Oh, SNAP!

When Congress allowed the Emergency Unemployment Compensation program to sunset in 2013, Republicans were vilified for enacting such a draconian measure. In hindsight it worked and resulted was a surge of “long-term unemployed” workers going back to work. In 2014 unemployment steadily declined from 6.6% to 5.6% in 2014.



At the start of 2016 unemployment stood at a healthy 4.9%. The only remaining conundrum was how to get more able bodied Americans workers back into the labor force. That appears to be happening this year. The March employment report included an observation that after a decade long decline the labor force participation rate continued to inch up from 62.6% at the end of the year to 63% in March.

Where and why are workers finally starting to emerge from the abyss of the great recession? It’s not demographics or economic strength. Once again it appears to be sensible changes to government food assistance programs. We used to call them food stamps but nowadays the 74 billion dollar Federal food program is called Supplemental Nutrition Assistance Program or SNAP.

Starting in April, SNAP benefits for able-bodied adults without dependents (ABAWD) will be limited as Congress passes more authority back to states to make the program more efficient. 40 states will limit the able bodied to 3 months of benefits every three years. I will be watching the labor force participation rates in these states to see if they vary from other states who aren’t limiting food stamps to the most needy. I would wager that the 3 month participation rate trend will grow as people who can work are nudged back into the workforce.

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Time to Jump?

It’s a day that only happens every four years.  Just like the Olympics and Presidential elections, we observe Leap Day today.   The extra date on the calendar brings an extra day’s pay for some and explanations to kids on why February doesn’t always have 29 days.  Then tomorrow March rolls in and we push on towards Spring.

Because it takes more than 365 days (365.24 to be exact) for the Earth to orbit the Sun, Pope Gregory XIII added February 29 in 1582 to what we now know as the Gregorian Calendar to synchronize the solar calendar to the ones that we hang on our walls.  So, what do we do with the extra day?

I then began to think about things that I do once every four years.  I vote in the Presidential elections, watch the Olympics, and usually clean out my sock drawer. Others will attend a high school or college graduation or buy a new car.   But with only one extra day every four years, how do you make it count? What makes it different than any other Monday?

The word leap is defined as jumping or springing a long way.  In the past four years, have you leapt forward towards financial freedom?  What changes have you made to ensure your success in meeting your financial goals?  We are all four years older since the last time we saw the number 29 on our February calendar.    Live up its namesake and use this day to take the next leap towards planning for your future. For some, that could be developing a budget to control spending urges.  For others, it could be consolidating old retirement accounts to invest with a purpose.   

Whether it’s your first leap or your fiftieth, take advantage of this extra time to plan for your future.  You’ll have to wait four more years to have another day like this.

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Super Bowl Sunday Prep List

Wow your guests for the big game with these essentials

Sound System Upgrades – Porsche 911 GT3 Soundbar



Wearable Subwoofer Vest

  

Table Decorations – Grass Table Runner 




Fashion Swag - Vintage 70’s Big Mac Belt Buckle

 

Food- Potato and Mozzarella Croquettes




Condiments – Sriracha2Go




Fanduel / Draft Kings Parlay Cash – Prop Money Series 2000s Blank Filler Bundles $500,000


 

 

Gear - LeatherHead Black Bison Football



 

Extra Drink Storage - Marshall Beverage Vault




Additional Seating – Tailgate Backpack Cooler Chair



 

Don’t Forget your millennial hipster guests - Beard Wipes



 

 

 

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Which Tax Payer Are You?

Taxes = Fear, I don’t know where to start.

Taxes = Worry, I hope this software works!

Taxes = No big deal, my people have this under control.


Within the next few weeks, you will have most of your information to file your 2015 tax return, and some of you will rely on me or another CPA to help you through that process.  Hopefully, when the process is complete, you will feel a sense of calm about filing your tax return.

The IRS and Congress don’t make it easy to feel that sense of calm.  As has become the norm lately, Congress waited until December to pass a tax deal that was retroactive for all of 2015.  However, this deal did make some breaks permanent, which will allow us to plan for future years. 

