financial-insights newsletter 2016 q4 v05...@ new york bye week atlanta @ arizona @ new orleans...

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4Q · 2016Newsletter

• 253.627.6010 • financialinsights.net Follow Us On•

Dorothy Lewis, CFP®

Dorothy Update Dear Clients & Friends,

Happy Fall! It has been a season since our last newsletter so we wanted to take some time as a sta� to connect and let you know what has been happening around our o�ce.

As many of you know, I was training to trek to Mt. Everest Base Camp in April 2016. During the training process I developed nerve pain and numbness in my legs. An MRI showed a pinched nerve and other spinal issues. This is the first major health issue in

my life, so I really can’t complain. I have tried a myriad of treatment options. Nothing has helped, so in November, I will have a spinal procedure to relieve the pain. The recovery period is 6-12 months so it will be a while until I am back in the o�ce. I will still be taking client calls. In the meantime, you will continue to be serviced by our capable advisory team.

I wish you all a wonderful holiday! If we haven’t spoken with you in a while, or if you have any questions, we would love to hear from you. Please feel free to contact Ali in our o�ce.

» Community Engagement HighlightsOur Team has been busy in the community. We sailed on a Dragon Boat Adventure with friends in the beautiful July weather. The company and weather were terrific.

Ali Criss cycled over 3 mountain passes in the hot August weather to raise funds in support of the Child Abuse Prevention Center at Mary Bridge Children’s Hospital.

We were the proud sponsors of the 125th PNW Tennis Championships and enjoyed sharing it with you.

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3110 Ruston Way, Suite CTacoma, Washington 98402

2323 N 30th St Ste 100Tacoma, Washington 98403

Introducing

MariaHarlowChief Operating O�cer

Maria is the Chief Operating O�cer at Financial Insights. She is responsible for the day to day operations, community engagement and human resources. With over 20 years of experience Maria brings her positive and supportive attitude to Financial Insights. Raised in Tacoma, Maria has been engaged in the community and loves to volunteer her time to and support local non-profits.

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• 253.627.6010 • financialinsights.net3110 Ruston Way, Suite CTacoma, Washington 98402 Follow Us On

Upcoming Medicare Supplement ChangesAs well as being a newer employee here at Financial Insights, I’ve also helped retirees navigate Medicare insurance for over 7 years now. This can be a confusing topic, and one that seems to regularly introduce changes to deal with. With budgetary concerns regard-ing Medicare growing more pressing, the pace and scale of changes is very likely to increase. Perhaps I can leverage a bit of my experience to help keep our clients “in the know.”

For my first article, I wanted to highlight a change in supplemental coverage that is approximately 4 years out (2020). One of the concerns Congress has with Medicare is the “all you can eat” nature of having virtually limitless coverage with little to no copays. To address this, all supplemental plans that cover the Medicare Part B deductible ($166 a year currently) will be eliminated, which mean the Plan F and Plan C. It’s important to note that if you enroll or are enrolled in either of these plans prior 2020, you will be allowed to stay put, but no new enrollees will be accepted after this cuto� date. So long story short, supplemental plans that cover ALL Medicare copays/deductibles will no longer be around after 2020.

As to the big picture going forward, I expect that an increasing amount of cost-sharing measures will become the norm. These could come in the way of further curtailing of supplemental plan options, more rapid annual increases in Part B premiums, reductions in Part D prescription coverage, and more. Whether changes like these substantially impact the bottom line is anyone’s guess. But one thing’s for sure, the fight to save Medi-care has surely begun.

2323 N 30th St Ste 100Tacoma, Washington 98403•

Josh MeziereInvestment Advisor

Representative

Tech HacksWith technology ever-so-changing in today’s world, it’s extremely helpful to stumble across some “tech hacks”, or short-cuts if you will, in the technology world. I recently watched a TED talk by a man named David Pogue, who outlined 10 computer/smart phone tricks everyone should know. These tricks will help you get the most out of your technology, and we want to share them with you below!

1. Use the space bar to scroll down a page. Hold the shift key and the space bar at the same time to scroll back up again.

2. Tab between boxes on online forms. When there’s a pop-up menu to input details of your state, type the first letter of the state to scroll through options.

3. To make web text larger, press CTRL and “+” Mac users, make that COMMAND and “+”

4. Don’t bother with punctuation on your smartphone. Hit the space bar twice for a period and the next letter will be automatically capitalized.

5. Hit the call button of your phone to redial the last person you spoke to. No need to go into your contacts.

6. Speaking of phones, carriers have keystrokes that let you bypass the “15 seconds of instructions, like we haven’t had answer machines for 45 years.” Sadly, each shortcut is di�erent. “I didn’t say these were going to be perfect,” Pogue allows.

7. Use Google as a dictionary by typing “define” followed with the word you want to understand. You can also use it as an FAA database for flight details.

