INDEPENDENT INVESTORcontent.sharefc.com/cms/newsletter_pdf/41/141/... · these five common investment pitfalls -- and how to avoid them. Six Tips to Help You Avoid Online Fraud What

INDEPENDENT INVESTORYour Guide to Life Planning

January 2014

Making a positive impact onas many lives as I can.

Erika MarinChaney & Marin, FinancialPlanningFinancial Advisor4545 Hondo Pass STE CEl Paso, TX 79904915-7596393Fax: [email protected]

In This Issue

Weekly Market Commentary | Week of January 13, 2014There are many popular indicators as to how the year may unfold for investors.

Bond Market Perspectives | Week of January 6, 2014After a difficult 2013 for most sectors, the bond market is ringing in the New Year withenthusiasm.

Four Tips to Help Reduce Your DebtThe recession -- and subsequent slow recovery -- has caused millions of Americans to focus evenmore closely on living within their means. Here are some key considerations to keep in mind.

Five Common Retirement Planning MistakesFew American workers say they are "very confident" they will have enough money to livecomfortably throughout retirement. To help reduce such uncertainty from your life, considerthese five common investment pitfalls -- and how to avoid them.

Six Tips to Help You Avoid Online FraudWhat steps can you take to secure your valuable personal and financial data when banking orshopping online? Consider the following tips as important baseline checks.

2 Your Guide to Life Planning

Weekly Market Commentary | Week of January 13, 2014

Weekly Market Commentary

There are many popular indicators as to how the year may unfold for investors. We present one indicator ofstock market direction that has stood the test of time: the Year-Two Curse.

The Year-Two Curse

The beginning of the year is often full of talk about what indicators to watch as to how the year may unfold: thefirst five days indicator, the January effect, the Super Bowl indicator, even the Chinese lunar New Year cycle,among many others. Many of these indicators claim to tell us either the outcome for the year or the patternstocks may take for at least part of it. While most of these are little more than folklore and are easilydiscredited upon analysis, there is one that has stood the test of time, and we call it: the Year-Two Curse.

Year two of the presidential cycle has typically been a volatile one for investors. The start of the second quarterto the end of the third quarter of year two has consistently marked the biggest peak-to-trough decline of anyyear of the four-year presidential term. The pattern of the stock market last year, year one of the currentpresidential term, generally tracked the typical year-one pattern, as you can see in Figure 1.

It is not just this cycle that may be shaping up to track the year-two curse. This pattern has been enduring. Infact, nine of the 13 presidential terms since 1960 have seen losses during the "cursed" second and thirdquarters of year two. That 70% likelihood of losses during the period of the year-two curse is double the 35%frequency the market has been down over any two quarters since 1960. The 2009-2012 cycle also followed theyear-two pattern closely -- demonstrating that sometimes the more things change, the more they stay the same[Figure 2].


Why is there a year-two curse? The pattern may be so enduring -- not because of the events in Washingtonduring the mid-term election year, but perhaps because what happens in Washington affects our mood andhow we perceive other events, making us prone to be more pessimistic and sell when events inevitably occur.Maybe this mood comes from buyer's remorse after a year under a newly elected or re-elected president or thefear-mongering rhetoric that often comes from the mid-term election campaigns.

Whatever the cause, it seems clear that the events that acted as catalysts for the more substantial declines inthe S&P 500 Index during the year-two curse of the past 25 years had little to do with the election or events inWashington:

In 1990, the -19.9% drop was due to a recession that developed as oil prices spiked in the summerprompted by Iraq's invasion of Kuwait.In 1998, the -19.2% fall was sparked by the effects of the Asian financial crisis and related failure of thehedge fund Long-Term Capital Management.In 2002, the -33.6% plunge was tied to the lingering aftermath of the bursting of the tech bubble andthe rash of corporate scandals that followed Enron, including big names like WorldCom, Tyco, andAdelphia.In 2010, the -16.0% decline followed the end of the Federal Reserve's first bond-buying program, QE1(quantitative easing), on March 31, 2010 and economic growth faltered.

Will the year-two curse repeat in 2014? It may, particularly if a temporary economic soft spot develops in thesecond quarter. Weak economic data readings led to 5% or more pullbacks beginning in the spring of each ofthe past four years. We may again see some seasonal weakness, but there is no need to fear the curse. In fact,the curse may be a blessing for some, allowing those who have been awaiting a long-overdue pullback a chanceto buy. It is important to keep in mind that history shows that, on average, year two posts a solid gain forstocks, and the year-two curse is reversed by the end of the year.

