The Siena Investor – Spring 2016

Keep Calm and Step Forward

As you may already have observed, 2016 got off to a bad start for equity markets around the globe. In fact, for the S&P 500 Index, the first five trading days were the worst-ever start to a year, with a loss of 6%.

Combined with the weak performance of global equities in 2015, and all the geopolitical turmoil in the world, the stomachs of many investors started to rumble, especially upon hearing pronouncements from market “gurus” forecasting doom and gloom.

The Siena Investor – Fall 2015

Staying The Course During Periods of Market Volatility

Over the third quarter of 2015, market volatility has escalated and global equity markets have experienced substantial losses. While there are no doubt a multitude of contributing factors, the slowdown in the Chinese economy—the world’s second largest— and the sharp pull back in its stick market are contributing factors.

Given the current downturn and increase in stock market volatility, many investors are concerned and wondering whether now is the time to rethink their portfolios. While we believe investors should always make sure their appetite for risk matches the risk embedded in their investment portfolios, market movements alone are not a good reason to alter investment plans.

The Siena Investor – Summer 2015

Benefits of Delaying Social Security

It can be tempting to begin taking Social Security benefits the moment you are eligible. You’re ready to retire and have paid a lot into the Social Security system, so why not file immediately? Our second quarter newsletter dives into some reasons why you may want to delay taking your benefits, an in-depth look into the often overlooked filing strategy of double dipping, and the possible costs of delaying.

When considering when to start taking your Social Security benefits there is no “one size fits all” solution. Your decision should carefully consider all possibilities and filing strategies to best fit your unique situation. Contact a Siena Advisor today to discuss your personal social security situation!

The Siena Investor – Spring 2015

The Perception of Taxes

Taxes are often considered a necessary evil. How we perceive taxes and how we feel about paying them are complex issues. For investors, two significant situations to avoid when it comes to taxes are:

  1. Focusing solely on how much of an investment gain could be lost to taxes
  2. Worrying so much about taxes that it adversely affects decision making

The Siena Investor – Winter 2014

What to Do if the Bear has Emerged From Its Hibernation

It seems like investors have had plenty to worry about recently, even without considering the last few weeks of stock market volatility. After all, we’ve seen:
Slowing growth in most of the developed world, including the possibility that European economies will enter their third recession since 2007.

  • Growth in China’s economy decelerating faster than expected.
  • ISIS on the march.
  • The end of the Federal Reserve’s bond buying program, and the accompanying threat of rising interest rates.
  • A rising dollar’s negative impact on the competitiveness of U.S. manufacturers.
  • “Sky high” valuations as the Shiller CAPE 10 rose to over 26 (versus the historical average of 16) and still remains at about 24.
  • Nervous investors anxious about the threat posed to the global economy by the Ebola virus.

The Siena Investor – Fall 2014

One Generation to the Next

Passing wealth to the next generation can be a complex topic.  The success of your estate plan depends on properly communicating the details of your plan to family members.  The topic of what comes after your passing can be an especially difficult conversation. Remember, when the entire family participates in important decisions, others in the family will begin to recognize that family unity is something to be valued.

The Siena Investor – Summer 2014

The Importance of Education.

The advice to follow an evidence-based approach to investing is significantly different from most of the advice heard on Wall Street and in the financial media. It also is different from the strategy followed by the typical individual investor. Therefore, we believe it is extremely important to be aware of the academic research demonstrating that markets are generally highly efficient.

The Siena Investor – Spring 2014

How Risky Are Individual Stocks? 

2003 provided a great example of just how risky individual stocks can be. According to Morningstar there were 5,758 stocks in existence for the entire year. While the S&P 500 rose more than 28 percent in 2003, 866 stocks (15 percent) produced negative returns. Their average loss was 33 percent and they underperformed the S&P an average 61 percent.

in Context – Winter 2013

featured articles:

  • Upcoming Budget Decisions – With the eleventh hour passage of the American Taxpayer Relief Act of 2012, some might think we have put the fiscal cliff behind us. Unfortunately, this is not the case. While the federal government has temporarily suspended the debt limit until May, without government action the mandatory spending cuts associated with the fiscal cliff will begin in March.
  • Understanding the Debt Ceiling – The first aggregate limit on U.S. government debt, now commonly referred to as the debt ceiling, was enacted in 1939 when President Franklin D. Roosevelt and Treasury Secretary Henry Morgenthau asked Congress to replace the old system of separate limits on different types of debt with the aggregate limit.
  • 2012 In Review: Economy and Markets – In 2012, investors watched eagerly for signs that the U.S. recovery was gaining steam. The current expansion, which started in mid-2009, has been deemed the weakest in postwar history.
  • Perspectives – Viewpoints on improving the quality of your life; financial security and your happiness.

