Performance Update – January 2018

Hello from Sycamore,

“Well 2017 has come to a close and we think you’ll agree that it was a very good year.  Our Growth and Income Composite gained a bit more than 21% for the year. In fact we had enough gain in 2017 to equal two very good years so we’d not be surprised to see the pace slow significantly over the next year or so.”

You’ve just re-read the first sentence in our year end letter for 2017. With the recent volatility it’s easy to forget how much the market advanced in 2017. Generally speaking we are pleased with 2018 and it has turned out about as we expected. FYI – don’t be concerned…we are not turning into market timers! We don’t like the market’s overall decline of more than 4% but when you sprinkle in the advance in corporate profits and the tax decreases…2018 shapes up pretty well and certainly leaves us optimistic about 2019. The economy continues to chug along and generally ‘weak markets’ are followed by ‘strong markets’. Unless the economy weakens significantly, we feel 2019 could be a good year for investors. Sycamore’s Growth and Income composite performance is listed below. Your individual performance can be found on your individual performance reports which are enclosed. The chart below compares the return of Sycamore’s Growth and Income Composite (gross of expenses) to the S&P 500 index including dividends. All returns are annualized through 12/31/2018.

1yr 3yr 5yr 10yr 15yr 20yr
Sycamore Growth & Income Composite* -5.76 9.49 8.28 13.12 8.86 7.84
S&P 500 ** -4.38 9.26 8.49 13.12 7.77 5.62


The Economy As We See It

We think the basics of the economy look good. Our rate of growth (expansion of our economy) was about 3%. This is somewhat better than we’ve been averaging for the last few years and the last few years have been giving us good results. There is a pile  of data that tell us the economy is doing well and that last year’s tax decrease for corporations was a win for shareholders. Let’s look at just a couple…unemployment now stands at 3.7% and continues to decline. In fact the recent employment report shows that our nation created 312,000 jobs in December dwarfing an expected 184,000. The federal Reserve Bank continues to raise interest rates which we feel indicates the economy is still on track. At a glance, new orders for durable goods, retail sales, consumer confidence, industrial production and housing starts continue to trend higher. We’ve stated several times over the last few years that we are pleased with the economic “big picture” and that we feel it will provide the platform for growing corporate earnings. We see no reason to change that outlook. Oh…one last thing. We believe that in the long run share prices are driven by profits. Of course, as we’ve seen recently, the market is emotional and anything can happen in the short run.

Recent Securities Transactions

We had a request recently (thanks George) to add a couple of lines each quarter summarizing some of the activity in our portfolios. Keep in mind that not all portfolios contain the same holdings so your individual portfolio may or may not have had the activity that follows.

  • SCANA is being purchased by Dominion Resources and we choose to sell the SCANA rather than accept shares of Dominion.
  • We elected to sell both Harsco and World Fuel Services. We feel that the recent deterioration of the fundamentals on both of these companies will continue.
  • Express Scripts was purchased by Cigna. Our decision was to not hold Cigna at its current valuation.
  • We liquidated all holdings of Lamb Weston. This stock simply has increased in price so much that we feel the funds can be put to better use elsewhere – this is what we’d always prefer.
  • Praxair was merged int Linde. We expect to continue to hold Linde shares.
  • Looking ahead, Harris Corp is buying L-3 Technologies. We like and currently own both companies and intend to maintain that position through Harris. United Technologies has purchase Rockwell Collins and is spinning off their Otis elevator and Climate and controls divisions. We currently own Rockwell and United Tech and expect to keep the shares of United Tech issued for Rockwell and the spin off units at this time.

We’re looking forward to 2019 and hope you are as well. For questions or concerns, please don’t hesitate to contact us with any questions.

Thanks for your business and trust!

Sycamore Financial Group

*Data not audited. *Results reported gross of fees. **Past performance does not assure future results.  Investors cannot invest directly in the stock market indexes such as the S&P 500.  Investment return and principal value of an investment will fluctuate.  Investor value, when sold may be worth more or less than their original cost.

By |2020-01-11T07:25:11+00:00January 25th, 2019|2018 Newsletters|0 Comments

The Low Down on Retirement Accounts

Hello from Sycamore,

It’s that time of year again – if you are over 70 ½ and haven’t taken your Required Minimum Distribution (RMD) for the 2018 tax year, you can expect to be hearing from us!

What is an RMD?

An RMD is the minimum distribution you must withdraw from your retirement account each year.

When do I have to begin taking RMD’s?

You must begin taking your RMD on April 1 of the year following the calendar year in which you reach age 70 ½. What does this really mean?

Example: Your 70th birthday was June 30, 2017. You reach age 70 ½ on December 30, 2017. You must take your first RMD (for 2017) by April 1, 2018.