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specificadvice or recommendations for any individual. To determine which investment(s) may be appropriate foryou, consult your financial advisor prior to investing. All performance reference is historical and is noguarantee of future results. All indices are unmanaged and cannot be invested into directly. Unmanagedindex returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of theperformance of any investment. Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted and there can be noguarantee that strategies promoted will be successful.


Stock and mutual fund investing involves risk including loss of principal.

Quantitative easing is a government monetary policy occasionally used to increase the money supply bybuying government securities or other securities from the market. Quantitative easing increases the moneysupply by flooding financial institutions with capital in an effort to promote increased lending and liquidity.

INDEX DESCRIPTIONS

The Standard & Poor's 500 Index is a capitalization-weighted index of 500 stocks designed to measureperformance of the broad domestic economy through changes in the aggregate market value of 500 stocksrepresenting all major industries.

This research material has been prepared by LPL Financial.

To the extent you are receiving investment advice from a separately registered independent investmentadvisor, please note that LPL Financial is not an affiliate of and makes no representation with respect tosuch entity.

Not FDIC or NCUA/NCUSIF Insured | No Bank or Credit Union Guarantee | May Lose Value | NotGuaranteed by any Government Agency | Not a Bank/Credit Union Deposit

Tracking #1-236379 (Exp. 01/15)


Bond Market Perspectives | Week of January 6, 2014

Highlights

As the year begins, bond prices are broadly higher and seemingly contradict bond market participants'tapering concerns.

High-yield bonds and bank loans should benefit from an improving economy and low defaultenvironment in 2014.

The key underlying theme of bond yields tracking the health of the economy has not changed and willlikely continue for 2014.

Ringing in the New Year

After a difficult 2013 for most sectors, the bond market is ringing in the New Year with enthusiasm. Bondprices are broadly higher with the Barclays Aggregate Bond Index up by 0.23% through the first three tradingdays of 2014. Although returns remain modest on an absolute level, the positive reaction seems to contradictfears of how a reduction in Federal Reserve (Fed) bond purchases might adversely impact the bond market. Infact, sectors more sensitive to Fed bond purchases, such as mortgage-backed securities (MBS) and TreasuryInflation-Protected Securities (TIPS) have exhibited better price performance relative to Treasuries since theconclusion of the December 18, 2013 Fed meeting through Monday, January 6, 2014.

More economically sensitive, lower-rated bonds are ringing in the New Year with gusto, continuing a rally thatbegan following the December Fed meeting. Prices of high-yield bonds, bank loans, and preferred securitiesstarted the first few days of 2014 on a particularly strong note, showing little concern over the potential impactof a reduction in Fed bond purchases and focusing instead on the improving economic data. The average yieldspread of high-yield bonds contracted to its narrowest level since May 2013, which in turn matches apost-recession low [Figure 1].

The behavior of high-yield bonds and bank loans is less surprising and continues a trend evident for most of2013. These sectors have historically weathered rising interest rates better than most fixed income sectors andbenefited from an improving economy and low default environment -- two trends that we expect to continue in2014.

The lack of interest rate sensitivity should help high-yield bonds and bank loans weather gradually risinginterest rates in 2014. Fear over a reduction in Fed bond purchases and a less bond-friendly Fed was a primarydriver of negative returns for most bond sectors in 2013 [Figure 2]. High-quality bonds suffered their worstyear since 1994, and 2013 was one of only three years, in nearly 40 years of data, in which the broad BarclaysAggregate Bond Index produced a loss.


We continue to favor high-yield bonds for 2014, but the narrower yield spread indicates that returns forhigh-yield bond investors in 2014 may be lower than what investors experienced in 2013. The high-yield bondsector was the only one to witness a decline in average yields in 2013, and the lower yields will likely translateto lower returns for the new year. Conversely, higher yields on high-quality bonds should help cushion theimpact of rising rates in 2014 [Figure 3], but yields remain low by historical comparison and we expect 2014 tobe a challenging year with high-quality bond returns likely to be flat.

The bond market is ringing in the New Year in with enthusiasm, but early gains occurred amid thinly tradedmarkets, and the bond market will get a better test this week as market participants return. The U.S. Treasurywill auction new 3-, 10-, and 30-year bonds, and the supply may pose a good test of investor demand. Theproximity of key yield barriers -- 3.0% on the 10-year and 4.0% on the 30-year Treasury -- has brought outbuyers so far, but that may be challenged this week by new supply via the auctions.

