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This is a publication by Scott Anderson Financial. Scott K. Anderson, CPA, CFP®, EA is a Registered Investment Advisor in Newport Beach, California.
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In This Issue

Monthly Riddle

When was the first bank ATM introduced?​

Click here for the answer.

Quote

"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them."  - Thomas Jefferson

November’s Binary Choice 

Labor Day is the traditional start of the presidential campaign.  Like many other things about this election, that went out the window as well. Due to the Olympics in August, both parties held their conventions in July, so we have had an extra month this election cycle year to bear witness to the food fight.

Since absentee ballots go out about October 10th in California for the November 8th national election, I am writing my election newsletter in September. 

As I tell my students, I am a Vietnam Veteran (Navy), who spent a year on the rivers of Vietnam trying to secure the right to vote for the citizens of South Vietnam. As a thank you for my efforts, I have my students vote. 

This year is particularly challenging.  My students are Millennials.  They are not particularly Republican or Democrat.  Moreover, they generally find the character of both Trump and Clinton leaves a lot to be desired.  There is definitely some resentment that our Baby Boomer generation has produced these two as the only candidates.    

Outside of school, some people tell me they can’t vote in good conscience [for Donald Trump/Hilary Clinton] because, when faced with a choice between “the lesser of two evils,” the morally right thing is to choose neither one. They recommend voting for a third-party or write-in candidate. 

Notwithstanding the emotion of the moment, both Trump and Clinton became the nominee of their respective political party through a series of organized, ostensibly open election outcomes. For better or worse, that is the democratic process at work. It is hard to sustain the “moral” argument when a very large number of voters selected the respective candidates by electing them as their respective party nominee through an organized process.      

While both candidates are deeply flawed, one or the other (Trump or Clinton) will become president.  The choice is a binary – the appropriate irony in the digital world where everything is reduced to zeros and ones. To not vote, to leave the presidential box unchecked, or to vote for one of the third parties is to vote for the eventual winner who will be either Trump or Clinton. 

So what is a body to do? 

I tell my students that they need to remember several things when evaluating the candidates:

1) Forget personalities and the quip of the day.  For every peccadillo offered against one candidate, there is an offsetting peccadillo against the other candidate. Moreover, there probably is not enough wine to exhaust the list of offsetting peccadillos.  

2) The national debt is at 19 trillion dollars and rising.  The Millennials can thank the Baby Boomer generation and the parents of the Baby Boomers for that.  Nonetheless, it will fall to the Millennials and their children to pay back that debt along with all their other debts and taxes.

3) The next president will name one, and possibly as many as three or four justices to the Supreme Court.  While it has been a poorly kept secret for over 200 years, appointments to the Supreme Court are inherently political.  Now however, there is a clear philosophical division about how the Constitution and the other founding documents of this country should be interpreted. Should judges stick to what the founding fathers intended as the conservatives demand, or is the constitution a “living document" that evolves and changes as the progressives insinuate?

In the end, I plan to vote for the one of those two candidates who stands to hurt me the least. 

I asked Riley, the Golden Retriever with whom I share my office, what she thought about the importance of voting. She looked back at me, licked her paw and held it up to me. Thank you, Riley. Yes, you can help me seal the envelope with my vote-by-mail ballot next month. 

So without talking about politics and before it becomes Politically Incorrect, you might remind your friends and relations (including college students), to be sure they are registered to vote, and to vote as a way to honor our veterans and our country.
  
Vote on November 8th – if you don’t vote, you can’t complain.  
All the best,
Scott K Anderson Jr., CPA, CFP®, EA
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It's Your Money Workshop

The Fall 2016 schedule for the It’s Your Money! Workshop Series is now available. We hope that you will take advantage of this opportunity.  To find out more go to Financial Empowerment & Estate Literacy website or see the Workshop Series schedule here.
Julie will be presenting 
Fixed Income Investing 
October 24th at 1:30 pm
Lakeview Senior Center
Scott will be presenting 
Fixed Income Investing 
November 4th at 10:00 am
Orange Coast Community College
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By The Numbers: As of August 31, 2016

Click Here For The Monthly Economic Update
By The Numbers: As of August 31, 2016

Yield Curve: Interest Rate on US Treasury Securities versus Time to Maturity 

Dark Color – September 2, 2016; Light Color – One Year Ago
The Yield Curve is a graph of the interest rate on US Government securities based on maturity. All interest rates use the US Government yield curve as the reference, as the US Government rates are considered riskless, which means there is no chance of bankruptcy – the US Government can simply print money to meet its obligations.

Analysis: 


This is a “normal” yield curve – upward sloping – longer maturities command higher rates than shorter maturities reflecting (among other things) the higher risk of inflation in the meantime. 

Shorter term rates (two years or less) continue to be higher than a year ago due to Fed’s efforts to lever the entire yield curve up (increase interest rates) by moving up the left end of the curve. 

Longer term rates continue lower than a year ago reflecting (among other things) the tremendous number of investors (particularly foreigners) seeking to own US Government securities, because US Government securities are considered the safest investment in the world. 

The dilemma for the Fed is that if they try to push up the yields on the shortest maturities to try to lever the whole yield curve up, the demand for longer-term securities as a haven may have the effect of keeping longer-term rates lower, and the whole yield curve could accidently flatten out.  A flat yield curve offers investors (and businesses) no incentive to invest for the long term which will slow down the economy.

Look for Janet Yellen to continue to waffle until she is willing to sit down and tell Congress that unless Congress gets a fiscal policy (tax and spending) under control, there is nothing more the Fed can do.  

Source: http://news.morningstar.com/TreasuryYield/bonds.aspx
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Trivia Answer:
The first cash machine as we know them today was put into use by Barclays Bank at its Enfield Town branch in North London, in the United Kingdom on June 27, 1967.  To reduce resistance to the use of the machine, ads feathering a popular comic of the time were broadcast introducing the machine. In the US Chemical Bank (now known as Chase Manhattan Bank) installed the first cash machine in its Rockville Center branch on Long Island, New York, on September 2, 1969.
IRS Circular 230 Disclosure: if this newsletter contains any type of tax advice, please be advised that, based on current IRS rules and standards, the advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to the matter.
Copyright © 2016 Scott Anderson Financial, All rights reserved.​

P.O. Box 7463 | Newport Beach, CA 92658 ​| (949) 200-7111

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