The Investment Counselor Archive

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  • 2011

    • Stocks as an Asset Class (December 2011)

      Recently, macroeconomic factors have dominated the news across all financial media outlets. Between the tough employment situation here in the United States and the debt crisis in Europe, many investors have shifted focus from company fundamentals to the macroeconomic environment and a more "top down" way of thinking.

    • Family Philanthropy: A Prescription for Holiday Happiness (December 2011)

      As you begin to make plans for the holidays ahead, think about incorporating time to discuss your family's shared values and history as a way of building strong family ties and family continuity. Looking ahead 20, 50, even 100 years, to successfully preserve the family, individual family members should understand the core principles that the family stands for-- what makes the family special?

    • The Charitable Contribution Tax Deduction (October 2011)

      We all know that the tax code and government spending will be reviewed in the near future with the objective of increasing revenues and/or decreasing expenditures.  The charitable contribution income tax deduction will undoubtedly be included in these discussions.  Although most people do not make charitable contributions solely because of the related tax benefits, the tax benefits certainly enhance a taxpayer's ability to give.

    • The Income Investor's Dilemma (October 2011)

      In response to the 2008 financial meltdown and resulting Great Recession, the Federal Reserve has lowered the Federal Funds rate ten times, implemented two rounds of quantitative easing (nicknamed QE1 and QE2), and, in a recent announcement, indicated that interest rates could remain low for up to two years.

    • Balancing Personal Budgets:  The Road to Peace of Mind (August 2011)

      Budgeting is a subject we discuss often with non-institutional clients, regardless of net worth.  Most of our clients come to us with significant assets following an important event in their lives-- marriage, divorce, widowhood, retirement, inheritance-- searching for someone to help them manage their assets responsibly, or to help get them through a difficult transition period.  Some have just enough assets to last their lifetime; others have more than enough to take care of themselves, in addition to leaving a legacy for the next generation or their favorite charity.

    • "Staging" Success:  Profiling Industries for Investment (August 2011)

      At Clifford Swan, we believe it is a competitive advantage to be a long-term investor, especially in an age where the holding period of the average investor seems to be measured in days, not years.  To maximize our long-term advantage and your investment returns, we spend a lot of research time trying to understand companies and their industries.  Investors who attempt to perform well over the long term often look for companies and industries that have durable advantage.  In this article, we will consider two different frameworks commonly used by investors and analysts when trying to understand an industry and determine durable advantage:  (1) the industry life cycle and (2) the five competitive forces originated by Harvard Business School Professor, Michael Porter. 

    • Issuing New Gift Annuities in an Uncertain Environment (May 2011)

      We were recently asked by a client if it still makes sense to issue gift annuities given the present environment and its perceived risks.  Understanding that gift annuities are guaranteed obligations of the issuing charity, are the downside liabilities simply too great at the present time?  To address that question, we thought we would dust off an article we wrote just two years ago when we discussed the same subject during a similarly difficult period. 

    • Equity Expectations:  What Might the Future Hold? (May 2011)

      As oil prices continue to rise, hovering around $100 per barrel as of this writing, we are paying almost $4.50 per gallon for premium gasoline.  I wonder about my lunch plans...should I bring leftovers from home or go to McDonald's and order off the $1 menu?  This situation poses an even bigger question for us as investors:  Is the spike in oil and gasoline prices temporary, or is something structural changing?

    • Message from the President (May 2011)

      As we continue to grow and expand our investment counseling practice, we recently seized an opportunity to add Kevin J. Cavanaugh to our professional ranks.  Though he traveled over 5,000 miles from Ireland to join Clifford Swan, Kevin is actually returning to his Los Angeles roots. 

    • Innocents Abroad (March 2011)

      Our eighteen year old daughter, Jenny, approach my wife and me the other day with the radical proposal that she and a friend be allowed to travel by themselves in Europe for a month this summer.  My immediate reaction was, "Gee, honey, why not just travel in the United States, instead?"  This elicited from Jenny the predictable, "Oh Dad!" response, and we are still at loggerheads on this issue.  Perhaps you are wondering what our little family drama has to do with investing?  Well, it reminded me that Clifford Swan has, for some time, been exploring ways to invest outside our borders.  There is no denying that Switzerland is like the Grand Tetons on steroids (and you get cheese thrown in, to boot) the major European capitals are, for the most part, more beautiful than our major cities, and the beer is better in Prague than in Milwaukee (don't tell my daughter that).

    • Choppy Waters:  Navigating the Municipal Bond Markets (March 2011)

      Traditionally, the $2.9 trillion municipal bond market has been a safe haven for those seeking income that is protected from taxes.  Two-thirds of municipal bonds are held by individuals either directly or through mutual funds.  These individuals are seeking to invest in them primarily for their tax-free income and secondarily for their yield.  However, the generally tranquil municipal market has been experiencing more ups and downs than usual in the past few months, leading investors to exit municipal bond funds in droves and question their viability as a safe haven.

    • Determining the Date of a Charitable Gift (January 2011)

      The date on which a charitable gift is made, also known as the "date of delivery," not only determines the tax year in which the related charitable deduction may be taken, but could determine the value of the gifted assets.  This is most relevant when securities that fluctuate in value over time are given to charity, since non-cash assets are priced, for gift valuation purposes, as the gift's date of delivery.  Lastly, the gift date could affect the donor's long or short-term holding period of the gifted asset. 

