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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Scott Anderson Financial

In This Issue

Financial Trivia

Before starting Wells, Fargo & Co in San Francisco in 1851, what company were Henry Wells and William Fargo instrumental in forming on the east coast?​

Click here for the answer.

Monthly Quote

“The greatest leader is not necessarily the one who does the greatest things. He is the one that gets the people to do the greatest things."
- Ronald Reagan, 40th US president​

2016 – Opaque at Best

One of the most important academic theories about the stock market is the Efficient Market Theory, which postulates that all information is immediately known to all market participants and is immediately priced into the prices of a security. Thus, it is generally very difficult for any one market participant to get the jump on the other participants. Transient short-term advantages may be had, however, through speculation that the market may have misinterpreted the information, or on the darker side, through insider information.  

So sitting here on January 1, 2016 and trying to say what will happen in 2016 is a bit of a challenge. 

One prognosticator I read occasionally said to look at everything that went down in 2015 and assume it will go back up on 2016.  Another prognosticator I read more frequently believes that market will continue to trudge ahead.  The fundamentals are solid, and GDP growth will be in the 2%+ range, which is enough but just barely.

My thinking is that more than in past presidential election years, there is tremendous uncertainty in the market about this election.  The market hates uncertainty. About the only conventional wisdom at the moment is that Hillary Clinton will be the Democratic nominee.  Even then, once the voting starts in the primaries in February, we may find that her uncontested nomination is without much enthusiasm.  On the Republican side, it could be a wild scramble and may not be decided until the summer convention. So the fall election may turn out to be a choice between an uninspiring nominee and a wounded/compromise nominee and end with a nail-biting election on November 8th.  

The Federal Reserve will probably raise short-term interest rates again but ever so slightly. Will anyone notice? 

The wildcard in all this is ISIS.  A Paris-style attack in the US sometime in the spring could change everything.

The issue of global climate change is a non-starter when your basic survival is at stake.

Notwithstanding market perturbations, January is a good month to visit to get a complimentary credit report from Experian, Equifax, or Transunion.  Check to see that there are no surprises.

January is also a good month to visit your Social Security account at and check that the contributions to your Social Security account for the last several years have been recorded properly. The Social Security benefit is calculated on the highest 35 years of contributions to your Social Security account including contributions in the years after you start taking Social Security benefits. 

Also, remember that the “file and suspend” benefit claiming strategy for a married couple ends on May 1, 2016.  If you are a married couple where one or both of whom is at Social Security’s full retirement age and neither of whom are taking Social Security benefits, that option might be of economic interest to review but time is running out.

So what is my plan for 2016? Continue to follow the market through diversified cash-generating investments. Pay down debt. Vacation and travel on a cash basis. Eat more protein. Eat fewer carbohydrates. Exercise.    
I asked Riley, our Golden Retriever, what she foresaw for 2016. She was lying by my desk and chewing on one of the rawhide bones that Santa left her.  She looked at me, tilted her head slightly to see if she had heard the magic words “walk” or “car” and then went back to chewing on her bone. Ah, Riley, good plan. Buy and hold. Be alert. Enjoy what you have.  

So welcome to 2016. It could be a bewildering year with many cross currents and a few surprises (which for Riley means squirrels come spring time). Nonetheless, slow and steady wins the day. 
All the best,
Scott K Anderson Jr., CPA, CFP®, EA
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By The Numbers: As of December 31, 2015

Click Here For The Monthly Update

Yield Curve: US Treasury Securities Versus Maturity

Dark Color – January 7, 2015; Light Color – One Year Ago

Analysis: rates are slightly higher than a year ago across the board reflecting the Fed’s increase in the shortest term rates.

This is a “normal” yield curve – sloping upward – longer maturities command higher rates than shorter maturities reflecting higher risk of inflation in the meantime. 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 because the US Government can simply print money to pay off its obligations.

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Trivia Answer:  In 1850 Wells, Fargo, their former competitor John Butterfield, and other rivals consolidated their express companies into the American Express Company, which dominated freight and delivery in New York State.   When the board of directors of the American Express Company hesitated on the matter of westward expansion to meet the new demands for express and mail services in the growing west, Wells and Fargo formed Wells, Fargo, and Co. which was separate from American Express. Ironically, much of the operations of Wells, Fargo, & Co were left to the California management of the company as Wells and Fargo continued to be active in the American Express Company and never moved west.
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 © 2015 Scott Anderson Financial, All rights reserved.​

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

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