JFS Insights QTR Jan pub

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JFS Insights QTR Jan pub Powered By Docstoc
					       Quarterly Newsletter
                                                                                                             Volume 10, Issue 1

                                                                                                             January 2012

                  JFS insights

Inside this issue:                    Is It Time to Refinance?
Changes to Cost Basis       2            With mortgage rates at an all   role in securing a good mort-       considering a refinance, the
Reporting                             -time low, many borrowers are      gage rate. In fact, you’ll need a   savings should outweigh these
                                      considering refinancing their      good credit score to qualify for    expenses, so calculate the
Banks vs. Credit            2         homes. Most people refinance       any type of mortgage at all.        breakeven point. If the breake-
Unions                                to save money. Depending on        3. What are my financial            ven point is 15 months and
                                      your situation, a refinance can    goals? Many homeowners              you plan to stay another five
Toolbox                     3         save money in two ways –           refinance to lower their            years or longer, then it’s proba-
                                      lower payments or lower inter-     monthly payments. Others            bly worth it. However, if you
JFS Small Group             4         est rates. Although the rates      choose a shorter-term loan          plan to move in two years, you
                                      sound great, lenders have tight-   with higher monthly payments,       may want to reconsider refi-
                                      ened up the approval process,      so the overall interest paid is     nancing.
                                      making it more difficult to get    reduced. But, owning your           5. What are the terms of my
  Performance Reports                 a loan.                            home sooner should not out-         current loan? Borrowers with
      Get a Facelift           suggests ask-       weigh other financial goals,        adjustable-rate mortgages or
                                      ing yourself these six questions   such as saving for retirement,      interest-only loans should con-
   Over the years, we have received   before a refinance.                paying off high-interest debt,      sider the potential benefit of
valuable feedback from our clients    1. Do I have equity in my          or saving for college. Another      switching to a fixed-rate loan.
regarding our performance reports.    home? Homeowners need to           consideration is whether or not     Consider any other restrictions
Thanks to advances in technology      have at least 20% equity in        you want to retire without a        on your loan, such as an early
from our service providers, we are    their home to qualify for a new    mortgage.                           payment penalty. If you have
able to improve the layout and                                                                               had your current mortgage a
                                      loan without paying private        4. How long do I plan to
design of our performance reports                                                                            long time, more of your pay-
while incorporating some of our
                                      mortgage insurance (PMI).          stay in the home? Remember,
                                      Some people opt to bring cash      refinancing is much the same        ment applies to principal. By
clients’ best suggestions. The new                                                                           refinancing, you will restart the
performance reports will be imple-    to the settlement in order to      process as when you obtained
                                      pay down their loan balance to     your original mortgage. There       amortization process and most
mented March 31, 2012.                                                                                       of your monthly payment will
                                      qualify.                           will be similar settlement fees:
   Changes will include net cumula-                                      application fee, loan origina-      be credited to interest again
tive contributions versus account     2. Do I have good enough
                                      credit? Credit scores play a big   tion fee, appraisal fee, etc. In                    continued on page 2
value and household level report-
ing. Several features remain the
same, including standard bench-
   With the next standard mailing,
                                      Market Comments
we will send additional details          The final quarter of 2011       the quarter and 7.85% for           balancing the need to reduce
along with an explanation page to     ended on a positive note, and      2011.                               debt levels yet continue to
help you read and understand your     although the gains did not                                             meet entitlement spending and
report. In addition, we will be
                                                                            Many causes for concern
                                      erase the losses of the year       remain in the economies of the      critical defense and infrastruc-
providing an online demonstration     overall, the results and the                                           ture spending and maintain an
of the new report format and will                                        world: U.S. growth as meas-
                                      various reports coming in for      ured by the Gross Domestic          appropriate level of social ser-
address anticipated questions and     2012 lead us to guarded opti-                                          vices and benefits plagues most
concerns at that time. Details re-                                       Product (GDP) was adjusted
                                      mism. Indexes we compare our       downward to 1.8% for Q3,            developed countries. Where
garding the demonstration will be
                                      portfolios to show the fourth      anemic at best; the Eurozone is     does one find the delicate bal-
emailed to clients and posted on
our website by March 15.
                                      quarter and year end returns as    facing a likely recession due to    ance between finding a way to
                                      follows: S&P 500, 11.81% and       the debt problems of a number       increase revenues without
                                      2.11%; Russell 2000, 15.47%        of its members; and the slower      causing the economy to con-
                                      and (4.18%); and MSCI-             than normal recoveries in de-       tract? Where do economic
                                      EAFE, 3.28% and (11.83%).          veloped markets are hindering       necessity and political reality
                                      The Barclays Capital Aggregate     growth in emerging markets.         meet and find a compromise?
                                      Bond index was up 1.12% for        Resolution of the problem of                        continued on page 3
Page 2

