IMPORTANT NOTE ABOUT TAX FORMSThe Internal Revenue Service (IRS) has changed the yearly 1099 Tax Reporting Statement mailing deadline from January 31 to February 15, as mandated under the Emergency Economic Stabilization Act, signed into law October 3, 2008. In addition, similar to last year, some custodians have requested a mailing extension from the IRS that will allow them to mail selected tax statements by March 2, 2009. This is done in an effort to reduce the number of corrected tax forms a customer may receive.
Just the Facts Please
During these difficult times it is important to set emotions aside and look at the facts. As defined by Wikipedia the key features of a recession include:
Below-average GDP growth. The historical definition of a recession is when the economy has two consecutive quarters of negative growth. Usually, by the time the official reports have become available, the market has already priced in the recession. Most recessions have a time span of 18-24 months.
Lower disposable incomes
Higher unemployment rates
Decreased consumer spending is caused by the above mentioned conditions, lower disposable income from inflationary pressures, higher commodity prices such as oil, or food sources. The less spending can lead to higher unemployment. Many times this first shows in the retail sector. The three items mentioned, basically, will manifest itself on the other and snowball into a recessionary period.
The basic idea behind economic cycles is that they're just that: cycles. Any steep decline in economic activity will likely be offset by future surges in the economy's growth. In the long term, the highs and lows average out to form the trend, or average, economic growth rate. This trend growth rate is subject to change, but it has remained relatively steady in the past, indicating the general rate of growth that we can expect to see in the future.
Now, I understand that one could argue that there are many anomalies this time around and that this recession is worse than others but the simple fact remains….economic cycles are part of the game and at some point we will be entering an expansion phase. See example below:
So, while today we are undoubtedly experiencing very tough times, please keep faith that in all likelihood relief is around the corner.
Regardless of our optimism, Colgan Capital also realizes that each and every client has unique circumstances. For this reason we would like to underscore our genuine interest in helping you. Although we are busier than ever managing portfolios and reviewing financial plans WE WANT TO HEAR FROM ANYONE THAT HAS QUESTIONS OR CONCERNS. Remember, when you hired us to manage your money you also got our personal commitment to help you achieve your life goals. We are your financial partner in good times and bad.
Next month I am going to change it up a bit and write an article about something other than the markets. Stay tuned because my advice next month could change your life.
Personal Update
For those of you who like to see the pictures of Christopher and Emily here are a couple of them sledding last week. Christopher loves it but Emily...well she tries to enjoy it but she hates the cold!
