile. They even found time to visit some national landmarks, including the Washington Monument. On the day they were there, the National Park Service affixed a contraption to the top of the obelisk by which some intrepid inspectors rappelled down the four sides of the structure, inspecting the monument for damage caused by the recent earthquake.

4 - We plan to begin implementing our new portfolio models this month. If you're a client who didn't attend one of our portfolio resetting workshops and haven't taken the time to view the DVD of the presentation, this would be a good time to do so. We want clients to be fully informed and to have an opportunity to discuss the changes with us.

Enjoy this beautiful fall week!

-Andy

Risks in Chasing Yields

Three reasons to be wary of chasing dividend yield for income

Rod Greenshields of Russell Investments discusses why "not invading principal" involves hidden risks that many investors don't recognize.

Notes From a Noted Economist

2011-09-26T10:00:00.000-07:00

1 - It seems that late September/early October (along with late January/early February) is conference season. In addition to the Financial Planning Association (FPA) National Convention less than two weeks ago, last Wednesday and Thursday saw the annual Symposium of FPA's Charlotte chapter. Both Juliet and I attended, and as always, it was superb. We heard from several top-notch speakers, each of whom had important and timely information to share.

2 - If you scroll down a bit, you can read a synopsis of the presentation by Ken Goldstein, one of the speakers from the Charlotte symposium. If you have a minute, read his comments. The summary comes directly from my notes, and I think you'll find his comments to be interesting and insightful.

3 - As if we had not gotten smart enough last week, Juliet is boarding a plane this morning bound for Washington, DC, where she will participate in a two-day Operations Workshop with TD Ameritrade. In Washington, she will meet up and spend time with Bonnie Armstrong, our special projects guru. Juliet will be back in the office on Thursday; in the meantime, Libbie and I will hold the fort.

4 - On Friday, we mailed out Portfolio Resetting DVDs to clients who were unable to attend the workshops in person. Please let us know if you have any trouble viewing the video or have questions regarding the content.

Of course, last week saw the stock market lose everything it had gained the previous week -- and more. This see-saw may continue for a while yet. We continue to steer the best course we know how.

Have a wonderful week!

-Andy

Ken Goldstein Holds Forth

At the Financial Planning Association of Charlotte's annual two-day symposium last week, Ken Goldstein (above), an economist with The Conference Board, gave an excellent presentation entitled "Stuck in the Slow Lane." Here are some of the highlights from the notes I took during the talk:

"Some folks are wasting time talking about a fiscal crisis, but this country doesn't have a fiscal crisis. We have a jobs crisis." And the single biggest problem causing the jobs crisis, according to Goldstein, is the fact that there is no demand for goods and services. Businesses aren't going to hire more until consumers spend more. Consumers aren't going to spend more until businesses hire more, so it becomes a vicious cycle.
"Right now, with an economy that faces a lack of demand, we're talking about reducing the deficit. We're talking about the wrong thing."
"What we are seeing is not simply a cyclical crisis, it is a fundamental structural shift in the global economy. The world you lived in prior to 2006 is not coming back. The economy will come back, but the world has changed. The rules--some of them--have changed."

By way of example, Goldstein described three changes that have occurred in the U.S economy:

1 - Increasing savings by US consumers. This means that dollars which used to be spent in the economy are now sitting unspent in the bank. This includes people who have started aggressively paying down debt, as a reduction in debt is equivalent to an increase in savings.

2 - The rules of finance have changed. It is much harder to obtain a loan. As a share of the overall economy, lending is shrinking.

3 - Housing has undergone a fundamental shift. In Goldstein's words, "Real estate just got a long term haircut." This is because the population is barely growing, so we don't need as many houses. Why is this important? Here's why: You have heard that 2 out of every 3 jobs come from small businesses. Well, more half of those jobs are related to real estate. When real estate slowed to a crawl, many of those jobs dried up.

And it doesn't look like the situation is about to change anytime soon. The economic advantages of being a homeowner instead of a renter have changed. Also, in Goldstein's words, "No longer can you get a mortgage with no money down, nor should you. So the sub-prime market is gone, and it's not coming back."

(A couple of real estate sidelights from the talk: [1] The average consumer cares more about the housing market than the financial market. [2] In Canada, homeowners can't deduct mortgage interest the way we can here, yet their housing market is stronger than ours.)

