Cigar Box Bulletin December 2009 Volume 12 Issue 12 · 2017-10-26 · field of wealth management....

Retired Men’s Association

Cigar Box Bulletin December 2009Volume 12 Issue 12

Inside this Issue

UpcomingMeetings

Friday, Jan 8 Friday, Feb 12 Friday, Mar 12 Friday, Apr 9 Friday, May 14

Reporter:Fred Schulz

Reporter:Bill Tafuri

December Minutes

Continued on page 5

December Speakers

Birthdays 2 Anniversaries 9 Photos by Cooke 10 Burning Bush 11

Continued on page 3

Mort Brond introduced our December speakers, James Joslin, Chairman and CEO of TFC Financial Management and Renee Kwok, President of TFC. The speakers have a combined experience of nearly 60 years in the

field of wealth management. They gave us over an hour of detailed financial data and investment recommendations. We were also supplied with 3 thought provoking handouts for later consideration: an excerpt from a client communication The Government Can’t Print More Gold. This points out that although gold is presently at an all-time high it has not appreciated as much as the S&P 500 over the last 40 years and has not kept up with inflation.

Bill Ely called on Rey Graunas to lead all in the pledge of allegiance.

Bill also thanked Barry David and his crew for preparing the coffee and Jack Sheppard Jr. and Hollis Gray for picking up the donuts at the Stop and Shop.

Wally Hart called on this month's travelers for reports on their trips:Merrill Mack reported that he traveled to Bangkok, Bhutan, and Cambodia. His 3 1/2 week tour included some terrific scenery, Angkor Wat, and Bhutan in the Himalayas.Dave Raduziner reported on his trip to Israel for his granddaughter's wedding. He said that he learned a lot about the culture including a very religious wedding and later a visit to a farm in the desert which used desalinated sea water for irrigation.

Lloyd David called on sponsors to introduce their visitors:Dick Stitt introduced John Jacobson who has been retired for 10 years from his motor cycle and furniture businesses. John winters in Florida.

James Joslin Renee Kwok

The Cigar Box BulletinP. O. Box 261

Wayland, MA 01778

Published monthly by the Retired Men’s Association

of Weston, Wayland, Sudbury and surrounding communities.

Board of Directors:John Kiladis PresidentFrank Lyons Vice PresidentBill Ely Vice PresidentBarry David Vice-PresidentJohn Kassabian Vice-PresidentMerrill Mack TreasurerAl Persson Editor of BulletinKarl Geiger Ron RiggertWally Hart Hollis GrayWayne Clemens President Emeritus

The RMA is a not-for-profit corporation

Proof ReadersBill Gilmour

Yutaka Kobayashi, Bob Curtiss, John Heckscher, Wayne Clemens

Day Year Age

December BirthdaysCharles A. Fowler 17 1920 89Irving Goldstein 19 1920 89George Freedman 11 1921 88Jack Sheppard, Jr. 24 1924 85William Meoli 26 1926 83Benjamin R.Stahl 10 1927 82Domenic N. Cerasuolo 25 1927 82John Blair 5 1929 80Roy Paro 16 1929 80Harry W. Webber 24 1929 80Robert E. Peterson 26 1929 80Charles Wade 15 1931 78Lee H. Goodstone 15 1932 77Gerry Moran 9 1934 75William T. Maloney 12 1935 74Neil Kaufman 25 1936 73Thomas Gelsinon 25 1941 68John Kiladis 19 1943 66

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We were also supplied with an excerpt from Charles MacKay’s 1841 book Extraordinary Popular Delusions and the Madness of Crowds, which discussed the financial frenzy and chaos that developed through speculation in tulips in Holland in 1636. The third item was a brief list of some of our common failures in making rational decisions and discussion about them.

The first half of the presentation was given by Jim Joslin. The speaker titled his talk from a Yogi Berra remark “The Future Ain’t What It Used to be”. This was to point out, among other things, the recent changes occurring in the composition of our global financial markets and that we need to adopt different mindsets to survive.

The current recession was brought on by mal-pricing of risk in the housing and credit markets. Subsequent unwinding and de-leveraging caused gridlock in the financial markets leading to a broad economic collapse. Bank lending came to a standstill. This time the financial market paralysis caused the economic crisis whereas usually the expectation of declining economic growth causes a change in the financial markets

There were warnings of this problem. In 1998 the US financial markets had to bail out Long-Term Capital Management, a hedge fund which was leveraged at 24 times its investors’ equity. Although run by Nobel laureate economists, their financial models had neglected to include the possibility of a liquidity freeze or a severe drop in the equity markets. The LTC rescue was considered a “one-time” event and the wake-up call was ignored.