Looking out further, investors should note that the key underlying theme of bond yields tracking the health ofthe economy has not changed and is likely to continue for 2014 [Figure 4]. The Fed acknowledged theimprovement in the economy as a rationale to begin removing bond purchases. The bond market furtheracknowledged this sentiment via the highest inflation expectations in eight months, as measured by 10-yearTIPS, and a modest creep forward in expectations for the Fed's first rate hike to September 2015, up fromNovember 2015. A defensive positioning with lower-than-benchmark duration and an emphasis onlower-rated bonds is still warranted despite early-year enthusiasm in the bond market.


IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specificadvice or recommendations for any individual. To determine which investment(s) may be appropriate foryou, consult your financial advisor prior to investing. All performance referenced is historical and is noguarantee of future results. All indexes are unmanaged and cannot be invested into directly.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that youdiscuss your specific tax issues with a qualified tax advisor.

The economic forecasts set forth in the presentation may not develop as predicted and there can be noguarantee that strategies promoted will be successful.

Bank loans are loans issued by below investment-grade companies for short-term funding purposes withhigher yield than short-term debt and involve risk.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values and yields willdecline as interest rates rise, and bonds are subject to availability and change in price.

Credit Quality is one of the principal criteria for judging the investment quality of a bond or bond mutualfund. As the term implies, credit quality informs investors of a bond or bond portfolio's credit worthiness, orrisk of default.

High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally shouldbe part of the diversified portfolio of sophisticated investors.

Mortgage-backed securities are subject to credit, default risk, prepayment risk that acts much like call riskwhen you get your principal back sooner than the stated maturity, extension risk, the opposite ofprepayment risk, and interest rate risk.

Preferred stock investing involves risk, which may include loss of principal.

Treasury inflation-protected securities (TIPS) help eliminate inflation risk to your portfolio, as the principalis adjusted semiannually for inflation based on the Consumer Price Index (CPI) -- while providing a real rateof return guaranteed by the U.S. government. However, a few things you need to be aware of is that the CPImight not accurately match the general inflation rate; so the principal balance on TIPS may not keep pacewith the actual rate of inflation. The real interest yields on TIPS may rise, especially if there is a sharp spike


in interest rates. If so, the rate of return on TIPS could lag behind other types of inflation-protectedsecurities, like floating rate notes and T-bills. TIPs do not pay the inflation-adjusted balance until maturity,and the accrued principal on TIPS could decline, if there is deflation.

Treasuries are marketable, fixed-interest U.S. government debt securities. Treasury bonds make interestpayments semi-annually, and the income that holders receive is only taxed at the federal level.

Yield Spread is the difference between yields on differing debt instruments, calculated by deducting the yieldof one instrument from another. The higher the yield spread, the greater the difference between the yieldsoffered by each instrument. The spread can be measured between debt instruments of differing maturities,credit ratings and risk.

Government bonds and Treasury bills are guaranteed by the US government as to the timely payment ofprincipal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.

INDEX DESCRIPTIONS

The Barclays Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollardenominated. The index covers the U.S. investment-grade fixed rate bond market, with index components forgovernment and corporate securities, mortgage pass-through securities, and asset-backed securities.

This research material has been prepared by LPL Financial.

To the extent you are receiving investment advice from a separately registered independent investmentadvisor, please note that LPL Financial is not an affiliate of and makes no representation with respect tosuch entity.

Not FDIC/NCUA Insured | Not Bank/Credit Union Guaranteed | May Lose Value | Not Guaranteed by anyGovernment Agency | Not a Bank/Credit Union Deposit

Tracking #1-234779; Exp. 01/15


Paying off debt iseasier once you stopusing your credit cards.

Four Tips to Help Reduce Your Debt

The recession -- and subsequent slow recovery -- has caused millions of Americans to focus even more closelyon living within their means. If you are ready to face up to your own financial realities, one crucial step is to setout a plan of action. Here are some key considerations to keep in mind.

Tip 1: Keep Track of Your Spending

It's hard to reduce your spending if you don't have a good idea of how much you are spending. Keep track ofyour typical monthly expenses for three months to find out where your money is going. To get an even morerealistic idea, factor in some unexpected expenses -- such as auto and home repairs. Once you have a record ofyour spending, compare your average monthly outlay to your monthly income. If you have a surplus, this is theamount you can apply each month to paying down debt and building savings. If you have a shortfall, you'llneed to examine your expenses more closely to see what you can potentially cut back or cut out.