Other bullet points to consider:

"The average raise this year, for those who get one, might be 1% - 2%."
"For everything you buy, 18.5% of that cost goes to pay for somebody's health care."
"The Fed is about to announce Operation Twist. Don't pay any attention to it. It won't hurt and it won't help."
"If we go into a second recession, it will be short and shallow, but we won't come out of it with a bang."
"There is no pricing power, nor will there be for the foreseeable future." (It is virtually impossible for businesses to increase prices on their goods and services, because consumers can't afford higher prices. That translates to low inflation.)"
"No matter who gets elected next November, the economy is not going to grow at a rate greater than 2% to 2.5%, with an inflation rate of about the same, because there is no ability to raise prices."
"Emerging economies are growing at 2 - 3 time the rate of developed economies. At this rate, the global share of the economy will go from 60/40 in favor of developed economies to the reverse within ten years or so."
"Global businesses are trying to convince emerging market consumers to trust their brands. Those companies that succeed in that quest will still be in business when the good times return."
"If Europe goes to heck, all their banks are really going to take a hit. Then our banks are going to take a big hit; that's called contagion."
"The problem with the Eurozone is that since the beginning of the euro, one size fits all. That doesn't work."
"So," Goldstein concluded, "the economic environment is lousy." The question then becomes: What is the economy going to look like 10 years from now?

The good news is that there's a brighter future ahead. It's going to come from taking all the money that companies and investors have been hoarding and investing it into the "next great thing." Goldstein didn't know exactly what that next great thing will be, but he believes that it could be in an area such as renewable or other domestic energies.

Finally, the most interesting moment during the Q & A period came when an advisor asked: To what extent should the government be involved in the economy? Goldstein's answer: "We need a cop on the corner. How big a cop is open to debate, but we need that cop."

2011 Financial Planning Association (FPA) National Conference

2011-09-20T10:36:00.000-07:00

1 - As I write this, I'm flying home from the Financial Planning Association's annual national convention in San Diego, California. As is always the case with such events, I learned a great deal from the sessions and even more from my colleagues and other attendees. Much of what Millard & Company is doing -- from our frequent client communication to our recent portfolio modifications -- was validated and echoed by some of the leading thinkers and practitioners in the industry. It was a gratifying experience.

2 - Among many other worthwhile sessions, I participated in a half-day pre-conference workshop entitled "Has Diversification Failed Us?", given by Dr. Christopher Geczy of The Wharton Business School. For a brief report on this interesting and enlightening session:

Has Diversification Failed Us?

A summary of a pre-conference workshop at FPA Experience 2011 in San Diego, CA on September 15, 2011

As mentioned above, I was privileged to spend Thursday morning in a very interesting session with Dr. Chris Geczy of The University of Pennsylvania's Wharton School of Business. His office is next door to the famed economist Jeremy Siegel, author of Stocks for the Long Run.

Chris is no slouch himself: he serves as Academic Director of the Wharton Wealth Management Initiative and co-created the first full course on hedge funds at Wharton. Before earning his Ph.D. at The University of Chicago (which is, along with Wharton, one of the top two or three business schools in the nation), he worked for the Board of Governors of the Federal Reserve System in its Division of Research and Statistics. He also works with his own private investment clients. I think it's safe to say that this guy is no dummy.

The provocative title of Chris' session was "Has Diversification Failed Us?" We explored the historical value of diversification; the fact that most asset classes declined during the recession of 2008; which asset classes provide the most (and least) diversification benefits; and potential sources of diversification as we move forward in the 21st Century.

The short, emphatic answer to the question posed in the title is no, diversification has not failed us. In fact, it is more important than ever. But in a crisis, the effect of diversification is diminished. In 2008 there was no refuge from falling asset prices except for cash. So the question becomes: Where can we look for added sources of diversification? Where do we seek protection during tough times?

Dr. Geczy's session focused largely on what is known as the "Endowment Model," also known as "Yale Model" after that university's famed portfolio. In case you are unfamiliar with Yale's endowment fund (reported by the
National Association of College and University Business Officers
to be worth more than $16 billion), for many years it has enjoyed enviable returns with relatively low volatility.

Like our Millard & Company portfolio models, Yale's endowment maintains a relatively low allocation to stocks. And, like our models, Yale devotes a healthy allocation to alternative asset classes. But unlike us, the folks at Yale have access to some very illiquid asset classes such as timberland.

