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MARKET UPDATE
WHY THE MARKET WILL BE
FLAT & WHY THAT’S GOOD
Q2
MARK IWAMOTO, MBA, Chief Investment Officer
2015
IN THIS ISSUE
1
WHY THE MARKET WILL BE FLAT (THIS
YEAR) AND WHY THAT’S GOOD
1
THE NUMBERS
1
APRIEM WEBSITE
2
THE ESSENCE OF ESTATE PLANNING
2
2015 WOW CALENDAR
3
APRIEM CARES
4
AROUND THE OFFICE
There’s a lot going on in the world financial markets this year
but the one constant is that everyone’s favorite stock market
index, the S&P 500, is still grinding higher.
After falling by two-thirds from 2007-2009, the S&P has been on a
tear as indexing has regained its popularity even after investors
rode the index down during the Great Recession. As performance
chasers keep piling into the S&P attracted by the well-known names
in the index, its recent success, and the strong U.S. dollar, we see
the index at somewhat of an inflection point. That does not
necessarily correlate to a bearish stance on the S&P, but it does
mean that many of the other indices that have not kept up with the
S&P in the past six years may well begin to play catch-up. And this
phenomenon would be a healthy overall scenario for stocks in
general. One noteworthy positive scenario we outlined in my last
write-up.
And so far that seems to be happening. Through April 24th of this
year, the S&P has been the laggard while performance of other
indices dwarf its year to date return. While the first 100 days of
2015 does not indicate a trend, longer term trends gather
momentum as discrepancies in returns increase in magnitude.
THE NUMBERS
As of 04/28/2015
R
e
f
INDEX
YTD Return
e
r
S&P 500
+2.71%
e
n
MSCI EAFE
+9.62%
c
BLOOMBERG
e
-2.17%
COMMODITY
s
:
I
n
U.S. TREASURY YIELDS
t
e
5 YEAR
1.30%
r
a
10 YEAR
1.97%
c
t
30 YEAR
2.67%
i
v
e
References: Interactive Data, MSCI Barra, Dow Jones and S&PD
a
t
a
,
M
S
C
I
A broadening out of more stocks participating in gains in the market
in the future makes for a more sustainable and durable advance.
So could the S&P 500 actually stall out or maybe even fall back as
other indices post gains? Absolutely. Many of the large cap market
leaders are now over owned by institutional investors and mutual
funds. While this over allocation has been working, there will come
a time that prudent rebalancing of portfolio risk and portfolio
diversification takes place. And this usually happens when investor
(Continued on Page 3)
APRIEM WEBSITE
REVISITED
BENJAMIN LAU, CFA, Portfolio Manager
Have you been our website recently?
On April 15, 2015 we changed the layout to make it more
interactive and easier to navigate. Beyond that, you can now
read our blogs to get updated with what’s going on with the
markets and around our office. We also added a dedicated
page for Women Of Wisdom (WOW).
www.apriem.com
WEALTH PLANNING
WOMEN OF WISDOM (WOW)
THE ESSENCE OF
ESTATE PLANNING
2015 WOW CALENDAR
WILLIAM PUGH, CFP®, Wealth Manager
We updated our calendar of events to give you more
timely and relevant educational seminars.
Since none of us know the exact day and time we will die,
time is the essence of a good estate plan.
MEGAN PIERPONT, Wealth Manager
May 13
Having a good estate plan requires the self-realization that we
will not live forever. So given this fact, what will happen to all
of our stuff, and who is going to take care of my overall wellbeing if I am not able? As you ponder this thought, either a
sense of angst or peace will follow. If you have angst then you
probably need to do an evaluation of your current estate plan.
May 27
1.
“Just do it!” as the popular shoe company would say.
Creating a well thought out estate plan can be overwhelming
and like most overwhelming tasks in life, it's easy to
procrastinate. The hard truth is that the absence of a plan will
put loved ones in a very burdensome reality. The basic estate
planning documents include a Living Trust, Wills, Power of
Attorney, and Health Care Directives. In the event of death or
incapacity without these documents, the state will step in and
begin a probate proceeding or a conservatorship. These
proceedings are costly, time consuming, and stressful for the
family.
Jul. 10
Jun. 9
Jun. 16
Aug. 13
Aug. 27
Sep. 17
Sep. 24
Oct. 14
2.
Funding the trust as is important as drafting the trust
document itself. A trust is ineffective if your assets (property and
investment accounts) are not titled in the name of the trust. This
is a common mistake made by many so it's important to make
sure all your assets are titled correctly.
3.
Conduct a review of your retirement accounts and life
insurance policies to make sure that your primary and
contingent beneficiaries are named properly. Play out differing
scenarios to make sure that you understand exactly how these
assets will be treated both from a succession plan and a tax
planning perspective. Doing so could save the family from
additional stress and unnecessary taxes.
4.
