CIGX, LLC, investment counsel, offers financial planning services, including retirement planning, college planning, investment planning, and insurance planning. We take a broad and thorough approach to your financial future. The process begins with data gathering, such as asset...Read More
CIGX, LLC, capital management, offers the global strategies model portfolio series. These model portfolios range from conservative to aggressive and use a macro-economic, a.k.a top-down, fundamental analysis approach to asset management. Emphasis is placed on diversification,...Read More
The purpose of financial planning is to attain financial security, which everyone defines differently. In the ideal situation, we start early, establish goals, develop a plan, and consider as many contingencies as possible. For example, we just helped some twenty something’s with a retirement plan, permanent insurance, and emergency fund. Assuming they stay the course, they will never have a money care in the world. However, it does not always work out that way.
After Joe passed away, Susan’s spending problem really got out of control. The house was paid for, but the shopping habit meant that more money was going out than was coming in. A new budget was necessary. There were small chunks of money in savings accounts and cd’s strewn across different places, but it was not much, and it was dwindling quickly. Getting Susan to go to work
was a new concept, but it helped in two ways. It got her out and about and her mind off things. It also meant that she had much less time to go shopping. She could use the income to do her clothing shopping. Consolidating the small accounts and investing those funds has dramatically improved her financial picture. It was a good time to get more aggressive with her savings. Over the years, this move significantly increased her net worth.
Now, she works for fun, has plenty of money, and has not touched her savings.Read More
Here is the first in a series of “Case Studies”: Why we should start planning now for you and your family’s future financial security!
The purpose of financial planning is to attain financial security, which everyone defines differently. In the ideal situation, we start early, establish goals, develop a plan, and consider as many contingencies as possible. For example, we just helped some twenty-something’s with a retirement plan, permanent insurance, and emergency fund. Assuming they stay the course, they will never have a money care in the world. However, it does not always work out that way.
A few years ago, we had the unfortunate situation of a sudden death. The surviving spouse had not worked in 20 years, and we had one kid in college and one on the way to college in two years. There were some life insurance proceeds and a 401k that we rolled into a spousal IRA. Working together, we were able to figure out that by paying off the mortgage and returning to work just ten hours a week, we would have no change in financial standard of living. We even got both kids through college without owing a penny!Read More
Oil prices have dropped precipitously in the last few months. Today, January 12, 2015, oil dropped to below $46 at the close of business. You know what it means to your wallet, but how does this affect the markets?
It is very difficult to tell what has caused this tremendous drop in the price of oil. By any measure, consumption has not been reduced. There is more supply in the economy, as the US, Canada, Mexico, and many other countries have been drilling oil wells over the past few years. However, the supply/demand equation is not changed that much, as countries like India and China have increased their demand for oil. Africa and South America are also developing and consuming more petroleum based products.
As a result, I think this decline in oil prices is temporary. Consumers should enjoy the low prices, but not permanently budget for less expenditure in gas. The only way to really consume less gas is to drive less or drive an alternative fuel vehicle. At this time, sales of these vehicles is still negligible worldwide.
In the short term, lower fuel prices will lead to greater consumption and consumer discretionary stocks should do well. However, this sector has already enjoyed a significant upswing and their increased sales, revenue, and earnings may not be result in significant increases in the stock price as these earnings are already reflected in the stock price.
The IMF assesses that a 10% decline in oil prices leads to a 0.2% increase in global GDP. According to the Economist magazine, every dollar drop in oil prices saves China an annual $2.1 billion. In other words, they are saving 60-70 billion dollars in 2015 versus 2014, if prices stay around 50 a barrel. For the United States, the benefit of low oil prices is huge, but it is a mixed bag. The US is simultaneously the world’s largest consumer, importer, and producer of oil ! US producers are most likely to pull back on production with a significant decrease in prices. Low oil prices will most likely lead to some consolidation in the US energy sector. Again, since we consume more than we produce, the US economy benefits overall. *
Another beneficiary would be those emerging markets that are not petroleum exporters. Countries like India, Vietnam, Indonesia, Malaysia, Kenya, and Peru benefit from lower oil for their exports such as food and manufactured goods.
Monetary policy may be affected by low oil. The Federal Reserve is doing its best to cause inflation. Food prices are high, but energy prices have gone down, so this would affect their numbers. This may lead the Federal Reserve to keep interest rates low for longer than anticipated. The current consensus is that the Fed will raise rates by June of 2015.
Perhaps the best thing to do is to take those costs savings and invest in energy companies, as they will inevitably recover through a return to higher prices, market consolidation, and corporate restructuring.