API 2nd Quarter Update 2009

Market update

Where is the recovery? Are we there yet? There are signs we are improving and some economic recovery is underway but there are other indicators signaling we may need more time. The media headlines announcing layoffs and closures are beginning to dim and hiring is beginning in some industries. Target announced today it is adding 9,000 jobs and if you work 20 hours a week, you receive full medical benefits, a 401k, life and disability insurance. Target believes unemployment has peaked for them. It is a fact that unemployment continues to rise even after the economic recovery is under way.

The media has been writing about the best quarter results we just had. In reality, the quarter was good because we declined to a market bottom (I hope) on March 6th.  By example, the Dow is down 3.7% year to date but was up 11% for the quarter.  The S&P 500 is up 1.8% year to date and is up 15% for the quarter. While the quarter rebound numbers are encouraging, it is the outlook for the end of the year and next year that I focus on.

“Knowing is not enough; we must apply. Willing is not enough; we must do.” Bruce Lee

Refinance Rules Changed July 1, 2009

The new Home Affordable Refinance rules were passed in March but did not impact the market very much. Under the March guidelines, homeowners could borrow up to 105% of their home value. Today, the loan to value amount is increased to 125% to those that use Freddie or Fannie loans. These new limits help those who owe more than their homes are worth. I am hoping they also make 40 or 50 year mortgages common. I support whatever it takes to help people stay in their homes and bring the payments into a range they can afford. We do not need more foreclosures diluting real estate values. The next wave of interest only loans and adjustable mortgages set to adjust is going to hit in July, August and September. I believe this wave will be the Alt A and documented loans but perhaps, at this time, homeowners may have lost their job and cannot afford to pay an increased monthly payment. If their loan cannot be modified, they will go to foreclosure.


Blog updates

Are you subscribed to our blog? We have been busy blogging trying to keep you up to date in areas of interest. These are the most recent titles we have posted this quarter: Property tax and loan modification scams, Orange County Home prices will still decline as median price rises; FDIC Extends Coverage Limit and New Credit Card law; Pension lump sum distribution rule changes; Zillow estimates; Helping Seniors with Daily Living; Market gains since March low; and Ways to save money.

We welcome areas of interest from our clients.  If you have a question about something or think others should be aware of a new scam, etc. please let us know.

“In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.”––Teddy Roosevelt

Credit Card interest rates rise

Citi raised interest rates on up to 15 million credit cards today. I expect more banks will follow suit as they begin to adhere to the new guidelines dictating when they can raise rates. Make sure your credit card bills are paid on time as you leave on vacation this summer. Making even one payment late gives the company a reason to cancel your card and new cards are harder to obtain right now.

California’s Budget Woes

California's state controller is ready to issue more than $3 billion in IOUs this month as the state's budget stalemate wears on. The IOUs are technically called individual registered warrants. It's not the big companies that will suffer most from getting a promise instead of cash, but small businesses that rely on state contracts.  It's also unclear if some of California's biggest banks will accept the IOUs.  Currently only Bank of America has confirmed that they will honor the warrants.  IOUs will also be sent to California counties, which now must find other ways to fund a wide array of social programs.  Governor Arnold Schwarzenegger declared a fiscal state of emergency July 1. State offices will be closed three days a month to conserve cash.

How does this affect California bonds?  Right now, the market still believes that bondholders will be paid in cash on a timely basis. In California, bond interest payments are 2nd on the priority payment list after education funding.  Let’s hope that the state legislature can cut spending and balance the budget soon.


Wishing you a relaxing, stress-free enjoyable Summer!

Sandy, Carol, Joanne and Erin

API 1st Quarter Update 2009



Asset Planning’s Open House

It was great to see so many of you attend our open house on March 5th. The photo exhibit of Italy by Jules Reuter was enjoyable; as were the wines he poured and talked about. Thank you for attending and helping us celebrate our new office.


A positive month for the market

March gave us a 23.11% return in 13 trading days: the best since 1938.  The market surged over the past two weeks as we began to see signs of recovery and hope from several sectors of the market. The key indicator is the trend in payroll, excluding farming. The highest month for job loss was December with 681,000. January continued with 655,000 jobs lost. February had another 651,000 jobs lost in that month. Each month is a smaller number of jobs, even though the number of jobs lost is astounding. March data is being released on April 3rd, but ADP is estimating 730,000 jobs were lost verses the Labor Department’s estimate of 663,000. The most jobs lost in 2009 have been in New York but the sectors that have the biggest losses are financial, automotive and retail. Another key trend indicator is volume. I will believe the rally has depth when I see a significant increase in volume with rising prices. This means new buyers are coming into the market.