                                             Changes to Cost Basis Reporting
                                                Pursuant to recent changes in      purchased in 2011.                 should carefully review any
           The JFS Team                      securities regulations, beginning        Additional enhancements to      cost basis information report-
President                                    with 1099s issued for the 2011        cost basis reporting will con-     ed on their 1099s and forward
 Robert C. Jazwinski, CPA/PFS, CFP®          tax year, cost basis information                                         any questions to either their
                                                                                   tinue to be phased in as re-
Chief Operating Officer                      for some securities will begin to                                        financial advisor or custodian.
 Laura J. Blaire, IACCPSM., MSM                                                    quired. Accordingly, investors
                                             be included on the forms.
Chief Financial Officer
 Janet J. Earle                                 While brokerage firms
Pittsburgh Office                            could elect to include cost
 Sarah J. Amey, CFP®
                                             basis for a number of
 Ron Wyatt, CFP®, CIMA®, ChFC®, CRC®
 Debra A. Malvin                             different types of securi-
Advisors                                     ties, JFS has elected to
 Anthony S. Burt, CFP®, CIMA®, AIFA®         include only the cost basis
 Karen L. Chikosky, CFP®                     currently required by law.
 Gary A. Dalessandro, CPA/PFS, CFP®
                                             This means, cost basis for
 Janelle M. Fumerola, CFP®
 Amanda L. Marcello, CFP®
                                             “covered” securities will
 Stephanie J. Rossi, CFP®                    be on 1099s for accounts
 Deborah A. Stiger, CPA/PFS, CRPS®           managed by JFS. A cov-
Wealth Management Support                    ered security may include
 George Christoff                            any stock or ETF that was
 Patricia B. Chupak
 Amy E. Klenec
 Christine L. Paroz
 Jeffrey A. Pendel, ATP
 Toni M. Rossi
 Tracey M. Schimp
                                             Banks vs. Credit Unions
 Amanda R. Smith                                                                                                      deposit insurance. Credit un-
                                                The 2008 financial crisis and      that field can be broad, includ-
 Karen Truchan, RP®                                                                                                   ion members elect a board of
                                             its aftermath have forced new         ing an employer, church,
Business Retirement Plan Support                                                                                      directors from the member-
                                             rules and expenses on banks.          school, community or employ-
 Tammie L. Bernard                                                                                                    ship in democratic fashion.
                                             While some of those rules, such       ee group. The vast majority of
 Nancy J. Robertson                                                                                                   Banks, however, are run by a
                                             as bans on high overdraft fees        consumers, especially in large
Operations Department                                                                                                 group of investors, and the
                                             and limitations on interchange        communities and cities, have
 Robert R. Collins                                                                                                    primary purpose is to make
                                             fees, are good for consumers,         an opportunity to join a credit
 Stephanie E. Foltz                                                                                                   money for the investors and
                                             they resulted in a decline in reve-   union. You can find a credit
 Debbie Jarrett                                                                                                       stockholders.
                                             nues, forcing banks to build new      union near you at the Credit
 Sally Jazwinski, MBA                        revenue streams. On September         Union National Association            Whichever you choose,
 Amanda B. Kusluch                           29, 2011, Bank of America an-         website,         make sure to do the research,
 Carla A. Regginello                         nounced a $5 monthly debit card          Credit unions are offering
 Janice Schwanbeck, MA                                                                                                weighing the pros and cons to
                                             fee. By November 1, Bank of           more and more services that        make a smart decision regard-
 Erin B. Steele                              America was so heavily criti-         are found at traditional banks
 Paula L. Visniesky                                                                                                   ing your money, and to be
                                             cized, it abandoned the plan. On      but with a community orient-       sure you’re getting the most
                                             November 8, CNN Money re-             ed slant. They often are able to   out of your banking institu-
                                             ported that 40,000 people joined      offer higher interest rates on     tion.
                                             credit unions during the ‘Move        CDs and savings accounts and                                     §
                                             Your Money” and “Bank Trans-          checking accounts with less
                                             fer Day” movements held No-           fees. They are able to offer
                                             vember 6.                             competitive rates on various
     “It’s not your salary that makes
                                                Consumers are growing weary        loans and credit cards. Al-        Is It Time to Refinance
     you rich; it’s your spending habits.”                                         though credit unions are lim-
                                             of banks and their steady on-
                                                                                   ited to the number of branch-      and not to building equity.
                     - Charles A. Jaffe      slaught of fee increases, so they
                                             are looking for alternatives.         es available, many offer a wide    6. Do I have a second mort-
                                             Some are turning toward credit        ATM network and online             gage or line of credit? Bor-
                                             unions, which is a cooperative        banking.                           rowers with a second mort-
                                             financial institution that is           While banks are insured by       gage will face additional com-
                                             owned and controlled by its           the Federal Deposit Insurance      plexity when refinancing. The
                                             members (customers) and is a          Corp. (FDIC), credit unions        lender in the second position
                                             nonprofit operation. Although a       are insured by the National        must agree to stay in second
                                             credit union is required by law to    Credit Union Administration        position, which the lender may
                                             define its field of membership,       (NCUA), which mirrors bank         or may not be willing to do.
                                                                                                                                                           Page 3

