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Margaret Starner

Margaret’s Musings

Here’s where you’ll find Margaret Starner’s thoughts and insights on developments that shape your community, your world – and your portfolio.

Margaret Starner

In the Chinese art of Feng Shui, the red door brings luck and positive energy to those who live behind it. Throughout our website, the red door is your portal to Margaret's Musings. “Red Door with Tassel” photograph appears courtesy of Julie Masterson Photography.

| December 21, 2010 – Is Santa Claus Real? (Note: Slight Correction To Social Security Tax Provision) |

Is Santa Claus real? Since I know my grandchildren sometimes read my blog, I can't answer that question directly...however Santa seemingly came early this weekend when our elected officials reached a compromise to extending the Bush tax cuts. As a result, all Americans will continue to enjoy their current marginal tax rates and a 15% tax rate on long term capital gains and qualified dividends. The bill also included other tax relief measures, including:

  • A 2% reduction on social security payroll taxes
  • Extension of tuition and child tax credits (also phased out for high earners)
  • An increase in the Alternative Minimum Tax exemption
  • An extension of unemployment benefits for those who have been out of work for longer than 6 months, but less than 99 weeks

The final component of the bill (and perhaps most significant from a financial planning perspective) is a change to estate tax law. In 2011, the estate tax was scheduled to be 55% of the value of an estate after the first $1 million. Now:

  • The tax will be 35% of an estate's value after the first $5 million. The implication of this law is that a married couple can now leave $10,000,000 of assets to heirs before paying any estate tax whatsoever

  • The gift tax exemption has been "unified" with the estate tax exemption, allowing a person to gift up to $5,000,000 of assets during their lifetime

  • A "portability" provision has been added. This means a surviving spouse can utilize any unused portion of their deceased spouse's $5 million exemption, beginning with deaths in 2011. There's one catch - you can only use one spouse!

Despite the impressive nature of these numbers, we definitely are getting some coal in our collective stocking as well.

  • First and foremost, the tax bill does nothing to address our deficit, given its projected cost of $858 billion dollars
  • Second, the new law is only in effect for two years, so it does not solve any of our long-term structural problems. Of course, the two year time-frame also means taxes will be the pre-eminent election issue in 2012. Both parties seem to relish this fact, and are surely formulating their election talking points already. I get exhausted just thinking about it!

Roger and I are preparing to celebrate the Holidays with my daughter Lise, Bruce, and our grandchildren Cole and Micaela in LA. Our other daughter Dana and her family (Kenji, Kailee, and Kendall) will spend one day with us as well, as they pass through on their way to an Australian vacation. I'll also see my brother, sister-in-law, and some nieces and nephews. At this very moment, I am looking at the L.A. weather forecast (50s and rainy for the next week) and wondering why in the world I am leaving sunny Florida. Thankfully, I'll be back for New Year's, in plenty of time to cheer on my Stanford Cardinal in the Orange Bowl! For the record, Stanford was 4th in the BCS rankings.

For some Santa fun, I wanted to provide all of you with a link to a fascinating website:

We recently had a chance to introduce the site to a number of clients. For those of you who haven't heard of it, the site illustrates major global development trends with animated statistics and colorful graphics. For instance, with a few clicks, you can view the change in life expectancy and per capita income over the past 200 years for dozens of countries across the globe. I encourage all of you to explore the website and its various capabilities. If you have any questions, please feel free to call us and we can provide some basic navigational instructions.

Our holiday gift to our clients and friends is a contribution to Teach For America in the MS Delta. In a future musing, I will share a progress story about Teach For America's efforts in my home state.

In closing, I hope this holiday season finds you all well, happy, and enjoying time with loved ones. We look forward to seeing all of you in the New Year.


Margaret C. Starner, CFP®
Senior Vice President, Financial Planning

| November 22, 2010 – Happy Thanksgiving From The Starner Group!|

Over the weekend, we received the attached from a friend. I thought the message was quite appropriate and reminded me of all that I am thankful for this Thanksgiving. You don't have to actually answer the questions. Just read the e-mail straight through, and you'll get the point.

Enjoy the read and Happy Thanksgiving from all of us at the Starner Group.

  1. Name the five wealthiest people in the world.
  2. Name the last five Heisman trophy winners.
  3. Name the last five winners of the Miss America.
  4. Name ten people who have won the Nobel or Pulitzer Prize.
  5. Name the last half dozen Academy Award winners for best actor and actress.
  6. Name the last decade's worth of World Series winners.