    • Formal Investment Policies (January 2011)

      While this article focuses on a common concern of our not-for-profit clients (hospitals, universities, religious organizations, community service providers, etc.) it may also be useful to our individual clients who can address these investment policy (IP) elements in a less formal way with their investment counselor.

    • Positive Trends for the 2010s?  Waves, Bubbles and Renewal (January 2011)

      For the last three years, the world has suffered through financial and economic stress, including write-offs, foreclosures, market plunges, and significant increases in unemployment.  So, what's ahead?  Many have enumerated the headwinds we might encounter, describing a "new normal" with retarded growth, accelerating inflation, and/or stagnation.  Despite these problems, we believe investors should not lose sight of the bigger role played by innovation and technology in shifting the economy in positive directions. 

    • Message from the President (January 2011)

      As most postulated, Congress and the President enacted sweeping tax legislation at the 11th hour, impacting many important tax areas:  income, estate and business.  While there is not sufficient space here to cover all the details, I wanted to highlight a few items of particular importance to our clients and readers. 

  • 2010

    • Market Outlook (December 2010)

      Clifford Swan Investment Counsel has a history of investing in "high-quality" companies.  The term high-quality can mean different things to different people, but to us it means that a company displays three important characteristics.

    • From Idea to Investment:  Our Research Process at Work (October 2010)

      Clients often wonder how investment firms analyze and attempt to make sense of all the conflicting news and information regarding the economy and the investment markets.  We thought it might be enjoyable and interesting to take you through a typical week in our research and investment meetings and show you how our thinking goes into your portfolios-- where "the rubber meets the road."

    • Market Outlook (October 2010)

      As we look back at the last three quarters, we see what a volatile market looks like.  The year started out with the market, as measured by the Standard & Poor's 500, down about 5% after a very strong recovery in the last three quarters of 2009.  This was followed in the spring by a 10% gain and then a move back to a loss during the summer.  The market's latest upward move has netted a gain of about 4% for the first three quarters of 2010.  This volatility is caused largely by investors who were expecting a more stable recovery and have been surprised by the unpredictable economic environment we've experienced. 

    • Message from the Chairman:  Educating the Next Generation (October 2010)

      For many of us, September always brings thoughts of "back to school" and the sense of excitement and energy that new learning opportunities represent.  This year, Clifford Swan embraced its own brand of education by introducing the "Young Stewards Program" to teach teens wealth stewardship and financial skills. 

    • Leadership through Good Governance (October 2010)

      Aspiring writers are often given the advice, "write about what you know."  In thinking about how to best use this opportunity to share some ideas and thoughts with you, I paused to consider whether there is any common thread in the myriad of activities that I am privileged to enjoy as a business executive, board chairman, non-profit director, foundation trustee and family leader.  I would suggest that each of these roles offers the opportunity and responsibility to serve by encouraging effective governance. 

    • Inheriting an Individual Retirement Account from Your Spouse (October 2010)

      When individuals lose a spouse, they often inherit the assets from their spouse's retirement plan.  Although the knowledge of this inheritance often comes at a difficult time, it is important that the surviving spouse quickly evaluate the available options, determine his or her own financial needs, understand the tax implications, and consider the inheritance of future beneficiaries.  Since some of these choices are irrevocable, it is extremely important that they be carefully considered.  In order to preserve all available options, beneficiaries must make certain decisions within nine months of the date of death of the original account holder. 

    • 2010 Repeal of Estate Tax:  Testamentary Charitable Remainder Trust Implications (July 2010)

      In our first quarter, 2010, newsletter, an article by James Gamb discussed a few of the unintended consequences of the estate tax repeal for 2010.  This article will discuss the unintended consequences involving charitable remainder trusts (CRTs), created by a decendent's will (testamentary CRTs).

    • Message from the President (July 2010)

      "A major enjoyment in life is playing basketball, touch football and various water sports with my seven grandchildren"  (Ed Ogle, from www.cliffordswan.com).  Ed Ogle's website quote will soon more accurately reflect the new realities of his life than the previous seven years Ed spent at Clifford Swan.  We should have been suspicious when he uttered it.  Effective July 31, Ed will give retirement another try; this time, he will likely succeed.

    • Disruption and Volatility:  The Effect of Today's Market Automation (July 2010)

      May 5th of this year was a relatively uneventful day on Wall Street, with the Dow Jones Industrial Average (DJIA) closing at 10,868.12.  The following day, Thursday, May 6th, the market spent much of the morning and early afternoon in moderately negative territory declining 161 points by 2:00 p.m. (ET).  Shortly after 2:30 p.m. (ET), the decline began to steepen.  Within twelve minutes the DJIA had fallen an additional 261 points to 10,445.84.  Five minutes later, it had dropped an additional 573 points to 9,872.57, for a total plunge of 9.16% from the previous day's close.  As quickly as the market dropped, it suddenly reversed itself, recovering 543 points in approximately a minute and a half, to 10,415.65. 

    • Market Outlook (July 2010)

      The second quarter of 2010 reminded us all that equity markets can be choppy.  After four straight quarters of gains, the Standard & Poor's 500 (S&P 500) index fell 12% during the quarter.  The Chicago Board of Options Volatility Index (VIX), which is a broad measure of volatility for the S&P 500, spiked to levels not seen since early 2009 (see chart above).

