Sun Current http://current.mnsun.com Local News for Bloomington, Eden Prairie, Edina and Richfield Minnesota Tue, 03 Mar 2015 02:28:11 +0000 en-US hourly 1 5 Biggest Divorce Mistakes http://current.mnsun.com/2015/03/5-biggest-divorce-mistakes/ http://current.mnsun.com/2015/03/5-biggest-divorce-mistakes/#comments Mon, 02 Mar 2015 22:30:02 +0000 http://current.mnsun.com/?guid=6468946257608d63c259d613d7a01131 Attorneys say that if both you and your ex-spouse feel like you came out of your divorce thinking you gave up a lot, your settlement was probably fair. Maybe, but often your settlement’s results appear only after you live with them for a while. Here are five settlement pitfalls to watch for.

1. House poor. People don’t like being uprooted and often hesitate to inflict change on children who may already be upset from the divorce. Others are seriously attached to their house and likely invested a lot of work in it over the years. Nevertheless, many of the recently divorced ultimately find house payments difficult and the house itself difficult to maintain alone.

Your house may also suddenly be too large and, depending on the situation, can produce a huge and unexpected taxable event such as capital gains when you sell it.

2. Short-sightedness. All too often divorcing people focus on short-term issues and benefits rather than considering long-term effects of financial decisions. Some are so eager to end the marriage that they don’t even want to discuss the benefits and drawbacks of decisions.

Money decisions amid emotional turmoil almost always come with obvious plusses and hidden, eventual minuses. For example, if you keep the house and the equity but give up some substantially equal amount in a retirement plan account, you risk missing out on investment-return gains in your retirement accounts and lose that amount of savings for your retirement and your future. If you have to refinance the house to pay some of the equity to your spouse, you may run into cash-flow problems – essentially trading retirement savings for, perhaps, equity in a home that you may ultimately find too expensive to keep.

Always consider the long-term and the likely what-ifs.

3. Real costs. Maybe you simply have to keep that rental home. Or maybe you want favorite investments in the settlement. You’re likely looking at the current value of the investment, without considering costs of liquidation.

For example, if you receive the rental home and eventually sell it, you must pay capital gains and depreciation recapture, a sort of past-due for tax breaks you take for wear on the property through years and which can amount to a sizable (up to 25%) tax bite. You may also pay Realtor fees and general sales expenses.

Always calculate the cost of eventually selling or disposing of an asset that’s part of a marital settlement.

4. Payback. The major goal of some divorcing couples seems to be revenge at any cost. These people appear unable to speak civilly to each other, much less able to discuss differences and mediate issues; sometimes they actively work to undermine each other, stall and engage in other bad behavior.

Many not only create a poisonous atmosphere but often ratchet up attorneys’ fees. Family law attorneys often charge more than $350 an hour, may want a $10,000 retainer (renewable when depleted, naturally) and charge you 15 minutes of billable time for reading one short email.

Sometimes attorneys also engage other experts, such as business valuation specialists, pension evaluators, certified public accountants, investigators and career and vocation evaluators, among others. Fees can mount up.

If you’re willing to be reasonable, maybe try mediation. If that fails, at least try to not fan the flames and instead listen to the practical advice of your attorney. Why break the bank?

5. See only one piece. A divorce settlement is often a large puzzle with lots of pieces. People commonly look at one or maybe two areas, not the entire picture.

For example, you and your ex can trade the child exemption on your tax returns in different years. Having a child one extra day a year may allow you to claim head of household status when you file income taxes, potentially a considerable saving. You may also want to receive more maintenance (alimony) and less child support – without realizing that alimony incurs income tax.

To cite another instance, an attorney once asked me about the advisability of a lump sum in lieu of a series of alimony payments. The payer in that case was unable to deduct the lump sum from his income tax because of an arcane rule about front-end loading (excess) alimony; the Internal Revenue Service considers such a payment a non-taxable property settlement and therefore not deductible.

Much like when you decided to divorce in the first place, look at your settlement agreement as a whole. All parts need to work together to help you thrive in the near-term as well as in your future.