How did you do?

The point is, none of us remember the headliners of yesterday. These are no second-rate achievers.
They are the best in their fields. But the applause dies. Awards tarnish. Achievements are forgotten.
Accolades and certificates are buried with their owners.

Here's another quiz. See how you do on this one:

  1. List a few teachers who aided your journey through school.
  2. Name three friends who have helped you through a difficult time.
  3. Name five people who have taught you something worthwhile.
  4. Think of a few people who have made you feel appreciated and special.
  5. Think of five people you enjoy spending time with.


The lesson:

The people who make a difference in your life are not the ones
with the most credentials, the most money, or the most awards.
They are the ones that care.


Margaret C. Starner, CFP®
Senior Vice President, Financial Planning

| November 5, 2010 – Post have to love a Corvette!|

For those who love cars and the road, Roger (my husband of 48 years on Nov 17th) took off in his Corvette in early August to drive through America. First, he went up the East Coast to PA for a family reunion. On his way, he stopped in Virginia to visit his grand-nephew, a Marine of 17 years, who was going through rehab after losing his foot in Afghanistan. Next, he turned to Ohio and through the Midwest all the way to the Reno Air Races....down to CA and is now on his way home via Phoenix and Dallas. Given there was no room for his golf clubs and me, I flew and met him throughout his travels so we could visit friends and relatives together. My trips included Moline, Des Moines, Kansas City, Chicago, Denver, Newport Beach, Stanford for my class reunion, and Phoenix. Wherever we visited, the election was on everyone's mind.....our friends ranged from the very conservative to the liberal. As you might imagine, we had some lively discussions. Interestingly, everyone shared general concerns about the country's direction, even though no one we met had lost a job or a meal. In fact, life was cautiously the same...spending less on meals but still getting kids off to college or admiring grandchildren's pictures...things that are common and dear to all of us. Still everyone knew someone in foreclosure or without a job. While everyone was managing, we all had a feeling that things could be better or in the very least, that things were not quite right. Either way, the common thread was that as a country we didn't share a common vision nor have a leadership strategy for our grandchildren's future.

The Republican sweep, in many respects, is a demand from the voters to "give us a dream". Everyone knows about the high unemployment, high deficit, and more global competition. Despite the rhetoric...we as an electorate are tired of the whining. While we complain about taxes and spending...and there is plenty to fix there....we can handle the details if someone can inspire us with a grand plan.

Speaking of a grand plan, I'd like to shift this musing away from national politics to introduce something a bit closer to home. Specifically, Raymond James recently debuted a new ad campaign with the tagline "Life Well Planned. " Our first television commercial (link at the end of this e-musing) focuses on Emily Skinner, a librarian (and Raymond James client) who is 187 years old! Thankfully, since Emily has a financial plan, she's still living life to the fullest.

Now, I'm not sure how many of us will be hang gliding at age 187 like Emily, but I must say that I am a big fan of the new campaign. Since I began in this business 30 years ago, I have been steadfast in my belief that planning is the key to long-term financial success. I am thankful to be affiliated with a firm that has always shared my belief.

30 years ago I was attracted to Raymond James (RJA) because of founder Bob James' belief that financial planning was the wave of the future. Of course, neither RJA nor financial planning was on many radar screens back then. I was fortunate to have Bob as a mentor until he passed away unexpectedly in 1983 . I wasn't sure how the firm would remain committed to the financial planning concept. I guess my passion and vision made an impression. Tom James, then CEO, decided to formalize the concept by hiring someone to create and lead the development of a financial planning department. Tom said to me..."Margaret, I hired someone with you in mind." The hire was a lawyer, Ken Ziesenheim, who laid the foundation for the Financial Planning department before moving on to Thornburg Investments. Ken continues to be an important voice in the field of financial planning and one of my closest friends. Oh, Ken just bought a Corvette too and he said he would be driving it on the race track in Daytona this Sunday!

I'd like to think that Raymond James/The Starner Group's commitment to planning differentiates us from our competitors. I have always said that we are in the business of dreams and wishes. Specifically, our job is to understand your dreams and wishes, help you prioritize them when possible, and then put a plan in place to give you a high probability of making them come true. Invariably, that requires striking an appropriate balance between enjoying today and preparing for what's to come. This is not always easy, especially in years like 2008. Yet, I believe planning is most important during difficult times. Over the past few years, we've revisited dozens of financial plans - either by recalculating retirement analyses, helping make difficult real estate decisions, re-evaluating risk tolerances, or any number of other activities. If you haven't taken full advantage of our planning expertise recently, I encourage you to reach out to us with any and all of your financial questions - that's why we're here.

