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Trend or Noise?

  • Trend or Noise?

    “To be a successful investor over the long run, you must adapt to the belief that you cannot predict the market.  You must use tools that remove your emotions from the decision-making process.”  Greg Morris, Technical Analyst and Author

    One of the most important and hardest lessons for an investor to learn is to distinguish noise from information. With a proliferation of news sources from newspapers and broadcast media to financial publications, blogs, and social platforms, we are constantly bombarded with vast quantities of diverse market and economic information. The current emphasis on “content” marketing is adding to the over saturation with every financial professional contributing his daily or weekly wisdom to the overflow. The truth is very little of this information is useful when it comes to making investment decisions.

    Media “experts” have a very poor track record of calling market direction. Because “bad news sells,” the media’s focus is overwhelming on doom and gloom. On election day 2016, the U.S. stock market fell 5% sparked purely by fears fed by media noise. Investors who bought into the noise missed the market’s subsequent run to new highs.

    The market trend is the truth that merits our attention. The noise distracts us from the truth and replaces a systematic approach to the markets with emotion.

     

     

    Little has Changed in Retirement Account Contribution Limits

    Retirement account contribution limits remain the same for 2017 with minimal adjustments in income limits for various account types. Remember to fully fund your account(s) for 2016 by April 15th and start funding your 2017 contributions as soon as possible to take advantage of compounding.

     

    Type of Retirement Plan Maximum Annual Contributions
      2016 2017
      Under Age 50 50 and Older Under Age 50 50 and Older
    Individual Retirement Plans*
        Traditional and Roth IRA $5,500 $6,500 $5,500 $6,500
    Employer-Sponsored Retirement Plans

       401(k), Roth 401(k), 403(b), 457 and

       SARSEP Plans – Employee contribution

    $18,000 $24,000 $18,000 $24,000
       SEP (Simplified Employee Pension) IRA

    Employer contribution – 25% of compensation up to $53,000

    Employee contribution up to $5,500 under age 50; $6,500 over age 50

    Employer contribution – 25% of compensation up to $54,000

    Employee contribution up to $5,500 under age 50; $6,500 over age 50

    Small Business or Self-Employed Retirement Plans

       Self-Employed 401k  (a.k.a., Solo-401k,

       Individual 401k, Roth 401k)

    Salary deferral of 20-25% of compensation,
    plus $18,000 (under 50) or $24,000 (over 50) in 2016 and 2017
    up to a maximum of $53,000 in 2016; $54,000 in 2017

       SIMPLE (Savings Incentive Match Plan

       for Employees) IRA  – Employee contribution

    $12,500 $15,500 $12,500 $15,500

     

    *The income limit for taking a full deduction for contributions to a traditional IRA while participating in a workplace retirement will increase by $1,000 for singles, from $61,000 in 2016 to $62,000 in 2017, and for married filing jointly, from $98,000 in 2016 to $99,000 in 2017. The deduction completely phases out when income goes above $72,000 for singles and $119,000 for married filing jointly, an increase by $1,000.

    The start of the year is also a good time to check and make certain your beneficiary designations are correct. Beneficiary designations spell out who—or what trust—is going inherit the retirement account when the account holder dies. These designations take precedence over any provisions made in the will.

     

     

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