Fortunately for people like us and our clients, there are more and more ways to access these previously-inaccessible asset classes through ETFs and some open-end mutual funds. Of course, as more and more of these vehicles become available, it becomes vital for investment fiduciaries like us to try to identify those options that are appropriate, beneficial, liquid, stable and inexpensive. Just because we can do something doesn't mean that we should do it.

In the end, Dr. Geczy did not grace us with a simple and easy recipe for attaining the perfectly diversified portfolio. He didn't even tell us which vehicles to invest in to achieve that ideal portfolio. As always, such decisions must be dealt with on our own. But after the session, I was able to spend a few minutes alone with Chris and describe for him what we have been doing with our models. He seemed very impressed to learn that we have been allocating a portion of client assets to commodities since way back in 1998, and he indicated that our current changes were right on track. It was very reassuring.

3 - In case you're wondering, none of the great minds that I heard from in San Diego -- none -- were foolish enough to try to predict where the stock market is headed in the next few months or years. One presenter made a great point when he said, "I don't want to be one of those guys who says, 'I don't know where the market is going, but....' Nobody knows the future, and I'm not going pretend I can. I just want to get my clients ready for anything." Sound familiar?

Speaking of the she stock market, it had a good uptick last week, but that doesn't mean we can expect more of the same indefinitely. I'm reminded of a memorable Han Solo line from Star Wars: "Great shot, kid! Don't get cocky."

Have a fabulous week!

-Andy

A Special Event for Special Guests

2011-09-14T06:25:00.000-07:00

Items for your attention this week:

1 - Last Friday's Client Appreciation movie night was a rousing success. There were 56 clients and guests in attendance. The dinner was outstanding (although some folks had to wait for their pizzas, everyone took the delay with gracious good humor), and we received many comments that seeing the movie, Casablanca, in high definition on a big screen brought a whole new enjoyment to the experience. But I would have to say that the greatest compliments were reserved for Juliet's homemade Tiramisu. And for me, the best aspect of the event was certainly the company. It was a grand evening.

2 - The DVD of our recent Portfolio Resetting session should be available later this week. Please contact Juliet if you would like to receive a copy.

3 - The second panel discussion in our New Realities series, previously scheduled for September 20, has been postponed. Two of our hoped-for panelists have scheduling conflicts with the original date, so we are working on setting a date which will work for everybody. You will receive an email invitation as soon as plans are complete.

The stock market continues to be jumpy, driven largely by events in Europe. We are following events closely and mostly laying low for the time being. Times like these are why we diversify the way we do.

Enjoy the week!

-Andy

Our New World

2011-09-06T21:11:00.000-07:00

With the combination of Labor Day and the impending tenth anniversary of 9/11, one's thoughts inevitably turn to the changes that have taken place in our world in the last ten years. Both the concept of labor as it applies to the American worker and the idea of national security are a world away from our notions of a decade ago.

Some would argue that the changes to our world are all bad. I prefer to leave that judgment for tomorrow's historians, who will have the benefit of hindsight which we do not currently enjoy. Instead, we would do well just to recognize the new realities as they exist, and deal with them as best we can. That is the goal of all our recent work and events here at Millard & Company, and we hope you are deriving some benefit from them.

Items for your attention this week:

1 - Just a few days remain until this Friday's Client Appreciation Movie Night. We already have a good number of clients planning to attend, but we would love to have more, so please plan to spend some of your Friday evening with us. You may bring up to three guests. Each person will enjoy a personal made-to-order pizza from a wood-fired oven (which will be set up next to the Depot deck), fresh local salad, and Italian wine from our friends at La Bouteille. Juliet is even making Tiramisu for dessert. We will view the timeless Casablanca on the big screen in digitally-restored Blu-Ray high definition, complete with surround sound. It promises to be a fun night, so please make plans to join us here by sending your RSVP to Libbie Johnson at ljohnson@low-stress-investing.com, to let us know to expect you!

2 - Last Tuesday's portfolio resetting work sessions were very well attended and received. We had 67 total clients in attendance between the three sessions. We will begin to implement the new portfolio models over the coming weeks and months. For those clients who were unable to attend, we are preparing a DVD of the presentation for you to view at home; the video should be ready by the end of next week.

3 - By way of introducing the client work sessions, we showed the 10-minute video slide show below. Feel free to view it and share it with others if you'd like. Unlike this introduction, the main presentation that will be included on the forthcoming DVD is intended for clients only.

Fall has unofficially begun; have a great week!