    • Gift Annuity Payout Rates Increase Slightly (July 2010)

      For the first time in seven years, the American Council on Gift Annuities (ACGA) has increased, althought slightly, the recommended payout rates for charitable gift annuities (CGA).  Since July 2003, there have been two rate reductions.  The first reduction was effective for CGAs issued after June 2008, and the second rate reduction became effective in February 2009.  The most recent increase to the recommended payout rates apply to gift annuities received after June 2010. 

    • Family Culture and Family Wealth (as published by the Family Office Association) (June 2010)

      I begin with a personal family story.  In 1998 I joined my four siblings and our 8 kids for a family birthday party- it was Dad's 80th birthday and we gathered in my brother's house in Louisiana around some good seafood and a birthday cake with that really sweet frosting lovingly decorated by the grandkids.  For some reason that night Dad began to talk more about his life and experiences than he ever had before- leaving Mississippi on a freight train at age 18 in search of work, learning the ropes of the oil business from literally the group up, starting a business with a small bank loan and a wife and four kids to support, being on the island of Tinian during World War II and building the airstrip that launched the Enola Gay and its fateful cargo. 

    • Market Outlook (April 2010)

      The new health care legislation, passed by the U.S. House of Representatives on March 23, 2010, was brought into law basically along party lines, with the support of 219 Democrats and the opposition of 178 Republican and 34 Democratic representatives.  The historic legislation is the same bill, with the exception of some changes made by the House, that was passed by the Senate on Christmas Eve of last year.  Estimated to cost the federal government about $938 billion over 10 years, the bill will extend coverage to approximately 32 million Americans.  This added cost will be covered by new taxes, fees, and savings in Medicare, with state governments assuming some additional costs. 

    • Tax Breaks for Higher Education Costs (April 2010)

      As parents of college students prepare their income taxes for 2009, many will now qualify for a significant new tax break.  In an attempt to stimulate the economy, last year the Obama administration and Congress replaced an old tax break with one that will benefit most families paying college costs.  For most people paying tuition, the American Opportunity Credit is the best of several choices.  Still, families and their tax preparers need to evaluate all of the available options for their particular situation. 

    • Considerations for a Successful Charitable Gift Annuity Program (April 2010)

      Charitable Gift Annuity (CGA) contracts continue to be very popular with many donors.  They are simple to understand, while offering security, a steady stream of income, and some tax advantages.  On the surface, they appear relatively straight forward for charities to administer, while attracting a large donor base.  And yet, there are many intricacies we would suggest non-profits consider as they maintain or establish as successful CGA program.

    • The Inflation Contagion:  An Analysis (April 2010)

      When you hear "inflation", do images of long gas lines or skyrocketing gold and silver prices emerge?  These images from the 1970s defined the term "inflation" for a generation, but are current inflation pressures anywhere close to those experienced three decades ago?

    • Question & Answer- Estate Taxes Laws In Flux (April 2010)

      As you may have heard, Congress did not act in 2009 to resolve uncertainty relating to the 2010 estate tax and generation-skipping transfer tax laws.  This complicated situation is the result of a series of Bush-era tax cuts enacted in 2001 and set up to expire in 2010.  Original supporters of the estate tax cut wanted to permanently repeal the tax, which is estimated to raise $25 billion this year, but instead settled for a plan that slowly increased tax exemptions for estates while lowering the estate tax rate. 

    • Message from the Chairman (April 2010)

      To those of you whom I have had the opportunity to meet in the past, hello again, and to those clients and friends whom I have not yet met, I look forward to getting to know you as opportunities arise.  As Peter Boyle mentioned in his letter last quarter, we are introducing some new resources that we hope will be useful for families interested in encouraging successful stewardship of family wealth through effective communication and governance, financial education for the next generation, and family philanthropy. 

    • Market Outlook (January 2010)

      It is that time of year again when the prognosticators polish off their crystal balls in an attempt to provide visionary forecasts about the coming year.  While we regonize the limited productiveness of such an exercise, we thought it might be interesting to look back at last year's outlook for 2009.

    • Thinking It Through:  Roth IRA Conversions (January 2010)

      We have addressed Roth IRAs in past newsletters, providing an in-depth review of the topic in 2007 with a piece entitled, "Should You Consider a Roth IRA Conversion in 2010?" (Please visit our website www.cliffordswan.com to access an archived copy of this article).  Now that 2010 is upon us, we thought it timely to look into the details to help better understand the conversion option for investors. 

    • Commuted Payment Gift Annuity- College Tuition Annuity (January 2010)

      It is possible for an individual to receive a charitable tax deduction today and avoid taxation on a portion of appreciated assets currently held while providing future financial assistance to both a charity and heir of their choice.  A grandparent holding appreciated stock can donate the stock to a charity in exchange for a Commuted Payment Gift Annuity that pays the grandchild a fixed amount for four years beginning when the grandchild reaches the age of eighteen and is likely to begin his/her college experience. 

    • Message from the President (January 2010)

      At this time of the year, many of us are jotting down New Year's resolutions and hoping to keep more than not.  At Clifford Swan, we have our own list of resolutions which, while not new, are certainly worth reaffirming on a regular basis.  We urge not only our clients, but the investing public to consider the same.

    • Divide and Conquer (January 2010)

      Every business, if it is successful, reaches a point where it is profitable.  The owners of the business then have one of the most fundamental financial decisions to make:  how much of the profit to reinvest in the enterprise in order to grow future revenues, and how much, if any, of the profits to share with the owners of the business (through dividends and/or share buybacks). 

