Broker Check

2018 - 3rd Quarter

Dear Valued Client,

Our “real time” world is overwhelming!  It’s difficult to know what’s true, what’s important and what is not.   This letter is my attempt to highlight some of the key issues that we are now facing and relate them back to your financial planning and investment decisions. 


Stocks & Bonds….

Third quarter 2018 was easy sailing for  U.S. stocks, however, international stocks struggled. YTD through September 30, 2018 the S&P was up +8.99%, the NASDAQ was up +16.56%, the EAFE was down <3.76%> and the MSCI Emerging Markets was down <7.39%>.  On the fixed income side, the Barclays Aggregate Bond index was down <3.48%> for the same period. 

As you know, stocks have taken a decidedly downward move since the end of September.  As I write this letter on 11/26/18 all the indexes I’ve noted above except the NASDAQ have negative returns YTD.  The NASDAQ is still positive but only a paltry + .52%.  This downturn is significant enough to be in “correction” territory.  It’s important to remember that stock market corrections are normal and healthy because they help prevent a market bubble that will eventually burst.

Volatility has been high.  Investors are worried about lots of things, most notably rising rates, inflation and trade.  Additionally, stocks have done very well in the past few years.  For these reasons, investors are choosing to take some profits, reduce their equity risk and increase their allocation to cash. Now that Treasury and CD yields are in the 3%+/- range, cash is a more appealing investment option than it was last year when rates were close to zero.


The Economy….

Interestingly, our economy seems to be doing very well.  The typical signs of an imminent recession are not in place. In about seven months we will be in the longest economic recovery in our country’s history.  Most economists are not expecting a recession until 2020 or later.  However, there are potential headwinds.  The following are key areas of concern:

  • Rising Interest Rates: After holding the federal funds rate to near zero for seven years, rates finally began to rise in 2015. This year, the Federal Reserve has already raised the fed rate three times, and many expect one more raise before the end of the year.  The Fed’s goal is to set the fed rate at a so-called “neutral setting.”  The Fed rate right now is 2% to 2.25%.  Fed officials estimate the “neutral” rate in today’s environment at about 2.75% to 3%.  Overall rising rates have not yet stymied our economy; however, housing starts have slowed. 
  • Inflation: The Fed currently targets a 2% inflation rate.  Right now,  inflation is less than 2%.  Historically low unemployment and rising wages have triggered inflation but not this time - not yet. 
  • Trade Policy and Tariffs: Honestly, I do not think anybody knows how this will play out.  S. trade talks with China are not going well, and it looks like tariffs in both countries will rise steeply and will include more basic materials and products in 2019 unless something changes.  From what I can gather from my reading, there is widespread agreement that China needs to “play fairer” when it comes to trade but our current administration’s tactics and tariffs have the support of far fewer economists.  Any sort of good news on this front would probably be good for stock markets worldwide.  We will have to wait and see.   To date, only about 9% of U.S. corporations have altered their business plans due to the current tariffs. 
  • Other Substantial Concerns: We cannot predict or estimate the cost of extreme climate disasters and/or geopolitical events. Certainly, there has been an escalation in natural disasters in the past few years.


So, what to do?

Here I go again, the same thing!  Go back to basics.  Keep a long-term perspective, be patient and recognize that change is a constant in our world and in your financial plan.  Number-one rule: keep enough cash in reserve for emergencies and upcoming extraordinary expenses.  Rebalance your portfolio – the whole idea is to buy low and sell high – take some profits from your winners and add to investment positions that have underperformed.  It is important to be disciplined, and that can be difficult.  Avoid being in a position where you are forced to sell your investments in a downturn.

This year, many of you have reduced your allocation to equities and increased your allocation to cash and bonds.  We have raised the cash we plan to distribute in 2019.  If you have not been in for a review yet in 2018 please give us a call. 

I do not believe in market timing.  It is impossible to know when to sell and then when to buy back in.  Hopefully, knowing you have adequate cash reserves will help you be patient and “ride out” the inevitable ups and downs of the stock market.  It helps me to remember that stocks are businesses, they sell the same products and services regardless of who’s president or which political party dominates Congress, in good times and bad.


A Few Important Planning Tips:

  • Estate Planning: If you haven’t had your revocable living trust and other estate planning documents updated since 2012, I recommend you see your estate planning attorney and  have it reviewed.  The regulations have changed significantly since 2012.
  • Homeowner’s Insurance: If you haven’t already made sure that the replacement cost maximum dollar coverage in your policy is adequate to rebuild your home please do so.  The cost to rebuild is much higher today than it was before last year’s fire.  This is important.









What’s New!

We now have two Notary Publics in our office!  Both Alan Dorin and Tom McCaffrey are licensed and good to go!  If you need a notary, just give us a call and set up a time to come in.  If it’s inconvenient for you to come in, they can come to your home or office - just give us some advance notice.  This is a new service for you and there is no charge. 


When you send an email to our office, we ask you to send it to or cc  We all receive emails sent to  and this will help us be sure we don’t miss your email.


December 13, 2018 Client Meeting:  2019 Economic Outlook

Our featured speaker is Dr. Robert Eyler.  Dr. Eyler is Professor and Chair of Economics at Sonoma State University.  He has been a visiting scholar at both University of Bologna and Stanford University.  He is an expert in both international economics and our local economy.  We are lucky to have him back with us again this year and I know it is going to be an interesting evening!  Bring a friend!


As always, I want to thank you for your business, confidence and friendship.  It is such a pleasure to have such terrific clients!


Here’s to a wonderful holiday season and a happy, healthy and prosperous New Year!

Best wishes,














References: Wall Street Journal; LPL Research; Santa Rosa Press Democrat;


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security.  To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.  All performance referenced is historical and is no guarantee of future results.  Indexes are unmanaged and cannot be invested into directly.  Investing involves risks including possible loss of principal.  No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.


Financial planning offered through JL Schneider & Associates, a Registered Investment Advisor and

a separate entity from LPL Financial.

Jan Schneider, CFP ®, is a Registered Principal and Investment Advisor Representative with, and securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.

900 MENDOCINO AVENUE, SANTA ROSA, CA  95401 (707) 522-8000  FAX (707) 522-8008