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How can anyone judge unless one’s mind has been opened and enlarged by reading?
– John Adams

Reading is still the main way that I both learn new things and test my understanding.
– Bill Gates

Books allow you to fully explore a topic and immerse yourself in a deeper way than most media today.
– Mark Zuckerberg

The more that you read, the more things you will know.
The more that you learn, the more places you’ll go.
– Dr. Seuss

As we close 2018, we’re pleased to share our favorite books of the past year with the clients and friends of the Janiczek community.

The Art and Science of Getting and Staying “On a Roll”

 I love adapting engineering and physics concepts to solve common financial problems many people, even financially savvy people, encounter all the time. That’s why I’m so excited about my latest invention, the Wealth Allocation Wheel.

Illustration 1

The challenge, in simple terms, is “staying on a roll.” There is an art and science to staying on a roll with your wealth. This means having enough inertia with your wealth to successfully navigate the Stages of Financial Freedom (see Illustration 1). The clear aim I have written about extensively is how to achieve controlled growth while avoiding short or long periods of stagnation or depletion.

MLPs May Increase Portfolio Performance

Owning oil and gas pipelines can add octane to a portfolio’s performance, particularly in today’s energy and economic backdrop.

It’s our job to help clients gain the proper exposure to safety, market and aspirational asset categories. It’s also our job to identify pockets of the market that, when available, have attractive fundamentals and/or characteristics worth considering. Oil & Gas MLPs in the midstream space (storing and transporting energy) has caught our interest for years and remain an asset class of interest. While we take care of researching and handling the details for our clients, it doesn’t hurt for you to pipe into the conversation. Here’s a quick primer on the space.

One asset class has rebounded to new all-time highs — U.S. small cap stocks.
Comparison of S&P 500, Russell 2000, Emerging Markets and Int'l Developed Indices

After a bullish 2017 and hopes of a continued global equity melt up, 2018 has instead reintroduced market volatility. Despite global market volatility, U.S. small cap stocks have rebounded to new all-time highs.

Factors influencing the success of U.S. small cap stocks

So what factors has caused this success versus larger capitalization stocks?

“The Return of Volatility.” “Volatility Is Back With A Vengeance.” These are some of the headlines recapping the first quarter of 2018. Many of them
discuss volatility and risk interchangeably, as though they were both the same … but they’re not.

Risk and volatility are different, and we intend to set the record straight. In this issue of Portfolio Matters, we cover the first quarter’s risks and volatility that was (and wasn’t) witnessed in markets, and provide investors some clarity on thinking about the two individually and separately…read more.

Tax season is in full swing, and it can bring some uneasy thoughts.  “How much will I get back?”  “How much will I owe?”  “Am I forgetting anything?”  “What can I expect next year?”

In a recent team meeting, one of our firm’s partners shared a question from a client that’s often not heard, “Why is my tax bill so low?!”

This client had been taking significant IRA distributions since the beginning of retirement as they had settled into a routine of travel and other retirement leisure.  Of course, IRA distributions are generally going to be taxed as income, and the client became accustomed to paying a steady tax bill each year.  In recent years, their travel slowed and their expenses correspondingly decreased, but their regular withdrawals had not.

Janiczek® Wealth Management is pleased to announce we have once again been named among the TOP RANKED WEALTH MANAGERS IN DENVER COLORADO by AdvisoryHQ. This ranking adds to a long list accolades going as far back as 2001 and as recent as 2018, including:

  • Barron’s
  • Financial Times
  • AdvisoryHQ
  • Worth Magazine
  • Mutual Funds Magazine
  • NAPFA
  • CIPA (best Business/Finance Book of the Year)

 

What separates the ordinary from the extraordinary? I believe consistently doing the best with what you have with daily choices and actions. In a word: habits!

When you use the power of choice and habit, outside forces play a secondary role. It doesn’t matter how educated you are, what occupation you choose, how much you earn or who you know. What does matter is what you do with what you have today.

Habits Make the Difference

For instance, take Gladys Holm who, as a secretary, earned no more than $15,000 a year throughout her life. Yet she left $18 million dollars to a hospital for heart disease research when she passed away! Gladys had the opportunity to invest in her employers’ stock over her career and she did. She also had the opportunity to invest in other stocks (like all of us do) and she did. She had the opportunity to participate in her employer’s stock option plan and did. Notice the trend… she had many opportunities and took advantage of each one to the degree she could with her modest salary. She became known for driving her fire-engine red Cadillac and delivering teddy bears to children at a local hospital in her Chicago neighborhood.

Lifelong learning.  It’s a core belief here at our firm, and we regularly read across a variety of topics.  I recently asked the team to share any of their favorite books from the past year, business or otherwise.  Below is what we’d offer up as our recommendations from 2017, and if you have any good book recommendations from the last year, please let us know!

Brady Siegrist

As my clients know, planning for the future eventually includes a conversation about mortality.

While the S&P 500 remained near its all-time high, the recent massive selloff in the technology sector went mostly unnoticed. But for investors who follow the so-called “FANG” stocks (Facebook, Amazon, Netflix, Google) the hit was painful: About $60 billion in value was wiped out in just one afternoon, representing the largest selloff in nearly 2 years.

The wipeout was a function of just how big these companies have become and the position they are in with new tax reform looming. Tech companies are expected to receive little benefit given its already-low average tax rate of 18.5% (below the 20% proposed rate).

This has caused investors to rotate out of the tech stocks and into the financial services sector, which stands to benefit more from a corporate tax rate that would drop from the current 35% to 20%.

Interestingly, the S&P 500 was relatively unaffected while this rotation into financials and out of tech ensued.  The index’s volatility actually remained low, as did correlations among the S&P 500’s member stocks.

In other words, the diversity offered by the S&P 500 Index allowed for the index too remain relatively unscathed by the trading within the tech and financial sectors, a key reminder to investors that having proper exposure across the markets continues to be important with the S&P 500 near its all-time high.

 


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