     Market Comments, continued
        We see reason for optimism in
     several areas. Despite the down-
     ward adjustment to GDP for
                                           rates remain in record low
                                           territory. At this point even
                                           small increases in new home
                                                                                    back to long-term average
                                                                                    returns. Over the 10 years
                                                                                    ended in December 2011,
     Q3, which was caused largely by       construction will lead to great-         however, markets as measured           The U.S. jobless rate at the end of
     consumers spending less for           er job growth, as construction           by the S&P 500 were up only            December 2011. Data surpassed
     services, indicators are pointing     employment has remained                  2.9% on an average annual              economists’ expectations and
     to improvements in Q4 and             depressed. Greater job growth,           basis. Arguably, the future            marks a six-month stretch in
     2012. In December, the unem-          of course, will lead to higher           should hold better returns in          which the economy generated
     ployment rate dropped for the         spending and thus more job               order to make the next rever-          100,000 jobs or more in each
     fourth straight month to 8.5%,        creation as demand increases.            sion upwards! Whether the              month.
     the lowest level since Feb-
     ruary 2009. In December,                         Index returns for periods ending December 31, 2011                                     Source: New York Times

     200,000 net new jobs                                        3 Months        1 Year         3 Years          5 Years
     were added, while for the
     year 1.6 million jobs were 100% Stocks                         9.6%         -3.9%           12.7%            -1.4%
                                                                                                                           We strive to provide excep-
     added to the U.S. econo- 100% Bonds                            1.1%          7.8%            6.8%             6.5%
     my. The Institute for
                                                                                                                           tional service. If you are
     Supply Management re-                                                                                                 pleased with the services
     ported that the U.S. man-     Stocks          Bonds                                                                   you receive, the highest
     ufacturing and service 75%                  25%                7.5%         -0.9%           11.2%             0.5%    compliment you can give is
     sectors continued to ex- 60%                40%                6.2%          0.8%           10.3%             1.7%    a referral to your friends
     pand last month with
                                 50%             50%                5.4%          2.0%            9.7%             2.5%    and family members.
     both sectors up from the
     November readings. The      40%             60%                4.5%          3.2%            9.2%             3.3%
     Conference Board and 25%                    75%                3.2%          4.9%            8.3%             4.5%    Please contact our office
     University of Michigan                                                                                                directly if there is any
     consumer        confidence The table summarizes returns from stocks and bonds by various asset allocations. Stocks    change in your financial
     indexes both rose sub- include 1/4 allocated each to large growth and value; 1/12 allocated to each small growth
                                                                                                                           condition or investment
     stantially in December, and value; and 1/3 allocated to foreign. Returns for 3 and 5 years are annualized. Past
     beating the expectations performance is not indicative of future results.                                             objectives.
     of economists. Finally, the
     U.S. housing market appears to        With more tax revenue to                 increase in market prices
     be slowly regaining some mo-          governments from the newly               comes in 2012 or sometime
     mentum: construction spending         employed and smaller costs to            thereafter, the corporate earn-
