Year-End 2017 Tax Planning Letter

Dear Clients and Friends:

Our Year-End 2017 Tax Planning Letter is now available on our website. The letter offers insights on how to create a tax-saving plan to reduce your 2017 tax bill.

To read the letter, please click here.

Listed below are other valuable topics covered in this issue:

  • Plan now for a smooth filing experience
  • How early Roth IRA funding can make your child a millionaire
  • Don’t count on these tax breaks for 2017

If you would like to discuss any of our Tax Planning Letter topics in more detail, please call Steve at (818) 449-3122 or send him an e-mail at

We hope you find this information both useful and interesting. Contact us to arrange a year-end tax review. Likewise, please let us know if there is anything we can do to help with your financial planning or investment needs.

Warm regards,

Berkson Asset Management, Inc.
Registered Investment Advisor

Quarterly Market Review – Third Quarter 2017

Dear Clients and Friends:

It’s hard to believe that the holidays are approaching once again!  The end of the year is a good time to review your long-term goals and financial plans.  Please let us know if we can help in any way.

Also, we encourage you to take a look at our most recent Quarterly Market Review (QMR).  Click here to view the report.

The QMR provides you with a summary of how the world stock and bond markets performed last quarter.  The QMR also provides a timeline of world events that is intended to serve as a reminder that investors should view daily events from a long-term perspective and avoid making investment decisions based solely on the news.

We sincerely appreciate your continued business and hope that you find this resource valuable.  If you would like to set up an appointment to discuss taking advantage of our services, please contact Steve at 818.449.3122 or

Very truly yours,

Berkson Asset Management, Inc.
Registered Investment Advisor

Global Investor Insights

Dear Clients and Friends:

The time that we spend learning about you and your goals helps us focus on the things that matter most to you.

Working with Dimensional Fund Advisors, we’re part of a global community of financial advisors and their clients. This year, nearly 19,000 of these clients (and maybe even you) participated in a feedback survey.

Results of the survey have helped us reflect on your client experience and consider additional ways that we can continue to meet your needs. Investors shared feedback on a range of topics, and we thought you might be interested in a couple of key findings:

  • Investors rank sense of security/peace of mind—well above investment returns—as the primary way they measure the value of working with their financial advisor.*
  • Investors’ top worries are not having enough money to live comfortably in retirement and experiencing significant investment loss in a market downturn.*

Click here to view the survey results.

If there are additional ways that we can add value for you or if you know of someone who could benefit from our services, please let us know. We are always happy to have the conversation.

Very truly yours,

Berkson Asset Management, Inc.
Registered Investment Advisor

Steven M. Berkson, CPA/PFS, MBT, CFP®


*Source: 2017 Dimensional Global Investor Feedback Survey.

Can Volatility Predict Returns?

Dear Clients and Friends:

When investing in stocks, understanding the volatility of their returns can be an important ingredient to help investors maintain a disciplined approach. People invest their capital hoping to earn a rate of return above that of just holding cash, and there is ample evidence that capital markets have rewarded disciplined investors. For example, Exhibit 1 illustrates what investing $1 in 1926 into various asset classes would have translated to through the end of 2015. Nevertheless, returns can be negative for days, months, and even years. After such episodes, investors are frequently exposed to stories exclaiming what may cause the next financial crisis. Read more

Lessons for the Next Crisis

Dear Clients and Friends:

It will soon be the 10-year anniversary of when, in early October 2007, the S&P 500 Index hit what was its highest point before losing more than half its value over the next year and a half during the global financial crisis.

Over the coming weeks and months, as other anniversaries of major crisis-related events pass (for example, 10 years since the bank run on Northern Rock or 10 years since the collapse of Lehman Brothers), there will likely be a steady stream of retrospectives on what happened as well as opinions on how the environment today may be similar or different from the period leading up to the crisis. It is difficult to draw useful conclusions based on such observations; financial markets have a habit of behaving unpredictably in the short run. There are, however, important lessons that investors might be well-served to remember: Capital markets have rewarded investors over the long term, and having an investment approach you can stick with—especially during tough times—may better prepare you for the next crisis and its aftermath.  Read more

Economic Growth and Equity Returns

Dear Clients and Friends:

A relevant question for many investors is whether their view of economic growth should impact how they invest.

