1 | Week In Review

Labor Reports Shook The Markets. What Will The Inflation Report Do?

The ADP Labor report seemed disconnected from the unemployment report, which leaves some uncertain on what will happen when inflation numbers are reported. Many expect higher inflation due to rising energy prices – how will the markets – and the Fed react? Annex Wealth Management’s Dave Spano and Derek Felske discuss.

2 | Poll

Will The Superbowl Indicator Be Accurate This Year?

Almost 50 years ago, sportswriter Leonard Koppett proposed a connection between who won the National Football League’s (NFL) championship game and how the stock market did over the following 11 months.

In a nutshell, the Super Bowl Indicator simply says that if the winning team is from the National Football Conference (NFC), or was in the NFL before its 1966 merger with the American Football League, then stocks will have a bull market that year. If the winning team comes from the American Football Conference (AFC), then the next year will see a bear market.

From 1967-2015, the indicator had an accuracy rate of 82%, missing only nine out of 49 games. However, over the last six years, the predictor has been off. As of the last Super Bowl, the predictor has been right 41 out of 55 games, a 75% success rate.

Oops! We could not locate your form.

Super Bowl Indicator Definition (investopedia.com)

https://www.forbes.com/sites/lcarrel/2022/01/31/super-bowl-indicator-says-if-rams-win-the-market-should-rise-in-2020/?sh=1ed4a9d16456

3 | Client Exclusive

The history behind a few of the classic Valentine’s Day traditions.

Those who celebrate the traditional meaning of the day have little over a week to buy their gifts, make their reservations, and write their sappiest poems, or better yet, buy some dog treats!

Whether you choose to mark the day or not, we’re here to provide you with a few interesting facts about the date that may add a little interest to your plans, whether they be extravagant or the very opposite of that.

Did you know that the very foundation of the day (to honor St. Valentine, of course) is apparently not very solid? The Catholic Church recognizes at least three saints by the name of Valentine, and no one is quite certain of who it is that has persisted through the ages to today.

One potential Valentine was a priest during the third century in Rome. When the emperor of the time decided that single men made better soldiers than ones who were distracted or busy with wives and children, he outlawed marriage for young men. Valentine, obviously a proponent of love, saw the injustice of the law and continued to perform marriage ceremonies in secret for young lovers. When his actions were discovered, the emperor ordered that he be put to death, thus becoming a martyr.[1]

Another potential candidate was a Valentine that was killed for helping persecuted Christians escape the brutal Roman prisons of his day. The legend has it that when he was in jail himself, he fell in love with a young girl, potentially his jailor’s daughter, who would visit him. Before being put to death, he allegedly wrote her a letter and signed it “From your Valentine” – an expression still used on modern love notes today.[2] Both stories are of champions of love, so maybe history is telling us that you can decide which Valentine suits you.

The very first recorded Valentine was sent by a young French Duke while he was imprisoned in the Tower of London in 1415. Coming from a family of importance and fraught with political intrigue, the Duke was in his second marriage for power and political gain when he was captured in battle against enemies of his family and sent to the Tower. Though the poem itself is somber, he addresses his wife as his “very gentle Valentine” as a term of affection.[3]

On a much happier note, lovers and friends began exchanging handwritten notes and cards on February 14 in the 17^th century, but it wasn’t until the 1840s that valentines began to be mass-produced and sold in the U.S. by Esther A. Howland. She’s known as the “mother of the American valentine” when she made elaborate and crafty cards with lace and ribbon. She set up a small assembly line in her home and hired local girls to put together the creations that would become easily recognizable as a tangible way to say, “I love you”.[4] Today, American’s spend an estimated 145 million dollars on Valentine’s Day cards each year![5] Esther was really on to something!

You know what goes great with a highly decorated card? A heart-shaped box of chocolates! The first heart-shaped box was introduced in 1861 by Richard Cadbury, son of John Cadbury, founder of the famous chocolate company. Today, more the 36 million heart-shaped boxes of chocolate are sold, which equals about 58 million pounds of chocolate. [6] We can’t forget about the other staple of edible Valentine’s Day affection: the Conversation hearts, as they are so aptly called.