8. To highlight a word, don’t drag across it with the mouse. Double click it. And don’t bother deleting text; just type.

9. Avoid shutter lag by half pressing down the button of your camera before you take a picture. For folks who still use cameras.

10. Press “b” to black out a slide (or “w” to white it out). And make sure people are paying attention to your wonderful presentation.

KelseyMadden

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What to Expect When Expecting Returns How do money managers set their expectations for future returns from the stock market? There are probably as many methods as there are money managers. Our personal favorite is the one used by John Bogle, the founder of Vanguard. In 1991, while still the CEO of Vanguard, Mr. Bogle was interviewed by The Journal of Portfolio Management. In the article, he outlines his ingenious formula for predicting future stock market returns. Moreover, the formula is designed to compare current market conditions with their historical norms while helping to estimate what returns over the next 10 years may look like.

E(R) = D0 + G1 + ∆P/EE(R) = expected return of the stock marketD0 = current dividend for the stock market (2.0%)G1 = expected growth rate of corporate earnings (average since 1995 = 6.0%)∆P/E = change in price to earnings ratio (this number represents changes in investor sentiment)

Stock market returns are broken into three components; dividends, earnings growth and investor sentiment. Dividends and earnings growth are pretty straightforward. Investor sentiment is represented by the change in the price to earnings ratio of the market as a whole. Think of the price to earnings ratio (P/E) as the overall price level of the market. A P/E of 10 means that an investor must pay $10 for every $1 of earnings. A P/E of 20 means that an investor must pay $20 per $1 of earnings. The historical average P/E of the stock market is around 15, while the current P/E is 25. This would indicate that stocks are about 65% more expensive than average. In the following chart, we aim to gauge expected returns over the next 10 years based on various potential market P/E ratios ten years from now.

Obviously, we can’t know what the average market P/E will be in 10 years. But, if the market P/E returns to its historical average of 15, the model predicts a measly 3.0% average annual return over the next ten years. Three percent sounds pretty low until you consider the market has returned 16.5% a year since March 2009. (About twice the predicted return when investor sentiment remains unchanged.) The model may not be perfect, but it gives us a reasonable approach for predicting returns over the next decade as well as a long term perspective on investing.


Avg Market P/Ein 2026

10

15*

20

25

30

Current Dividend(D0)

2.0%

2.0%

2.0%

2.0%

2.0%

Annualized Return2016-2026

-0.8%

3.0%

5.8%

8.0%

9.8%

An. Inv. Sentiment(∆P/E)

-8.80%

-5.00%

-2.20%

0.00%

1.80%

Earnings Growth(G1)

6.0%

6.0%

6.0%

6.0%

6.0%

Craig Davis & Daniel McCa�rey



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Save the Date!

December 7th, 2016 at 5:30pm

R . S . V . P . • 2 5 3 . 6 2 7 . 6 0 1 0K m a d d e n @ F i n a n c i a l I n s i g h t s . n e t

HOLIDAY PARTYat t h e Museum of Glas s i n d ow n tow n Tac om a

35 YEARS of FRIENDS & COMMUNITY


Is it time to do a Home MortgageRefinance?

For some homeowners, it is still a good time to refinance as rates are only a fraction higher than their historic lows!

Even if you can take down your interest rate by just 1%, a refinance may make sense!

To discuss your specific situation further, feel free to call Ali to setup a conference call.

Give me a call today! > 253.627.6010


2016Seattle Seahawks Game Parties!

Miami@ Los AngelesSan Fransisco@ New YorkBye WeekAtlanta@ Arizona @ New OrleansBu�alo@ New EnglandPhiladelphia@ Tampa Bay@ Green BayLos AngelesArizona@ San Fransisco

SUN, Sep 11SUN, Sep 18SUN, Sep 25SUN, Oct 2SUN, Oct 9SUN, Oct 16SUN, Oct 23SUN, Oct 30MON, Nov 7SUN, Nov 13SUN, Nov 20SUN, Nov 27SUN, Dec 11SUN, Dec 15SUN, Dec 24SUN, Jan 1

1:05pm1:05pm1:05pm10:00am-----1:25pm5:30pm10:00am5:30pm5:30pm1:25pm1:05pm1:25pm5:25pm1:25pm1:25pm

Get ready forHAWKS FOOTBALL!We love our Hawks here at Financial Insights! We are hosting two game watching parties and would love for you to join us at either or both events!

• Monday Nov 7th, 5-8pm• Thursday Dec 15th, 5-8pmPoint RustonCopperline Community Room5005 Main StreetTacoma, WA 98407

R.S.V.P. v 253.627.6010

[email protected]

Ali Criss, CFP®ManagingPartner



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financial-insights newsletter 2016 q4 v05...@ new york bye week atlanta @ arizona @ new orleans...

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