The Kinsey Report - Kinsey Wealth Management

The Kinsey
Report
December 17, 2014
Volume 25 Issue 4
s we proceed to the finish line of
2014, we are enjoying a return of
manufacturing to the United States.
That includes a number of foreign
companies making first time investments into manufacturing on our soil.
Corporate earnings have been solid
and the outlook for our future is
seemingly optimistic.
A
The Market
The S&P 500 finished 2013 at
1848.36. Today it finished at
2012.88. That represents an increase
of more than 8.9% so far for 2014.
Energy prices have been falling with
oil below $57.00 per barrel as of this
writing. That is down from more than
$100.00 per barrel six months ago. It
is impacting the oil producers and
confusing the market averages
somewhat, but this too will pass. Ultimately, the savings at the gas pump
will find its way back into the economy, which is good news.
The Economy
Have you hugged an energy engineer lately? If you happen to know
one, you should consider doing so.
Consumer prices are up a modest
1.7% in the past year and the key
reason is our country’s booming energy production. The level of production is helping to lower world oil prices. That in turn lowers what we are
paying at the gasoline pump. Food
and beverage prices are up at a 3.1%
annual rate for the last 6 months, and
up 2.9% for the past year. Housing
starts, although lower in October, are
up 7.8% from a year ago, with multifamily units down 6% and singlefamily units up 15.4%. Although volatile in recent months, the underlying
trend for housing remains upward,
and I feel can continue to do so. Finally, inflation is up less than the
Fed’s target of 2%, jobs are on the
increase, and wages and hours
worked are increasing as well. Our
economy may not be expanding in a
big way, but things are much improved over the past few years.
Keith L. Kinsey, CFP®
Managing Director - Investment Officer
6810 North Knoxville Avenue
Peoria, IL 61614
Wells Fargo Advisors, LLC
Member NYSE/SIPC
At The Fed
Christmas—New Year—Tax Season
The FOMC (Federal Open Market
Committee) reaffirmed its view that
the current 0 -1/4 percent target range
for the federal funds rate remains appropriate. Further, they anticipate they
will likely maintain this target for a considerable time
following the end of its
asset purchase program
last September. The general consensus seems to
be that the Fed will begin
raising rates some time in
2015. Remember, the Fed has not
raised the short-term rate since 2006.
It is encouraging to me to see the Fed
showing more signs of confidence in
our economy.
Investment Strategy
Over the past 20 calendar quarters,
the S&P 500 stock dividend payout
rose from $49.04 billion in Q4’09 to
$89.02 billion in Q3’14 to equal an
increase of 81.5%. The stock dividend
yield as of 12/9/14 was 1.95%. At the
end of 2009, 363 of the 500 companies were paying a quarterly dividend.
At this writing, 423 of the 500 are paying a quarterly dividend according to
S&P Dow Jones indices. What has
not changed is the average payout
ratio, which has remained low since
1999. The dividend payout ratio
(percentage of a dollar’s worth of
earnings paid out as a dividend) for
the companies in the S&P 500 stood
at 32.5% in October 2014. The payout
ratio has averaged closer to 52%
since the 1930s according to S&P
Dow Jones Indices.
The moral of the story is dividends
are an important part of investing.
They have increased nicely and yet
are still well below historical averages. In my opinion, considering investing in companies with dividends
makes as much sense as it ever has.
For more information regarding these investment ideas, please call. Dividends are not guaranteed and are subject to change or elimination.
TEL:
(309)683-8951
Toll free: (800)634-3323
FAX:
(309)693-3349
www.kinseywmg.com
As we look forward to Christmas celebrations with family and friends—or as the
lyricist wrote: “The Most Wonderful Time
of the Year,” followed closely by New Year
celebrations; we will soon be forced to
tolerate what we call Tax Season!
If you have any cost basis information
missing on your statement, please let us
know and we will work with you to update
the data.
As a reminder, beginning with the 2008
tax year—Congress and the IRS moved the
postmark due date for Form 1099-b reporting to February 15th. Most issuers of
1099s now request a 30-day extension to
mail those forms in order to have additional time to capture as much information as possible, and eliminate some
amended forms.
Several types of securities have a delayed
reporting date because payments in December, January and February impact the
Form 1099 information that must be provided. In addition, issuers can provide
supplementary information and factors
that need to be included with our reporting, but cannot be calculated by them
until January or February.
Rest assured, I am as frustrated by these
delays as anyone. But as my Dad always
said, we have to accept those things we
cannot change. He didn’t say we had to
like it!
Please contact Jessica with any questions
you may have.
Wells Fargo Advisors does not provide legal or tax
advice. Be sure to consult with your own tax and
legal advisors before taking any action that could
have tax consequences. Any estate plan should be
reviewed by an attorney who specializes in estate
planning and is licensed to practice law in your
state.
Happy Investing!
May God Bless!