Created by a Pharmacist whose actual goal was to find a better and less labor-intensive way to make throat lozenges, once the machine began to prove useful, Oliver Chase then quickly switched to making candy. It was only a few years later that the idea of stamping words on the small candies made them into what they are today and now more than 8 billion conversation hearts are manufactured each year.[7]

Though you may or may not want to celebrate the day as it’s traditionally meant to be, you don’t have to forget about your pets. A newer trend emerging with both couples and singles is to shower pets with gifts to show love. In 2021, Americans spent an estimated 2.14 billion (yes, with a ‘b’) dollars on gifts for their dogs and cats.[8] Those with pets know that they need love too, so why not include them on V-day too!

As time goes on, the celebration of Valentine’s Day has evolved. Whether you plan to celebrate with someone else, or with your furry friend, remember that love is something that we should all celebrate, whether it’s from friends, family, or your dog!

Have an idea you’d like us to write about, or a story to share? Send us an email at clientinterest@annexwealth.com.

[1] https://www.goodhousekeeping.com/holidays/valentines-day-ideas/a26863/valentines-day-facts/

[2] https://www.history.com/topics/valentines-day/history-of-valentines-day-2#section_1

[3] https://www.history.com/news/historys-oldest-known-valentine-was-written-in-prison

[4] https://time.com/4663003/esther-howland-valentines/

[5] https://www.goodhousekeeping.com/holidays/valentines-day-ideas/a26863/valentines-day-facts/

[6] https://www.goodhousekeeping.com/holidays/valentines-day-ideas/a26863/valentines-day-facts/

[7] https://www.huffpost.com/entry/history-of-conversation-hearts_n_5a72a8e1e4b06fa61b4d60ef

[8] https://www.finder.com/how-much-do-americans-spend-on-their-pets-on-valentines-day

4 | Did You Know?

TD Ameritrade’s “SLOA” Letter Is on Its Way

If you use TD Ameritrade as your custodian, they will be sending you a letter to confirm your standing letter of authorization (SLOA) for your TD Ameritrade account(s).

The SLOA are authorizations you have established to move money from one account to another (i.e. a distribution from your IRA to your primary checking; your money market to your Roth IRA).

The letter will list your current account, type of distribution instructions on file, and the banking instructions, if applicable.

There is no action required by you. The letter serves as a required informational notice.

If you would like to make any changes to your distribution instructions (establishing a new bank account, etc.) please contact your Wealth Manager or Client Service Manager.

5 | Ask Annex

“Does my husband have to pay taxes on a life insurance policy if he cashes it out?“

– Christine

Annex Wealth Management’s Eric Strom, CFP® had these insights:  

The answer is, maybe. Generally speaking, with each premium payment your husband has made over the years to pay for that life insurance policy, he has been building up what is called cost basis. The cost basis is his money that he’s already paid taxes on that is “inside” the life insurance policy. If his life insurance policy is the type that builds up cash value, then he has the benefit of cashing in the policy whenever he chooses, though as a side note – he’ll want to consider if there are surrender charges or any other fees that may reduce his cash value upon surrendering. 

If, at the time he cashes in the life insurance policy, the cost basis is higher than the cash value, he will typically owe no taxes at all. On the other hand, let’s say that it’s an older policy that’s been growing for a while, it could be that the reverse is true – the cash value is higher than the cost basis. In that case, typically all of that difference will become immediately taxable as ordinary income in the tax year the policy is surrendered. Ordinary income is generally considered less tax efficient, so you’ll want to be extra careful here. 

Other factors such as policy loans can affect the taxable gain as well. Please have the policy professionally reviewed to determine the tax consequence, and to discuss the pros and cons of cashing in the life insurance. We at Annex offer that service and would be happy to help you with exactly that, just reach out to us if you are interested. Our team reviews hundreds of life insurance policies every year, so we’re glad to help you too! 

6 | Financial Fact

About 35% of employers automatically enroll new employees into their sponsored 401(k) accounts, unless participants opt out.

magnifymoney.com

7 | Annex Radio

Metaverse Real Estate: Pyramid Scheme Or The Future?

Top Stories: Latest Labor Department Stats, $10,000 Super Bowl Tickets, & Tesla News

Events & Webinars

Annex Wealth Management has always been committed to client growth and education. Planning and saving can be demanding. We’ve found that when our clients master key concepts, it often enhances working together to reach their goals. Because these are not sales presentations, our clients benefit from a truly informative experience.