Schwartz Financial ­Weekly Commentary 11/6/17

The Markets

“Taxes are what we pay for a civilized society.”

U.S. Supreme Court Justice Oliver Wendell Holmes’s statement is engraved on the front of the Internal Revenue Service building in Washington, D.C. Some people agree with the sentiment. Others believe it to be a logical fallacy.

It’s likely the tax plan proposed by House Republicans last week had all of them talking, regardless of position on the opinion spectrum. Some of the changes suggested in the proposal include:

  • Reducing current marginal income tax brackets from seven to four (12, 25, 35, and 39.6 percent). The New York Times reported, “While the lowest income rate would increase, typical families in the existing 10 percent bracket would most likely be better off because of a larger child tax credit and an increase in the standard deduction.”
  • Repealing the Alternative Minimum Tax.
  • Increasing the standard deduction to $12,000 for individuals and $24,000 for married couples, while eliminating personal exemptions (the $4,050 exemptions you claim for yourself, your spouse, and your dependents).
  • Repealing state and local tax deductions.
  • Reducing (and eventually eliminating) estate taxes.
  • Setting the corporate tax rate at 20 percent. Financial Times wrote, “This will not increase wages or growth by much, and nowhere near the wild claims made by its proponents. But a lower rate combined with a broader tax base is not a terrible idea…To pay for the cuts, the tax law writers have gone after corporate deductions…”
  • Eliminating medical expense deductions. The Hill explained, “Under current law, the IRS allows individuals to deduct qualified medical expenses that exceed 10 percent of a person’s adjusted gross income for the year. The bill would repeal that itemized deduction, effective in 2018.”

In addition to headline news about tax reform, investors contemplated the appointment of Jerome Powell as the next Chair of the Federal Reserve and embraced strong earnings. The Standard & Poor’s 500 Index, Dow Jones Industrial Average, and NASDAQ closed at record highs last week.

Data as of 11/3/17 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 0.3% 15.6% 23.9% 8.7% 12.8% 5.6%
Dow Jones Global ex-U.S. 0.9 21.6 22.9 4.0 5.4 -0.9
10-year Treasury Note (Yield Only) 2.3 NA 1.8 2.4 1.7 4.3
Gold (per ounce) 0.1 9.3 -2.6 2.8 -5.5 4.6
Bloomberg Commodity Index 1.2 -0.7 3.9 -9.6 -9.1 -7.1
DJ Equity All REIT Total Return Index 1.2 7.0 14.0 7.2 10.2 6.8
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s,, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

are you bullish about Pet Tech? Early in the last century, authors like Anna Sewell (Black Beauty) and Jack London (White Fang) wrote stories that encouraged readers to understand and empathize with animals. Today, entrepreneurs are developing devices to help people better understand pets. Here are a few innovations in the pet-tech space that may (or may not) become household necessities or in-demand holiday gifts:

  • Remote control pet interaction. You may be sitting in your office, miles from home, but that doesn’t mean you can’t pull out your smartphone and fling a treat to Fido or shine a laser for Boots to chase. That’s right, interactive pet cameras let you see, feed, talk to, and play with your pet when you’re far away.
  • Pet insight software. A tech writer at Slate wrote, “For the most part, [my cat’s] feelings, daily activities, and health are a black box to me.” Apparently, it’s a common issue. Entrepreneurs have invested $10 million to develop “deep learning software that can analyze the huge quantities of pet video…to learn more about animal behavior and how it’s linked to animal health issues and moods.”
  • Fitness trackers for pets. Pet owners who suspect their animals are too sedentary may want to invest in smart collars for their pets. Some collars track temperature, heart rate, heart rate variability, activity, calories burned, and more. Once a normal baseline has been established, pet owners may be able to spot anomalies that signal health issues.
  • Robotic pets with artificial intelligence. Perhaps, you just don’t have the time to feed, walk, and play with a pet. Maybe, you travel too much or dislike the household wear and tear associated with pets. If you want a pet that behaves perfectly and requires less care, you may want to consider a robotic alternative that’s “packed with an array of sensors, cameras, microphones, and internet connectivity, as well as far more advanced AI backed by cloud computing to develop the dog’s personality,” according to The Guardian.

It’s a high-tech world, after all.

Weekly Focus – Think About It

“Lots of people talk to animals…. Not very many listen, though…. That’s the problem.”