Example: Your 70th birthday was July 2, 2017. You reach age 70 ½ on January 1, 2018. You do not have to take an RMD for 2018. You must take your first RMD (for 2018) by April 1, 2019.

Then each year after this you must take your RMD by December 31 of that year.

Can I take more than my RMD amount?

You can withdraw more than the minimum amount required. The total amount you withdraw will be included in your taxable income.

Can I take withdrawals before 70 ½?

Yes. Once you reach 59 ½ you may take withdrawals with no early withdrawal penalty. You will still be responsible for regular income tax on the complete amount withdrawn.

You may also withdraw funds prior to age 59 ½ however, you will need to pay an extra 10% early withdrawal penalty in addition to the regular income tax.

Highlights for 2019

Retirement Savings Plan Contribution Limits have changed.

  1. 401(k), 403(b), 457 plans and federal government Thrift Savings Plan contribution limits increases from $18,500 to $19,000 annually.
    1. Catch up contributions for those over age 50 remains unchanged at $6,000.
  2. IRA contribution limits increase from $5,500 to $6,000.
    1. The additional catch up contribution remains at and additional $1,000 over the annual limit, now making it $7,000.
  3. SIMPLE IRA contribution limits have increased from $12,500 to $13,000.
    1. Catch up contributions limit for those over age 50 remains at $3,000.

For questions or concerns, please don’t hesitate to contact us with any questions.

Thanks for your business and trust!

Allison Rumschik
Sycamore Financial Group

*Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Investment return and principal value of an investment will fluctuate. Investor value, when sold may be worth more or less than their original cost.

By |2019-10-31T05:02:35+00:00December 5th, 2018|2018 Newsletters|0 Comments

The Market is Volatile – Is this Normal?

Hello from Sycamore,

If you have been watching the news lately, you have likely seen that the markets have been volatile. What should you do you ask? We believe it is best to stay the course. These recent, large single day declines may seem a bit spooky, but when we look at the big picture, these are to be expected with an index that has increased in value over time. The Dow Jones Industrial Average (DJIA) has been around for over 122 years and in January 1975 the DJIA was valued a little over 600 points, now fast forward to 2018 we have seen the DJIA climb to well over 26,000 points.

If we learned one thing from some of our most volatile times: the great depression of 1929, black Monday 1987, Friday the 13th, 1989, the dot com crash of 2000, September 11, 2001, or the recession of 2008 – it is that markets are resilient. Historically September proves to be the worst performing month of the year and then October follows it and proves to be the most volatile month in the market. For these reasons we aren’t surprised by the volatility we are currently seeing. Looking back on the market we have also noticed you can’t avoid volatility, but you can persist through it.

We do however, understand seeing large single day declines may feel alarming, but if we look at the 10 largest single day point declines vs the 10 largest single day percentage declines it can point out that although the single day numbers are larger, the percentage declines are smaller. We may not like seeing the large point declines, but even a decline of over 1000 points is under a 5% change, making this much lower than the drops we have seen during even the most recent recession (2008).

Largest Single Day Point Declines Largest Single Day Declines by %
Rank Date Close Net Change % Change Rank Date Close Net Change %Change
1 2/5/18 24,345.75 -1,175.21 -4.6 1 10/19/1987 1738.74 -508 -22.61
2 2/8/2018 23,860.46 -1,032.89 -4.15 2 10/28/1929 260.64 -38.33 -12.82
3 10/10/2018 25,598.74 -831.83 -3.15 3 10/29/1929 230.07 -30.57 -11.73
4 9/29/2008 10,365.45 -777.68 -6.98 4 11/6/1929 232.13 -25.55 -9.92
5 10/15/2008 8,577.91 -733.08 -7.87 5 12/18/1899 58.27 -5.57 -8.72
6 3/22/2018 23,957.89 -724.42 -2.93 6 8/12/1932 63.11 -5.79 -8.4
7 9/17/2001 8,920.70 -684.81 -7.13 7 3/14/1907 76.23 -6.89 -8.29
8 12/1/2008 8,149.09 -679.95 -7.7 8 10/26/1987 1793.93 -156.83 -8.04
9 10/9/2008 8,579.19 -678.92 -7.33 9 10/15/2008 8577.91 -733.08 -7.87
10 2/2/2018 25,520.96 -665.75 -2.54 10 7/21/1933 88.71 -7.55 -7.84

Source Wikipedia

So back to the original question – is this normal? We feel it is.

Thanks for your business and trust!

Allison Rumschik
Sycamore Financial Group

*Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Investment return and principal value of an investment will fluctuate. Investor value, when sold may be worth more or less than their original cost.