The banks led the market rally during the week of March 17th to 31st.  When banks appear to stabilize and look forward to profitable status, the market rallies. Several banks have begun to talk about repayment of their TARP money, which is a very good sign. I think the banks have now realized how hampered they are if they continue to operate with TARP money. Their incentive bonus pool is dry, their CEO’s (and other executives) salary is under a microscope and they are being watched by very angry public shareholders.  President Obama and Congress lashed out at AIG and made their bonuses subject to a 90% tax.


“In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.”––Teddy Roosevelt






Asset Planning Blog – Our current thoughts

Are you signed up? When you sign up and confirm, a copy of the blog is email directly to you. I do try and post at least once per week and Carol also recently blogged about the proposed tax changes. Since this newsletter comes quarterly, the blog is my way of staying in touch with current events or changes. I also try and explain what is going on in Washington with the Federal Reserve Board, Congress or Tim Geithner, from my perspective.   Things are changing so quickly on a daily and weekly basis;  you can keep in touch from our blog.  Go to www.AssetPlanningInc.com and click on blog to sign up.



Mark- to- market and uptick rule

I think the market has already anticipated the restoration of the mark-to-market rule. This would help give the banks more flexibility in putting a value on mortgage assets they are holding that do not have a ready buyer at this time. The assets may have value and cash flow but if a buyer is not able to come forward to purchase it, it does not have liquidity and cannot be sold in today’s market and must be marked down in value to reflect that. This rule would restore some value on the banks balance sheet and lessen pressure to raise more capital. This vote will take place April 2nd.

The uptick rule is something that never should have been removed by Christopher Cox’s SEC.  (See my quarterly comments in April 2008!) When this rule was removed, it allowed the naked short sellers to pummel a stock to the ground. This means you could sell a stock you did not own (naked) and continue to drive the price down. The uptick rule was in place and meant you could not sell a stock until the stock had risen at least 1/8th in price- thus an “uptick” in the price. This stopped many of the short sellers. Stock prices have been driven down and it must be reinstated by Mary Shapiro, the new SEC chair.  


Asset Planning in the news

In a consumer survey conducted through Orange Coast Magazine, Sandy was nominated as a “ FIVE STAR: Best in Client Satisfaction Wealth Manager”. Our deepest gratitude goes out to our clients that made this honor possible. Details on the survey are enclosed and you can look for us in the 2009 March issue of  Orange Coast Magazine.


      "Our attitudes control our lives.  Attitudes are our secret power working twenty-four hours a day, for good or bad.  It is of paramount importance that we know how to harness and control this great force."             Tom Blandi   

API 4th Quarter Update 2008



Happy New Year 2009!     

     USC beats Penn State 38- 24

The Good, the Bad and the Ugly.

The Good: Once again, my Trojans were the highlight of my year. USC has played in the Rose Bowl the past four years.  Fourteen of my cousins are coming from Minnesota next year to see the Rose Parade since they sit at home in mounds of snow and see our beautiful sunny weather. The Trojans have won seven consecutive Pac 10 conference titles and played in seven consecutive BCS bowl game, winning six.

The Bad: The market closed out 2008 with the worst year since 1931, with a loss of 38.5% for the S&P.  The Dow dropped 33.8% and NASDAQ turned negative 40.5% for the year.  It is safe to say that many unprecedented events took place this calendar year that will never happen again.  There were so many panic areas: banks failing, brokerages falling to liquidation points, insurance companies at risk, airlines in bankruptcy, auto makers on the brink of disaster, commodity prices soaring and then crashing. 

The Ugly: New York finds Bernie Madoff living in his penthouse apartment, instead of jail, after he confessed to a 50 billion dollar fraud of investments from charities, foundations, pensions and investors.  It was announced this morning that he mailed over one million dollars worth of jewelry to friends and relatives over the past few days. I do not understand why he is under house arrest instead of jail.