In early August of 2007, two large US hedge funds attempted to liquidate almost identical, highly leveraged equity positions and this caused the NY financial markets to freeze briefly. This then led to the global investment markets’ downward drift which bottomed in the US in March 2009.

The Congressional stimulus package of early 2009 has arrested the free fall. However, the economy is still at the edge of a precipice. A second downward dip is a possibility although it is less likely.

Many investment strategists have now become bullish and believe that earnings will increase and that stocks today are valued at 14 times next year’s EPS which is a reasonable level. However, the continued toxic debt, real estate foreclosure backlog and the need for US consumers to reduce their credit dampens this optimism.

The Fed’s actions and emergency stimulus were aimed at the threat of deflation. But this could lead to inflation unless the large central-bank-generated monetary infusions are reined in properly. Today, the world is awash in cash but the banks are still reluctant to lend. Global interest rates are at record low levels. Fed Chairman Bernanke’s field of study was the Great Depression and he is well aware of the errors of his predecessors and he should be expected to raise interest rates next year, probably in the late summer.

On the other hand, Washington politics will have to be considered. Our trading partners and creditors are moving toward more free market economies and reduced taxes. Yet our political class appears to be reducing incentives for business and raising taxes for purposes of wealth redistribution. The dollar has declined by 12% year-to-date and this suggests that we should include a foreign currency exposure in our investments.

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This past decade has shown that regulatory failures were widespread. Ratings agencies need to change their procedures to be aligned with investors’ interests instead of the securities issuers. Aggressive bank lending needs to be moderated. This will lead to tighter regulations, but they won’t prevent all excesses. The Federal government is going to be our new partner.

Another concern is that market sentiment swings in accentuated extremes. Because of the massive increase in instant information availability, we have many choices available. This leads to the question of how we should react. What is our inclination to take risk, willingness to trust authority, how to respond to herd instinct, which can lead to important long-term investment success. This is at least as important as the macro- and micro-economic variables in the computer investment models of the professionals. During the past 15 years, several universities have been studying the new discipline of Behavioral Finance, the study of investor psychology. A major item in this is our “herd instinct” behavior and relates to the handouts mentioned above.

Jim illustrated the “herd instinct” with an interesting video from the Allen Funt TV show Candid Camera. A scene shows a lone man in an elevator facing forward. Subsequently, one by one, 3 people enter and stand facing the rear of the elevator. The original man is then perplexed and eventually faces the rear also. Another scene shows a man again facing forward and 3 people enter and face the side of the elevator. The original passenger again gradually adjusts by also facing the side. Several other examples such as hat wearing and removing were also shown.

Another example of the “herd instinct” was shown in one of Jim’s slides of bond fund and equity fund cash flows over the last year. During late February 2009, money was being withdrawn at the rate of $30B per week from equity funds and the S&P index dropped by more than 20%, while the bond funds remained almost flat. The equity fund money was reinvested in the next month.

The bottom line of Jim’s talk was that financial markets usually discount economic outlook but often reflect aspects of human nature: greed, fear, need to conform, overconfidence, tendency to seek confirming data, vulnerability to misperception. It is difficult to resist pressure to conform and consensus driven decisions are often the result of “mob mentality”.

Renee Kwok delivered the second half of the presentation and covered a large amount of financial data. She began with a list of instructions for a rational approach to investing:

1. Set aside cash reserves sufficient for 4 to 6 months of expenses2. Check your investment asset mix periodically (at least once per year)3. Establish a personal investment policy4. Implement this policy for each account 5. Rebalance periodically and revise targets or goals as necessary6. Avoid market timing.

She next went through a number of detailed financial data slides and gave recommendations. (Copies of the presentation were made available if anyone left his name at the end of the talk.) She discussed a number of trends and predictions:

1. The US is presently 23% of the world’s economy but that percentage is declining and overseas growth will exceed that of the US. Therefore strategy 1 is that at least 30% of equity

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Minues contiued from page 1

Bob Mainer introduced Keith Sims who has lived in Wayland for a few dozen years and retired last month. He had worked in plastics production and water treatment at GE.Ron Riggert introduced Bob Green who was originally from Nebraska and moved into Acton in the sixties. He worked in the computer engineering business for Honeywell, Digital Equipment, Data General, Computervision, and others. He retired in July.

Gerry Brody reported on the18 birthdays and 15 anniversaries in December. John Bushman jumped in during the announcements to point out that on this his 50th anniversary he had changed some over the years but his wife still looks the same as she did when they were married.

Bill Towle reported on the successful walk at the Sedge-Meadows in Wayland on November 18th. Twenty members and guests attended the walk over relatively flat ground. He also reported that there will not be a walk scheduled by him in December, January, February, or March as he will be in Florida and he is looking for a leader for the April walk. Bill encouraged all to get up each day and walk. And, he showed a video emphasizing the point.