As promised, I want to end with a link to our new commercial. Though few of us will share Emily's longevity, all of us should have a plan...just in case :)


Margaret C. Starner, CFP®
Senior Vice President, Financial Planning

| August 20, 2010 – It's still about Jobs!|

I've had some interesting responses to my last musing. The recurring theme of these responses was "you sound pessimistic." In truth, I am more cautious than pessimistic – though pessimism seems to be the norm nowadays. On that note, I recently asked a good friend and client how she was doing...she responded that she was in a "funk". When I asked for further clarification, she explained she was worried about everything...the war, higher taxes, the growing deficit, the lack of recovery, China leaping over Japan to the 2nd largest economy and catching up with the US. The whole world seemed bleak. Certainly, the headline that jobless claims are up for the month adds to the "bleakness."

As I reflected on our conversation, I thought about the difference between perception and reality. Certainly, many Americans feel bleak right now, but are those feelings justified given the actual economic data? How bad is it? I asked that exact question to one of our bond portfolio managers during a conference call earlier this week. His response:

  • If you had told me in 2008 that our economy would look like it does today in
    two years, I would have been quite excited by the good news. In other words,
    the economy has come back from the abyss and is growing again. Albeit,
    slow growth, but growth all the same.
  • Corporate profits are good and corporate balance sheets are stronger than ever.
  • Capital markets are functioning.
  • Patience is required. A recovery of this magnitude takes time.

In past musings, I’ve written about Bill Gross (of PIMCO fame) and his definition of the "new normal". Many people assume the "new normal" is negative. In the "old normal," leverage and/or borrowed money provided a multiplier for growth. Conversely, in today’s world, consumers are deleveraging and reducing debt. Though this adjustment takes time, deleveraging/debt reduction by definition does mean slower growth. In the long term, households, companies and the country will be financially healthier with less debt. In fact, many corporations learned this lesson in the early 2000’s – hence the strength of today’s corporate balance sheets.

Now, households are reducing debt and savings rates are running at 6%. The laggard is our government, which is still running enormous deficits. Certainly, the government has many challenges to face over the next few years – working toward a healthy balance sheet may be the largest of these challenges.

So, if the "new normal" means that corporations, households, and the government balance sheets are healthy within a few years, I am satisfied with that outcome. Certainly, this scenario, along with structural reforms and a platform for higher employment, can put our country back on the road towards growth.

Notice the bolding of the word employment in the previous paragraph. As I mentioned in my last Musing, high sustained unemployment is socially and politically dangerous. I read a great quote today..."the best social program is a good job". I believe that more stimulus is needed – and yes, this would add to the national debt in the short-term. Note – I believe this stimulus must be targeted – there is a big difference between wasteful spending and spending on rebuilding and expanding the country's infrastructure, including R&D. Yes, the impact will not be instant...but I believe it will be long-lasting...and a needed investment.

Job opportunities do exist for the highly skilled. As we examine the ranks of the unemployed, we are learning that many lack the proper skills and education to succeed in today's workplace. This is not a problem that can be fixed in a year or two.

The rest of the developed world is reducing spending...
On a global scale, many other major developed countries are focusing on cutting back on spending. In general, most European nations have a much higher social safety net than the US; England ran a deficit even in the "good times". Thus, getting their house in order requires more government constraints.

Germany has had a strict corporate focus during this recession – to avoid laying off employees. This policy is a bet that the Germans will have a competitive advantage when the global economy emerges from the recession. So far, their bet looks good. The German workforce had continued to develop new products and improve existing products. In the short term productivity lags, but they believed that keeping the experience and skills of their workforce intact is of primary importance.

You may be interested to know that Raymond James follows this same strategy in every economic downturn. Our firm did not make wholesale layoffs in 2008/2009, though salaries and work hours were reduced. As a result, Raymond James is coming out of the downturn with a more experienced workforce than our competitors.

Unlike the private workforce, Government seems to be big fact I read that one out of every 6 workers works for either the federal, state, or local government. Reducing government spending will entail more layoffs, not simple as the ranks of the unemployed continue to grow - the recently fired and the soldiers returning from Iraq only add to the problem. Already, Secretary Gates is meeting great resistance in his efforts to reduce spending and implement layoffs in the Defense Dept.