"Our lives are not determined by what happens to us, but by how we react to what happens; not by what life brings us, but by the attitude we bring to life.  A positive attitude causes a change reaction of positive thoughts, events and outcomes.  It is a catalyst, a spark that creates extraordinary results."  Anonymous

We have been a nation of spenders and we need to become savers instead. I think the economy in recession, rising unemployment and foreclosures is scaring many people to their core. More lay- offs are coming from all sectors.  The housing debacle has shaken the employment in banks, financial and mortgage, home builders, construction, home improvement, and more. It is not over yet. The next wave of the Alt A adjustable rate mortgages are due to reset their interest rates in 2009 to 2011. The move to cut interest rates to almost nothing will put pressure on mortgage rates to stay low in hope that these Alt A mortgages are refinanced, instead of foreclosed on.

Are retirement dreams deferred? Even conservative asset allocation portfolios saw losses of 20 to 30% in a matter of weeks. Panicked selling by hedge funds that were overleveraged brought the market to volatility never seen before. The market moving by over 400 points in the final trading hour of the day became the norm in October and November.

I wish president elect Barack Obama success with his new cabinet appointments and his crisis team. President Obama will take office in less than two weeks in the midst of the worst financial crisis this nation has ever faced.  My daughter will be at the inauguration to witness history in the making.

We look forward to seeing you in our new offices! Sandy

"Keep your dreams alive. Understand to achieve anything requires faith and belief in yourself, vision, hard work, determination, and dedication. Remember all things are possible for those who believe.” Gail Devers

Notes from Carol:

Please check out our blog on this site and sign up for email notices of each new post.  This is our way to keep in communication with you in these hectic economic times.


2009 Tax Changes - Here are some highlights of the changes:


Required Minimum Distributions from IRAs and Retirement Accounts are WAIVED for 2009

This means if you are over 70 ½ you will not have to take a mandatory distribution from your accounts.  You will not have to make this up, the Treasury is letting you skip the distribution.  This waiver also applies to Inherited IRAs.  We will be sending a letter if this applies to you.


IRA and 401K:

Working taxpayers can put more money away for retirement.  The maximum 401K, 403B and 457 contribution increases to $16,500 and anyone born in 1959 or earlier can contribute another $5,500, for a total of $22,000.  There is no change for IRA and Roth IRAs.  The limits remain at $5,000 plus $1,000 if you are born in 1959 or earlier.


Roth IRA:

The Roth contribution limit phase out for couples is when AGI (adjusted gross income) is $166,000 to $176,000 and for singles it is $105,000 to $120,000.


Estate Tax:

The estate tax exemption is increased to $3,500,000 with the top tax rate at 45%.  The lifetime gift tax exemption is still at $1,000,000 and the annual gift tax exclusion rises to $13,000 per donee.


Realized Losses and Gains for 2008

I will be mailing out the 2008 realized Capital Gains and Loss reports the last week of January.  This will have the cost basis and net proceeds for any sales.  It will also have the capital gains and dividends paid for the year.  You will need this in addition to the 1099s that you will receive from Schwab or TD Ameritrade to give to your tax preparer.


Wishing you a Happy, Healthy and Prosperous New Year!  Carol Somoano

API 3rd Quarter Update 2008

Moving news!
10833 Valley View St  Cypress, CA 90630

It’s official – we’re moving! We signed a new lease and we will be moving our office two miles east on Katella Ave. Our new office will be twice as big as our current location. Construction is beginning on the build out and we hope to move into the new space in mid December. We will be on the fourth floor of the building, on the corner of Valley View and Plaza, behind the El Torito.

“May you live in interesting times”  - ancient Chinese proverb and curse.  It is thought that the phrase comes from a saying which means leaders are made in turbulent times. If that is true, I pray the new leaders will come forward and lead us out of this turmoil.

Our markets are changing at a very rapid pace. In response to that, we are working on a new web site. I will have the ability to post a blog comment on the website and you will be able to read my thoughts as often as I post them. This will give us the ability to communicate to our clients more frequently. We are living through a global liquidity crisis and it is causing a financial meltdown of the markets.  Even with the turbulent headlines, very few of you have called us. Many of you sent emails, expressing support for us and the stress we are under. One client brought us flowers to cheer us! We appreciate the support you have shown and we are doing everything we possibly can to steer a clear course through these waters.  Without a doubt, this is the hardest time I have ever had trying to predict the market. The melt down we had on Black Monday in 1986 was dramatic, but pales, compared to the market of the past few weeks.

