Editor’s note: Marc Leavy,CFP? is a regular financial columnist for Business Reform Magazine, the leading Christian business magazine with over 100,000 readers. Each issue features practical advice on operating successfully in business while glorifying God.
All market news for the last few weeks has been erroneously tied to the war. Now that the war is nearly over, the true market mover is revealed. Earnings. Earnings are what drive the markets and it is that time of year for companies to report on the first quarter. Hopefully, in the next two weeks, we will gain a better indication as to where the markets are headed.
Economic data continues to be mixed. Retail sales rose in March by 2.1%. The increase was stronger than expected and the largest monthly increase since October 2001. However, nearly half of that figure came from auto sales. Consumer sentiment also increased more than expected. Oil prices continue to drop as the war progresses. Dow component GE reported an expected 20% increase in quarterly net income. However, when excluding a charge in accounting costs, earnings actually fell and stock closed flat.
Fellow Dow component, Microsoft was downgraded by a brokerage firm. Dow component, and the world’s largest jet manufacturer, Boeing dropped after it announced it would take $1.2 billion pretax, charges to account for declining value of a number of the company’s assets. Wal Mart was downgraded as being too expensive because it is selling at 27 times the 2003 earnings estimate.
As of this writing the markets are within .5% of the opening. As I also stated last week, without definitive earnings news, the market is bound in a broad trading range.
After you mail your tax return this week, late Tuesday night, you will have collected most of the information necessary to begin planning your financial strategy to realize your dreams.
First, you will need lists of assets and liabilities, copies of tax returns, insurance policies, wills, trusts and pension plans. This involves getting a handle on where you are in your financial life before you plan for where you want to be.
The second step in the financial planning process is identifying both financial and personal goals. The three objectives most cited by my clients are: security in retirement, providing for children’s education and developing an estate plan.
The third step is identifying problems that might prevent financial independence, such as too little or too much insurance, a high tax burden, inadequate cash flow or current investments that are losing money.
The fourth step is writing a realistic plan accenting your strengths and compensating for your weaknesses, as able. Make sure your plan is written and keep it handy for review over the year. Financial Planning is a process and you should measure your decisions against your plan to keep you focused. I provide a checklist to help clients implement their plans and not let details go unattended.
A final, and often most important, step is periodically reviewing and revising the plan to account for changes in personal and economic conditions. I always appreciate and respond to your e-mails. Your questions and comments are welcome.
Marc Leavy, CFP® is a Certified Financial Planner. Principled Investing teaches Solomon’s principles of investing and offers wisdom regarding comprehensive financial planning. You may contact Marc at [email protected] or visit www.principledinvesting.org.