Follow AdviceIQ on Twitter at @adviceiq

Wendy Spencer, CFP, CDFA, is president of Spencer Capital Strategies Inc., an independent Money Concepts contractor in Arvada, Colo. She is also a family law mediator; her divorce website is www.divorcemoneypro.com.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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Attorneys say that if both you and your ex-spouse feel like you came out of your divorce thinking you gave up a lot, your settlement was probably fair. Maybe, but often your settlement’s results appear only after you live with them for a while. Here are five settlement pitfalls to watch for.

1. House poor. People don’t like being uprooted and often hesitate to inflict change on children who may already be upset from the divorce. Others are seriously attached to their house and likely invested a lot of work in it over the years. Nevertheless, many of the recently divorced ultimately find house payments difficult and the house itself difficult to maintain alone.

Your house may also suddenly be too large and, depending on the situation, can produce a huge and unexpected taxable event such as capital gains when you sell it.

2. Short-sightedness. All too often divorcing people focus on short-term issues and benefits rather than considering long-term effects of financial decisions. Some are so eager to end the marriage that they don’t even want to discuss the benefits and drawbacks of decisions.

Money decisions amid emotional turmoil almost always come with obvious plusses and hidden, eventual minuses. For example, if you keep the house and the equity but give up some substantially equal amount in a retirement plan account, you risk missing out on investment-return gains in your retirement accounts and lose that amount of savings for your retirement and your future. If you have to refinance the house to pay some of the equity to your spouse, you may run into cash-flow problems – essentially trading retirement savings for, perhaps, equity in a home that you may ultimately find too expensive to keep.

Always consider the long-term and the likely what-ifs.

3. Real costs. Maybe you simply have to keep that rental home. Or maybe you want favorite investments in the settlement. You’re likely looking at the current value of the investment, without considering costs of liquidation.

For example, if you receive the rental home and eventually sell it, you must pay capital gains and depreciation recapture, a sort of past-due for tax breaks you take for wear on the property through years and which can amount to a sizable (up to 25%) tax bite. You may also pay Realtor fees and general sales expenses.

Always calculate the cost of eventually selling or disposing of an asset that’s part of a marital settlement.

4. Payback. The major goal of some divorcing couples seems to be revenge at any cost. These people appear unable to speak civilly to each other, much less able to discuss differences and mediate issues; sometimes they actively work to undermine each other, stall and engage in other bad behavior.

Many not only create a poisonous atmosphere but often ratchet up attorneys’ fees. Family law attorneys often charge more than $350 an hour, may want a $10,000 retainer (renewable when depleted, naturally) and charge you 15 minutes of billable time for reading one short email.

Sometimes attorneys also engage other experts, such as business valuation specialists, pension evaluators, certified public accountants, investigators and career and vocation evaluators, among others. Fees can mount up.

If you’re willing to be reasonable, maybe try mediation. If that fails, at least try to not fan the flames and instead listen to the practical advice of your attorney. Why break the bank?

5. See only one piece. A divorce settlement is often a large puzzle with lots of pieces. People commonly look at one or maybe two areas, not the entire picture.

For example, you and your ex can trade the child exemption on your tax returns in different years. Having a child one extra day a year may allow you to claim head of household status when you file income taxes, potentially a considerable saving. You may also want to receive more maintenance (alimony) and less child support – without realizing that alimony incurs income tax.

To cite another instance, an attorney once asked me about the advisability of a lump sum in lieu of a series of alimony payments. The payer in that case was unable to deduct the lump sum from his income tax because of an arcane rule about front-end loading (excess) alimony; the Internal Revenue Service considers such a payment a non-taxable property settlement and therefore not deductible.

Much like when you decided to divorce in the first place, look at your settlement agreement as a whole. All parts need to work together to help you thrive in the near-term as well as in your future.

Follow AdviceIQ on Twitter at @adviceiq

Wendy Spencer, CFP, CDFA, is president of Spencer Capital Strategies Inc., an independent Money Concepts contractor in Arvada, Colo. She is also a family law mediator; her divorce website is www.divorcemoneypro.com.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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Using the Dollar Index http://current.mnsun.com/2015/03/using-the-dollar-index/ http://current.mnsun.com/2015/03/using-the-dollar-index/#comments Mon, 02 Mar 2015 21:00:03 +0000 http://current.mnsun.com/?guid=9908799aca6d364f09091d58d9555fd8 You’ve probably heard in the news that the dollar is stronger. But how much? A handy index tells you. If your business is involved in imports or exports, or if you invest in foreign securities or international mutual funds, it pays to know how to work with this index.