  • 2009

    • Uniform Prudent Management of Institutional Funds Act (UPMIFA) (October 2009)

      In our work with endowment committees and non-profit boards, we have been fielding some questions about potential changes caused by the adoption in California of the Uniform Prudent Management of Institutional Funds Act (UPMIFA).  While there are a number of important issues affecting endowments associated with the UPMIFA, for purposes of this article we will focus on the impact it may have on spending and investment policies.

    • Message from the President (October 2009)

      November will mark our second anniversary as Clifford Swan Investment Counsel.  Who would have imagined almost a year ago that our first anniversary would usher in the beginning of the most challenging investment and economic period faced by our industry and our country in decades, if not in our lifetimes?

    • Market Outlook (October 2009)

      Wow!  What a difference a few months make.  As of this writing, the Standard & Poor's 500 stock index is up over 32% since the start of the second quarter-quite a move in a relatively short period of time.  Many of the economic indicators we follow are showing signs of bottoming and, in some cases, even turning up.

    • When Was Your Last Financial Checkup? (October 2009)

      Recent economic events have forced many people to look critically at the state of their financial condition.  For some, this is the first time they will experience unemployment, either personally or through someone close to them; the first time their real estate investments have dropped in value; the first time their portfolios have fallen significantly; or the first time they have been forced to alter their spending and retirement plans.

    • Is It Really Different This Time? (October 2009)

      The first decade of the 21st century is drawing to a close.  As of this writing, the Standard & Poor's 500 is 15% lower than it was when the decade began, and while shareholders of American companies have found equity returns unfulfilling, the past ten years have been anything but uneventful in the stock market.

    • Market Outlook (July 2009)

      With the end of the second quarter behind us, we have seen a remarkable snap back in the equity markets both here and abroad, peaking in early June.  With an eye to previous bear markets, this is a typical pattern after a major market bottom.  The greatest unknown factor affecting the future direction of the market is the economy and the timing of the recovery.

    • Sustainability - A Family Goal (July 2009)

      Especially now, families are concerned not only with preserving their financial wealth, but with maintaining and enhancing their over-all social health and capacity for stewardship by successive generations.  Think about the collective "assets" of your family as all the talents, knowledge, skills, and unique experiences each family member brings to your family's culture.

    • IRS Updates - Mortality Assumptions (July 2009)

      The mortality assumptions used by the IRS to calculate charitable deductions for gift annuities and additions to split-interest trusts have been updated and are now based on the 2000CM mortality table effective for gifts made after April, 2009.

    • Q&A - SEC Plans to Contact Clients (July 2009)

      The U.S. Securities and Exchange Commission (SEC) is charged with the oversight of all Registered Investment Advisors.  In reaction to the agency's blatant failure in the Madoff case, the SEC has begun a new procedure as part of its examination of investment advisors.  The SEC has decided to directly contact advisors' clients with a "Routine Account Information Confirmation."

    • Safety of Custodial Assets (July 2009)

      In light of the recent problems encountered in the financial services industry, some of our clients have expressed concern over the safety of their assets.  Our clients' assets are held, in custody, at brokerage firms and banks such as Charles Schwab & Company and City National Bank.  As assets held in custody, federal law requires that they be segregated from the custodian's corporate assets and are not subject to the claims of the custodian's creditors.

    • Message from the President - Regulatory Change (July 2009)

      Throughout history, generational attitudes have been forged through common life events which have defined, or re-defined, fundamental beliefs.  Most notably for our industry are individuals who are products of the Great Depression, but indelible marks are also made by major wars and domestic conflict.

    • The Power of the People - How Shareholder Votes Are Reshaping Corporate Boardrooms (July 2009)

      Corporate governance can be defined as the set of processes, customs, policies, laws and institutions affecting the way a corporation is controlled.  Key elements of good corporate governance principles include honesty, trust and integrity.

    • The Municipal Bond Earthquake:  Security in an Insecure World (April 2009)

      The year 2008 will go down as a year that sent a number of credit quakes and shivers throughout the financial markets.  From the fall of Bear Stearns to the collapse of Lehman Brothers and the implosion of American International Group, the meltdown of the mortgage bond markets, especially those with sub-prime mortgages, reverberated everywhere.

    • Question & Answer- Your IRA in View of Significant Changes (April 2009)

      What is the most significant change?  Can IRA owners still contribute IRA funds to a charity?  Are there important conditions which qualify a charitable contribution?  Time to convert to a Roth IRA?

    • Planned Giving News - Issuing New Gift Annuities in an OLD BEAR MARKET (April 2009)

      With stocks down 50 percent in the past year and a half, many gift planners are wondering if issuing new gift annuities is a prudent decision for now and in the future.  Or are the risks to the issuing organization simply too great?

    • Message from the President (April 2009)

      There is something nice about Spring.  For baseball fans it means the beginning of the baseball season.  If you are a basketball fan, March Madness provided 33 hard-fought college basketball games.  And for those like me who are fans of the outdoors, while snow is still plentiful in much of the country, the warming weather brings fields of wildflowers into bloom - a pleasant distraction from the tumultuous financial markets.

    • Issuing New Gift Annuities in an Old Bear Market (April 2009)

      With stocks down 50 percent in the past year and a half, many gift planners are wondering if issuing new gift annuities is a prudent decision for now and in the future.  Or are the risks to the issuing organization simply too great!