Opinions about future economic growth often differ across market participants. For example, in a survey of more than 60 economists conducted by the Wall Street Journal in June 2016, estimates of US GDP growth in 2017 ranged from 0.2% to 3.7% (1).  A relevant question for many investors is whether their view of economic growth should impact how they invest. In this regard, they may be surprised to find that the historical link between annual GDP growth and equity returns has been quite weak.  Read more

Balancing Your Fixed Income Decisions

Dear Clients and Friends:

Fixed income can play an important role in a portfolio. But its role may vary according to an investor’s financial needs and concerns. For example, many investors look to fixed income for safety, income, and more stability in their portfolios. They must weigh these priorities against their concerns over future interest rates, inflation, government debt, and other factors that might affect fixed income returns.

Striking this balance can be a challenge in any market environment, but especially now, as low interest rates have sent many investors on a quest for higher-yield bonds or alternative investments. Depending on your approach, this pursuit of yield may invite more risk—some of which may be hard to see or understand (1).

So, what’s an investor to do? How can you make prudent fixed income decisions while also addressing today’s low interest rates? Consider these principles:  Read more

Back to School

Dear Clients and Friends:

With school back in session in most of the country, many parents are likely thinking about how best to prepare for their children’s future college expenses.

Now is a good time to sharpen one’s pencil for a few important lessons before heading back into the investing classroom to tackle the issue.

According to recent data published by The College Board, the annual cost of attending college in 2015–2016 averaged $19,548 at public schools, plus an additional $14,483 if one is attending from out of state. At private schools, tuition and fees averaged $43,921.  Click here to view Exhibit 1: Published Cost of Attending College.

It is important to note that these figures are averages, meaning actual costs will be higher at certain schools and lower at others. Additionally, these figures do not include the separate cost of books and supplies or the potential benefit of scholarships and other types of financial aid. As a result, actual education costs can vary considerably from family to family.  Read more

Fall 2017 Client Update

Dear Clients and Friends:

Our Fall 2017 Client Update is now available on our website.  This edition offers insights on whether it is always a good idea to amend your tax return.  Let’s say you discover a mistake on your return.  What should you do?  Our Client Update provides the answer along with some considerations that should be taken into account.

To read the newsletter, please click here.

Aside from the discussion on amending a tax return, the following is a list of additional topics covered in this issue:

  • Five home office deduction mistakes
  • Boomerang kids: problem or opportunity?
  • Mark Your Calendar – 2017 tax dates
  • Five questions to ask before paying off your mortgage early
  • Tax Talk – How to be sure it’s the IRS calling; and IRS-approved collection agencies accused of illegal practices

If you would like to discuss any of our Client Update newsletter topics in more detail or schedule a tax appointment, please call Steve at (818) 449-3122 or send him an e-mail at

We hope you find this information both instructive and helpful.  Please let us know if there is anything we can do to help with your tax or investment needs.

Warm regards,

Berkson Asset Management, Inc.
Registered Investment Advisor

Quit Monkeying Around!

Dear Clients and Friends:

In the world of investment management there is an oft-discussed idea that blindfolded monkeys throwing darts at pages of stock listings can select portfolios that will do just as well, if not better, than both the market and the average portfolio constructed by professional money managers. If this is true, why might it be the case?

Exhibit 1 shows the components of the Russell 3000 Index (regarded as a good proxy for the US stock market) as of December 31, 2016. Each stock in the index is represented by a box, and the size of each box represents the stock’s market capitalization (share price multiplied by shares outstanding) or “market cap” in the index. For example, Apple (AAPL) is the largest box since it has the largest market cap in the index. The boxes get smaller as you move from the top to the bottom of the exhibit, from larger stocks to smaller stocks. The boxes are also color coded based on their market cap and whether they are value or growth stocks. Value stocks have lower relative prices (as measured by, for instance the price-to-book ratio) and growth stocks tend to have higher relative prices. In the exhibit, blue represents large cap value stocks (LV), green is large cap growth stocks (LG), gray is small cap value stocks (SV), and yellow is small cap growth stocks (SG).

For the purposes of this analogy you can think of Exhibit 1 as a proxy for the overall stock market and therefore similar to a portfolio that, in aggregate, professional money managers hold in their competition with their simian challengers. Because for every investor holding an overweight to a stock (relative to its market cap weighting) there must also be an investor underweight that same stock, this means that, in aggregate, the average dollar invested holds a portfolio that looks like the overall market (1)Read more