September 2017 Newsletter to Clients
Submitted by Moneywatch Advisors on September 5th, 2017
Enjoy this month’s edition that features the new Moneywatch Advisors logo and website plus our thoughts on potential impacts of the Federal Reserve’s plan to reduce bond purchases starting in October.
As you can see at the top of this page, we have a new, fresh logo for Moneywatch Advisors!
When Bob Bova started Moneywatch in 1980 he was among the very first in the country to try a new approach to wealth advising – provide clients the help and advice that is in their best interest, not the advisor’s best interest. What a concept!
Back then, the industry was dominated by stockbrokers and insurance salespeople, mostly men, that were paid by commission. In other words, they were paid when they sold you a stock or an annuity – regardless of whether that product would actually help you achieve your financial goals. Bob’s approach was vastly different. Coming from the world of stockbrokers, he knew there was a better way. So, Moneywatch was born with an objective to align the firm’s interests with those of the client – a fee-only financial advising firm.
Today, 37 years later, Moneywatch manages approximately $145 million in assets owned by its 269 clients with a team of seven people. Of those 269, half of you are 50 or younger and half of you are over 50. Similarly, with Bob still as Chairman and Chief Investment Officer, and Ramsey Bova as the President and now 50% owner of Moneywatch Advisors, our leadership team reflects the age groups of our clients too. We believe this adds value to our clients as Bob has and is experiencing the issues faced by retirees such as Social Security, Medicare, and the sequence of withdrawals from investment accounts while Ramsey is accumulating assets for retirement while caring for a growing family and career, just as our younger clients are.
As Moneywatch continues to grow and attract new clients we are excited about our new look. It is fresh and clean and, just like the name Bob chose for the firm, it explicitly conveys what we do for our clients. More important, we are excited about our revamped website – www.moneywatchadvisors.com - because of the added information it will allow us to deliver to you, our clients, as well as to prospective clients.
The Federal Reserve: In December of 2008 the Federal Reserve made the decision to purchase U.S. Treasuries and mortgage-backed securities each month in hopes of providing economic stimulus. Almost ten years later, the Fed is ready to reduce these monthly purchases as they believe the economy can now withstand “normalization”.
We believe the purchasing program has kept yields artificially low; high demand (particularly by the Fed) has kept prices up; price and yield have an inverse relationship. What will happen to the prices of these bonds when the Fed reduces the amount it has been regularly purchasing? Basic economics would lead us to believe that as demand decreases (the Fed purchases less) the price would also decline as the bonds no longer are sought after by a large purchaser. In this case yields would rise. What does that mean for investors? Today, you can purchase a 10- year US Government Bond and expect a yield of 2.13%. If yields increase due to the Fed’s normalization one would assume that equivalent bonds would be selling at a higher yield in the future. As the Fed continues to ‘unwind’ bond purchases we expect some impact on interest rates. The extent is unknown but we remain confident that holding ‘floating rate’ funds during this period will prove optimal.
Thank you for your continuing confidence.
Past performance is no guarantee of future results. The opinions expressed are those of Moneywatch Advisors, Inc. and are no guarantee of the future performance of any particular fund. This information is for educational purposes only and is not intended as investment advice. Please consult your financial advisor for more detailed information or for advice regarding your individual situation.