Wells Fargo Advisors did not assist in the preparation of this report, and its accuracy and completeness are
not guaranteed. The opinions expressed in this report are those of the author and are not necessarily those
of Wells Fargo Advisors or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any
trading strategy. Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate
non-bank affiliate of Wells Fargo & Company.
Page 2
The Kinsey Report
Food for Thought
Holiday (or perhaps everyday) Blessings!
This year, Karen and I have been blessed richly with the addition of our new son-in-law, Chris. Having Kristen and Chris living
just down the street is a blessing in itself. Kim is doing great at the University of Iowa, or as we now call it… the real U of I. And
Karen is enjoying her new found retirement.
Karen and I were part of a group of about 55 people from Central Illinois that ventured up to Minneapolis to volunteer at a processing center for Operation Christmas Child - the shoebox ministry of Samaritans Purse. It was a very moving experience and
we made many new friends. Our group of perhaps 200 volunteers from across several states, processed between 70 and 80
thousand shoeboxes in approximately 10 hours over a day and a half. Karen has an ever increasing role with this organization
that touches so many lives.
Kim has been involved with Dance Marathon at the University of Iowa and we will join her at “The Big Event” after the first of
the year as volunteers working with the families of the kids being treated for cancer at the University of Iowa hospitals. This
wonderful organization raises money for many things to assist the medical professionals with additional tools to work with these
kids. Additionally she enjoys her involvement in Campus Crusade for Christ, or CRU as she calls it.
Kristen has begun working with the youth group at our church and leading a high school girls’ bible study. This is in addition to
coaching a 2nd - 4th grade girls basketball team in the Peoria Girls Sports League (PGSL).
We are always looking for candidates for The Karing Angel award. This award is for people who put themselves in the line of
danger to assist a stranger who is in need. Today, December 17th marks the 7th anniversary of the attack on Karen that precipitated our starting the award. Karen’s Karing Angel, Liz, was with us for Kristen and Chris’s wedding and will remain part of
our family for the remainder of our lives. For more information on this project, please give me a call.
And I have to mention Jessica. Most of you know of her dedication to the Honor Flight of Greater Peoria. But in addition, Jessica and her family volunteer every year at their Community Thanksgiving Dinner in her home town of Burlington, Iowa. For the
past two years, Jessica has been in charge of the operation that delivers almost 850 meals to homebound residents.
I am so blessed to be surrounded by so many people with such giving hearts. Holiday Blessings to you and yours.
Miscellaneous
Christmas Hope!
While packing up shoeboxes to ship to India and Ecuador, I couldn’t help but wonder what life might be like for the young children that would eventually receive them. I must confess, a wave of guilt passed through me while considering how much we
have in these United States. You see, we in the U.S. make up approximately 4.5% of the world’s population, while producing
25.5% of the worlds GDP (Gross Domestic Product). We are truly a blessed people. To us, middle class means 1200 square
feet and two cars. In some countries, middle class means 300 square feet and a dirt floor, or less.
As I was pondering the thought while loading a shipping carton, a fellow volunteer was introduced by the Chaplain, a volunteer
himself. The 24 year old man told his story of being taken from his parents as an infant in Russia. Both of his parents were alcoholic and unable to care for him and his two older sisters. Growing up in an orphanage in Russia, meant sharing everything
from a room to a towel with more than 20 other boys. He explained how he was separated from his sisters and rebelled
through his childhood. By the age of 9, he was drinking and smoking and rebelling against all authority.
One day, while walking toward his classroom from detention, he heard unusual activity and even some laughter coming from
down the hallway. When he entered his classroom, each of his classmates was opening a shoebox, courtesy of Operation
Christmas Child. As he approached his desk, he noticed there was a shoebox waiting for him as well. My eyes began to tear as
he described its contents.
His favorite item was a wash cloth. He viewed it as his own personal towel. He would no longer have only a towel shared with
24 other boys, but a miniature towel all to himself. He was also thrilled with a tube of Spongebob Squarepants toothpaste. He
put a small amount on his finger and found it to taste like bubble gum. He laughed as he admitted he finished the whole tube
that day. Another item he mentioned was a notebook. He was not allowed to use the notebook issued him by the orphanage
for anything but schoolwork. Now, for the first time, he could write to his sisters, living in the girls’ orphanage.
He explained the most precious gift he truly received that day was hope. That hope was received because, for the first time, he
believed someone out there that didn’t even know him, cared enough and loved enough to give him these gifts.
Being able to communicate with his sisters about his new found hope, his attitude and behavior changed quickly. About 2 years
later, all three were adopted by an American family who raised them as their own. As he learned where the shoebox came
from, he decided to volunteer and help other children find that same hope.
I cannot express how thankful I am that Karen involved herself in Operation Christmas Child so many years ago. Now retired,
she has more time to dedicate to this worthy cause. She tells me delivering a shoebox to a child like this young man from Russia, is near the top of her ‘Bucket List.’ I plan to be there with her on that journey as well. Thanks Karen!