Before making it to DVD (and before DVDs), we liked Lily Tomlin’s Tony Award winning “The Search for the Signs of Intelligent Life in the Universe.” The play was better in San Francisco Curran’s Theater than Atlanta’s Fox Theater but maybe it was the Bay Area’s ambiance.
Washington, D.C.’s wrangling had me wondering about intelligent life there. But things do look a bit better.
Janet Yellen, President Obama’s mutual funds. With a smattering of Fidelity funds augmenting Vanguard, one thing is certain, she’s no sucker.
Many preferred, astonishingly enough, Wall Street insider Larry Summer over Dr. Yellen. In the 90s, Summers ignored Brooksley Born’s repeated warnings regarding dangers lurking in financial derivatives — because girls know nothing about finance. In 2005, just before the housing market collapse, economist Raghuram Rajan warned excessive risk-taking by banks would lead to a major financial crisis. While Summers harshly dismissed those concerns, Dr. Yellen spoke out on the perils lurking in the financial industry.
Given our culture, many will cast scorn Yellen’s way. Here’s a novel idea; let’s put America first. According to a Wall Street Journal analysis of more than 700 economists, Yellen’s predictions were the most accurate. Yale Professor and Nobel Award winner Robert Shiller called Yellen “a real mensch” who has integrity and humanity plus the ability to make good policies happen. Many will complain she lacks inflation busting cred but her record belies those accusations. In the '90s she pressed Alan Greenspan to adopt a formal inflation target — certainly not the position of an inflation dove.
Maybe the South Walton building renaissance is a sign of an economy on the mend. Dr. Yellen understands raising interest rates is a “blunt instrument” to prevent asset bubbles. Jacking up mortgage rates will negatively affect local real estate sales.
Dr. Yellen had me from hello. When a client walks in the door with long held Vanguard mutual fund positions they simply understand how markets work. Statistically women are better investors than men and may make a better Fed Chair. Our granddaughter or yours could be Fed Chair one day, too.
Year End Tax Planning Tips
It goes against human nature to sell a losing position. We hate to admit failure and I’m guilty, too. However by selling a losing position you can offset long term gains or up to $3,000 of ordinary income. Sell a loss position then replace it with a low-cost exchange traded fund and increase diversification.
Couples need to be aware their combined income could put them over the threshold levels for new 2013 taxes. We recently worked with a couple where one made more than $250,000 but the spouse made significantly less. The higher earner’s HR department could easily make the appropriate changes for his .9 percent Medicare surtax but the spouse was in the dark. High earning couples could also pay an additional surcharge (3.8 percent) on investment income so “harvesting” any losses will reduce your tax liability. Call your CPA and discuss any necessary changes.
For anyone who took a defensive position before the debt crisis, sigh, remember market timing does not work but time in the market does. Unfortunately the Georgia Bulldogs’ defense remains missing.
Buz Livingston, CFP, has a Blue Mountain Beach based fee-only, hourly financial planning and investment management firm. For more information, visit www.livingstonfinancial.net.