–Benjamin Hoff, Author of The Tao of Pooh

Value vs. Growth Investing (10/27/17)

Name 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year
US Market 0.23 17.16 1.98 5.29 26.76 10.74 15.18
US Core 0.14 16.81 1.49 4.63 25.97 10.84 15.91
US Growth 0.64 25.93 3.58 6.55 32.69 11.71 16.01
US Large Cap 0.31 18.62 2.42 5.43 27.32 11.19 15.23
US Large Core 0.44 18.74 2.05 4.79 27.00 11.57 16.38
US Large Growth 0.59 27.44 3.97 6.31 33.11 12.40 16.52
US Large Val -0.12 10.31 1.10 5.05 22.02 9.53 12.80
US Mid Cap 0.21 14.39 1.28 4.70 24.64 9.69 15.33
US Mid Core -0.38 14.08 0.77 4.32 23.56 9.25 15.05
US Mid Growth 0.88 22.05 2.84 6.75 30.07 9.47 14.42
US Mid Val 0.12 7.20 0.10 2.82 20.06 10.25 16.51
US Small Cap -0.60 10.61 -0.47 5.63 26.99 9.09 14.21
US Small Core -1.20 7.24 -1.72 3.92 23.76 8.61 14.09
US Small Growth 0.43 21.39 1.74 8.64 35.56 10.72 15.03
US Small Val -1.16 3.62 -1.64 4.18 21.45 7.79 13.39
US Value -0.14 9.23 0.72 4.56 21.65 9.58 13.61
 ©2004 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) is not warranted to be accurate, complete or timely. Morningstar is not responsible for any damages or losses arising from any use of this information and has not granted its consent to be considered or deemed an “expert” under the Securities Act of 1933. Past performance is no guarantee of future results.  Indices are unmanaged and while these indices can be invested in directly, this is neither a recommendation nor an offer to purchase.  This can only be done by prospectus and should be on the recommendation of a licensed professional.

Office Happenings:

Nothing Surprises Me

Having been a financial advisor for [number] years, I rarely encounter anything that surprises me; but last week, I was visiting with a retired client—I’ll call him “Joe”—who asked me if I knew anything about insurance.  What happened after that is what I’d like to share with you:

I told Joe that we offer insurance in many different forms, to satisfy the various estate planning needs of our clients, but we don’t really solicit for it, as you would expect insurance salespeople to do.  When I asked him why he wanted to know, Joe said that he had a policy that he’d bought many years ago and on which, in fact, he was still making a $50 monthly payment.  The death benefit was $50,000.  He told me the only reason he’d asked was because I’d done such a good job for him over the years with his investments.  Not knowing if I could help, I said, “Let me have a copy of your last statement and I’ll see what can be done.”

Well, to my surprise, I was able to show Joe insurance coverage that would double his death benefit and end his monthly payments to boot.  All because he asked!

I believe there are many policies out there just like Joe’s.  If yours is one of them, would you bet on your insurance company contacting you about it?  So long as you’re content with what you have, why would they want to double your life insurance benefit—especially if it means no more premiums for them?

Joe has increased the death benefit of his policy from $50,000 to $100,000 without any out-of-pocket expense—in fact; he is saving that $50 monthly payment—all because he decided to ask me.

So, if you have any old life insurance policies, don’t hesitate to see if they can be improved.  You have nothing to lose and everything to gain.  In case you want to check, just contact my office.


Michael L. Schwartz, RFC®, CWS®, CFS

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

Michael L. Schwartz, RFC, CWS, CFS, a registered principal offering securities and advisory services through Independent Financial Group, LLC., a registered broker-dealer and investment advisor.  Member FINRA-SIPC. Schwartz Financial and Independent Financial Group are unaffiliated entities.

This information is provided for informational purposes only and is not a solicitation or recommendation that any particular investor should purchase or sell any security. The information contained herein is obtained from sources believed to be reliable but its accuracy or completeness is not guaranteed.  Any opinions expressed herein are subject to change without notice.  An Index is a composite of securities that provides a performance benchmark.  Returns are presented for illustrative purposes only and are not intended to project the performance of any specific investment.  Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly.  Past performance is not a guarantee of future results.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices. 


* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.


* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.


* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.


* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.


* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.


* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.


* Past performance does not guarantee future results.


* You cannot invest directly in an index.


* Consult your financial professional before making any investment decision.


* To unsubscribe from our “market commentary” please reply to this e-mail with    “Unsubscribe” in the subject line, or write us at “”.

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