State and local government retirement benefits are time bombs that cannot be solved by reducing services and/or raising taxes. Certainly, reducing benefits is an especially difficult option as this will negatively impact retirees. This will not be easy - we all know someone who was a state or federal employee – for instance, my sister is a retired principal. Changing federal/state commitments mid-stream is difficult and may be politically or legally untenable.

I say to my friend who is in a "funk" not to listen to all the pundits who rant and rave. Both liberals and conservatives seem to spend the majority of their time leveling complaints at one another. Unfortunately, "real solutions" require a dialogue. This dialogue requires us to say where our country should be in 10 years and beyond...not just now and next year. We need to be inspired by a better and more sustained future – very much like the "race to the moon". Many Americans believe that a healthier nation, thus providing good basic health care to all, is critical. Many obviously saying where we want to be in 10 years will not be an easy dialogue.

So far, Congress doesn't appear to be up to such a dialogue. In this election year, I keep looking for the candidate who has the courage to promote and inspire such a dialogue instead of ranting and raving about the opponent. The dialogue should include creating meaningful jobs. This may involve not raising taxes now as well as more infrastructure spending.

In summary, yes, we have some real problems that require real reform, compromise, time to recover and patience. Good news. There are always opportunities in change...and we are going through a monumental change. Remember, lots of money was made by Peter Lynch in the 70's. So I say...don't be in a funk by all the alert to potential opportunities.

Like the Jet Blue flight attendant...
I get ballistic about Medicare fraud. According to the Economist magazine, Medicare and Medicaid fraud is about $60 billion annually. Of course, I live in the Medicare fraud capital of the US – South Florida, which accounts for 1/3 of the nation's prosecuted fraud so far. Personally, everyone I know on Medicare has seen a least one fraudulent charge on their Medicare billing. Calling and reporting this to Medicare only gets you a yawn.

The Miami Herald has done an admirable job of reporting and exposing the crime, which is when I go ballistic. For example, South Florida mental health clinics submitted claims for $421 million last year; 4 times more than Texas which has 30% more residents! At last, the government is waking up and is doing the obvious...conducting a full scale war on Medicare fraud in South Florida. Relative to other problems, this should be an easy war. My sympathy goes to all the healthcare providers and patients who fight Medicare for honest reimbursements while the crooks bilk us of $60 billion a year.

Just in case you have run out of summer reading I am listing some links to articles that I have found interesting as they relate to economic growth and the recession.

When Unconventional becomes Conventional by Paul McCulley

Interview with Robert Shiller

Latest Missive from Bill Gross of Pimco fame


Margaret C. Starner, CFP®
Senior Vice President, Financial Planning

| August 6, 2010 – Summer is almost over... |

August has begun, which means summer is drawing to a close. Hopefully, you all had a great summer despite the record heat. As you know from my Musings, my family and I rented a villa for a week in San Gemini, Italy. The experience was almost magical. The 17th century villa was restored around year 2000. This meant we had the experience of living in an old stone castle with huge rooms combined with the amenities of modern electricity and plumbing plus a heated swimming pool. The grandkids loved having so much space and being able to climb up to the lookout tower. San Gemini is high on a hill and the villa was on the highest hill in the the view of the town square and area was spectacular. Every day, the kids would walk down to the village square for their gelato. Somehow gelato tastes better in Italy! Before coming home we celebrated our granddaughter Micaela's 10th birthday with an Italian feast instead of the usual MS barbeque.

Though the trip was wonderful, we had our mishaps. Bruce's wallet was stolen by the famous Roman pickpockets. At least he was already enjoying Europe at the time. I nearly didn't make it there at all! Somehow, my passport was missing when I arrived at passport control, which meant I would have to return to the US immediately and obtain a replacement. Hooray for American Airlines and the US Embassy who saved my trip by getting me a replacement passport just in time. Anyone interested in my miracle of being "saved" can give me a call.

Unfortunately, there is nothing magical about the economic recovery yet. Despite all the concerns and talk about the deficit and taxes, the number one topic should be about reviving employment and thus economic growth. Economic growth without improvement in the employment figures cannot be sustained because we will have social and political unrest and a bigger deficit in the long run. Unfortunately, most experts agree that private industry alone is not going to be the catalyst for making significant improvements in the employment figures. I think Obama is going to have to think about "more" stimulus. HOWEVER, this stimulus should focus strictly on employment...and avoid doling out cash payments.