The Siena Investor – Fall 2013

Lessons From 2012

Over the majority of 2012, our collective attention was focused on several events:

  • Our continuing fiscal deficits and our ability to continue to fund them
  • What would happen regarding the fiscal cliff
  • Who would win the presidential election
  • The increased possibility of rapid inflation caused by the fiscal and monetary stimulus
  • The European fiscal crisis and the potential for sovereign defaults and the breakup of the Eurozone
  • Rapidly slowing growth in China and other developing nations

The Siena Investor – Summer 2013

A Message Worth Repeating.

In light of recent market drops, it is no wonder many investors seem to be worn out and wary of the market. Investors experience a rally, only to see another crisis and another dramatic drop.  In volatile times like these, it is even more important than ever to have a well-developed financial plan that doesn’t take more risk than your ability, need, and willingness to take risk.

in Context – Spring 2013

featured articles:

  • Stock Market Perspective – After the bear markets of 2000–2002 and 2008, we seem to have entered an era in which investors wonder whether a market collapse is right around every corner, even following new market highs. The S&P 500 Index achieved a new high at the end of the first quarter, closing at 1,569 after beginning the year at 1,426, but has experienced considerable volatility surrounding the events in Boston.
  • Standard & Poor’s 500 Index – Within financial circles, however, the S&P 500 is considered to be a superior gauge of U.S. stock market performance because it includes more stocks and it weights stock by the value of the included companies instead of the stock prices of the constituent companies.
  • Clearing Up Misconceptions About Social Security Benefits – Should people who are receiving Social Security benefits, or who will begin to receive benefits in the next few years, be concerned that benefits will stop?
  • Perspectives – Viewpoints on improving the quality of your life; financial security and your happiness.

in Context – Winter 2012

featured articles:

  • 2011: The Year in Review – Important lessons learned after a year defined by volatility.
  • Understanding the Role Central Banks Play in Financial Matters – With the European Central Bank in the headlines for most of the year, it’s important to understand how central bank’s affect financial markets.
  • Seeking the Inefficient Asset Class – Are some markets less efficient than others?  Eugene F. Fama and Ken net R. French discuss the evidence.
  • Perspectives – Viewpoints on improving the quality of your life; financial security and your happiness.

The Siena Investor – Winter 2012

7 Lessons Learned from 2011.

Every year, our colleague Larry Swedroe takes a look back at the investing lessons the markets provided in the past year.  In 2011, the markets offered investors a chance to revisit a few remedial courses by teaching lessons it had introduced in prior years.  So, this year’s list includes a few reminders that we are just as likely to lose our discipline in good times as we can in bad time.

in Context – Fall 2012

featured articles:

  • Planning In An Uncertain World – For the majority of 2012, events both economic and political have left Americans with more questions than answers. Most investors would agree that recent times have been fraught with uncertainty.
  • The Science of Investing – The amount of research on financial markets and investing rivals that of medical research. Largely starting in the 1950s, finance began its transition from a neglected area within economics to a legitimate field of study.
  • Top Ten Money Excuses – Human beings have an astounding facility for self-deception when it comes to our own money. We construct the façade of a logical-sounding argument, which is often an elaborate, short-term excuse that we use to justify behavior that runs counter to our own long-term interests.
  • Perspectives – Goals are important, but sometimes, we get so attached to goals that we forget to live. When that happens, it is beneficial to find a healthy balance between living the goal and living life.

The Siena Investor – Fall 2012

The Roots of Estate Planning

Many people assume estate planning documents are strictly financial in nature. In reality, having such documents in place also expresses an individual’s personal instructions regarding health care preferences, family care and cherished belongings. The following are all part of the estate planning process.

  • Power of Attorney
  • Health Care Directives
  • Guardian Designation
  • Memo Regarding Personal Effects


in Context – Spring 2012

featured articles:

  • Considering International Diversification – Last year was challenging for globally diversified stock portfolios. While the S&P 500 Index was up 2.1 percent in 2011, the MSCI EAFE Index, which is basically the international equivalent of the S&P 500, was down 12.1 percent. The MSCI Emerging Markets Index was down 18.4 percent.
  • Global Equity Markets – One reason for global diversification in a stock portfolio is the amount of the world’s stock market value that is now located outside of the United States. In past decades, the United States represented more than 50 percent of the value of the world’s stock markets. That is no longer the case.
  • The Good Ol’ Days – Alongside the wars, depressions and natural disasters of the past century, there were some notable achievements for humanity — like women’s suffrage, the development of antibiotics, civil rights, economic liberalization, the spread of prosperity and democracy, space travel, advances in our understanding of the natural world, and enormous advances in telecommunication. (Oh, and the Beatles.)
  • Recency Bias – Every day we rely on habit to get a lot of things done. We commute the same way to work every day, we eat at the same restaurants and we shop at the same stores. We rely on habit to help us make things easier because few people want to reinvent their lives every day. But this habit of forming habits also does something else. In academic circles, it’s called the recency bias, and it can trick us into making decisions we might not make otherwise.