    • Market Outlook (April 2009)

      After suffering through a terrible year in 2008, the stock market continued to decline in January and February of this year, but has staged an impressive rally in March.  As we expected, the financial crisis of late last year has spread to the rest of the economy with consumer and business spending declining, exports falling, and unemployment rising.

    • Paying for College:  A Reality Check (April 2009)

      This is the special time of the year when many high school seniors are the first to check the mail each afternoon.  They are looking for that wonderful acceptance letter from their favorite college.  Students and parents are elated when the envelope brings good news.  But then, in quieter moments, the parents oftentimes ask each other whether they are financially prepared to make their child's dream become a reality.

    • Market Outlook (January 2009)

      We cannot give you our market outlook without first commenting on the last fifteen months.  The decline in the equity markets, and the short time frame in which it happened, is historically unprecedented except for the 1929-1932 decline nearly 80 years ago.  At the beginning of 2008, we were mildly cautious on equities due to the collapse of the real estate markets and its anticipated effect on the banking system.

    • Alternative Energy (January 2009)

      Despite the media focus on the slower economy, as long-term investors it is still important for us to understand alternative energy solutions.

    • Message from the President (January 2009)

      Four times a year I draft a message to our clients and other readers of this newsletter.  While elsewhere we will cover our thoughts on the market, I can't help but reflect on what will, hopefully, be the most challenging year of my career.

    • "What can we expect from a New Stimulus Package?" (January 2009)

      What are the pros and cons of massive Federal infrastructure spending as a form of economic stimulus?

    • Charitable Trust "Qualification" Tests and Charitable Lead Trusts (January 2009)

      In the Planned Giving News section of our second quarter 2008 newsletter, we discussed the effect of changes in the IRS discount rate on the present value calculations used to determine the charitable deduction for gifts to split interest charitable trusts.  Every split-interest trust has two interests; the income interest and the remainder interest.

  • 2008

    • Credit, Confidence and the Current Market (October 2008)

      For the last year we have been forecasting a slowdown in the economy.  Unfortunately, the combination of the economic slowdown and credit crunch has caused equity markets around the world to be very volatile and to decline more than was expected by us and most other professional investors.

    • Message from the President - "These are the times that try men's souls." (October 2008)

      Thomas Paine penned these words in the opening of The American Crisis in December, 1776.  Today, we could use these same words in an opening dialogue discussing the current worldwide financial crisis...

    • Question & Answer (July 2008)

      We frequently receive questions from clients who have become concerned about the security of their investments during periods of significant stress in our financial markets or the banking system.  The major broker-dealers and bank custodians provide multiple layers of protection through the Federal Deposit Insurance Corporation (FDIC), and the Securities Protection Corporation (SIPC), and supplemental private insurance.

    • Does the Stock Market Care Who is President? (July 2008)

      Presidential election years are always interesting, but this year's election has already captured the public's imagination like no other in recent memory, and we are only through the primaries.

    • Market Outlook (July 2008)

      Over the last six months, the equity market has traded inversely with the price of oil.  While the trend in oil prices has been rising since the first of the year, the equity markets have had a downward turn.

    • Clifford Swan Research, or "How to Love Financial Team Sports" (July 2008)

      In recent a recent interview, Randy Zaharia, research analyst and Principal, discussed the Clifford Swan research process with his partner, Kathleen Gilmore.

    • Charitable Trusts and the IRS Discount Rate (July 2008)

      The monthly IRS discount rate, which is at historically low levels, is used in the present value calculations required for split interest charitable trusts such as charitable remainder trusts and charitable lead trusts.

    • Developing Financially - Savvy Young Adults (April 2008)

      A serious problem facing the United States today is the lack of financial knowledge of the average young adult.

    • Gift Annuities:  Safe or Sorry? (April 2008)

      In our role as investment managers and administrators of planned giving assets, our non-profit clients periodically ask about the wisdom of spending a reasonable portion of gift annuities prior to the demise of the annuity's beneficiaries.

    • Is Big Bad Oil Still a Good Investment? (April 2008)

      We have all seen the headlines - but is the situation really as dire as some pundits would have us believe?

    • High Basis - Low Tax (January 2008)

      The tax advantages of donating highly-appreciated assets to a charitable trust are widely known and often discussed.  They include an up-front charitable deduction, avoiding estate tax on the donated assets, and shielding large capital gains.

  • 2007

  • 2006

  • 2005

  • 2004

    • What's in a Name? (December 2004)

      Remember when sales people in the financial services industry were clearly identified as stockbrokers, registered representative, insurance salesmen, or mutual fund salesmen?

    • 2004 Legislative Highlights (December 2004)

      The year 2004 was important for California non-profits.  The state's legislature took significant steps in the area of non-profit governance and better donor protection, while at the same time aided the long-term viability of these institutions through changes in gift annuity regulation.

    • USA PATRIOT Act and Planned Giving (October 2004)

      For decades, money laundering in the United States has been a federal criminal offense.  Financial institutions have always been required to assist authorities in countering money laundering attempts by maintaining programs and filing reports on certain transactions.

    • Oil Prices Blow a Gasket (October 2004)

      Oil prices have reached $50 per barrel, 75% higher than one year ago.  Why and what does it mean to us as investors?

    • New California Legislation for Gift Annuities (October 2004)

      As mentioned in our Summer 2004 newsletter, a bill was introduced in the California Senate on January 6, 2004 by Senator Scott that increased the maximum allowable equity exposure of charitable gift annuity reserves from ten to fifty percent.