-Andy

After the Storms - in Financial & Nature

2011-08-29T20:20:00.000-07:00

I hope you and your loved ones avoided any of the nastiness that was Hurricane Irene. Someone once said, "Nature bats last." Ain't it the truth?

Items for your attention this week:

1 - Our official videographer Erik Olsen has put together an excellent 3-minute video of highlights from the August 19 reception and challenging presentation of Dr. Peter Brews. Click on the image below to view it. Also, for those who have requested the slides from Pete's presentation, you may download them by clicking here.

2 - Clients should remember the special portfolio resetting work session tomorrow (Tuesday, August 30). This important 1-hour workshop will introduce our newly-reconfigured model portfolios, including some asset classes and funds that we haven't used before. I strongly encourage all clients who can to attend one of the three sessions: 10:00am, 2:00pm, or 5:30pm. The same information will be covered at all three sessions, so pick a time that is convenient for you. No need to register, just show up at your preferred time. (For those who cannot attend, we will be preparing a DVD of the presentation for you to view at home.)

3 - After all the stress and strain of this summer, we deserve a little break. We will hold a Client Appreciation Movie Night on Friday, September 9 in the Depot Room. All clients are cordially invited, and you may bring up to three guests. We will enjoy made-to-order pizza from a real wood-fired oven, fresh local salad, plus Italian wine from our friends at La Bouteille and (of course) dessert. The movie, Casablanca, starring Humphrey Bogart and Ingrid Bergman, is one of the all-time classics. We will view it on the big screen in digitally-restored Blu-Ray high definition, complete with surround sound. It promises to be a fun night for all, and it's our way of saying thank you for putting up with us!

Enjoy the week!

-Andy

Adjusting to the New Realities

2011-08-23T19:01:00.000-07:00

The equity markets were down for a fourth straight week as investors grapple with the new realities of the global economy. While our clients have not been completely exempt from the pain, our portfolio models are well-diversified, with a relatively small exposure to stocks. Even our most aggressive models have less than 50% of assets in the stock market. Now is when strategic diversification earns its keep. (Last week's video talks about the recent market volatility, its causes, and what it might mean for you. If you'd like to view it, click here.)

Items for your attention this week:

1 - I have been promising a change in our portfolio models. The research and revamping process is just about complete, and we will be showing the changes to clients at a special workshop next Tuesday, August 30. This important 1-hour workshop will introduce our newly-reconfigured model portfolios, including some asset classes and funds that we haven't used before. I strongly encourage all clients who can to attend one of the three sessions: 10:00am, 2:00pm, or 5:30pm. The same information will be covered at all three sessions, so pick a time that is convenient for you. No need to register, just email Libbie at ljohnson@low-stress-investing.com with your preferred time.

2 - Those who attended the talk by Dr. Peter Brews at the Tryon Fine Arts Center last Friday will tell you that it was a fascinating look at our nation's current fiscal dilemma, the generation-long process that brought us to this point, and the actions we as individuals can take to make it better for future generations. See below for one of the slides from his presentation. (We hope to have a brief video of the the event for next week's update.)

3 - We have totally re-done our website, www.low-stress-investing.com, and we're quite pleased with the result. If you haven't done so yet, please visit it and give us your feedback and suggestions.

Enjoy the week!

-Andy

Let's Make a Deal

2011-08-01T20:15:00.000-07:00

1 - Well, that wasn't so hard. (Do you note just a touch of sarcasm here?) Late last night, leaders of both parties in Congress finally reached a compromise agreement to raise the federal debt ceiling and cut spending over the next ten years. However, the proverbial fat lady has yet to sing: the legislation still must pass both houses by midnight tomorrow night in order to meet the deadline, and it promises to be a heavy lift in the House of Representatives. So, we continue to wait....

3 - Please make your plans now to attend our August 9 event (that's next Tuesday) entitled "New Realities: Real Estate." Interest is very high in this timely topic. We have three distinguished panelists, each of whom can be considered a real estate expert. One one (Cathy Toomey, president of the Polk County Board of Realtors) is focused on Polk County, one (Madelon Wallace, partner with Walker Wallace and Emerson) the greater foothills region, and the third (Scott Hamilton, CEO of Advantage West) all of Western North Carolina. If you have any interest in discussing the new facts of life as they apply to real estate, I urge you to attend. Libbie will be contacting clients soon to take reservations.

