Client Axiom | Vol 270
August Markets Positive While Fed Likely Delays Tapering
Meet The Axiom®’s Guest Editor: Derek V.W. Felske, CFA®
Hello, I’m Derek Felske, Chief Investment Officer at Annex Wealth Management.
I’m originally from out east, where I went to college and graduate school. Today, I enjoy living in Milwaukee, where I keep tabs on my grown children, spend time with friends, and sharpen my competitive instincts by playing golf.
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“As Chief Investment Officer, I help head up Annex Wealth Management’s Investment Team and Investment Committee, which meets every week to discuss and refine our course of action as it relates to our overall strategy. I understand that the most popular part of Axiom is Week In Review, where I often appear to discuss the markets and economy. “
– Guest Editor: Derek V.W. Felske, CFA® | Chief Investment Officer
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August Markets Positive While Fed Likely Delays Tapering
The markets continue to look good with the seventh straight positive month in August. Chief Investment Officer Derek Felske and Managing Director of Wealth Management Services Mark Beck talk about corporate profits continuing to grow, the labor markets still showing higher unemployment numbers, and how stagflation all play parts in the current state of the economy. They also discuss what the Fed is focusing on currently, and how they may delay tapering given the progress they still need to see in the markets.
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The U.S. Open is in full swing, or should we say, groundstroke.
Typically held at the very end of summer, the U.S. Open has remained a staple to tennis fans and players alike.
Players have come to New York from 35 different countries to compete in only one of the four Major tennis tournaments of the year. The U.S. Open, which saw its first matches played on August 24, will go until September 12. The singles players brackets began with 128 players, which cut down to 64 after just one round of matches, and it takes two full weeks to declare a winner. With a few big-name players out due to injury such as Roger Federer, Rafael Nadal, and Serena Williams, this may be the year where we see new names rise to the top.
The tournament, in its very original form, began in 1881. At that time only members of the U.S. National Lawn Tennis Association could participate and only men were permitted to play. Women were allowed to compete six years later in 1887.[1] It wasn’t until 1968 that the tournament was renamed to the U.S. Open – the first year amateur players were allowed to enter the competition, hence making it “open”.
The tournament surface has also changed throughout the years. From the start in 1881 to 1974, the players were required to play on a grass surface, which is still used at Wimbledon. For the next three years, play shifted to clay, still seen at the French Open, and finally in 1978, the tournament changed to the hard-court surface that it’s known for today, now painted blue for players to see the ball easier.[2] Jimmy Connors is the only person to have won the U.S. Open singles title on all three court surfaces.[3]
While still playing on grass, in 1973 the U.S. Open became the first tournament to offer equal prize money for both men and women – an effort that was spearheaded by Billy Jean King when she threatened to boycott the tournament as the defending champion in women’s singles competition. The complex where the tournament is played is named after King, in honor of her achievements and impact on equality in the sport.
If you’re looking to get into the sport for the payout today, the long road to a Grand Slam title pays $2.5 million in prize money for the final match, a decrease from 2020 after players and organizers agreed to cut the winner and runner-up payment in order to boost winnings paid out in early rounds of the tournament. Because of the cuts to top payouts, lower seeded players who may not make it far in the tournament still receive $75,000 just for playing in the first round.[4]
During tournament play it’s a rule that after every nine games the balls are changed out. With how hard the players hit them, it’s not really surprising, but that means after all is said and done, the tournament goes through approximately 70,000 balls![5] That would make for a lot of happy dogs out there.
The two-week event is popular among both pro and novice fans. In 2019, the tournament hosted over 700,000 tennis fans over the two full weeks. While the 2020 tournament was played, there were no spectators. This year they are back to full capacity, much to the excitement of fans and New Yorkers alike.
On the final day of play, the trophy we will see hoisted high by the exhausted winner has been designed by fellow New York icon Tiffany & Co. The trophies presented to the winners are symbolic only. Every year, the same trophy is presented, and the winner then takes a full-scale replica home for their trophy case. The U.S. Open is the only tournament that offers the full-scale replica, while the other three Majors give ¾ scale models to their winners behind the scenes.[6]
Want to get started in the sport? Experts say that the best age to begin tennis is five or six years old, so your kids or grandkids might be the next big tennis stars if you start them early enough.[7] And don’t worry, they make small racquets specifically for kids that they can actually hang on to. At that young age, you might be starting them on a path towards the big stage! These same experts also say that tennis is a sport for all ages, so if you aren’t five or six, you can still get out there too and have success.
The U.S. Open has a been a long-standing tournament that brings together the best players and the most dedicated fans. Love tennis? The 2022 U.S. Open is currently scheduled for late August and into September again, so if you are thinking about a trip out to New York to see the biggest names in the sport play, now is the time to start planning. The tournament draws large crowds, and tickets sell fast. Who knows, you might even spot a celebrity or two in the crowd trying to blend in.