    • Not so Fast on Hedge Funds (October 2004)

      Why many investors are chasing after them:  Many stocks and stock indices have lost money over the past five years, and with interest rates rising, bonds are seen as a poor bet.

    • Building vs. Buying Your Wealth Plan (July 2004)

      We were recently asked to address a group on the subject of wealth planning.  Specifically, how can individuals take charge of a process which often seems overly technical and complicated -- with infinite choices, considerations and ever-changing tax laws?

    • Cash is Key (July 2004)

      Over the years our clients have heard us discuss the importance of cash flow in evaluating companies in our portfolios.  We would like to take this opportunity to explain why we use this approach and give a brief summary of the benefits.

    • Proposed Legislation (July 2004)

      Proposed Federal Legislation:  Tax-Free IRA Rollovers to Charitable Remainder Trusts. 

      Proposed California Legislation:  Increase to maximum amount of gift annuity reserves invested in common stocks.

    • Dealing with the Trade Deficit (April 2004)

      Since the early 1980's, the U.S. has steadily purchased more foreign goods and services than it has sold to the rest of the world.  Last year, the trade deficit soared to a record $489.4 billion.

    • Tiers and Taxes (April 2004)

      This past November 20, the U.S. Treasury department issued proposed regulations (REG 11089698) detailing new rules for distributions from Charitable Remainder Trusts (CRT).

    • The Market Shuffle (April 2004)

      As we close out the first quarter of 2004, most major stock indexes (Dow Jones Industrial Average, Standard & Poor's 500, and Nasdaq Composite) were mixed compared to year-end.

    • Investing Charitable Remainder Trusts (January 2004)

      Charitable remainder trust, charitable gift annuities, and pooled income funds serve mutiple purposes for both charitable organizations and their donors.  Many charities use these planned giving vehicles to significantly increase their donor base and support by opening more possibilities for a broader range of donor needs.

    • Healthcare:  The 21st Century Juggernaut (January 2004)

      Healthcare costs are looming ever larger as we move further into the 21st century.

    • Back to the Future - 2004 Understanding the Mutual Fund Scandal (January 2004)

      Back in the mid 1980's, Universal Studios released the first of three hit movies titled Back to the Future.

  • 2003

    • Donation of Income Interest (October 2003)

      If you are a beneficiary of a charitable remainder annuity trust and are thinking of donating your future income stream to the charity, now is the time.

    • Climbing a Wall of Worry (October 2003)

      A bull market.  After three years of negative stock market returns, the last six months have had positive results.  As of this writing, there has been a dramatic 31% rise in the S&P 500 index since March.

    • California, the Sixth Largest Economy (October 2003)

      While most Californians were enjoying summer vacations, the state, whose municipal bond rating as recently as 2000 carried an AA rating, was unceremoniously down graded by both Moody's and Standard and Poor's to the lowest in the nation.

    • TAX CUTS:  Solution or Illusion? (July 2003)

      This past May 28th, President Bush signed into law the Jobs and Growth Tax Relief Reconciliation Act of 2003.

    • Saving for College Just Got Easier (July 2003)

      Selecting a college savings plan has been almost as difficult as selecting a college.  There are several popular savings plans available and each has its own unique advantages and disadvantages.

    • Proposed Charitable Giving Legislation (July 2003)

      On April 9, 2003 the senate passed S. 476, The Charity Aid, Recovery and Empowerment ("CARE") Act of 2003 by a vote of 95 to 5.  On May 7, 2003 the House introduced companion legislation H.R. 7, The Charitable Giving Act of 2003.  Among other objectives, the purpose of both bills is to provide additional tax incentives for charitable contributions by individuals and businesses and change the way certain nonprofit entities are regulated.

    • Market Comment (July 2003)

      The equity market has risen more than 20% since its lows in mid March.  These gains are impressive, and we are happy to report that many of our individual holdings had similar increases.

    • Case of the Disappearing Mutual Fund

      (July 2003)

      Trustees of Charitable Remainder Trusts and other life income arrangements may from time to time receive notice regarding their mutual fund investments.  What are trustees' options when notice is received of a proposed merger?

    • Case of the Disappearing Mutual Fund (July 2003)

      Trustees of Charitable Remainder Trusts and other life income arrangements may from time to time receive notice regarding their mutual fund investments.

    • Double Taxation of Dividends (April 2003)

      In early January, President Bush announced a major tax cut proposal to reduce federal taxes by about $700 billion over the next ten years.

    • The Fog of War (April 2003)

      Throughout the twentieth century, US financial markets have managed to cope with armed conflicts and crises.

    • A Bubble is a Bubble (January 2003)

      As most of you know, Clifford Associates has a long history that dates back to 1915.  While none of the current principals were around at that time, many of us have a long history of managing investments and advising clients on their financial needs.

    • Stimulus Proposal (January 2003)

      The administration's tax change proposal has been presented and the usual political challenges are surfacing.

  • 2002

    • No Pain, No Recovery (October 2002)

      The most important contribution of your investment counselor is helping you find the proper balance between risk and return in your portfolio.

    • Bonds Just Bonds (October 2002)

      Most of you probably do not often think about the value added by the bonds in your portfolio.  The most obvious benefit of bonds in a portfolio is to provide balance and diversification across asset classes.

    • Looking Beyond the Vale (October 2002)

      The market is most dangerous when it looks best;  it is most inviting when it looks worst.  Advice from Frank J. Williams, a successful investor of the early 20th century, provides some hope to today's investors facing the worst market slump in 30 years.