Other than unemployment, the big economic headline is are we headed to "double dip recession?" I don't think so, but an awfully lot of people are worried....which could make the prophecy self-fulfilling. Jeff Saut, Raymond James Chief Strategist, wrote the following on the subject in a recent missive:

A Man Lived by the Side of the Road....
and sold hot dogs. He was hard of hearing, so he had no radio. He had trouble with his eyes, so he had no newspaper. But, he sold really good hot dogs. He put up a sign on the highway telling how good they were. He stood by the side of the road and cried, "Buy a hot dog, mister." And people bought. He increased his meat and bun orders and he bought a bigger stove to take care of his trade. He got his son home from college to help him. But then something happened. His son said, "Father, haven't you been listening to the radio? There's a big depression on. The international situation is terrible and the domestic situation is even worse."

Whereupon the father thought, ’Well, my son has been to college. He listens to the radio and reads the papers, so he ought to know.’ So, the father cut down his bun order, took down his advertising signs and no longer bothered to stand on the highway to sell hot dogs. His hot dog sales fell almost overnight. "You were right, son," the father said to the boy. "We are certainly in the middle of a great depression." . . . Author Unknown

The story is reflective of my concerns. In today's WSJ, Peggy Noonan wrote that she and many others are concerned about the pessimism that has begun to seep into the American psyche...replacing the historical "can do" optimism of the American culture. Just as Federal might was employed to save the financial system recently, the same must be done to create jobs. Fortunately, some of this has begun with the recently-passed Education Jobs and Medicaid Assistance Act, which saved the jobs of nearly 140,000 teachers and state workers who care for the elderly and sick. Let me be clear, this stimulus should NOT detract from the fact that municipalities and states need fiscal reform. In fact, I believe the recipients of the stimulus should have requirements for structural reform. But that's another thought for another day.

Speaking of another day, I plan to send you part 2 of this musing sometime next week. I'll talk a bit more about the global economy and share a fascinating interview with economist Robert Shiller.

In the interim, please don't hesitate to contact us with questions, or even just to share your summer vacation stories.


Margaret C. Starner, CFP®
Senior Vice President, Financial Planning

| May 7, 2010 – Free-Falling Dow Recovers for 3.2% Loss |

On a stunning Thursday afternoon that reminded observers of the most volatile days of 2008, the Dow Jones Industrial Average (an unmanaged index of 30 widely held stocks) plunged nearly 1,000 points before quickly recovering to finish with a somewhat less dramatic 347.80-point loss on the day.

Turmoil in Greece over its financial crisis and the unpopular austerity measures passed by its government as a precondition for bailout loans helped fuel investor worries. Some fear the Greek situation could be contagious, possibly spreading to other weaker European economies such as Spain, Portugal and Italy. Under tremendous financial pressure, the euro, which last week traded in the $1.33 range versus the U.S. dollar, slipped to the $1.25 level before settling at slightly above $1.26. The price of oil dropped during the sell-off, too, closing the day at $77.11 on the New York Mercantile Exchange.

As the day ended, the Dow finished at 10,520.32, down 3.2% from Wednesday's close. The NASDAQ Composite (an unmanaged index of common stocks listed on the NASDAQ National Stock Market) ended the day at 2,319.64, down 3.4%, and the S&P 500 (an unmanaged index of 500 widely held stocks) finished at 1,128.15, down 3.2%.

There was widespread speculation that trader errors and technical glitches may have contributed to the precipitous fall, but there was no immediate proof of that, although the allegations were being investigated. News and reports concerning the U.S. economy remained relatively positive.

If you'd like to discuss the market in relationship to your portfolio, please give us a call.


Margaret C. Starner, CFP®
Senior Vice President, Financial Planning

| March 31, 2010 – Farewell Mom |

My mother passed away on March 3rd, quietly and peacefully. We had her funeral service on March 8th in San Mateo, CA, where Mom was buried near my sister. Then, our family went back to Shelby, MS to have a memorial service for all her friends and relatives in the area. Both services were tributes to her as a mom and a beautiful lady of good taste, highlighting her love for her family, passion for life, generosity, and sharing good food. Going back to MS was important. Mom loved her home, the house was built and decorated both to be lovely and for entertainment. She hosted many mahjong parties and huge dinner were allowed to play throughout the house. I was always amazed that she didn't seem to notice when children almost "knocked or broke" her many knick- knacks. Of course, some were broken...and some of these were expensive. However, she cared far more that everyone just had fun.

