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DWM is committed to learning for its team, clients and friends. In this changing world, it’s extremely important to stay current in all areas impacting your financial future.

We encourage all of team members to “drill down” on current topics important to you and contribute to our weekly blogs.  Questions from our clients and their families are often featured in our blogs.  

Financial literacy for clients and their families is very important to us.  We generally hold an annual wealth management seminar for all of our clients.  We encourage regular, at least semi-annual, meetings in person with our clients to review family updates, progress on financial goals, asset allocation and performance of investments.  We’re happy to assist younger members of the family as part of our total wealth management program.

Here’s our latest blog:

 

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October: Halloween and National Cybersecurity Awareness Month

NOC-trick-or-treat-header.jpgWhat a combo!  Ghosts and goblins seem pretty tame compared to the potential theft of our financial information.  146 million Americans got a big scare last month when Equifax announced that hackers had stolen their personal information.  Fast food chain Sonic just announced that customers’ debit and credit card information was stolen last week.  So, while Halloween costumes, haunted houses and trick or treats get put away on November 1st, cybersecurity issues cannot be put away in the attic trunk or tossed into the garbage.

We probably all wish we could just email Equifax a two word message:  “You’re Fired!”  Unfortunately, it’s not that easy.  For example, Fannie Mae, who sets the rules for most mortgages, requires information from all three credit “repositories.”   If you will never need a mortgage, you can try to delete your files from Equifax.  However, those who have tried have been put “on hold” for hours and then told that deletion of their files was impossible.  The “no” response to deletion was confirmed by Equifax former CEO Richard Smith last week to Congress. For now, the best we can do is freeze (not “lock”) our accounts at Equifax, Transunion and Experian.

New “cyber-vampires” are emerging from the darkness.  Did you ever watch the movie “Catch me if you can?” Great film.   It is the story of Frank Abagnale, Jr., played by Leonardo DiCaprio, a master of deception and a brilliant forger who stayed one step ahead of the FBI (Tom Hanks) for five years with his highly successful scams.  Once arrested, he spent five years in jail from age 21 to 26.  Since that time, Mr. Abagnale has put his unique skills to good use teaching FBI agents around the country about cybercrime, identity theft and fraud.    He also serves as an ambassador for AARP’s Fraud Watch Network and lives in Daniel Island, SC.  Here are some of Frank Abagnale’s (“FA”) recent warnings:

FA: “Stop writing checks- if you are still paying by check, you might be putting your life savings at risk.”  If you go into a grocery store and write a check, you have to hand the clerk the check with your name and address, phone number, your bank’s name and address, your bank account number, the bank routing number and your signature.  And then, the clerk may ask to write down your date of birth and driver’s license number as well.  You never get the check back, it goes to the store’s warehouse, where it may be destroyed thoroughly (or not) six months from now.  Anyone seeing the check has all they need to draft on your bank account tomorrow.

FA: “It is now 4,000 times easier to forge checks (with today’s technology).”  50 years ago, FA used a Heidelberg printing press, originally costing $1 million, to forge checks.  The press was 90 feet long and 18 feet high.  Now, one simply opens their laptop and says, “Who’s my victim today?”  In fact, FA indicates that forging checks is so easy these days that street gangs that used to deal in drugs and narcotics are forging checks instead.  FA: “It’s easier and you spend a lot less time in jail if you are caught.”

FA: “Technology breeds crime-whether it is forging checks or getting information.”  Facebook is a great source of information for the crooks.  One of the most common scams now is the “grandparents scam.”  The bad guys go on Facebook and find out who the grandparents are and see who the grandson is dating.  They easily manipulate their telephone caller ID to show a call coming from the NYPD or other police department.  The thieves place their call on a Friday night and tell the grandparents that the grandson is at the jail after being picked up for DUI/DWI and being held for bail.  If money for bail is not received in two hours, the grandson will have to spend the weekend in prison.  “Millions of grandparents have fallen for this scam.”

At DWM, we recognize that you have worked and continue to work very hard for your money.  Our goal, in every facet of providing Total Wealth Management, is to protect and grow your assets.  Cyber-safe practices are a key element of risk management.  Our first job is to educate our clients and friends about the importance of cybercrime, identity theft and fraud.  Charles Schwab & Company, the custodian for our clients’ money, is as dedicated as we are to keep you and your funds safe and help prevent attacks.

Watch for more blogs this month (and beyond) on cybersecurity.  It’s a tremendously important topic!!

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DWM 3Q17 Market Commentary

3aa0dd096e2d3a6fbc4c3a4c7dea6188 XL“Train Kept A Rollin’ All Night Long…” The US economic expansion continued on during the third quarter of 2017. It is the third longest expansion since World War II and is now closing in on 100 months.  There were plenty of negatives that tried to slow it down. Politically, we had the debt ceiling deadline, a failed attempt to repeal Obamacare, and a war of words with North Korea. Even the lives and economic losses from the likes of Hurricane Harvey, Irma, Maria, western wildfires and two Mexican earthquakes – amounting to what could be the most expensive year for natural disasters ever - couldn’t slow this train down.