Death is not the only reason to create a plan. An
unexpected or long term disability can have a bigger impact on
your personal and financial affairs. Prepare for who might raise
your children, who will handle your finances, and who will make
health care decisions if you were to become incompetent or
disabled. You can do this by having a Health Care Directive and
proper Durable Power of Attorneys in place.
5.
In naming your successor trustees, it is important to
make sure that they are trust worthy, capable, and willing to
help. For example, you should place control of your assets in
the hands of a person who is financially healthy themselves and
has an understanding of the roles and responsibilities of a
successor trustee. If you cannot determine a competent
individual successor trustee, it may make sense to name a
corporate trustee to assume the role of trustee after you pass.
6.
Planning ahead will help ensure that your estate tax
exemption amount will be fully utilized to your advantage. Under
the current estate tax law for 2015, each individual can pass on
up to $5.43 million dollars of assets to their heirs, estate tax free.
Amounts in excess of this can be subject to taxation of
approximately 40%.
(Continued on Page 3)
Oct. 23
Nov. 10
Nov. 19
“Spring Cleaning your Finances” over High Tea
Megan Pierpont, Wealth Manager
“Driving Solo”
Susan Alpert, Author
Medicare Overview
Jeffrey Rodriguez, Social Security Administration &
Susan Zajfen, Council of Aging of Orange
Investments 101
Benjamin Lau, CFA®, Portfolio Manager
Economic Update
Mark Iwamoto, Chief Investment Officer/Principal
Alzheimer’s Research Update
Linda Scheck, Director with UCI Mind
Budgeting 201
Rhonda Ducote, Senior Wealth Manager
Estate Planning over Wine & Cheese
Tiffany Chiu, Estate Attorney &
Harmon Kong, CFP®, Principal/Chief Wealth Manager
Investments 101
Benjamin Lau, CFA®, Portfolio Manager
College Planning and Funding
Amy Mendelson, M.A., College Counselor
Overview: Total View/Apriem/Schwab websites
Shawn Covarrubias, Operations Manager
Social Security Overview
Jeffrey Rodriguez, Social Security Administration
Holiday Celebration
Jeff Brooks, Macy’s Corporate Sales Manager
To RSVP, please call our office or email Shawn Covarrubias,
Operations Manager at [email protected].
Here’s an overview of some of our previous WOW events.
January 22, 2015
Economic Update with Benjamin Lau, CFA, Principal/
Portfolio Manager held at Fleming’s Prime Steakhouse in
Newport Beach. He gave you some market updates and our
economic outlook for 2015.
February 12, 2015
Senior Identity Theft & Financial Scams with our guest
speaker Kathleen Weidner, Esq. from the Council on Aging
OC. If you missed this event, read Megan Pierpont’s, Wealth
Manager blog in our website apriem.com.
February 26, 2015
Budgeting 101 with Rhonda Ducote, Principal/Senior Wealth
Manager who taught you how to create a budget and stick to
it.
March 11, 2015
Charitable Planning with our guest speaker Julia Gordon,
Senior Relationship Manager from Schwab Charitable who
taught you how to reach your charitable goals with tax-smart
investing.
Women Of Wisdom focuses on the unique financial needs of women
just like you. We invite you to participate so you can become
more CONFIDENT and expand your knowledge of financial issues
and topics. We are all UNIQUE but share one desire to grow as
women in wisdom. Come let us celebrate, encourage, embrace and
educate you.
APRIEM CARES
SPIRIT OF VOLUNTEERISM
JENNIFER NECIR, Financial Analyst
Here at Apriem Advisors, volunteerism is part of our corporate culture and we encourage and support our employees
to give back to their communities. Here are some of the highlights in the early part of 2015.
April 14, 2015
William Pugh, CFP®, Wealth Manager
received the OneOC 2015 Spirit of
Volunteerism Award for his inspiring
contribution to the Leadership Board for
Seneca-Orange County, a non-profit
organization that focuses on helping children
find permanency. The event was held at the
Grand Ballroom at Anaheim’s Disneyland
Hotel. This is the largest gathering of
nonprofit supporters in Orange County.
Congratulations, Bill! Apriem is proud of you.
BILL WAS NAMED THE 2015 SPIRIT OF
VOLUNTEERISM AWARDEE
March 28, 2015
Rhonda Ducote, Principal & Senior Wealth
Manager and Shawn Covarrubias,
Operations Manager attended the Juvenile
Diabetes Research Foundation Dream
Gala. This night is dedicated to raising funds
to help find a cure for Type 1 Diabetes.
March 28, 2015
Harmon Kong, CFP®, Principal & Chief
Wealth Manager attended the Jessie Rees
Foundation NEGU Gala. This organization is
dedicated to encouraging kids and families
fighting cancer to Never Ever Give Up.