She wanted very much to go home one more see and be in the home she created and loved. She didn't get to do that. Going to Shelby for the Memorial was something we had to do for her and for us. Shelby, like many MS Delta towns, is a ghost of what it was. Most businesses have closed as the town experienced a "white flight." The Shelby First Baptist Church is still beautiful, despite membership having shrunk to only a dozen members, a fraction of the hundreds who once belonged. The church is maintained by volunteers. Mom's home sits on the edge of town on two acres. The family and friends had lots of fun coming together one more time in mom's memory. We laughed and recalled all the many good times. Mom's great grandchildren got to run around the house and play at will, pretty much like the generations before them. Now, we have the task of cleaning and selling most objects therein. An era has passed. James and Mae Chow, the dominant successful grocer in Shelby who touched so many are now part of history. After my father passed away, mom sold the store and business to a Chinese immigrant family who spoke no English. They saw the business advertised and took the opportunity. Thanks to my mother's help over the years, they are now on the path to a successful business. This is a wonderful legacy of what is possible in America.

I haven't yet processed what life will be like without mom. I just know how fortunate I was to have her this long. She had battled cancer since her late 40's...and she lived to almost 89.

Many of you who have read my Musings know the challenges of mom's fight with cancer and our family dealing with end of life care. As I reflect, I can't help but think about the New Health Care Bill and the inherent challenges of managing its costs. My family experience indicates we have much more to learn about how to deal with "end of life" care. As end-of-life approaches, our family, like most, was hard-pressed to differentiate between facts, opinions, and emotions. The process can be unnecessarily expensive and disruptive. The concept of "comfort care" is nebulous depending upon which family member is listening.

If the facts are correct – that a huge percentage of Medicare spending is for the last few years of life – I find it amazing that we don't have a process for medical professionals to communicate to families on what to expect and what to do. I was very fortunate to have oncology friends who helped me understand the symptoms and what was really happening to my mother's body. But those conversations took place after we had struggled with her care for many months. Social workers in our hospitals are somewhat helpful, but they often lack medical expertise to explain symptoms. Conversely, physicians give you the facts, but seemingly little guidance on what to expect as the patient deteriorates. Bottom-line? Too many gaps in services and knowledge exist...leading families to request all kinds of expensive services. In retrospect, I know that many of these could have been handled more effectively and less expensively. Even the concept of hospice can be confusing. Everything seemed to revolve around what qualified for Medicare reimbursement. Of course that was important, however we just wanted what was best for mom. Clearly, end-of-life decision-making requires a balance between emotion and pragmatism. In our case, emotion often won out. The choices we made were probably too expensive for us...and to Medicare...and maybe mom wasn't really more comfortable. I wonder if patients could have better care – and families could be spared much confusion and money – if our system focused more on preparing the family for what to expect?

Thanks to all of you for your kind words during this difficult time. Rest assured that we have continued to mind your portfolios and communicate with your accountants as necessary during this busy tax season.

Happy Passover and Happy Easter.


Margaret C. Starner, CFP®
Senior Vice President, Financial Planning

| February 17, 2010 – Gong Hoy Fat Choy! |

Gong Hoy Fat Choy!
Happy Chinese New Year!
This is 4707 & the year of the Tiger!

The Chinese Year of the Tiger began February 14th and the predictions are for a dramatic and intense year. Tiger years can be turbulent and full of additional demands in work and love, yet we can make the most of this year by looking at the shifts ahead as opportunities rather than burdens.

The year will be active and will not be dull for anyone. There will be moments of opportunity with lots of ups and downs. Romance may flourish too...interesting that New Year’s Day on the Chinese calendar coincided with Valentine's Day on the traditional calendar.

Looking back at last year, which was the year of the Ox, the prediction was for slow progress... and that was certainly true in many areas...i.e., health care reform, jobs, financial regulations, the energy bill, and housing crisis. Definitely more was said than done in the Year of the Ox!

In the Chinese culture, celebrating the new lunar year is very fact, the celebration lasts 15 days. While we find the annual predictions both fun and fascinating, the New Year is much more than prognostication to the Chinese. Growing up in Mississippi, my family observed the essence of Chinese New, money and luck all played important roles. Luck is intertwined with all of our activities, but money and food have always had their own special rituals:

Money: Personal debts that remained unpaid by New Year’s are considered bad luck. All debts to friends and family must be repaid before New Year’s...this may explain why the Chinese have so little personal debt.