Thing is: the positives outweigh those negatives. At the end of the day, the market is powered by companies’ earnings. And those earnings have been robust and are expected to continue to be! And it’s not just domestically; growth is accelerating at a global level with Eurozone businesses and households more confident about their prospects than at any time in more than a decade. Japan has shown decent growth and inflation this year. And emerging markets are enjoying better fundamentals with more credible politics. Choo! Choo!

We are big believers in asset allocation which is why we showcase the major asset classes each quarter. Here’s how each fared:

Equities: The S&P500 rose 4.5% on the quarter and is now up 14.2% year-to-date (“YTD”). Sounds excellent, but actually a more diversified benchmark, the MSCI All Countries World Index, which includes US large cap stocks, US smaller cap stocks AND international stocks, did much better, up 5.3% quarter-to-date (“QTD”) and now up 17.3% YTD. We’ve been saying for some time that domestic large cap stocks in general look pretty “frothy” and hence it’s not surprising to see this rotation out of domestic large cap stocks into other cheaper equities. The other thing at play is the renewed interest in the so-called “Trump trade”. The areas that moved post-Trump Presidential Election, like small cap and value, have ‘steamed ahead’ in the last few weeks from the renewed hope of possible tax cuts. In just September, the Russell 2000 outperformed the S&P 500 by 4.2% and the Russell 3000 Value outperformed the Russel 3000 Growth by 1.6%.

Fixed Income:  During the quarter, the Fed announced that they are pushing ahead with an aggressive schedule for rate increases. We are happy to see the Fed take this path toward “normalization” while the economy is strong. The US needs to get back to higher rates so that the Fed has “some coal for their engines” if things go bad. That said, this announced path has succeeded in boosting inflation expectations, which has pushed up yields in both the 2-year and 10-year US Treasury notes, with the latter closing the quarter at 2.3%, its first quarterly gain of 2017. For the record, the Barclays US Aggregate Bond Index gained 0.9% in the third quarter and is now up 3.1% for the year. The inclusion of global fixed income assets led to better results with the Barclays Global Aggregate Bond Index registering +1.8% for 3Q17 and +6.3% YTD.

Alternatives:  Let’s take a look at a few ‘alts’ we follow. Gold gave back a little in September, but registered a +3.1% 3Q17 return represented by the iShares Gold Trust. With 2017 going down as one of the worst natural disasters year on record, the alternative exposure to reinsurance-linked securities (sometimes referred to as ‘catastrophe’ securities) took a hit. One would have thought oil would have suffered from the hurricanes as well, but demand was strong and with slowing US production, oil prices (WTI) ended the quarter up 12.2%. For the record, the Credit Suisse Liquid Alternative Beta Index, our chosen proxy for alternatives, was up 1.6% for the third quarter and 2.8% YTD. 

For balanced investors, It’s been a pretty nice three quarters to start 2017. Looking forward, this bull market train can continue to roll, and a case can be made that returns can even get stronger given the great economic fundamentals around the globe. If Washington can get something done relative to a tax cut, look for stocks to accelerate into year-end.

Of course, there will always be (rail) road blocks. We are thrilled to see inflation measures move toward the Fed target range around 2%, but there are many out there concerned that inflation might ‘chug’ right through those target levels and create havoc on the back-end. Furthermore, the announced and about-to-start-very-soon Federal balance sheet reduction is an unprecedented experiment. And it’s not just the US attempting this.  Global central banks at some point need to do some house-cleaning and will be reducing their balance sheets as well. There is a huge risk something can go wrong and send this train off track. Lastly, we don’t think the markets are adequately pricing in the geopolitical risk out there, which some would say is approaching multi-decades high. Frankly, when a small probability risk is hard to price in, the market usually just shrugs it off. With trading activity so light recently and little risk currently priced into the market, things could get ugly very quickly if anything goes wrong.  

In conclusion, these are challenging times. It’s not easy to navigate the terrain out there. So make sure you have good direction and management. Don’t fall victim to a bad conductor and wind up like Ozzy Osbourne “going off the rails of a crazy train!” Make sure that your engineer is keeping you on track. At DWM, we engineer our clients’ portfolios to ride safely through the peaks and valleys that this train has and will travel through. With the right team at the controls, you can make your journey a pleasant one.

Brett M. Detterbeck, CFA, CFP®

DETTERBECK WEALTH MANAGEMENT

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DWM Says Thanks – Last Weekend at Arlington Park!

This past Saturday, many clients/family/friends attended our annual Chicagoland Friends of DWM Appreciation Event at Arlington Park Race Track in Arlington Heights, IL. We were blessed with a warm, sunny day under the shade of one of Arlington Park Race Track’s marquee tents!

A great time was had by all!

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Don the Handicapper educated us aka “Arlington Park Betting 101”.

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And we had some lucky winners!

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Then again not all of us were old enough to bet, but still had fun!

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Some just wanted to chill…in a tree!

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Some of us – both young and old – even had a roll down the hill match! (Thanks for organizing, L.M.)

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For those that attended, thank you very much for coming and partaking in what was a truly special day for our Detterbeck Wealth Management team. And to both those that did attend and to those that couldn’t make it, let us reiterate that we are honored to have you all as our friends and look forward to a continued great relationship! Thank you!!!

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Lastly, for those in Charleston area, we look forward to hopefully seeing you at our October appreciation event! Details to be sent out soon.

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