Some of the tax breaks that have been made permanent are:

  1. Tax-Free direct payments from your IRA to a charity of up to $100,000.
  2. The itemized deduction of state sales tax for those in states without an income tax.
  3. The write-off of $250 for teacher classroom supplies

On an almost daily basis, I see the fear and worry that many people harbor deep inside them related to taxes and the IRS.  Those feelings come from the abundance of difficult tax codes and horror stories circulated through social media.  If you are tired of the anxiety that taxes bring, I’d love to assist you in a transition to quality professional tax preparation. 

The transition can be easier and less expensive than you may think.  At Leconte Wealth Management, our clients have tax preparation included as part of our comprehensive wealth management package.  If this sounds like an appealing option to you, please give us a call.

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Groundhog Day - Making the Most of "Life Resets"



As we tire of winter, pine for warmer days and look to Pennsylvania for hope, I wanted to revisit the enduring theme from Bill Murray’s 1993 classic. To quickly recap for the 5% of society that hasn’t see Groundhog Day, Mr. Murray plays Phil Conners a misanthropic weatherman who loathes the monotony of the Groundhog Day remembrance but is forced to cover it for his local station. Through freak circumstance he finds himself stuck repeating, repeating the day and its events. Phil isn’t released from exile until he confronts and corrects his moral defects. As he triumphantly reinvents the worst day of his life into his best, he finds freedom and happiness.

Like Phil, we inevitably face moments where we have to it the reset button. In 2016 you may encounter something on your personal or professional life that requires a fresh perspective. It could be a financial or health issue that forces you to change courses. Each of these scenarios will require a different response to find a workable solution.

After a 5% loss on the S&P and a 7.8% loss on the NASDAQ, investors are looking at the worst January in memory. They need to discern if this is the start of really bad times or time to buy more. Here’s my decision tree for investment uncertainty:

  1. Understand where you are.
    1. How old are you?
    2. How much time do you have to invest before needing your funds?
    3. What caused the declines in your portfolio?
  2. What is the worst case scenario?
  3. Is there an opportunity for improvement in this?
  4. Who can help me get through this?

This list is helpful beyond investment problems and number 4 is the most critical advice to follow. Don’t go through it alone. You have people around you that can offer help and encouragement. A little hint, they are usually the folks who have already hit the “life reset” button a few times themselves.

Phil Conners learned that we are only destined to repeat mistakes if we fail to recognize that a change needs to happen. Use Life Resets as an opportunity for growth and stronger relationships.

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Can you Invest Like a Billionaire?

Let’s role play the part of a billionaire investor and see how good you would be at it. Here is the scenario: You own 61.5 million shares of this stock trading at $93. That puts your stake at 5.7 billion dollars. It’s an oil stock and in just the last two months it drops from $93 to $79/share. Your paper loss would be somewhere around 860 million dollars.

The outlook calls for oil to continue to drop and global supplies are growing each day.  You’re a billionaire so you could buy more if you wanted to. The wait for a turnaround won’t be immediate. What do you do?

Option 1

Do not dwell in the past, sell, cut your losses and look for something better.

Option 2

Despite being down, buy more shares now and even more if it goes lower.

Option 3

Keep what you have but dont add anymore to a losing position.



 

Warren Buffett’s company, Berkshire Hathaway owns this stock. Do you want to compare your decision with Buffett? He bought 759,000 more shares on January 6th when the stock closed at $78. The next day the stock dropped to $76, adding another 124 million dollars to a paper loss that is now almost one billion dollars on the whole position. What would you do at this point? How would you handle losing a billion dollars in a couple of months?

Buffett bought twice as much on the 7th when it dropped again. It dropped to $75 on the 8th. He bought another 1.74 million shares. He didn’t let the immediate pain of losing a billion dollars in 2 months cloud his judgement about the long term opportunity. He was following his own well-rehearsed advice. He was being “greedy when others were fearful”. Here’s the chart of his continued purchases in January as oil stocks were getting hammered.



You may be tempted to reply that it’s easier for billionaires to invest like this since they have such deep pockets and are in charge. Realize that Buffetts company stock, Berkshire Hathaway was also down 15% last year and his personal stake of 350,000 shares in the company dropped over 12 billion dollars!

The lesson for mere mortals is a behavioral one. Buffett has mastered the fear that prompts rash decisions. He uses situations where other investors are capitulating to their fears as an opportunity to buy solid long term assets “on sale”. To mimic his approach you will have to divorce your investment decision making from the emotions of near term moves which is easier said than done.



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