    • CRT Investment Policy Review (July 2002)

      The last three years have been challenging to all investors including Charitable Remainder Trusts.  The split interest nature of these entities make them perhaps more vulnerable to emotional, reactionary changes than an institution's endowment pool.

    • Demanding Integrity (July 2002)

      There has been much criticism of the accounting practices of public companies.  We agree the Enron/Arthur Anderson problems highlight current deficiencies.

    • CRT Investment Policy Review (July 2002)

      The last three years have been challenging to all investors including Charitable Remainder Trusts.  The split interest nature of these entities make them perhaps more vulnerable to emotional, reactionary changes than an institution's endowment pool.

    • Market Outlook (July 2002)

      For investors, the current uneasiness with equities- specifically driven by a distrust of analysts, corporate directors and auditors, international trade disputes, and an unstable geo-political landscape- is overshadowing a budding economic and corporate recovery.

    • The Mechanics of Present Value Calculations (July 2002)

      Charitable remainder trusts, charitable lead trusts, pooled income funds, and charitable gift annuities create an obligation to make periodic payments to a beneficiary over the time period specified by the trust or gift annuity agreement.

    • What's Next? (January 2002)

      We frequently are asked this question.  It is particularly common at year end as investors look forward to a New Year and make financial plans.

    • Time to Emphasize CRTs (January 2002)

      Many Development Officers confide to us some discouragement in attracting new trusts since the three year stock market erosion has diminished or evaporated capital gains.

    • Balancing Interests (January 2002)

      A standard unitrust makes periodic payments to an income beneficiary based on a percentage (payout rate) of the trust's value.  The trust must be revalued, and the income beneficiary distributions recalculated, at least annually.

    • How Much Can the Market Bear? (January 2002)

      Can we have a third year of declines for the current bear market?  We can, but is it likely to happen?

  • 2001

    • Setting Investment Policy (October 2001)

      In an earlier newsletter (Fall 2000) we discussed benchmarking investment returns and pointed out significant differences between endowments and deferred gifts.  Investment policy must respond to the split-interest nature of life income arrangements.

    • Credibility GAAP (October 2001)

      Within the Securities Exchange Act of 1934, the Securities and Exchange Commission (SEC) was given legal authority to establish financial accounting and reporting practices for all publicly traded companies.  Since 1973, the SEC has designated the Financial Accounting Standards Board (FASB) as the organization in the private sector to establish those accounting standards.

    • Financial Planning Vs. Financial Statements (October 2001)

      Charitable remainder trusts transfer funds to a charitable organization at some time in the future, usually upon the termination of the life income interests.

    • Setting Investment Policy (October 2001)

      In an earlier newsletter (Fall 2000) we discussed benchmarking investment returns and pointed out significant differences between endowments and deferred gifts.

    • Living with Uncertainty (October 2001)

      Each and every day, financial markets and their participants assess the risks inherent in investments and assign prices based on those risks.  Uncertainty, however, by its very definition is non-quantifiable and therefore difficult to assess.

    • Unbiased Advice? (July 2001)

      Back in 1921, A.M. Clifford, our founder, decided he would serve his clients exclusively as an investment counselor, and no longer as a broker-dealer.  Even then, he had serious concerns about the potential conflict of interest behind selling investment advice, while earning commissions from the securities he recommended.

    • Too Late at the Ball (July 2001)

      The late comedian Eddie Cantor once told a joke that today's investors can probably relate to, after the past 18 months of market turmoil.  He said, "They told me to buy this stock for my old age and it worked perfectly.  Within six months, I felt like an old man."

    • History Repeats Itself, Again (April 2001)

      One year ago, we printed an article, "Two Tales and Holy Grails," addressing over-valuation of Internet stocks and booms and busts of the past (e.g., electric light, autos).  Subsequently, with surprising speed, the tech-dominated NASDAQ fell by over 60% from its peak.

    • IRAs as Planned Gifts (April 2001)

      The IRS recently released rules that substantially improve the distribution process for IRAs and qualified retirement accounts.  The changes are clearly investor friendly and offer an opportunity to discuss new IRA strategies with prospective donors.

    • Good News for IRAs (April 2001)

      The IRS recently released rules that substantially improve the distribution process for IRAs and qualified retirement accounts.  The changes are clearly investor friendy and may impact your IRA strategy.

    • Planned Giving Strategies - Part II (April 2001)

      There are various forms of planned giving arrangements, each with unique characteristics that have evolved to address specific donor needs.  This is the final installment of a two-part article which identifies these characteristics and needs, and explains the corresponding investment approach applicable to these various types of arrangements.

    • IRAs as Planned Gifts (April 2001)

      The IRS recently released rules that substantially improve the distribution process for IRAs and qualified retirement accounts.  The changes are clearly investor friendly and offer an opportunity to discuss new IRA strategies with prospective donors.

    • The Perfect Storm (January 2001)

      In 2000, we saw the first year of negative equity-index returns in a decade.  It is important to understand the forces behind this dramatic market reversal.

    • Reduced Capital Gains Rates, Yes.  Simplification, No! (January 2001)

      As a result of tax legislation passed in 2000, beginning with the 2001 tax year, a lower capital gain rate of 18% (8% for individuals in the 15% tax bracket) may be applied for assets held more than five years.  Simple enough, but that would be too easy.