Tip 2: Keep Saving

One way to establish good saving habits is to make saving even easier than spending. A handy tip is to set upseparate savings accounts with separate goals attached to them. Here are three suggestions that can help youbetter allocate your savings.

"Emergency Account" -- Your goal for this account should be to build up at least three to six months ofliving expenses. This way, if you lose your job or need a lump sum to pay for a significant expense, youmay not have to tap into your other savings or ring up more debt.

"Family Account" -- This account can help fund your children's school expenses (such as class trips andteam uniforms) or vacations.

"Investment Account" -- This account should be reserved for general or long-term saving goals.Hopefully, you already have a retirement savings account (either through your workplace or on yourown) and perhaps a college savings plan. But having another account to save for other longer-termgoals -- maybe to start your own business or remodel your home -- can be a smart move.

Tip 3: Keep a Tight Rein on Your Credit Cards

If you've accumulated significant credit card debt, you've first got to stop the bad behavior. Paying off debt iseasier once you stop using your credit cards.

Pay off your highest interest credit card debt first, making sure you avoid the "minimum balance trap."Paying more than the minimum can make a big difference.

Consolidate your debt by transferring outstanding balances to lower-rate cards. If you don't want totransfer your balances, you may be able to get your current credit card company to match the interestrate of a competitor.

Cancel all cards except for the one that offers the lowest interest rate.

Finally, set up a realistic payment timetable and stick with it. If you have trouble keeping pace, talk to aprofessional.

Tip 4: Negotiate More Favorable Payment Terms

Call your lenders, explain your exact circumstances, and ask them to consider revised terms that will benefityou going forward. Whether this involves an adapted payment schedule or the implementation of a reducedinterest rate, it can help you to pay off your debt without incurring more.

© 2014 Wealth Management Systems Inc. All rights reserved.

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It is difficult to createan effective investmentplan without firsttargeting a specificdollar amount andrecognizing how muchtime you have topursue that goal.

Five Common Retirement Planning Mistakes

Only 13% of American workers say they are "very confident" they will have enough money to live comfortablythroughout retirement. To help reduce such uncertainty from your life, consider these five common1

investment pitfalls -- and how to avoid them.

Mistake #1: Waiting to Maximize Your Contributions

The sooner you start contributing the maximum amount allowed by your employer-sponsored retirement plan,the better your chances for building a significant savings cushion. By starting early, you allow more time foryour contributions -- and potential earnings -- to compound, or build upon themselves, on a tax-deferredbasis. For 2014, the maximum you can contribute to your 401(k), 403(b), or 457 plan is $17,500. If you are age50 or older, you can sock away an additional $5,500, bringing the total to $23,000. If you can't contribute tothe max, be sure to contribute enough to take full advantage of any company match contributions.

If you don't have access to an employer-sponsored plan, you can invest up to $5,500 in an IRA. For those 50and older, you can add another $1,000.

Mistake #2: Ignoring Specific Financial Goals

It is difficult to create an effective investment plan without first targeting a specific dollar amount andrecognizing how much time you have to pursue that goal. To enjoy the same quality of life in retirement thatyou have become accustomed to during your prime earning years, you may need the equivalent of anywherebetween 60% and 100% of your final working year's salary for each year of retirement.

Mistake #3: Fearing Stock Volatility

It is true that stock investments face a greater risk of short-term price swings than fixed-income investments.However, stocks have historically produced stronger earnings over the long term. In general, the longer your2

investment time horizon, the more you might want to rely on stock funds.

Mistake #4: Timing the Market

Some investors try to base investment decisions on daily price swings. But unless you have a crystal ball,timing the market could be very risky. A better idea might be to buy and hold investments for several years.

Mistake #5: Failing to Diversify3

Investing in just one fund or asset class could subject your investment portfolio to unnecessary risk. Spreadingyour money over a well-chosen mix of investments may help reduce the potential for loss during periods ofmarket volatility. Diversification may offset losses in any one investment or asset category by taking advantageof possible gains elsewhere.

Now that you are aware of these five common investment errors, consider yourself lucky: You are ready tobenefit from other people's experiences -- without making the same mistakes.