Bill Ely announced that Bob Cooke has put a display in the front of the room prints of some very nice photos that he took in his travels.

George O'Reilly briefed members on upcoming events. He announced another plan to attend a re-hearsal at Symphony Hall on February 11th. He asked for signups and said that the cutoff for signups would be at the next RMA meeting on January 8th. In addition he announced several candidate mini events for next year and asked members to indicate their interest. These events would typically have members provide their own transportation with help from the committee on directions and parking. The candidate events were as follows:1. Genzyme Center tour with a possible MIT museum add on.2. Massachusetts Maritime Academy3. Boston Public Library and Trinity Church4. The Christian Science Center5. The Massachusetts State House6. The Boston Athenaeum (across from the State House)7. The Federal Court House8. Perkins School for the Blind9. The New Bedford Whaling Museum

David Cerul announced that he has a few activities that other members might like to participate in. They are chess once a week, bridge on Thursday nights, and a weekly patio tennis program. Inter-ested members should contact him.

John Strong asked for members interested in ringing the bell for the Salvation Army to contact him. Volunteers would typically stand in for just an hour.

Charlie Raskin gave an update on the health of members:A thank you note was received from Thor Knutrud concerning the contribution the RMA made to the Salvation Army for the memorial gift for his wife Lister. Joe Angel was recently hospitalized and was expected to be home shortly suffering from any num-ber of discomforting pains.

Special Eventsby

George O’Reily

Contiued from page 5

Matt Slate's wife Harriet, has taken ill with the expectation of a long bumpy road ahead. We wish them much comfort. RMA member Charlie Cope, of Wayland, unexpectedly suffered a massive heart attack last week, which led to his death. Wayne Clemens commented," that he was a very quiet and delightful human being and you would want to have as a friend". Jim Roberts' knee was operated on recently and he is now in the state of rehabilitation Tash Tashjain, as mentioned previously is going through the ordeal of radiation, chemotherapy, and tranfusions. The last transfusion appears to have been some help. A long way to go. Hang in TASH.

Charlie added "Enough said----just stay well--have a good holiday season----if you give good stuff to yourself or some one else---you get back good stuff".

On the lighter side, Rick Dugan shared a few jokes with the members including a poem about Sam the wise man and mama's bible.

Neil Kaufman led us all in the sing-along of the song DAMES from South Pacific followed by his own lyrics to the same melody.

Jim Howard announced that the ROMEO lunch would be at Lotus Blossom in Sudbury.

Romeo Report :

Seventeen RMA members and our two two guest speakers lunched at Lotus Blossom in Sudbury after the December Meeting...

The usual fine Japanese/Chinese cuisine was offered at the buffet...

Rick Dugan will be ROMEO host at Bella Costa in Framingham to start the New Year...

HAPPY NEW YEAR TO ALL !!!

Jim Howard

Continued from page 6

investment should be in international stocks or mutual fund.2. The US dollar will continue to decline over the long term. Therefore strategy 2 should be to

invest in unhedged, non-US dollar denominated equities 3. The BRIC (Brazil, Russia, India, China) economies are growing rapidly and together, their

GDP now exceeds that of the US. Therefore strategy 3 is to invest in diversified emerging market funds. Her list included: Brazil, South Korea, China, Taiwan, Russia, India, South Africa, Mexico, Israel

4. Expect rising interest rates and anticipate Fed action. Inflation will be moderate in the near term. Strategy 3 is to carefully review bond portfolio duration for price and interest rate risk. For now, stay in short term bonds (1 to 3 year duration)

5. Beware of potential bubbles (gold, commodities, etc). Gold has been a mediocre investment vs stocks over the past 40 years. Strategy 5 is to invest in diversified natural resource equity funds. Natural resource rich countries include Canada, Brazil, Middle East, Australia, Russia.

6. Increasing government intrusion and budget deficits may bring higher taxes, lower growth, and more regulation. Strategy 6 is to review tax efficiency of investments in taxable deferred accounts and consider municipal bonds.

7. Expect volatile investor behavior to persist with constant media and internet exposure. Strategy 7 is to resist market timing.

8. After the rally of the last 9 months, there is a return to fundamentals, quality and evaluations. Earnings recovery is underway. P/E ratios are reasonable based on future earnings. Strategy 8 is to structure your equity portfolio with both high quality actively-managed and passive (index) funds.