Continuing on the money theme – red envelopes, filled with coins or dollar bills, are given to all children, plus elderly aunties who are widowed or single. In our family, married adults cannot go to a home with children during the holiday period without the red envelopes. Certainly, all children visiting your home expect a red envelope. As you might expect, children are always delighted to see guests and/or go to family dinners during Chinese New Year. In fact, many children collect 5 or 6 red envelopes from all their aunties and uncles during the New Year season...maybe even more by the time the 15 days are completed. Perhaps this is why Chinese children don't complain about going to family dinners.

Food: The first feast begins with the family on New Year’s Eve. You must have the house cleaned and all your basic grooming done before New Year’s Day in time to celebrate on the Eve. Oddly, showering or washing your hair on New Years Day is considered bad luck. I don't know mother told me if I washed my hair on New Year’s Day...I would be washing my hair all year. Ditto with cleaning the house. So, by the time we sat down to dinner, everything was spanking clean. Conversely, good luck is granted to those who are happy, have smiling faces, and avoid quarreling, complaining or criticizing anyone.

The dinner was always worth the effort even though we had to eat the symbolic foods. There was a dish for wealth, a dish for long life, a dish to prevent bad luck, and a dish for good health. Once we were through with the symbolic food, we could savor all the delicacies such as shark fin soup or bird’s nest soup, abalone, etc. The rest of the days were spent going to friends and other relatives homes to eat more. We took gifts of oranges, tangerines, and kumquats and of course the red envelopes.

Over the years, I came to realize that the celebration is really about getting together with friends and family – all of our loved ones in a harmonious fashion...with special consideration to the young and the elderly. Every year, 15 days are set aside for these relationship activities...and the bonding lasts from generation to generation. This is part of creating one's luck.

Back to the Tiger. While the Ox is a plodding creature, the Tiger is courageous, fearless, active, dynamic, and unpredictable. I would interpret the zodiac calendar to say that one should spend the Ox year building a foundation to prepare for the opportunities that could occur in the Year of the many will occur for those who can seize them quickly...before they vanish.

In just a year, the country has evolved from the maximum fear of last winter/spring to the relief of summer/fall, and finally to the anger of today. Why anger? Because our leaders haven't done enough to remedy the country's lingering pain. If you are inclined to believe the predictions, the Tiger will present opportunities to take ACTION on fiscal discipline, fixing health care and to focus on long-term investing opportunities in new inventions and technological advances. As individuals, we must have the courage to make the most of our personal and individual talents. I am sure Ford Motor is seizing upon the unforeseen opportunity with the “Toyota recalls” to showcase the quality and safety of their cars before Toyota recovers.

My interpretation...celebrate the Tiger Year by sharing good food and bond with friends and families, treating the elderly and children, and having the courage to capture your opportunities.

In terms of the Zodiac, a great year lies ahead for those born in the years of the Dragon, Sheep and particularly, the Horse A relatively good year is in store for Rats, Cows, Rabbits, Roosters, Dogs and Pigs. Unfortunately, Tigers, Snakes and Monkeys are in for a bumpy ride!

If you want to know your prospects are for the Year of the or email me with your birth date and we will send you what the prognosticators are predicting.

I will be traveling this week first to San Francisco to celebrate Chinese New Year with my mother and family...then on to Los Angeles for more dining with my family in southern CA. I will be laden with red envelopes as I have many aunts, nieces, nephews, and grandchildren. As always, they will be smiling...after all that is the tradition!

| January 1, 2010 – 2009... A year in review – 2010 Preview|

2009 was one of those years that reminded us not only of the dangers of "following the crowd" but also how difficult it is to time the market.

From January through March of 2009, the markets worldwide were in a freefall. Governments around the world were pouring stimulus money into the global economy. Despite this fact, consensus among investors was that we were entering a long period of economic stagnation... even respected economic forecasters were predicting a one-in-five chance of another Depression. The market dropped to decade-long lows on March 9th and then... From March 9 to the end of November, global markets were up by approximately 50-65%.

I cannot imagine a better illustration of the dangers of following the crowd and market timing.

Now what? Economists around the world are pulling out their crystal balls. To us they seem about equally split between bearish and bullish. Listening and reading their predictions, we are reminded of two of our favorite quotes:

"An economist is a man who knows a hundred ways of making love but doesn't know any women." – Art Buchwald

"An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today." – Laurence J. Peter

All facetiousness aside, at The Starner Group, we don't pretend to know what will happen tomorrow. What we can tell you is what we are seeing and how that influences our opinions. Certainly, many worrisome trends exist – our country's high unemployment levels, depressed housing market, and ever-growing government deficits. Furthermore, despite the recent market recovery, individual investor sentiment and confidence seems to be negative.

