This year the United States will celebrate its 240th birthday! If you’re like most people, you’ll probably celebrate by doing what you always do, and why not? Why should you think of 2016 any differently?
Actually, this is one of those years that is different. Just in case you haven’t noticed, it’s an election year! Regardless how you feel about the candidates, in years like this, the words “being American” take on an entirely different meaning.
During election years, no longer is being an American a passive thing. It’s a choice; a philosophy. Every few years, we make the decision to take part in one of the noblest experiments in the history of mankind: the experiment to determine if men and women can govern themselves. The experiment to choose for ourselves what we can and ought to be, and the experiment to rid ourselves of dictators, kings, and nobles. To settle once and for all that no person has to bow; that no gender, race, or religion should lord over our common humanity.
You see, every election year we choose the people charged with leading us, both at home and abroad. This process says much about who we are as a nation. Think back on your history lessons. Think how rare it is to live in a country that can have complete shifts in power, with a transition that occurs peacefully. Most of the time, I feel it’s easy to take this fact for granted—after all, most of us have never known anything else.
But this process is at the core of what makes us so unique. It’s an amazing thing that our elected leaders set aside their power—not because they don’t want it anymore, but because they understand the greater goal of upholding freedom and independence. This singular phenomenon is the result of more than just laws. It goes beyond even the Constitution. Many governments have laid down similar limits on their chief executive’s power, to no avail.
So what ensures that our leaders don’t abuse those rules? We do; us; you and I. When a massive population of people collectively exercises their rights, there is no power in the world that can stop it.
So what are these rights? Here are a few:
- Our freedom of speech. We exercise it every time we talk politics by the water cooler. Every time a comedian mocks the most famous house in the world.
- Our freedom of the press. We all might brumble about the foibles and biases of the media, but remember what Thomas Jefferson said. “Were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate a moment to prefer the latter.” At no point is our right to a free and open press more important than during an election year.
In spite of all the noise and talking heads, a free and open media remains a chief source of information, so that we can make informed choices. It’s our main provider of context, so that the information we acquire is properly weighed and judged. Whether it’s through newspapers, television, or internet blogs, we never pay more attention to the press than during an election. Thus, we will never exercise our right to a free press more than during a year like this one.
- Our right to assemble. Do we appreciate how rare it is for us to be able to gather and discuss the world we live in? This probably seems so normal today, but for centuries people have had to meet in dark alleyways to share, commiserate, or even conspire. Our ability to organize in support of—or in opposition to—any organization, group, or person is uniquely American.
We exercise this right every time we gather to support one candidate over another, or when we meet in town halls to question our elected representatives. Furthermore, implicit in the right to assembly is the right to association—to affiliate ourselves as we please. Joining political parties or other causes exercises our right to freedom of association.
Now you might be saying to yourself, “We always have these rights no matter what year it is.” And that’s true. They’re guaranteed by the Constitution; twenty-four hours a day, three-hundred and sixty-five days a year; in rain, or sleet, or snow; in good times and bad. But it’s during an election year that the majority of us truly exercise those rights. And it’s those rights that make America unique. It’s for those rights that we declared independence in the first place. And it’s when we exercise them that we’re truly being American.
When you think about being American this Independence Day, remember it really isn’t about sports or food or music or money. It’s not even about the English language. We have those things only because of what America’s truly about: the basic rights we guarantee ourselves; that we guarantee for each other. The rights that men and women have fought for, and died for. The rights that people have sacrificed their lives, fortunes, and reputations to secure. So when we truly exercise our rights, that’s when the word “American” ceases to be a noun, but an adjective. “Being American” means being someone who values and respects my fellow man. “Being American” means standing up for the self-evident truths that free us from the shackles of ignorance.
With all of this in mind, I want to wish you a happy Independence Day. I hope you are able to take a few moments to recognize the historic opportunities available to you, especially during an election year. This is not your ordinary holiday. This is the time we can show we’re American, in word and in deed.
To you and your family, happy Fourth of July. Now go enjoy being an American!
There’s more to everyone’s story
We all face stress in our lives, much of it invisible to those around us. A very close friend of mine and his wife thought deeply about this subject and courageously decided to do something about it. They produced a short video message, primarily addressing some of the “unseen battles” of today’s teens.
Take 2 minutes to watch and then share with family and friends… It will be worth your time and effort.