By |2019-10-31T05:07:50+00:00November 13th, 2018|2018 Newsletters|0 Comments

Qualified Charitable Distributions – Summer 2018

Hello from Sycamore,

Qualified Charitable Distributions (QCD), a gift to charity may also be a gift to you:

A qualified charitable distribution is an otherwise taxable distribution from an IRA that is paid directly to the qualified charity. With the recent tax law changes and elimination of many itemized deductions, this may be the right year to ask us how this could help you or a loved one. If you are considering giving a gift to charity, read more to see if a QCD is right for you:

1. You must be over 70 ½.
2. You must have to take RMD’s from your IRA.
3. You do not itemize on your taxes.

Other items of interest:

1. Donations must be made to a charity that has been designated as a 501(c)(3).
2. The maximum annual deduction amount is $100,000 per individual.
3. Donations must be made during the calendar year.
(E.G.: January 1, 2018 – December 31, 2018).

Potential Benefits of QCD’s:

1. Reduce adjust gross income (AGI) for tax year the gift is given.
2. Lower taxes paid on Social Security.
3. Increase amount of deductible medical expenses.

Please feel free to call us if you want to discuss if a QCD is right for you 765-455-1554.

Thanks for your business and trust,

Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2020-01-13T08:20:20+00:00June 28th, 2018|2018 Newsletters|0 Comments

Tax Cuts and Job Acts – Spring 2018

Hello from Sycamore,

There are tax law changes that went into effect on 01/01/2018 and are set to expire on 12/31/2025. Sycamore, although not tax professionals, would like to point out some items that could have material affects to you. Below are some of the changes that may impact you – please consult a tax professional for advice and confirmation:

INCOME TAX BRACKETS: Federal income tax brackets were changed and most were reduced. While capital gains tax rates have remained the same, the brackets have increased slightly.

HOME OWNERS: If you own a home in a high-tax area of the United States you may be affected under the new law by a $10,000 limit on how much state and local tax (including property taxes) you will be able to deduct from your federal income tax. Home-equity loan interest will NOT be deductible under new tax law, whether you itemize or not.

529 SAVINGS PLANS: You may use funds of up to $10,000 a year from 529 accounts to pay for k-12 expenses at private institutions under the new law. The funds cannot be used for home schooling expenses.

YOU TYPICALLY FILE AN ITEMIZED RETURN: The standard deduction has increased from $6,350 to $12,000 for single tax payers, $9,350 to $18,000 for head of household filers, and $12,700 to $24,000 for married couples filing a joint return. If you are age 65 or over, blind or disabled, you can tack on $1,300 per married taxpayer to your standard deduction ($1,600 for unmarried taxpayers) Claiming personal exemptions has been one way to reduce your taxable income. Under 2017 laws the exemption amount was $4,050 each for individual, spouse, and dependent. Under the 2018 tax laws, the personal exemptions have been eliminated. Here are a couple examples:

1. Single – No Children

a. Standard deduction increases from $6,350 to $12,000
b. Personal exemption decreases from $4,050 to $0
c. Old tax break: $10,400 vs. New tax break: $12,000

2. Married Filing Jointly – Two Children

a. Standard deduction increases from $12,700 to $24,000
b. Personal exemptions decrease from $16,200 to $0
c. Old tax break: $28,900 vs. New tax break: $24,000
(https://www.investopedia.com/taxes/how-gop-tax-bill-affects-you/, 2018. Amy Fontinelle)

Under 2018 law, the deduction labeled as Miscellaneous Deduction which allowed tax payers to deduct expenses such as tax preparation, investment fees, and unreimbursed employment expenses has been eliminated.

ESTATE TAXES: The amount of your estate that will be tax free has doubled through year end of 2025 when the change is set to expire. Under 2017 laws the tax-free limit was $5.49 million for individuals and $10.98 million for married couples, the new limits are $10.98 million and $21.96 million, respectively.

INVESTORS: Under new law, the maximum corporate tax rate is 21% compared to a 2017 maximum rate of 35%. It has been nearly 30 years since corporate tax rates have been reduced under president Ronald Reagan. While we are not sure of what the outcome of the reductions will be, it would be likely to see potentially higher dividend rates, more competitive product pricing to place pressure on competitors, and expansion of business operations.

Thanks for your business and trust,

Craig Smith
Sycamore Financial Group

_________________

Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Invest return and principal value of an investment will fluctuate. Investor value, when sold, may be worth more or less than their original cost. The material in this presentation is for illustrative purposes and does not reflect any particular investment.

By |2020-01-11T11:25:31+00:00April 17th, 2018|2018 Newsletters|0 Comments