  • 2000

    • Planned Giving Strategies (October 2000)

      There are various forms of planned giving arrangements, each with unique characteristics that have evolved to address specific donor needs.

    • Benchmarking Planned Gift Investments (October 2000)

      As the pace of making deferred gifts to non-profit institutions has increased, the importance of this asset pool to the remainder interest institution has grown.

    • Drug Stock Prognosis (October 2000)

      There has been considerable negative discussion about the pharmaceutical industry over the last twelve months.  This is being generated mostly in the political arena, because a majority of the electorate currently view the industry as needing some sort of reform.

    • Benchmarking Planned Gift Investments

      (October 2000)

      As the pace of making deferred gifts to non-profit institutions has increased, the importance of this asset pool to the remainder interest institution has grown.  What was once a low-profile maintenance effort, run perhaps by the finance department, has come under the scrutiny of trustee board members.

    • Some Thoughts on the Euro (October 2000)

      Our guest author, Sharon Bentley-Hamlyn, is an investment manager with Walter Scott & Partners.  The firm is the sub-advisor to the Clifford Scott International Fund, L.P.

    • Lost Sheep (July 2000)

      Mutual Funds are attractive in some situations.  They allow smaller portfolios access to diversification and professional management.

    • End of the Long-Bond's Reign (July 2000)

      For more than 20 years it has been relatively easy to take the pulse of the U.S. bond market-just glance at the 30-year Treasury bond.

    • Two Tales and Holy Grails (April 2000)

      In his famous novel set in 1775, Dickens describes conditions as both "...the best of times and the worst of times."  And in the same sentence, he also offers his thoughts on the reasoning of the day, "... it was the age of wisdom, it was the age of foolishness... "

    • Measuring Investment Results (April 2000)

      How does one respond to a well intentioned trustee who asks, "How are our deferred gifts performing?"

    • Measuring Investment Results (April 2000)

      How does one respond to a well intentioned trustee who asks, "How are our deferred gifts performing?"  Can an experience level whose sole observations have been of the endowment portfolio provide adequate preparation to successfully evaluate results achieved by Charitable Remainder Trusts, Pooled Income Funds, or Gift Annuity Pools?

    • Valuing Pooled Income Fund Income Interests (April 2000)

      Many charities hold pooled income funds with limited assets and only a few participants, many of whom are unhappy with the level of income being distributed to them.  Faced with the prospect of continuing to administer a fund that is not appealing to the charity's donor base and is not expected to attract additional gifts, these charities often explore options that would allow them to close the fund.

    • Trading 'Round the Clock (January 2000)

      Valuing securities is a requirement assumed by the trustee, as described in this issue's companion article.  In addition to the instances noted, valuations are necessary at the time of charitable gifting, as well as for estate valuations.

    • Reverse Mortgages (January 2000)

      Are you house rich and cash poor?  Perhaps you are retired, have a modest income and the only asset left in your portfolio is your house.  Or perhaps you have a relative or close friend in this situation.  A reverse mortgage may be the answer.

    • The Year Ahead (January 2000)

      What is in store for the markets in the next 12 months?  This is a question everyone asks at the beginning of each year.

    • Trustee Duties (January 2000)

      The trustee of a charitable remainder trust assumes certain duties and responsibilities under local and federal law, IRS rules and regulations, and the trust agreement itself.  These duties encompass two basic areas, investment and administration.

    • 24 Hour Trading? (January 2000)

      We are seeing a significant increase in trading hours by securities exchanges in an effort to increase trading volume and accommodate the globalization of markets.

  • 1999

    • Index Fund or Time Bomb? (October 1999)

      Only rarely do we see index funds used in CRT applications.  There is good reason!

    • Changing Donor Expectations (October 1999)

      Earlier this year, we discussed many of the issues needing review before converting older NIMCRUTS to standard unitrusts.

    • Driving the Market (October 1999)

      During the last quarter investors have been pre-occupied with a host of economic concerns including:  possible renewed inflation, rising interest rates, volatile currency valuations, a growing trade deficit, political uncertainties and Y2K fears.

    • Index Fund or Time Bomb? (October 1999)

      Only rarely do we see index funds used in CRT applications.  There is good reason!

    • Y2K Ready (October 1999)

      After nearly a decade of work and an estimated $50 billion in private sector capital, it appears as the century turns, the ball will drop on time in Times Square, floats will roll down the streets of Pasadena and technology-related disruptions will be minimal.

    • Be True to Your School

      (July 1999)

      The lyrics of a popular Beach Boys song contain some investment advice that is still worth remembering.  During periods of shifting market rotation and concerns over higher interest rates, it is critical to "stay true" to a proven investment approach.

    • The Tortoise and the Hare Revisited (July 1999)

      Over the years, we have consistently preached the virtues of patience and reasonable (not sensational), low-risk returns.

    • Don't Slip If You Flip (April 1999)

      If you are considering an application to convert older NIMCRUTS to standard unitrusts by the June 8th deadline, you have no doubt reviewed the benefits with your beneficiaries and can easily speak to the issue of why the conversion should be allowed from their perspective.

    • Tune Up Your IRA, Tune Out the IRS (April 1999)

      In recent newspaper articles, questions have arisen about the improper handling by some custodians of Individual Retirement Account (IRA) distributions when such accounts are inherited by beneficiaries.

    • Donor Trusteed Gifts (April 1999)

      A continuing concern for charities is the possible erosion of gift (remainder) value of a poorly-managed, self-trusteed charitable remainder trust.

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