The U.S. Dollar Index (DXY) measures the value of the U.S. dollar relative to a basket of select currencies in an attempt to represent our major trading partners. The current mix is approximately:

  • 57.6% euro (EUR)
  • 13.6% Japanese yen (JPY)
  • 9.1% Canadian dollar (CAD)
  • 4.2% Swedish krona (SEK)
  • 3.6% Swiss franc (CHF)

The basket was altered in 1999 when the euro replaced several European currencies. It still includes the Swedish krona and the Swiss franc even though we trade more heavily with countries like China, Mexico and South Korea.

The U.S. Dollar Index value began at an arbitrary 100 in March 1973. Since then, it has been as high as 164.72 (February 1985) and as low as 70.698 (March 2008).

http://www.marottaonmoney.com/wp-content/uploads/2015/01/800px-U.S._Dollar_Index.png

You can find the index number at MarketWatch or other sites. MarketWatch also allows you to enter a date and get a historical quote. For example, the closing value of the dollar index is 80.04 at the end of 2013 and 90.28 at the end of 2014.

DXY 2014-12-31DXY 2013-12-31

 

 

 

 

 

With these numbers, you can say the U.S. dollar strengthened an average of 12.79% over 2014, because, to compute how much the dollar appreciated, simply subtract 80.04 from 90.28, and then divide the result by the initial value (80.04).

Note that the dollar appreciating 12.79% is not the same as foreign currencies losing 12.79%. To determine how much value foreign currencies lost requires some additional math.

Since one is the inverse of the other, the numbers are different. If the dollar appreciates 100% (doubling in value), foreign currencies lose only 50% of their value. Here is how to compute the percentage loss for foreign currencies:

If a dollar doubles, it is worth two times as much. The foreign currency is worth the inverse (1 divided by 2, which is 0.5). Since the foreign currency starts out as 1, and now is only 0.5, it loses 0.5. The loss (0.5) divided by the original value (1) equals the percentage loss (50%).

Now, apply the same math to real-world numbers. If a dollar is now worth 1.1279 times as much, then the foreign currencies are worth 0.8866 (1 divided by 1.1279). This means that they’re only 88.66% of their original value. The loss is 11.34%. Hence you can also say: Over 2014, foreign currencies lost an average of 11.34%, according to the U.S. Dollar Index.

Follow AdviceIQ on Twitter at @adviceiq.

David John Marotta, CFP, AIF, is president of Marotta Wealth Management Inc. of Charlottesville, Va., providing fee-only financial planning and wealth management at www.emarotta.com and blogging at www.marottaonmoney.com. Both the author and clients he represents often invest in investments mentioned in these articles.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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You’ve probably heard in the news that the dollar is stronger. But how much? A handy index tells you. If your business is involved in imports or exports, or if you invest in foreign securities or international mutual funds, it pays to know how to work with this index.

The U.S. Dollar Index (DXY) measures the value of the U.S. dollar relative to a basket of select currencies in an attempt to represent our major trading partners. The current mix is approximately:

  • 57.6% euro (EUR)
  • 13.6% Japanese yen (JPY)
  • 9.1% Canadian dollar (CAD)
  • 4.2% Swedish krona (SEK)
  • 3.6% Swiss franc (CHF)

The basket was altered in 1999 when the euro replaced several European currencies. It still includes the Swedish krona and the Swiss franc even though we trade more heavily with countries like China, Mexico and South Korea.

The U.S. Dollar Index value began at an arbitrary 100 in March 1973. Since then, it has been as high as 164.72 (February 1985) and as low as 70.698 (March 2008).

http://www.marottaonmoney.com/wp-content/uploads/2015/01/800px-U.S._Dollar_Index.png

You can find the index number at MarketWatch or other sites. MarketWatch also allows you to enter a date and get a historical quote. For example, the closing value of the dollar index is 80.04 at the end of 2013 and 90.28 at the end of 2014.

