Stearns Financial Poolside Chat – July 2, 2017



Welcome to the Special Fourth of July Edition of the Stearns Financial Poolside Chat.

For our U.S. clients, happy Fourth of July! One of our patriotic clients provided this quiz to test your American history:

  1. Which country gave America the Statue of Liberty?
  2. What are the first words of the Declaration of Independence?
  3. Who was the oldest person to sign the Declaration of Independence?
  4. How many people lived in America on July 4, 1776?
  5. Who sewed the first American flag?
  6. In what pattern were the stars on the first U.S. flag?
  7. Independence Day was first celebrated in what city?
  8. From what language did the word “barbecue” originate?
  9. What country invented fireworks?
  10. When did Congress declare the Fourth of July a national holiday?

Answers are below the FAQ section.

And now to the subject of financial independence. Many investors are questioning whether U.S. stock valuations have reached levels where they need a rest until earnings catch up, or Congress passes a corporate tax reform bill that provides more cash flow through tax relief. We believe some (not all) stock valuations can be sustained or climb further as long as corporate profits and earnings rise, regardless of what happens in DC.

The U.S. stock market continued its slow, steady march higher in the second quarter with unusually low volatility. On the surface the U.S. and some overseas stock markets are in a goldilocks phase where the modest (and at times sputtering) global economic recovery and rising earnings are just strong enough to incrementally add to investor confidence. But it’s been a tale of two markets, where some stocks have suffered mightily, especially retailers after the Amazon announcement that it is buying Whole Foods. Technology stocks had the worst month in six months after being a market leader while other stocks are approaching new highs.

We believe the global economy should continue to accelerate modestly, providing a tailwind for corporate earnings, profits and equity prices in selected U.S. and international stocks. While we think stock prices will move unevenly higher over the next 6 to 12 months (and likely beyond), we also expect more modest returns than investors have seen in recent years unless Congress can get good corporate tax reform and a decent infrastructure plan enacted. With all the problems encountered in reforming health care, it seems likely any other major tax or infrastructure legislation will be put off to next year.

Key Points to Consider

  • We continue to see a very low probability of an impending recession in the next 6-12 months. The Conference Board’s Consumer Confidence index and Consumer Sentiment (from the University of Michigan/Reuters) moved a bit higher recently and remain at healthy levels.
  • The recent bank stress tests were passed with flying colors. The U.S. Federal Reserve went to an extreme after analyzing the stress test results and said the results suggest the chance of another 2008/09 Great Recession in our lifetimes was “very unlikely.” They didn’t specify if the lifetime they are referring to is of the older members of the Fed board or their children or grandchildren!

In The News

  • SFG congratulates Dr. Jessica Williams, spouse of our Investment Committee member PJ Williams, CFA, who finished her medical specialty fellowship and has secured a position in Ft. Collins, Colorado. The Williams will live in Ft. Collins. PJ will continue to be a SFG team member (and member of our Investment Committee) in a more limited capacity, assisting the SFG investment team with research, plus strategic and tactical decision making.

Andy Clark, CFP®, who has been working with our investment committee in various roles, will assume some of PJ’s research analyst duties. Andy has over 13 years of experience and was formerly the Chief Investment Officer of a mid-sized, fee-only investment management firm in NY. Our clients who have already met Andy have been impressed with his in-depth investment knowledge, forward thinking scenario skills and ability to make complex economic issues simpler to understand.

  • Stearns Financial Group has again been selected by the Financial Times as one of their “Top 300” Registered Investment Advisors for 2017 – the fourth consecutive year SFG has achieved this ranking.

Frequently Asked Questions

Q: I’ve read about finding unclaimed money. What is it and how do you search for it?

A: We’ve had a few clients who were able to use some of the techniques listed below to find “lost” money that was owed to them.

From lost insurance refunds to forgotten security deposits, there are estimated to be billions of dollars of unclaimed money. There are online tools you can use to see if there are any forgotten funds in your name.

1. Start with the states

Searching locally, across the 50 states and the District of Columbia, is the most efficient way to find unclaimed funds.

The National Association of Unclaimed Property Administrators (NAUPA) has a free website at www.unclaimed.org that will link you to the appropriate department in your state that holds funds from things like abandoned safety deposit boxes or uncashed overtime checks.

You should search every state where you and your family have lived. Unclaimed.org also includes information on unclaimed funds in Puerto Rico, Guam, Quebec, British Columbia and Kenya.

Another site, www.missingmoney.com, offers a free search for participating states and provinces. This site allows you to search more than one state at a time by selecting “all states and provinces” on the drop-down menu.

2. Search federal tax refunds

The Internal Revenue Service (IRS) has a “Where’s My Refund” feature on its website at www.irs.gov/refunds . The feature allows you to search for your missing income tax refund check by entering a few simple items like your social security number and the amount you are owed.

