Though Civil Disobedience seems to call for improving rather than abolishing government – “I ask for, not at once no government, but at once a better government” – the direction of this improvement aims at anarchism: “That government is best which governs not at all; and when men are prepared for it, that will be the kind of government which they will have.”
Henry David Thoreau (July 12, 1817 – May 6, 1862) was an American author, poet, abolitionist, naturalist, tax resister, development critic, surveyor, historian, philosopher
Mr. Thoreau, who is sometimes cited as being an individualist anarchist, spoke those words more than 150 years ago. With the debt and budget deficit problems we face today we are once again hearing the populous cry for a better government. A message was sent to Washington with the November elections, and we continue to hope that our elected leaders are hearing the cry for a better government – one that will tackle our debt and deficit problems sooner rather than later. However, our concern continues to be that even though many are talking about change, it seems that most are not really ready for the sacrifices necessary to create true change.
PLANNING COMMENTARY
“Better government,” like so many things is rather subjective. While many would agree with our idea of “better government” (one that would tackle the debt and deficit problems sooner rather than later) many would also disagree as to the sacrifices necessary to make that happen. As time passes while our country wrestles with the direction and steps to take in this regard, the financial burdens will continue to compound.
This is precisely why making the right decisions as to things we control in our personal financial lives is so crucial. Management of the assets on your balance sheet and a structured approach to cash flow allocation are principles we continue to provide guidance to our clients on. Key themes we are communicating to our clients in relation to their wealth plans include:
• Tax law changes, both income and estate related, are certain to continue (for certain there will be changes as early as 2013). This increases the value associated with wealth transfer and tax protection strategies given a multi-generational focus.
• Demographic issues related to the baby boomers and budget deficit fixes will continue straining public finance and put wealth at risk. Specifically, entitlement programs must eventually change and this impact will materially affect our planning for every client.
• An increasingly complex world demands holistic planning to deal with ever-changing challenges. Constant evaluation of our clients “big picture” is required to ensure long-term success for a family and future generations.
MARKET COMMENTARY
The fourth quarter rally in the U.S. stock market has continued into 2011 with an additional gain of 2.4% in the S&P 500 index for January. The bond market returned about 0.3% for the month as measured by the Barclays Capital Aggregate Intermediate Bond index. International equity markets were mixed during January. The MSCI EAFE Developed Market stock index was up 2.3%, but the MSCI Emerging Market stock index saw a loss of – 2.2%.
The markets have been climbing a wall of worry, and we have experienced a four month rally in US stock prices. So what factors are moving the market higher? We believe that stock prices have appreciated for the following reasons:
• Stronger corporate profits
• Improving global GDP growth
• Attractive stock valuations
• Improving consumer confidence
• Extension of the Bush tax cuts, and
• A move to the center on government policy (as a result of the November elections)
We continue to advise following a disciplined and well-diversified asset allocation strategy. Rest assured that we will continue to look for tactical investment opportunities as certain asset classes may reach extreme levels of overvaluation or undervaluation.