Renee completed her talk with a list of 10 additional recommendations:1. Consider Roth IRA conversion (because taxes will rise in the future).2. Fund 529 College Savings Plans for grandchildren.3. Make annual gifts (up to $13K per recipient) to reduce your estate. 4. In 2010, you may be able to use funds in an annuity or life insurance policy to purchase long

term care insurance (Section 1035 tax-free exchange).5. Harvest capital losses to offset future capital gains and realize capital gains before 2011.6. Make charitable gifts of appreciated securities vs cash7. Check personal liability, financial and investment risk exposure. Insurance averages around

$400 per $1M of coverage.8. Consider Estate Planning Strategies which benefit from current low interest rates.9. Verify ownership of assets, titling of accounts and beneficiary designations for all accounts.

(These override your Will) 10. Check and update durable power of attorney, health care proxy and living will documents.

If you have futher questions Jim and Renee can be reached at www.tfcfinancial.com

If you received this bulletin by U.S. mail but would like to receive it in the future by email only, please email your request to [email protected]. Also, if you want to receive email from the RMA but are not receiving monthly messages, please send email [email protected] so we can upgrade our records.

Special Eventsby

George O’ReilyEvent Date Travel

DetailsCost Contact Cut-off

DateBSO Feb 11 Leave SBC

7:45 AMreturn 2:10

$40.00Lunch$47.00

GeorgeO’Reilly

January 8th

Photos by Bob Cooke

Years Day Year

Anniversariesin

December

Names in blue have been married more then 50 years

Harry Sweitzer Betty 59 9 1950Robert E. Peterson Marjorie 58 29 1951Donald Soorian Eleanor 58 29 1951Joseph Angel Peggy 57 27 1952Jerome D. Hanfling Marcia 54 24 1955Joseph Spound Paula 53 23 1956John B. Campbell Elaine 52 21 1957Harry Jones Jean 52 27 1957John R. Bushman Susanne 50 26 1959

Arnold Barnes Sally 49 27 1960Donald Connell Marilyn 49 31 1960Theodore Bially Phyllis 46 15 1963Paul Bledsoe Joyce 46 20 1963Yutaka Kobayashi Maureen 27 29 1982Ray Atkins Tamar 19 27 1990

Nearly everyone knows the story of Moses, the son of a Hebrew slave, and how the Pharaoh’s daughter rescued him from the river where his mother had placed him to avoid the Pharoah's order to kill every male Hebrew child. At this time, the Hebrews had been held in bondage for four hundred years. She raised him in the court of the pharaoh. After he discovered his true heritage and killed an Egyptian taskmaster, Moses fled to the Sinai Peninsula. He married a shepherd’s daughter and lived there tending his father-in-law’s flocks. After some years, Moses was chosen by the people of Israel to be one of their leaders.

According to the story as told in the Torah he returned to Egypt and led his people out of bondage toward the promised land. They wandered in the Sinai Peninsula for 40 years. Dur-ing this period, Moses found himself at the foot of a mountain. Scholars dispute where this mountain was. However, since the fourth century AD when Coptic Christians founded a small church there, Christians (and later Muslims) have revered what is now called Mount Sinai. Ac-cording to scripture, Moses spoke directly to God through a burning bush that was not con-sumed by the fire. On God’s instructions Moses went up on the mountain and there received, directly from the hand of God, the Ten Commandments.

Mount Sinai is in the southernmost part of the Sinai Peninsula in what is part of modern Egypt. In the fourth century a monastery was built there and named St. Catherine’s after a martyred Egyptian saint. Tradition has it that the monastery was constructed on the site of the burning bush.

A bush still grows there. It is a rare species of the rose family called Rubus Sanctus endemic to the Sinai and extremely long-lived. The monks at St. Catherine's believe that it is the same bush that Moses saw. Legend says that it was transplanted in the tenth century to its current location.

Over the centuries various improvements have been made to the monastery so that now it en-compasses a fairly large area and is surrounded by granite walls 60 feet in height. It not only houses a Christian church but also a Moslem mosque. Today the monastery is the repository for the second-largest collection of ancient manu-scripts, the Vatican being the only place with more ancient manuscripts. There are 4570 manu-scripts and 7000 early printed books. One of the Monks is an American, born in Texas. Nine years ago he became a member of the monastery. Since then he has been scanning and put-ting, in digital form, all of the ancient manuscripts and books. The goal is to make them avail-able to everyone and preserve them for eternity.

He hopes to make all manuscripts, like the burning bush, something for everyone to see and to appreciate but not be consumed at the same time. Too often in their zeal to reveal an ancient discovery, the finders destroy or damage the treasure.

by AL Persson

Burning Bush

Next MeetingFriday, January 8th

Website: RmenA.org

First Class Mail

R.M.A.Box 261

Wayland, Mass 01778

Cigar Box Bulletin December 2009 Volume 12 Issue 12 · 2017-10-26 · field of wealth management....

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