3. Search credit union accounts

The National Credit Union Administration (NCUA) website allows you to track down money that was in a federally insured credit union that failed. The best time to search for lost funds is within 18 months of the credit union being liquidated. You can search either by your name or by your state and territory. Click https://www.ncua.gov/services/Pages/asset-management/unclaimed-deposits.aspx to search.

4. Search retirement money

There is a federal agency, the Pension Benefit Guaranty Corporation (PBGC), that protects some pensions from companies that went under. Click https://www.pbgc.gov/search/unclaimed-pensions to search for your own or a family member’s missing pension.

For companies that still exist or have been bought out, it is best to contact the company directly.

Another federal agency, the Employee Benefits Security Administration (EBSA), also helps make sure retirement money is reunited with its rightful owners. Find resources and tips on the agency’s website (https://www.dol.gov/agencies/ebsa/key-topics/retirement ) by selecting “Retirement” in the drop-down menu under “Key Topics.”

5. Search for veterans’ funds

The U.S. Department of Veterans Affairs has a feature on its website that allows veterans and their family members to search for unclaimed insurance funds. The money is owed to individuals the department has not been able to locate and applies only to certain insurance policies. Click https://www.insurance.va.gov/UnclaimedFunds to search.

SFG’s Take: It may pay off searching these sites or you may find that a missing $29 check wasn’t worth the effort. We’ve occasionally heard stories of specific states or entities that require lots of documentation once you find missing money, so you’ll need to determine the value of your time compared to the payoff if you encounter this. Keep in mind when conducting your search that it is not necessary to pay a fee to track down unclaimed money. The resources for finding your lost funds are free.

Answers to the American history quiz

  1. Which country gave America the Statue of Liberty? France
  2. What are the first words of the Declaration of Independence? “When in the course of human events…”
  3. Who was the oldest person to sign the Declaration of Independence? Benjamin Franklin
  4. How many people lived in America of July 4, 1776? 2.5 million
  5. Who sewed the first American flag? Betsy Ross
  6. In what pattern were the stars on the first U.S. flag? Circle
  7. Independence Day was first celebrated in what city? Philadelphia
  8. From what language did the word “barbecue” originate? Spanish, English and Native American
  9. What country invented fireworks? China
  10. When did Congress declare the 4th of July a national holiday? 1870

Summary

The U.S. economic news remains positive. Corporate earnings of many companies are likely to do well without pro-growth policies being enacted by Congress, but well thought out pro-growth policies will help corporate earnings and may be a key to the next leg up of the bull market in U.S. stocks.

SFG believes overseas economies are looking more promising and SFG continues to consider our balance between U.S. and overseas stocks.

Given good investment opportunities in select areas and larger-than-normal political and geo-political threats, we continue to like diversification with a strong emphasis on high-quality investment themes.

Dennis, Glenn, John & PJ
(the SFG Investment Committee)


STEARNS FINANCIAL GROUP (Triad office)
 
324 W. Wendover Avenue, Suite 204 
Greensboro, NC 27408 
Telephone: 336-230-1811/ nationwide 800-881-7374 

STEARNS FINANCIAL GROUP (Triangle office) 
1450 Raleigh Road, Suite 105 
Chapel Hill, NC 27517 
Telephone: 919-636-3634/ nationwide 800-881-7374 

E-mail: StearnsFinancial@StearnsFinancial.com 
Website: www.StearnsFinancial.com

Stearns Financial Group has been selected by the Financial Times as one of their “Top 300” Registered Investment Advisors for 2017 – the fourth consecutive year SFG has achieved this ranking.

Past performance is no guarantee of future results. This material is not financial advice or an offer to sell any product. This report is for informational purposes only. The statements contained herein are solely based upon the opinions of Stearns Financial Group and the data available at the time of publication of this report, and there is no assurance that any predicted results will actually occur. The actual characteristics with respect to any particular client account will vary based on a number of factors including but not limited to: (i) the size of the account; (ii) investment restrictions applicable to the account, if any; and (iii) market exigencies at the time of investment. Stearns Financial Group reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This report contains no recommendations to buy or sell any specific securities and should not be considered investment advice of any kind. In making an investment decision, individuals should utilize other information sources and the advice of their investment advisor. Information was obtained from third party sources which we believe to be reliable but are not guaranteed as to their accuracy or completeness. Stearns Financial Group is a registered investment advisor. More information about the advisor, including its investment strategies and objectives, are fully described in the firm’s Form ADV Part 2, which is available by calling (336) 230-1811, or can be found by visiting www.stearnsfinancial.com .
The Financial Times Top 300 list is not indicative of future performance. Individual account experience may vary. The Financial Times Top 300 Registered Investment Advisors is an independent listing produced by the Financial Times. The FT 300 is based on data gathered from RIA firms, regulatory disclosures, and the FT’s research. As identified by the FT, the listing reflected each practice’s performance in six primary areas, including assets under management, asset growth, compliance record, years in existence, credentials and accessibility. Neither the RIA firms nor their employees pay a fee to The Financial Times in exchange for inclusion in the FT 300.  SFG-17-88