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CEO Report: Fourth Quarter

February 16th, 2018
By Jeff Petersen, CEO | Sr. Wealth Advisor

Happy New Year and welcome to 2018! While January seemed to be a continuation of 2017’s strong stock market with low volatility, February abruptly reminded us that there is no “free lunch” when it comes to achieving above “risk-free” returns (Treasury Bills are considered the proxy for a risk-free asset).

Those that “speculate” in the stock market as opposed to “investing” tend to eventually be caught by the normal forces of stock market movements. Much like how law enforcement professionals count on criminals to eventually be caught when they repeat their criminal behavior. We saw a perfect example of this speculation on January 5th from an Exchange Traded Note (ETN) that bet on volatility in the stock market remaining historically low, and it lost…big time!  The following link to an article by Bloomberg.com discusses how an ETN, with relatively low assets, helped to accelerate the losses in the stock market that day.



Credit Suisse has since announced that it is buying back the shares of VelocityShares (mentioned in the Bloomberg article) after losing 93% of its value. Not a good ending for those speculating in this ETN.


For more on the recent stock market volatility, we recommend that you read both my “Special CEO Report”  and Scott’s special report titled “The Dow Drops 1,000 Points…Should I Worry?”.


Almost forgotten with the wild gyrations of the stock market in February was the “Tax Cuts and Jobs Act” signed into law by President Trump on December 22, 2017. This tax bill will impact most US taxpayers, and we recommend that our clients discuss the impact on their personal goals and objectives with their Petersen Hastings Wealth Advisor and tax professional. For a quick review of the tax bill’s impact on your situation, the following tax calculator by the “MarketWatch” is a good place to start. The calculator is at https://www.marketwatch.com/story/the-new-trump-tax-calculator-what-do-you-owe-2017-10-26.


A couple of examples of areas to review with your Petersen Hastings Wealth Advisor is your method of charitable contributions. Many taxpayers will no longer be itemizing qualified expenses with the increase in the Standard Deduction. For charitable contributions, this can be a significant opportunity for tax planning. It is easy if you are over 70 ½ since most charitable contributions can be made directly from your IRA to the qualified charity. For those under this age, more complex tax planning will be needed. An example of one potential solution is to stagger charitable contributions every other year to capture a higher level of itemized deductions.


For those utilizing a Home Equity Line of Credit (HELOC) to fund a car or other non-home related purpose, your HELOC interest payments may no longer be a deductible expense.


With the changes in tax brackets, many clients will realize tax savings in 2018. It is important to review your quarterly tax payments with your tax professional. For those actively employed with earned income, we recommend revisiting the amount of withholding from regular paychecks to avoid over withholding federal tax in 2018.


Since this is only a summary of certain aspects of the new tax law, we recommend reviewing your individual circumstances with both your Petersen Hastings Wealth Advisor and tax professional.


Please note that fraud continues to be a concern with IRS tax filings. To reduce the chance of being impacted by these frauds, we recommend filing as early as possible. To learn more about these “schemes”, please visit https://www.irs.gov/compliance/criminal-investigation/tax-fraud-alerts.


As always, please feel free to contact your Wealth Advisor at Petersen Hastings if you have any questions or comments about your account. I also welcome your questions or comments at jeffp@petersenhastings.com. We consider it a privilege to serve you!


*(Petersen Hastings does not provide tax advice. The information provided in this article is for general information.

Please contact your trusted tax professional for specific tax advice.)