An excellent article on the Rescue plan is on the New York Times website called Rescue the Rescue by Thomas Friedman. I think it is correct because the average taxpayer does not understand the magnitude of the liquidity crisis and how it will come to play a part in their lives. The major credit card companies are doubling the minimum monthly payment due from 2% to 4%. I think this is a good thing if some consumers pay off their debts sooner. However, an estimated 40% of cardholders carry a balance from month to month and the low minimums free up cash. Consumers tend to charge the amount that they believe they can afford, via the minimum payment due, not the total amount they can pay.  I feel more consumers will not be able to pay the new minimums and begin to be pay late. The average American with a credit file is responsible for $16,635 in debt. For every four dollars paid to a credit card, one dollar is toward a late fee.  This will hurt all of us in terms of liquidity and decreased consumer spending.

"Hillary Clinton went from top political cougar to mortally wounded kitty in just three short days, courtesy of John McCain's choice of Sarah Palin."   - Jim Woods

An excellent article from The New York Times explaining how we got into the financial crisis:


Recent headlines we have seen in the past month

Dow dives 777 points as the bailout fails to pass; up nearly 500 points the following day
Citigroup buys Wachovia Bank
Lehman Brothers, 158 year old firm, files largest bankruptcy ever
Washington Mutual fails and is bought by JP Morgan
Freddie and Fannie Mae bought by the government
AIG bailed out by purchase of the government for 85 billion
Bear Sterns failed and fell into bankruptcy
Lehman Brothers sells Neuberger Berman
Money market fund, the Reserve, falls below $1 a share
Bank of America buys Merrill Lynch

The market in changing daily; bailouts, bankruptcies, and purchases and sales are taking place on the weekends. My Sunday evening is now spent watching the markets unfold in Asia and Europe. The futures trading give an idea of how the US market will open.

Year to date shows the Dow -18.2%; NASDAQ - 21.5% and the S&P a negative 20.57%.  This past Monday (September 29) in particular, the market reacted fiercely to the current events, the Dow dropped -7%; Nasdaq – 9.1% and the S&P – 8.8%.

We have sold positions on a global basis and moved some cash to government securities. We actually had more clients call us about bank failures and where to move their money than to ask us about the stock market. Know that we are working around the clock to address the situation, evaluate, analyze, and determine an outcome for all stocks and mutual funds. If I feel it is prudent to raise cash levels, we will do so, even if it means selling in a depressed market.

October is Breast Cancer Awareness Month    

One in eight women will be diagnosed with breast cancer. Have a mammogram and encourage those that you love to do the same. Be diligent with exercise and eat healthy in these stressful times. 70% of those diagnosed do not have a family history of the disease. 87% of  women that carry the BRAC gene will develop breast cancer. Please support and donate to the Avon Walk, American Cancer Society and the Susan G. Komen Foundation to find a cure for this disease.

Enjoy the Fall Holidays!  
Sandy Field

Notes from Carol: 

As of this writing, the Senate has passed the bailout package to have the Government act as the lender of last resort and we are awaiting the House vote.  What caused the problems and how and why it happened and who should be punished is going to be argued and debated for a long time.  But right now the problem needs to be addressed.  The banking system is frozen.  And if banks refuse to lend money to you, the people, who make the economy run, then the consequence will most likely be a massive recession.  The United States makes up 4% of the world population, but its stock market capitalization represents more than a third of the world’s wealth.

Congress is taking its cue from you.  I emailed my congresswoman and it took me over half hour to get it through because of everyone that was on the system at the same time.

In regards to our office move, the plan is for our phone number and email addresses to stay the same.  The new website should be up Mid-October.  We will do our best to keep you informed.

Stay healthy and Don’t forget to Vote!
Carol Somoano


API 4th Quarter Update 2005

  I wanted a close game, but not quite that close. My Trojans played in the Rose Bowl on January 5th but did not win to capture the National Championship. Vince Young of Texas is an amazing athlete and our defense could not contain him. The Trojans did, however, have a 12-0 season and played great all year long. They won 34 games in a row, thanks to Bush, White and Leinart.

Disaster Preparedness
Since I tell my clients to be prepared for any emergency, you should know Asset Planning has a written plan in case of emergency. I have backups of computer records, account information, and client contact information stored off site. If our building was damaged, I have systems in place and the staff is directed to report to my home to work. The computer systems and records are able to be accessed and are in place. We have call forwarding from our office phones to my home location so we are able to contact clients and manage our client��s accounts.

Medicare Part D and Medigap Insurance
Medicare Part D, or prescription plan coverage, became effective January, 2006.