3- Today is the one-year anniversary of Millard & Company as a separate corporate entity. My sincere thanks to Juliet, Libbie, Tabatha, Sharon, Bonnie, and Mike -- as well as many, many others. I am especially grateful to our wonderful clients, who have made this anniversary possible. Success is not achieved in a vacuum, nor is there any such thing as a "self-made man." It is with a sense of joy and thankfulness that I come in to our beautiful office every day, and we look forward to many more anniversaries to come.

Have a cool week!

~Andy

A Quiet Day on Wall Street

2011-07-27T05:23:00.000-07:00

1 - We just thought last week was crunch time on the debt ceiling issue. Now it really, really is. If you're like me, you've been following this story hour by hour: time and again, the politicians appear to be in the verge of an agreement, and every time, someone gets mad, takes their toys, and goes home. I wonder if everyone in Washington really grasps the magnitude of the issue they are dealing with. At this point, there's little we can do but watch -- and will a deal to get done.

2 - The list of speakers is set for our August 9 event entitled "New Realities: Real Estate." We have three distinguished panelists, each of whom can be considered a real estate expert. One one (Cathy Toomey, president of the Polk County Board of Realtors) is focused on Polk County, one (Madelon Wallace, partner with Walker Wallace and Emerson) the greater foothills region, and the third (Scott Hamilton, CEO of Advantage West) all of Western North Carolina. If you have any interest in discussing the new facts of life as they apply to real estate, I urge you to attend. Libbie will be contacting clients soon to take reservations.

3 - Sharon and I just visited our son Drew in New York City over the weekend, and I took a side trip to Wall Street. Everything was closed, of course, but my purpose was just to take a few photos to show you what can be found in the few blocks surrounding the New York Stock Exchange. I include just three below: (1) the giant brass bull -- a perennially popular photo stop for foreign tourists; (2) Federal Hall, just across the street from the exchange, where George Washington took the oath of office as the first President of the United States in 1789, and (3) one of the ubiquitous vendors that can be found all over Manhattan. How appropriate that, in the shadow of the very symbol of capitalism, you can find entrepreneurs still practicing the simplest form of free enterprise.

Have a great week!

-Andy

Unpleasant but Important

2011-07-19T20:17:00.000-07:00

1 - This debt ceiling business NEEDS to be resolved -- and soon. While observers have watched with sanguine hopes of an agreement, time continues to slip by. This week's article (following the week's economic news) discusses the ramifications of the situation and what might happen if no agreement is reached by August 2.

2 - Social Security is like the weather: everybody complains about it, but nobody does anything to fix it. Scroll down to read a bonus article that explores the various painful options for dealing with this vital but thorny issue.

3 - Here's a lesson for anyone without a clear-cut estate plan: Even as 94-year-old Zsa Zsa Gabor lies on her deathbed, her ninth (and presumably last) husband is gearing up for a legal battle against heirs from previous marriages. While most of us have had a far more limited array of spouses, it still behooves us to have our wills, trusts, etc. in order.

Have a great week!

-Andy

Birth of a Nation

2011-07-12T19:04:00.000-07:00

1 - Do you know how many countries there are in the world? Would you care to take a guess? I'll wait....
The official answer--as of today--is 193. That is the number of countries recognized by the United Nations following the birth of South Sudan over the weekend. We don't often think about it, but global demographics are in a constant state of change, and this is a perfect example. After a 40-year civil war culminating in a referendum last January, the new nation is now officially separated from the north, but still faces problems posed by poverty, international tension and the challenge of creating political stability. To view a brief video of the celebrations in the newest member of the family of nations, click on the video image below.

2 - My ongoing reexamination of our investment approach kicks into high gear this week. I have collected reams of material and talked with a variety of sources, and I plan to spend much of the week reading, re-reading, sitting in on conference calls, and evaluating our existing asset classes and portfolio models. The project is coming along well, and I am confident that it will prove to be well worth the time and effort.

3 - All clients should have received quarterly reports from Millard & Company by now. If you haven't, please let me know!

Have a wonderful week!

-Andy

What's All that Noise?

2011-07-05T13:10:00.000-07:00

1 - The politicians are still arguing over the conditions for raising the federal debt limit, and the August 2 deadline draws ever nearer. I'm sure you have noticed how everyone seems to be blaming everyone else, trying to pin our troubles on one political party or the other. The simple truth is that the U.S. is in a debt mess. That's everybody's fault. Both parties and pretty much all the rest of us have played a part in getting us here. We need to stop blaming and start fixing. For an interesting status report on the situation, read "The D-Word Haunts Wall Street" following This Week's Economic News.