That being said, we see many things to be positive about; for example, the aforementioned negative investor sentiment. Historically, this has been a clear contra-indicator...many of history's best investment opportunities have occurred when the masses are nervous. Furthermore, we still see historically-high levels of cash on the sidelines. Cash, we might add, that is earning nearly nothing. Typically, cash like this finds its way to higher-yielding alternatives. Of course, past performance is not indicative of future results...but we still have a hard time being too bearish at this time. I know some of you disagree.

Clearly, both the Bulls and the Bears have plenty of ammunition, but what if they are both wrong and our current "range-bound" domestic market continues? Historically, secular bull markets have been followed by extended periods of "range-bound" or "flat" markets. Certainly, this has been the case since our last (1982-2000) bull market ended. Range-bound markets typically contain numerous cyclical bull and bear markets, but these essentially cancel each other out, leaving the market flat overall. Certainly, investors can make money in a range-bound market, and in our opinion, active management is critical to achieving any long-term success. The indices may mask those specific opportunities that exist around the world.

The yield curve is another key indicator of the economy's future direction. The yield curve, which measures the spread between short-term and long-term interest rates, is very steep, a signal that investors are growing more optimistic about the health of the US economy. The last time the yield curve was even near its current steepness was in 1992 and 1993 when the economy was coming out of a recession.

This poses challenges for the bond and fixed income investor. Yesterday, yields on one-year CD's were paying approximately 0.60%. Two-year CD's were paying approximately 1.5%. Clearly, the investor is paying a price to stay in short-term cash. Conversely, the fear of rising interest rates in long term bonds presents a challenge for those who need or want more income. So what is an income investor to do? We believe this may be a good time to put a greater emphasis on dividend-paying stocks and other asset classes that deliver income. Certainly, risks exist – still, we believe dividend-payers offer a better chance of meeting your income needs in an inflationary OR deflationary environment.

While this letter so far has focused primarily on the US economy, we also continue to believe the global markets are filled with opportunities, albeit with risks and volatility. This is true for both the global equity and fixed income markets. At The Starner Group, we believe the global markets will be a growth engine for decades to come. Why? For one, much of the world's natural resources reside outside the US. Second, many emerging market countries (Brazil, China, India, etc.) have a burgeoning middle class of well-educated, high achievers driven to achieve prosperity. We believe they will reach this goal eventually.

In summary, we:

  • Are more optimistic than last December
  • Are cautious about long-term bonds
  • Believe income will need to be derived from a wide selection of income producing investments
  • Maintain that careful security selection and sticking to fundamentals will be critical if the current "range bound" market continues.
  • Maintain a global perspective will be an important part of successful investing
  • Maintain our positive outlook on "stuff" such as commodities and other raw materials
  • Believe proper diversification is important for hedging inflation/deflation

So, what does this mean for your portfolio? That depends. As you all know, we create unique portfolios for each of you based on your needs, goals, and risk tolerance. Despite the credit crisis, we have not abandoned the concept of diversification, which we believe is still the best proxy for "not knowing" what might come next.

For those of you in or nearing retirement, you already have more conservative, balanced portfolios that include bonds, dividend paying equities, insured assets and alternative investments. Now that we have learned the credit rating agencies are not so reliable, active management will play a more important role as "conservative" is not the same as we once thought.

If you wish to discuss our perspective in more detail, we welcome your call.

In closing, to our clients, we want to thank all of you for your continued faith in our abilities. We are grateful for your phone calls, attendance at our events, and referrals to your friends and colleagues who desire holistic financial planning services. 2008 and 2009 were tough years. We are hopeful that 2010 will continue the economic improvement that we have seen over the past nine months. Regardless, we promise to continue finding ways to improve your financial lives and futures, whether it be helping refinance your homes, identifying innovative or unique opportunities in the marketplace, or evaluating the impact of new life goals.

From all of us at the Starner Group, we look forward to serving your needs next year and for many years to come.

Happy New Year and wishing us all a prosperous 2010!

Links of Interest

Bill Gross, bond guru at Pimco, article "Anything but .01%" Click Here

Jeff Saut, Chief Investment Strategist at RJA article "Turning Point?" (Scroll down to the December 21st entry) : Click Here

David Brooks, New York Times, "The Protocol Society" Click Here