If a Major tournament isn’t quite your speed yet, there are several “tune-up” tournaments that happen throughout the country in places like Miami, Cincinnati, and Southern California during the year and leading up to the various Major tournaments. These tournaments may not host every single famous player at once, but chances are that a few big names will appear at each one to warm up for the next big show and make the trip worth it!
[1] https://www.townandcountrymag.com/leisure/sporting/a28832053/us-open-tennis-history/
[2] https://www.britannica.com/sports/US-Open-tennis
[3] https://www.espn.com/classic/biography/s/Connors_Jimmy.html
[4] https://nypost.com/2021/08/24/usta-awarding-record-payout-at-us-open/
[5] https://www.essentiallysports.com/all-you-need-to-know-about-us-open-2020-balls-atp-wta-tennis-news/
[6] https://www.essentiallysports.com/all-you-need-to-know-about-the-us-open-2020-trophy-wta-atp-tennis-news/
[7] https://www.ertheo.com/blog/en/ideal-age-begin-playing-tennis/
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Are you ready for pumpkin spice, boots and scarves? Or are you still poolside?
Poll: Does Labor Day mark the end of summer?
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A strong financial plan can help both now and in retirement.
Learn more about a few things that can potentially stall or disrupt your finances in retirement, and how together we can build a plan to help avoid them.
Retirement is something that most people work towards and look forward to. No matter your age now, whether you’re 15 years from retirement or 10 years into it, planning and awareness of your retirement goals is always important.
Listen in on a chat with our Financial Planning Team manager, Randy Winkler as he discusses the top 10 retirement “killers”, from lack of insurance planning to not creating a full-picture retirement budget, and how proper planning can help you avoid these things and more. At Annex, we are dedicated to building a plan that can help lead to stability and confidence in your retirement as we consider these things with you.
Your Wealth Manager is always happy to answer any questions you may have and guide you on decisions for making the most out of the retirement years that you work so hard to achieve.
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This week’s Ask Annex comes from Deb, who asks:
“If I were to switch advisors, who’s responsible for what in the process? And will I trigger capital gains?”
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We asked Annex Wealth Management’s Deanne Phillips, CFP®, CDFA®, ABFPsm:
Great questions…and the answers depend on whom you are switching to and where from.
In most cases, switching advisors on actively managed investment accounts or IRAs – where you are paying someone to manage them on your behalf – works like this:
- The new advisory team creates a new account with a custodian to take receipt of the account from the previous advisor.
- The “new” team also does the paperwork and completes the transfer of the assets. The transfer is usually not dependent on the account owner to call their old advisor and let them know about this – that’s optional. This is subject to security transferability.
- The account owner may be contacted by the old advisor to question why the accounts are leaving their management.
Here’s how Annex handles transfer situations: we work with you and do everything on your behalf. Our team sets up new account paperwork, notifies the operations office of your previous manager, and generates the transfer. You don’t have to contact your previous advisor (unless you want to) in order to make this happen.
Switching advisors from a retirement plan like a 401k or 403b (conducting a rollover) works differently and requires a little more involvement from the plan participant. At Annex, this includes conducting a rollover call with you and a client service manager to your plan administrator, working through any stock holdings in the plan and dealing with NUA (net unrealized appreciation) if applicable, helping you understand the tax implications, filling out the paperwork with you, and tracking the process. We are with you every step of the way, answering your questions and pushing the process along.
Capital gains are triggered in an investment account where holdings are sold, and gains are made. There are two types of gains that matter, from a tax perspective. Many investments work this way:
- Short term gains happen on sales that occur when you’ve held an investment for under a year. These are taxed to your income tax bracket; counted as income.
- Long-term capital gains happen when you’ve held an investment longer than one year and they are taxed more favorably, depending on your overall income.
At Annex, when we receive a new investment account, we bring the holdings over into your new account “in kind” where possible. That means that we transfer the holdings and shares as-is and without tax consequences. Then we work with our new clients on tax planning; looking at their tax return, estimating their current year’s tax picture with our team of tax professionals, and building a solid tax planning strategy around those gains and how much we should take in that calendar year, while taking into consideration the client’s entire holistic financial planning picture.
IRAs don’t have the same type of tax consequences, if transferred correctly: you’re only taxed when you take money OUT of the IRA, not when you roll it over custodian to custodian. Within an IRA, there is no tax consequence when you earn income on a holding or when you sell anything. Retirement accounts like 401ks are usually liquidated when a rollover is requested, and the cash proceeds are placed into the individual’s IRA without tax consequences.
It sounds like a lot to juggle – but our team is built to make processes like these as smooth and simple as possible. Let us know if you have any more questions.
– Deanne Phillips, CFP®, CDFA®, ABFPsm
Director of Client Learning & Development
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