2 - Libbie recently introduced me to a wonderful website called TED Talks. It contains a plethora of thought-provoking (and in some cases mind-blowing) talks by some of the most interesting people in the world. In keeping with our current project of looking at the changing global landscape and our place within it, I thought you might enjoy (and learn from) a TED Talk by economist Martin Jacques, author of When China Rules the World. If you don't have the 21 minutes to devote to the full talk, here's the executive summary: China is indeed well on its way to becoming the leading economy in the world, but that is a cause not for fear but adaptation. Americans and Europeans need to change the way we look at the world's largest country. The link to the video is contained in the image below.

3 - Client reports should be showing up within the next day or two. (Spoiler alert: it was a roller coaster quarter that, in the end, didn't move most investors very far in either direction.)

Hope your Fourth of July was just what it should have been -- hot and fun. Enjoy your short week!

-Andy

Exploring the "New Normal"

2011-06-27T19:53:00.000-07:00

1 - I mentioned in last week's update that I have begun an extensive process of re-examining our investment approach in light of the changing U.S. and global economy. You may want to glance at the brief video below for my preliminary thoughts on the subject.

2 - Many people make bad decisions regarding their IRAs -- not necessarily in regard to the investments, but rather in regard to the designation of beneficiaries and the structural composition of IRA accounts that have been inherited from someone else. The article following This Week's Economic News points out some of the pitfalls and remedies.

3 - Along with several members of our Tryon Kiwanis Club, Sharon and I went kayaking on the Green River yesterday afternoon. The three-hour expedition was coordinated by Lee Coburn and was guided by Green River Adventures, a wonderful small business located in Saluda. Here is a great local resource (the Green River) that many local people do not even know exists. Regardless of your age (we had several quite mature folks in our group), if you're interested in a fun time surrounded by the beauty of nature, you could do a lot worse than contacting Green River Adventures.

Have a cool week!

-Andy

A Closer Look

2011-06-21T06:52:00.000-07:00

1 - With a fearful national debt looming as well as a presidential election coming up next year, the debate on taxes is bound to become even more heated than it is now. In the midst of all the rhetoric, a little perspective might be in order. You may be surprised to learn that income tax rates are actually near historic lows across all income brackets. Take a look at the article immediately below for details.

2 - Speaking of historic lows, bank CD rates continue to be tiny, while inflation has begun to creep up -- which means that savers may actually be losing ground by keeping money in the bank. It's not quite that simple, of course; read the article following the week's economic news to get a more complete picture.

3 - I have begun an extensive process of re-examining our investment process and strategy. This is something we do periodically, but it seems especially appropriate at this point in history. For several years now we have known that the world economy is evolving rapidly -- but evolving into what? Plenty of people much smarter than I are looking into this very question, and I will be consulting with a variety of experts and other sources. As we gain greater visibility into this global process, we may be able to make some adjustments to benefit clients. I'll update you as the process continues.

Have a wonderful week!

-Andy

Simple Pleasures

2011-06-14T18:00:00.000-07:00

1 - The stock market lost ground last week, bringing the losing streak to six weeks; the last time that happened was nearly nine years ago. Before you get too depressed, though, check out the article below entitled "Reasons for Optimism." I have been reviewing many client portfolios, and for the most part, things still look pretty good overall, although it is shaping up to be a losing quarter for most clients.

2 - Our movie event for veterans of World Ward II was successful and fun. What an honor it was to just spend time in the presence of so much living history. Along with the guests of honor, there were quite a few others there to watch the movie and express their gratitude.

3 - The 18th annual Blue Ridge BBQ Festival (last week's update incorrectly said it was the 17th) appears to have been a success. It certainly was a success as far as crowd size and visitor fun. As for the financial question, it's now a matter of adding up the debits and credits over the next few weeks, but I'm cautiously optimistic.

They say a change is as good as a rest, and that seems to be true in my case. These days, my job at the festival involves managing traffic flow. Although it is physically and mentally demanding (think two 18-hour days followed by an exhausting clean-up), it exercises completely different parts of the brain and body than does my day job. So today I'm a little tired but strangely refreshed. Go figure.

Have a cool week!

-Andy

A good time was had by all:

Libbie took this photo during intermission on Monday. They are veterans all, and all but three of them served in WWII.

I took this photo from behind the stage at the Blue Ridge BBQ Festival on Saturday at 7:51pm.