Double Dip Recession Doom & Gloom
If you turn on the TV or open a newspaper, you are inundated with bad economic news, and it is not hard to believe that the end of the financial world is near at hand.  Here is a sampling of the negative headlines giving us the impression that we are headed for a double dip recession:

  • Unemployment at 9.5%
  • Existing and new home sales are depressed
  • Greece and Europe are in a deep financial mess
  • Expected tax hikes starting next year
  • U.S. deficit and national debt
  • S&P 500 Index  is down 12% since April 23
  • Gulf oil spill

You get the gist – we are being inundated with a lot of negative news.

Economic Recovery is Alive & Well
I may sound like a broken record, and be an eternal optimist, but I am not buying into the gloom and doom that we are being showered with.  We all know it is the media’s job to drown us with bad news.  Good news does not sell advertising.  What gets me is that the Wall Street “guru’s” are also buying into this bad news.What we are not hearing much about are the following:

  • Manufacturing is recovering nicely
  • Services are also growing
  • Private sector payrolls have increased by 33,000 in May and 83,000 in June(not taking into account the temporary Census workers which distorted
  • the numbers)
  • Productivity is increasing
  • Corporate profits are increasing
  • Personal Consumption and Expenditures are up
  • Gross Domestic Product (GDP) is positive and we are out of the recession
  • Individual debt levels are heading down (can’t say the same about our Federal or State Governments!)
  • S&P 500 Index is up 58% from the low in March 2009

I have a theory as to why Wall Street is so bent on trying to talking the economy into a double dip recession.  First of all, they were collectively wrong about the economy recovering so soon after the recession, so they are trying to prove themselves correct now!  The second theory is that if we really do go into another recession, they can try to time the market correctly this time, and buy at the bottom.  Good luck to market timing, which in my opinion is almost impossible to do well and consistently, but there are billions of dollars being made on that assumption by Wall Street firms!

Economic recoveries are never straight line affairs, there are always hiccups on the way up, but the overall trends are pointing to a meaningful recovery.  As I regularly tell clients, try to curtail exposure to the “talking heads” on TV, they just confuse and alarm us.  Stick to a balanced portfolio and rebalance it periodically!  If you need any help, please let me know.

Energy Credits to Trim 2010 Taxes
Time is running out to take advantage of the Residential Energy Property Creditwhich expires on December 31, 2010.  It applies to 30% of the cost of retrofitting an existing home to save energy, up to $1,500.  That means you have to spend $5,000 to get the full credit.  Items that qualify include insulation, windows, doors,roofing, hot water heaters and air conditioning systems.  Unfortunately,installation costs are not included in the credit.  The Madeyski’s are taking advantage of the credit by replacing the last 2 inefficient windows, so hopefully at your next meeting, you will be able to enjoy the “Low E”, Argon-filled windows in the office!  We might also replace the hot water heater as well.  Remember, a tax credit is very valuable, because it comes off the taxes you owe, or is added to the existing refund that you may be eligible for!  For more information, go to this website, is another credit, called the Residential Energy Efficiency Property Credit,which is more generous, but typically requires greater expense.  It is for 30% of the total cost of items like solar panels, windmills, and geothermal heat pumps, and the credit is unlimited.  This credit expires in 2016. I am holding out for a while, as I think the cost of solar panels may come down dramatically in the next few years, making the payback period for the expenditure much sooner.

Personal Notes
The NAPFA National Conference in Chicago was excellent as usual.  Learned a great deal and met many wonderful fee-only planners from all over the country. Also had a fruitful 2 day meeting with my practice management group members, from other parts of the country, getting their valuable insight into planning issues.The family will be taking-off soon, to get some “ocean time” at St. Pete Beach, FL, near Tampa.  Hopefully the beaches will still be ‘oil free’ by the time we get there. Dad will be joining us from South Africa. Since I continue to welcome new clients, please feel free to pass this newsletter on to anyone who may be interested.   My website at has information for prospective clients to review, if they are interested in my financial planning services.