The Siena Investor – Spring 2012

Investment Mistakes – The Impact of Taxes

Taxes are possibly the largest single expense that investors incur, even greater than management fees or commissions. Therefore, ignoring the impact of taxes is one of the biggest mistakes you can make.

However, it is also possible to become so concerned with taxes that you deviate from a prudent investment strategy to avoid the pain of paying them. You would be wise to remember that the only thing worse than having to pay taxes is not having to pay them.


in Context – Winter 2011

featured articles:

  • 2010: Variations on a Theme – Was 2010 a year of cautious optimism, or a year to be alternately cautious and optimistic? At times during the year, investors found reasons to be all of the above.
  • Estate Tax Update – 2011In the fall of 2010, individuals began to wonder if Congress would address the estate tax gap that occurred when the estate tax law expired at the end of 2009, leaving no estate tax in place for 2010. In December 2010, Congress addressed the gap
  • Quantitative Easing and Inflation – What is a quantitative easing? The term isn’t very well defined, but what it boils down to is the Federal Reserve Board wants to increase the cash reserves of banks. How will it affect inflation?
  • Five Things to Consider for Your 2010 Income Tax Return – Roth conversion income reporting, alternative minimum tax (AMT), residential energy savings costs, and more.

The Siena Investor – Winter 2011

How to Know When You Have Enough 

How do you know when you have enough? It’s a different answer for everyone, but not knowing it can put your investments in jeopardy.

Unless one inherits wealth, the most common way to amass significant wealth is by taking lots of risk. Being a risk taker who has known success can give you confidence in your ability to take risk. That confidence often creates the willingness to take risks. In addition, your wealth gives you the ability to take risk.

However, the ability and willingness to take risk are only two of the three criteria for an investment policy. There is a third (often overlooked) criterion — the need to take risk. A great irony is that the very people with the most ability and willingness to take risk have the least need to take it.

in Context – Fall 2011

featured articles:

  • Making Sense of Low Rates and the Risks of Stretching for Yield – Learn the risks associated with chasing yield in low interest rate environments and the four factors behind why interest rates are so low.
  • Exploring High-Dividend Equity Strategies – Due to low interest rates, investors are flocking to high-dividend paying equity strategies.  But, are they worth it?
  • Sovereign Debt Ratings and Stock Returns – The US government debt was downgraded in August after holding the Standard & Poor’s highest rating since 1941.  What will this mean for the US stock and bond market?
  • Making Plans – Beneficiary designations on individual accounts supersede whatever your will lays out.  Know the importance of keeping your beneficiary information accurate and up to date.

The Siena Investor – Fall 2011

Do You Suffer from Market Fatigue?

It can be hard to hear the best course of action during tough market times may be to do nothing. It can be even harder to repeatedly hear the message as things seem to get worse. But it is a message we would not repeat if we did not truly believe it was in your best interests. This newsletter discusses why our message is not wavering despite market conditions.

in Context – Summer 2011

featured articles:

  • Making Sense of the Eurozone Debt Crisis – How did it all begin? How are the recent developments between the IMF and European Union going to affect the global economy?
  • Understanding Credit Default Swaps – Credit Default Swaps were an integral part of the 2008 financial crisis, but what are they?
  • Home Bias – Q&A with Kenneth R. French on why investors tend to overweight their portfolio’s with equities from their home country.
  • Making Plans – The estate planning process and value of having an estate plan for your family

The Siena Investor – Summer 2011

Indexing Vs. Passive Asset Class Investing.

Many investors may believe that passive investing means simply buying index funds. However, there are some key differences between index investing and passive asset class investing. This newsletter discusses some of those differences.

in Context – Spring 2011

featured articles:

  • All Around the World – Understanding volatility after major world events.  The Trinity University in San Antonio researches what a prudent annual portfolio withdrawal rate for retirees is.
  • Investing Internationally – Learn the importance of diversifying your portfolio among international markets.
  • In the Face of Adversity – What will the March 11th earthquake in Japan mean for the Japanese economy, stock market, and the yen?
  • Perspectives – Viewpoints on improving your quality of life; understanding transitions.

The Siena Investor – Spring 2011

Lessons From 2010.

Every year, Siena takes a look back at the investing lessons the markets provided in the past year. While 2010 was a fine year for the markets, that doesn’t mean we can’t learn a thing or two about investing. In fact, we can be just as likely to lose our discipline in good times as we can in bad times.