Medigap plans were systemized many years ago into ten different plans, labeled A to J. Plan A is the basic plan. Plan B to J offer the same basic plan, with benefits added as you go up the alphabet. Two new Medigap policies, plans K and L, will arrive the same time as the Medicare Part D. Current Medigap plans H, I and J (the three plans that include prescription-drug coverage) will be phased out. If you have one of these plans, you can keep it but the drug coverage is inferior to what you would get with Part D. However, the premium for these plans will drop to offset the coverage afforded with Medicare. The best plan of action is to sign up for Part D and switch to plan A. B, C or F. If you make the switch within 63 days of the effective date of your Part D coverage, you will have guaranteed coverage and there is no waiting period for preexisting conditions.

The new plans K and L will have higher deductibles plans with lower premiums. These are more in line for those willing to self insure, since the coverage is less. If you have an old plan, you probably want to keep it and not buy a Part D plan.

You may receive marketing materials from companies trying to persuade you to switch plans. Most retirees should probably stick with their existing plans but first need to check the new plans against their existing coverage to see if the price and coverage warrant a change. UnitedHealthcare/AARP and United American Insurance intend to market one stop shopping for Medigap and Medicare drug coverage.

The Center for Medicare Advocacy is offering information via www.fairmedicare.org and they have ��Medicare Minutes�� you can listen to. This is very informative and they post a new message each month. December��s recording is on Part D. You can also try www.medicare.org for a complete listing of plans. You can list up to 25 drugs you are taking and compare three plans to see how the plans would cover the drugs you are taking.

Asset Planning, Inc Seminar
If you have an interest in attending an educational seminar on Medicare Part D, Medigap plans or on the nuts and bolts of Social Security changes, let us know. If enough of our clients have an interest, we will book a speaker and hold an educational seminar. We never allow anyone to try to sell products to our clients and will never disclose our client��s names or personal information.

How the equity and bond markets fared for 2005
The market was flat to choppy much of the year, again gaining ground in November and December. The S&P gained 3.1% for 2005, Nasdaq up 1.4% and the Dow Jones down 0.6. Gold and energy sectors gained much more. The S&P and Nasdaq hit four-and-a-half year highs on Dec 13, but lost ground by the end of the month. Bond funds struggled to eke out gains, as the intermediate bond category was up 1.75% for the year. International and Mid Cap funds did very well and value beat growth in large caps. Growth funds are showing signs of life, if rising interest rates do not hinder our economic growth, this may indicate a shift in leadership for the market.

Key numbers rise in 2006
The 401k, 457 and 403b limits rose to $15,000 with the catch up provision of $5,000, totaling $20,000. IRA contributions of $4,000 can be made in 2006, with an additional $1,000 for catch up for those over age 50. You have until April 15, 2007 to make a contribution for 2006.

The Social Security wage base is $94,200 for 2006, an increase of $4,200. That will be $260 more in tax for those highly paid workers. An increase in Social Security benefits to retirees rose 4.1% and the Medicare Part B premium is $88.50 per month, up $10.30.

IRA and SEP contributions need to be made by April 14, 2006. If you mail the contributions to us, it must be in our hands by April 10, 2006 to allow us to forward the check and post it to the account. I will be on vacation April 14th to 21st for Easter vacation and celebrating that tax season is over.
Fed Funds rate on the rise again

At the meeting on December 13, the Fed raised rates for the 13th straight time, to 4.25%. The next Fed Funds rate increase is expected to occur at the end of January.

We are currently showing an inverted yield curve, where short term rates are above long term rates. On December 27, the yield curve briefly inverted, based on the two and ten year treasuries. This is an important signal to watch as an inverted yield curve is indicative of an economic slowdown or recession. While this has produced a recession in the past, Greenspan argues that it needn't do so this time because of the reason for the inversion. Short rates are above long rates, not just because the Fed is tightening, he says, but also because lots of foreign money is being invested in long Treasuries. (I wrote about this last quarter)

My feeling is that one or two more rate increases may come by the end by March. Alan Greenspan's successor, Ben Bernanke, will be closely watched and analyzed.

Getting things done is not always what is most important. There is value in allowing others to learn, even if the task is not accomplished as quickly, efficiently or effectively. --- RD Clyde

Write your goals for both 2006 and 2007 and outline the steps you will take to achieve them. Take small steps and make progress monthly. Live for today but look toward tomorrow. Dream Big!

Sandra Field, CFP, MBA, CSA