Pursuing a Better Investment Experience

Dear Clients and Friends:

Successful investing is a journey, not a one-time event, so you will need to stay active in the process and prepare yourself for the long ride.  There are several ways you can improve your investment experience.  This week’s newsletter features a brochure from Dimensional Fund Advisors that contains ten key principles to help you increase your odds of investment success.

To read the brochure, please click here.

Below are the 10 key principles covered in this brochure:

  1. Embrace Market Pricing
  2. Don’t Try to Outguess the Market
  3. Resist Chasing Past Performance
  4. Let Markets Work for You
  5. Consider the Drivers of Returns
  6. Practice Smart Diversification
  7. Avoid Market Timing
  8. Manage Your Emotions
  9. Look Beyond the Headlines
  10. Focus on What You Can Control

If you would like to discuss any of the principles in more detail, please call Steve at (818) 449-3122 or send him an e-mail at steve@berkson.net.

We hope you find this information both useful and informative. 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

Getting What You Don’t Pay For

Dear Clients and Friends:

Costs matter. Whether you’re buying a car or selecting an investment strategy, the costs you can expect to pay are likely to be an important factor in making any major financial decision.

When it comes to making informed financial decisions, you should consider the true cost-effectiveness of your investment. When you buy a car, for example, the sticker price tells you approximately how much you can expect to pay for the car itself. But the sticker price is only one part of the overall cost of owning a car. Other things like sales tax, the cost of insurance, expected routine maintenance costs, and the potential cost of unexpected repairs are also important to understand. Some of these costs are easily observed while others are more difficult to assess. Similarly, when investing in mutual funds, different variables need to be considered to evaluate how cost effective a strategy may be for a particular investor.  Read more

July 2017 Quarterly Letter

Dear Clients and Friends:

The stock market continued its rally in the second quarter of 2017.  The quarter was good for U.S. equity investors with the market again reaching new highs.  The second quarter of 2017 was also good for foreign equity investors with markets in most developed market and emerging market countries delivering positive returns.  In fact, Russia and Qatar, countries that are both negatively impacted by trade sanctions, were the only developed or emerging market countries to suffer negative returns in the first half of 2017.

The Federal Reserve increased short-term interest rates on June 14, 2017 by .25% to 1.25%.  Despite this rate increase, and in the face of additional likely increases, both the U.S. bond market and the global bond market (excluding the U.S.) produced positive returns in the second quarter 2017.

The following are second quarter 2017 broad index returns:

  • U.S. Stock Market (Russell 3000 Index)                                                 3.02%
  • International Developed Stocks (MSCI World ex USA Index)                 5.63%
  • Emerging Market Stocks (MSCI Emerging Markets Index)                     6.27%
  • U.S. Bond Market (Bloomberg Barclays U.S. Aggregate Bond Index)    1.45%
  • Global Bond Market ex U.S. (Citi WGBI ex USA Hedged to USD)            .60%

As discussed in our letter last quarter,  Read more

Quarterly Market Review – Second Quarter 2017

Dear Clients and Friends:

It’s hard to believe that we’re already halfway through 2017.  Summer can be a good time to review your long-term goals and financial plans.

We urge you to take some time to review our Quarterly Market Review report to gain an understanding of how the world markets performed this past quarter.  Being proactive will likely increase your chances of reaching your financial goals.  Click here to view the report.

The report also features a quarterly topic, entitled “When Rates Go Up, Do Stocks Go Down?”  Since interest rates are likely to increase over the next few years, we thought this timely topic might help answer questions about stock market performance in a rising rate environment.

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 steve@berkson.net.

Very truly yours,

Berkson Asset Management, Inc.
Registered Investment Advisor

The Danger of Complacency

Dear Clients and Friends:

Despite a few instances of increased volatility due to global upheaval events, the equity markets have been surprisingly calm the past few months. In fact, data compiled by Dimensional Fund Advisors indicates the equity markets have been relatively calm since 1995 when compared to periods prior to 1995.

Financial pundits have speculated as to why volatility has declined in recent years and what this could mean for future returns. Research confirms that neither past performance nor current volatility do a good job forecasting future returns. Instead of dwelling on the unknown, we should instead focus on what we do know. For instance, Read more

Structuring a Portfolio to Match Investor Goals in Retirement


Managing your finances in retirement can be challenging.  However, understanding how to structure your investment portfolio to best attain your retirement goals can provide some peace of mind.  As with any goal, there are things to consider when deliberating your investment options.  The graphic entitled “Structuring a Portfolio to Match Investor Goals in Retirement” provides some considerations and potential solutions that can help guide you through the process.  Click here to view the graphic.