Source: Employee Benefit Research Institute, , March 2013.1 2013 Retirement Confidence SurveySource: Wealth Management Systems Inc. Stocks are represented by total returns from Standard & Poor's2

Composite Index of 500 Stocks, an unmanaged index generally considered representative of the U.S. stockmarket. Bonds are represented by annual total returns of long-term (10+ years) Treasury Bonds. Indexes donot take into account the fees and expenses associated with investing, and individuals cannot invest in anyindex. Past performance is no guarantee of future results. With any investment, it is possible to lose money.

3Diversification does not ensure a profit or protect against a loss.


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Never use personallyidentifying information,such as the last fourdigits of your SocialSecurity number, in apassword or username.

Six Tips to Help You Avoid Online Fraud

As technology continues to evolve, so too have the skills of cyber-criminals, who have honed their ability tobreak through firewalls, stealing valuable personal data and funds.

What steps can you take to better secure your valuable personal and financial data when banking online?Consider the following six tips as important baseline checks.

Tip 1: Be Safe When Connecting

Be careful how and where you use any online banking system.

Never connect to the Internet through an unsecured, public, wireless network.Never access your account from a link. Links are easy to tamper with, especially if they are embeddedin an email, text message, or online article. Always go directly to the home page of the financialinstitution first, and navigate from there.

Tip 2: Protect Your Passwords

Choose and use your passwords carefully. Use at least eight characters and include a liberal mix of uppercaseand lowercase letters, numbers, and special symbols.

Avoid using the same password for multiple accounts -- doing so leaves you more vulnerable.Never use personally identifying information, such as the last four digits of your Social Securitynumber, in a password or username.Be sure to change your passwords regularly and avoid reusing the same password and username ondifferent websites.Never share passwords, PINs, or other account-related information in response to an unsolicitedrequest. If you did not initiate the communication, you should not provide any information.

Tip 3: Regularly Monitor Your Accounts

Check account activity and online statements often, instead of waiting for your monthly statement. If younotice a "red flag," contact your bank immediately. When a customer reports an unauthorized transactionwithin 60 days of the occurrence, the financial institution will typically cover the loss and take measures toprotect the account.1

Tip 4: Protect Your Equipment

Be sure your computers and mobile devices are equipped with up-to-date antivirus and malware protection.

Most computer operating systems have built-in security firewalls. Be sure yours is set at "medium" orhigher.Exercise the same caution with your wireless home Internet connection. Without proper protection,there is nothing to protect anyone from gaining access to your computer files and personal accountdata. WPA encryption is considered the best type of Wi-Fi protection; WEP should be used only if WPAis not available.

Tip 5: Be Careful When Using Social Media

Social media sites, such as Facebook and Twitter, are used by millions of people worldwide, but be sure toexercise caution when sharing personal information on these sites. Details such as your birth date, homeaddress, or the names of schools you attended are frequently used by financial institutions to validate youridentity and are therefore potentially useful to cyber-criminals. Always review the privacy policies for anysocial network you join so as to avoid unintended disclosure of information.

Tip 6: Shop on Secured Sites

If you shop online, be sure to use only websites and merchants that you trust and that protect your accountinformation with industry-standard security protocols. Look for secure transaction signs, such as a lock symbolin the lower right-hand corner of your browser or "https" in the address bar.

With a healthy dose of caution and some old-fashioned common sense, you can safely use the Internet as atime-saving, convenient resource.

Source: Federal Deposit Insurance Corporation, Consumer Financial Protection Bureau, Section 1005.6.1



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The opinions voiced in this material are for general information only and are not intended to provide specificadvice or recommendations for any individual. To determine which investment(s) may be appropriate foryou, consult your financial advisor prior to investing. All performance referenced is historical and is noguarantee of future results. All indices are unmanaged and cannot be invested into directly.

Erika Marin is a Registered Representative with and Securities are offered through LPL Financial, memberFINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

Chaney & Marin, Financial Planning is not a registered Broker/Dealer and is not affiliated with LPLFinancial

Not FDIC/NCUA InsuredNot Bank/Credit Union

GuaranteedMay Lose Value

Not Insured by any Federal Government Agency Not a Bank Deposit

This newsletter was created using , powered by Wealth Management Systems Inc.Newsletter OnDemand

http://fc.standardandpoors.com/ondemand/index.vm?client=fcon

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INDEPENDENT INVESTORcontent.sharefc.com/cms/newsletter_pdf/41/141/... · these five common investment pitfalls -- and how to avoid them. Six Tips to Help You Avoid Online Fraud What