     beat analyst expectations by          support the unemployed, the              ings are at record levels while
     increasing 1.2% in November;          gap between revenue and ex-              markets continue to be at very
     home sale contracts reached a 19      penses will slowly contract.             low price earnings multiples
     month peak in November for a          These small steps will poten-            and are thus poised for future
     5.9% annual gain. J.P. Morgan         tially lead to a virtuous circle         gains. The challenge is in
     statistics show that the cost of      where continued increases in             maintaining our confidence             TOOLBOX
     owning a home now is signifi-         employment lead to greater               and our asset allocations to be
     cantly less than renting, which       spending and investing and               able to make the future market         What is the CNN Effect?
     should encourage qualified bor-       higher GDP and, ultimately, to           gains our personal gains. Our
                                                                                                                            A theory that seeks to explain the
     rowers to consider purchases.         a solution to reduce debt and            mantra continues to be that
                                                                                                                           effect that 24-hour news networks
     Home prices did continue to           improve both the U.S. and                your decision to stay in the
                                                                                                                           have on the general political and
     decline slightly and mortgage         global economies.                        market now may be one of the
                                                                                                                           economic climate. Because media
                                              Many challenges remain,               most important you make for
                                                                                                                           outlets provide ongoing coverage
                                           and, even with increased em-             your future wealth accumula-
                                                                                                                           for a particular event or subject
e?, continued                              ployment and better housing
                                              markets, new ones will surface.           We encourage you to con-
                                                                                                                           matter, the viewers’ attention is
                                                                                                                           narrowly focused for potentially
     You may want to combine a                The dynamics of the U.S. and           tinue in your recommended             prolonged periods of time. The
     second mortgage into the new             global economies are likely to         asset allocation unless some-         CNN effect can therefore cause
     mortgage, especially if there will       lead to future gains in stock          thing significant has changed         individuals and organizations to
     be additional cost savings.              markets. Much discussion has           in your life. Please don’t hesi-      react more aggressively towards
                                              been held about the concept            tate to call us with your con-        the subject matter being examined.
        The important thing is to con-        of “reversion to the mean,”            cerns and to continue planning        For example, by focusing on natu-
     sider all the alternatives, shop         and that with the strong stock         for your future. You continue         ral disasters, news outlets may
     around for the best terms, and           market gains of the 1980s and          to be our number one priority,        influence consumers and investors
     speak with a qualified mortgage          1990s, we had to expect that at        and we remain committed to            to react drastically to what is un-
     specialist before doing anything.        some point markets would               helping you meet your goals.          folding.
                                        §     lose ground in order to revert                                         §
                                                     JFS WEALTH ADVISORS