As the graphic demonstrates in the form of a pyramid, there are three main levels to consider in your retirement years: your needs, your wants, and your legacy/estate goals.  Each level requires certain considerations and investment strategies.  At the needs level, you may want safer, lower-risk investments to maintain principal.  As you climb into the wants and legacy levels, you can consider higher-risk investments to keep pace with inflation.  Your ability and willingness to tolerate risk should be compared against your investment time horizon, the need for liquidity, stability of earned or retirement income, as well as the flexibility to adapt if there is a need for Plan B.

We hope this week’s topic provides you with some basic information on how to enrich your retirement years.  If you would like to discuss retirement planning, or if you have any tax or investment questions, please contact Steve at 818.449.3122 or steve@berkson.net.

Very truly yours,
Berkson Asset Management, Inc.
Registered Investment Advisor

The Power of Tax-Deferred Compounding

Dear Clients and Friends:

Investing in tax-deferred accounts instead of taxable accounts can result in a surprising difference in wealth. Generally, tax-deferred investments allow you to postpone payment of tax and compound your pre-tax earnings, preferably until retirement when tax rates are likely to be lower.

The graphic entitled “The Power of Tax-Deferred Compounding” provides an illustration that compares the after-tax ending balances of both a tax-deferred account and a taxable account after a 30-year timeframe. Click here to view the graphic. Assuming a starting balance of $100,000, a 6% rate of return, and a 28% tax bracket throughout the 30-year period, the following results are realized:

  • Taxable account (income taxed each year)   $355,654
  • Tax-deferred account (before taxes)            $574,349
  • Tax-deferred account (after taxes)               $441,531

The example in the graphic assumes an investor has a starting balance of $100,000. However, similar added wealth can be achieved by investing $5,500 per year in an Individual Retirement Account (IRA) versus a taxable account over a 30-year period.

If you have any tax or investment questions or concerns, or if you would like to set up a midyear tax planning meeting, please contact Steve at 818.449.3122 or steve@berkson.net.


2017 Midyear Tax Planning Letter

Dear Clients and Friends:

Summer officially starts this week and we are happy to provide our 2017 Midyear Tax Planning Letter to help you get a head start on your tax, estate, and succession planning needs.  Click here to read the Letter.

With the current uncertainty surrounding tax reform, it would be risky to make any big moves in your current tax strategy; however, it is just as risky staying locked into your old tax planning patterns.  Our Midyear Tax Planning Letter provides insights on steps you can take now to help minimize your taxes and avoid surprises when it comes to your taxable income.

The Letter also provides suggestions on how to ensure your estate planning, as well as succession planning for business owners, meets your objectives using current laws, but remains flexible in the event major tax reform takes effect.

If you would like to set up an appointment to discuss a midyear review of your tax situation, or if you have any wealth management questions or issues, please contact me at 818.449.3122 or steve@berkson.net.

Very truly yours,

Berkson Asset Management, Inc.
Registered Investment Advisor

A System for Accomplishing Your Long-Term Investment Goals

Dear Clients and Friends:

This week’s blog post features my White Paper, A System for Accomplishing Your Long-Term Investment Goals, which seeks to help you understand our investment management process as well as help you achieve your long-term investment goals. The Paper begins by identifying key market risks and the common challenges most investors face as they strive to grow and protect their wealth. It then offers a system for investing and wealth management to help you successfully invest for the long-term and for retirement. Click here to read the White Paper.

We hope you find this information informative and helpful. If you or a friend are interested in arranging a personal, no-obligation Financial Planning Goals Discovery meeting, simply contact Jan Howley at (818) 449-3120 or email me at steve@berkson.net. Please let us know if there is anything we can do to help with your financial planning or investment needs.

Best regards,

Berkson Asset Management, Inc.
Registered Investment Advisor
Steven M. Berkson, CPA\PFS, CFP®, MBT

When Rates Go Up, Do Stocks Go Down?

Dear Clients and Friends:

Should stock investors worry about changes in interest rates?

Research shows that, like stock prices, changes in interest rates and bond prices are largely unpredictable (1). It follows that an investment strategy based upon attempting to exploit these sorts of changes isn’t likely to be a fruitful endeavor. Despite the unpredictable nature of interest rate changes, investors may still be curious about what might happen to stocks if interest rates go up.

Unlike bond prices, which tend to go down when yields go up, stock prices might rise or fall with changes in interest rates. For stocks, it can go either way because a stock’s price depends on both future cash flows to investors and the discount rate they apply to those expected cash flows. When interest rates rise, the discount rate may increase, which in turn could cause the price of the stock to fall. However, it is also possible that when interest rates change, expectations about future cash flows expected from holding a stock also change. So, if theory doesn’t tell us what the overall effect should be, the next question is what does the data say? Read more