(L-R: Bill Pugh, OneOC President/CEO Daniel McQuaid, and Seneca-OC Regional
Director Allison Maxon, Seneca-OC Leadership Board Member Carl Neisser, and
Seneca-OC Leadership Board Chair Albin Gess.)
Continued from Page 4
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Around the Office
Wealth Planning
March 16-18, 2015
Rhonda Ducote, Senior Wealth
Manager went to the 2015 RIA Summit
held in Westin Lake, Las Vegas, NV.
This summit unites an exclusive group
of Registered Investment Advisors and
CIOs of Family Offices with top
economists, analysts, solution partners,
and innovators in the field.
7.
Tax law as well as personal
circumstances change. It's important
to review your plan periodically for
potential changes with a competent
estate attorney or advisor that has
expertise in this area.
Market Update
euphoria starts to dissipate and fear starts
to outpace greed.
March 18, 2015
Jennifer Necir attended the 2015
Schwab Investment Outlook, a
conference held at the Balboa Bay Club
in Newport Beach. She heard from
speakers Greg Valliere of Potomac
Investment Research Group talk about
his view of Washington and Liz Ann
Sonders, Schwab’s Senior Vice
President & Chief Investment Strategist
share her economic and market
perspective. The event was moderated
by Trish Regan of Fox Business News.
March 27, 2015
Rhonda Ducote, Megan Pierpont,
Shawn Covarrubias, and Julie
These are just a couple of topics to be
aware of. Other topics might come up
and being proactive and partnering
with a good financial planner can
ensure that you are well informed and
well prepared.
This scenario of an unwinding of the over
owned S&P 500 index does not have to
end badly as long as one is diversified
within other asset classes and other nonU.S. equities and fixed income. Now is the
time to begin looking elsewhere for alpha
generation in one’s portfolio. Alpha is
used to measure performance on a risk
adjusted basis. As an investor, we want to
know if we are being compensated for the
risk taken. The return of investment might
be better than a benchmark but still not
compensate for the assumption of risk.
Muramoto¸ Administrative Assistant
attended the 2015 Women of Influence
forum held at Irvine Hilton. This annual
event brings together women of
influence, to learn from each other’s
triumphs, challenges, and tools for
rising to the top. Apriem Advisors is
an official sponsor of the event.
In other words, as the S&P 500 continues
to attract more investment, the risk versus
reward equation begins to become more
unbalanced in favor of a greater amount of
risk being taken on to achieve the same
returns as before. Keeping some portion of
one’s portfolio in bonds, precious metals,
REITs, international investments, and
even zero interest cash, makes sense
even when one area of the market steals
the headlines.
AROUND THE OFFICE
SHAWN COVARRUBIAS, Operations Manager
January 2015
The Investment Team met with Fund
Managers as part of our due diligence
process. Benjamin Lau, CFA, Portfolio
Manager and Landon Yoshida,
CRPC®, Wealth Manager met with
DoubleLine to hear about their 2015
market outlook (14th); met with Schwab
ETF to get updated on the Schwab One
ETF offerings (16th); and First Trust to
get updated with their lineup of ETFs
(21st ).
February 2015
The Investment Team met with the
following fund managers. Benjamin
Lau and Jennifer Necir, Financial
Analyst met with Natixis/Oakmark Funds
to get their 2015 market outlook (5th);
with William Blair Funds to get some
updates on their family of funds (17th).
February 4, 2015
Megan Pierpont, Wealth Manager
celebrated her birthday. Happy
birthday, Megan!
February 23, 2015
Shawn Covarrubias, Operations
Manager celebrated her birthday.
Happy birthday, Shawn!
February 24, 2015
Jennifer Necir attended a webcast
hosted by Deutsche X-trackers to get
their view on the international markets.
March 2015
The Investment Team, met with the
following fund managers. Benjamin
Lau, Landon Yoshida and Jennifer
Necir met with Center Coast to get an
update on their MLP Focus fund and
their family of funds (5th); with First Trust
in a conference call to get an update on
their Specialty Finance fund (6th); with
RiverNorth about their Strategic Income
fund (9th); with DoubleLine via webcast
where they heard DoubleLine’s
Founder, Jeffrey Gundlach provide his
quarterly update of the Total Return
bond fund (10th); with Eaton Vance to
discuss their outlook for the U.S.
municipal bond market (18th); with
Western Asset to hear about their Core
plus bond fund (19th); and Vanguard to
get the quarterly update on their family
of funds (31st).
March 5, 2015
Jennifer Necir and Shawn
Covarrubias attended a seminar titled
Understanding Financial Aspects of
Divorce held at Fleming’s Prime
Steakhouse in Newport Beach. They
learned about the financial
professional’s role, division of assets,
and impact to social security benefits,
health insurance benefits, life insurance,
taxes and other considerations in a
divorce.
March 12, 2015
Jenifer Necir attended an educational
webcast hosted by Schwab with
discussion on the investing implications
of a strong U.S. dollar.
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