                                                     1479 N. Hermitage Road 
                                                     Hermitage, PA 16148 

                                                     Phone: 724‐962‐3200 
                                                     Fax: 724‐962‐4611 

                                                     Thank you to all of our clients
      Relationships Built on                         for allowing JFS Wealth
         Loyalty and Trust.                          Advisors to serve your finan-
                                                     cial needs. We appreciate the
                  Use your
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                  scan our QR                                                organizations, assisting them with meeting life’s challenges and financial goals.
                  code to take you
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                                                                                   JFS Small Group Seminars
                                                     March - Fixed Income Strategies.                               planning and managing their finances.
                                                       Ron Wyatt will discuss different principals                     Advisors will extend invitations to clients that they
                                                     regarding fixed income strategies. This semi-                  feel will benefit most from the topic. If you have a
A copy of the JFS Wealth Advi-                       nar will be held in Pittsburgh and Hermitage.                  specific interest in a topic, please let your advisor
sors’ privacy disclosure and                         April - Protect Yourself from Identity Theft                   know so that we are sure to include you. In addition,
                                                                                                                    you are welcome to bring a guest who would find the
Form ADV Part 2 are available                           According to the Bureau of Justice Statis-                  information helpful. We also welcome suggestions for
upon request.                                        tics, in 2010, 7% of households in the U.S.,                   future topics, so we can continue to provide meaning-
                                                     or about 8.6 million, had at least one mem-                    ful seminars.
                                                     ber age 12 or older who experienced one or
JFS is a SEC registered, investment adviser          more types of identity theft. In Hermitage,
with its principal place of business in the
                                                     Janice Jasinski of Schroedel, Scullin & Bestic,
Commonwealth of Pennsylvania. JFS and its
representatives are in compliance with the           LLC will present information on how to
current registration requirements imposed upon       protect yourself.
registered investment advisers by those states in    September - Medicare Planning
which JFS maintains clients. JFS may only
transact business in those states in which it is        In time for open enrollment, a Highmark
registered, or qualifies for an exemption or         benefits representative will provide insight
exclusion from registration requirements. This       and education about the complex world of                          The choices you make define the leader you be-
brochure is limited to the dissemination of          Medicare coverage. This seminar will be held                   come. Each day we make a choice to change the cul-
general information pertaining to its investment
advisory/management services. Any subse-             in Pittsburgh and Hermitage.                                   ture of organizations and families and to influence
quent, direct communication by JFS with a            October - Political/Economic Update                            others by meeting the everyday needs of the commu-
prospective client shall be conducted by a                                                                          nity. Is it possible to make choices that will impact
representative that is either registered or quali-     JFS will host a noteworthy speaker in Her-                   ourselves, our teams, and even our cities for the bet-
fies for an exemption or exclusion from regis-       mitage to provide an update on the political                   ter?
tration in the state where the prospective client    and economic landscape.
resides. For information pertaining to the                                                                             Chick-fil-A Leadercast is the can’t-miss leadership
registration status of JFS, please contact JFS or    November - Educating the Next Generation                       event on May 4, broadcast live from Atlanta at First
refer to the Investment Adviser Public Disclo-         At a Hermitage                                               Assembly of God, 1455 N. Keel Ridge Road, Her-
sure web site (             location, Janelle                                              mitage. Speakers for the day include Soledad O’Brien,
For additional information about JFS, including      Fumerola will dis-                                             Tim Tebow, Patrick Lencioni and John Maxwell. The
fees and services, send for our disclosure                                                                          cost is $79 for a full day of leadership training, conti-
statement as set forth on Form ADV from JFS
                                                     cuss ways we can
using the contact information herein. Please         help our next gen-                                             nental breakfast, hot lunch and snacks. If you are in-
read the disclosure statement carefully before       eration understand                                             terested in attending, please contact Erin Steele at 724
you invest or send money.                            the importance of                                              -962-3200 or

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