Important IRA Rollover Rules
If you are like many Americans, your IRA may be one of your largest assets. When it comes to investing it, you are generally in the driver’s seat. However, before you decide to take an IRA distribution, you will want to understand several important IRS rules that apply to rollovers.
1) IRA One-Rollover-Per-Year Rule – Beginning in 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own. The limit will apply by aggregating all of an individual’s IRAs, including SEP and Simple IRAs, as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit. Exceptions: a) Trustee-to-trustee transfers between IRAs are not limited. b) Rollovers from tradional to Roth IRAs (conversions) are not limited. This is an important rule to keep in mind because once a second distribution is paid out as a rollover, it is too late. You can’t put it back into an IRA and are likely to face taxes and possible penalties.
2) No Rolling Over A Required Minimum Distribution (RMD) – If you are age 70.5 or over in 2016 and have a Traditional IRA, you will be required to take an RMD. This RMD may not be rolled over to another IRA. Also, the rules state that “the first money out” of your IRA is considered your RMD. Bottom line, if you are age 70.5 or over for the year, you must take your RMD before rolling over any other funds from your IRA. If your RMD is deposited to an IRA, you may be deemed to have made an excess contribution in that IRA which may be subject to a 6% penalty for each year it remains there.
3) No Later Than 60 Days – IRA owners are generally well intentioned when they ask that a check be sent out… “I’m going to put it in my IRA at ___________”. Sometimes they even look to their IRA for short term borrowing. Either of these scenarios can be risky. If the funds do not get returned to an IRA within 60 days, IRS relief for missing the 60 day window is expensive. A private letter ruling requesting an extension comes with a high price tag. Also, there is no guarantee that the IRS will grant you additional time to complete the rollover.
As you can see, there can be a lot of rules to remember. You may be thinking that there must be an easier way and there is. It’s called a trustee-to-trustee transfer. In fact, the above 3 rules do not apply at all if you go with the transfer instead of a rollover. It is critical that this transfer be executed properly. In a transfer, the funds are directly payable from your current IRA custodian to your new IRA custodian. You don’t take receipt of the funds like you could with a rollover. So, before taking a distribution, be sure to discuss the process in detail with a qualified financial advisor.
Flux – a series of changes: continuous change (Merriam-Webster).The world and markets are acting according to definition, so it’s prudent that investors practice as much patience as humanly possible. Here are a few phrases you should not be telling yourself:
|” I just got a great stock tip from a friend.”||“I can always start saving later.”|
|“I’m on a hot streak right now.”||“This time is different.”|
|“I should have seen this coming.”||“…but Jim Cramer said…”|
|“Rebalance? Why bother?”||“This is a can’t miss.”|
|“I’m going to check my account every hour.”||“It just feels right.”|
Valuations Still Matter
This bull market, which began in March, 2009, continues to test market highs. Some trends are encouraging, others cause concern. As sentiment has improved and valuations have risen, there is a lingering sense that complacency may be on the rise. If we are in the late innings of the profit cycle, it could result in margins and profits not growing much from here. Corporations are having an easier time servicing their debt because interest rates remain at multi-year lows, but when rates do begin to rise, more companies could be challenged to meet their targets and obligations.
Perhaps the biggest concern is that those leading the world’s central banks are in unchartered waters. They seem to be creating the playbook as they go. No one really knows how this will end. As Mohamed El-Erian, chief economic advisor at Allianz SE, recently wrote:
Central banks have become dramatically thrust into the limelight as they have become single-handedly responsible for the fate of the global economy. Responding to one emergency after another, they have set aside their conventional approaches and instead evolved into serial policy experimenters…
What central banks have been experiencing is part of a significantly broader change whose effects will be felt by all of us, our children, and, most likely, their children, too. It is a change that speaks to much bigger and consequential evolutions in the global economy, in the functioning of markets, and in the financial landscape. And the implications go well beyond economics and finance, extending also to national politics, regional and global negotiations and geopolitics.
As always, we hope you find these thoughts informative and that they help to provide you a better framework for future investing. If you have any questions about these topics, or anything else, please give us a call. We’d love to hear from you. 615-312-7130.
The material contained herein is intended as general market commentary. The views and strategies described herein may not be suitable for all investors. Certain opinions, estimates, investment strategies and views expressed in this document constitute our judgement based on current market conditions and are subject to change without notice. The information contained herein should not be relied upon in isolation for the purpose of making an investment decision. This material is not intended as tax advice or an offer or solicitation for the purchase or sale of any financial instrument. Past performance is not indicative of future results.
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