DXY 2014-12-31DXY 2013-12-31

 

 

 

 

 

With these numbers, you can say the U.S. dollar strengthened an average of 12.79% over 2014, because, to compute how much the dollar appreciated, simply subtract 80.04 from 90.28, and then divide the result by the initial value (80.04).

Note that the dollar appreciating 12.79% is not the same as foreign currencies losing 12.79%. To determine how much value foreign currencies lost requires some additional math.

Since one is the inverse of the other, the numbers are different. If the dollar appreciates 100% (doubling in value), foreign currencies lose only 50% of their value. Here is how to compute the percentage loss for foreign currencies:

If a dollar doubles, it is worth two times as much. The foreign currency is worth the inverse (1 divided by 2, which is 0.5). Since the foreign currency starts out as 1, and now is only 0.5, it loses 0.5. The loss (0.5) divided by the original value (1) equals the percentage loss (50%).

Now, apply the same math to real-world numbers. If a dollar is now worth 1.1279 times as much, then the foreign currencies are worth 0.8866 (1 divided by 1.1279). This means that they’re only 88.66% of their original value. The loss is 11.34%. Hence you can also say: Over 2014, foreign currencies lost an average of 11.34%, according to the U.S. Dollar Index.

Follow AdviceIQ on Twitter at @adviceiq.

David John Marotta, CFP, AIF, is president of Marotta Wealth Management Inc. of Charlottesville, Va., providing fee-only financial planning and wealth management at www.emarotta.com and blogging at www.marottaonmoney.com. Both the author and clients he represents often invest in investments mentioned in these articles.

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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Applications open for Edina’s Annual Mike Siitari Officer of the Year http://current.mnsun.com/2015/03/applications-open-for-edinas-annual-mike-siitari-officer-of-the-year/ http://current.mnsun.com/2015/03/applications-open-for-edinas-annual-mike-siitari-officer-of-the-year/#comments Mon, 02 Mar 2015 20:00:04 +0000 http://current.mnsun.com/?p=144049 The Edina Crime Prevention Fund seeks nominations for its fourth-annual Mike Siitari Officer of the Year Award. The Officer of the Year Award is given to an Edina Police Officer who has gone above and beyond the call of duty.

The award seeks to honor those who have shown exemplary service and leadership through innovation and public relations.

“It is important to recognize officers with this award as it reinforces good work,” said Police Chief Dave Nelson. “It raises [the department’s] morale. Each time someone is nominated, there is a lot of support from other officers who come to honor the officer [receiving the award].”

The Edina Crime Prevention Fund named Det. Mike Lutz the 2013 Mike Siitari Officer of the Year for his dedication to his cases and care for the victims.

He is also the longest-serving officer in Edina, having been a part of the department for more than 40 years. Additional past recipients of the award include officers Joel Moore and Dave Lindman.

The Mike Siitari Officer of the Year Award is given to one Edina police officer each year. Nominations from the public and city employees are accepted and winners are selected by the Edina Crime Fund. Individuals eligible for nomination must be police officers for the Edina Police Department.

“Good candidates for this award exhibit a day-to-day positive attitude and work habits. They consistently demonstrate high integrity and dedication, their quality of work is always going beyond expectations, and they are genuine about providing good service to the community,” explained Nelson.

To nominate a candidate, submit the name of the officer and a few sentences describing the nominee’s achievements. Nominations for the 2014 award can be made by writing to Nancy Karkhoff at nkarkhoff@edinamn.gov or the Edina Crime Prevention Fund, Re: Officer of the Year; 4801 W. 50th St., Edina, MN 55424.

Nominations must be received by Monday, March 16. Members of the Crime Fund will review the nominations and select a recipient.

For additional information, contact Karkhoff at 952-826-0472 or nkarkhoff@edinamn.gov.

A partner to the Edina Police Department since the late 1960s, the Edina Crime Prevention Fund has been a significant contributor to many police services and programs.

For more information about the fund, visit edinacrimefund.org.

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Bull Market: More to Run http://current.mnsun.com/2015/03/bull-market-more-to-run/ http://current.mnsun.com/2015/03/bull-market-more-to-run/#comments Mon, 02 Mar 2015 16:00:03 +0000 http://current.mnsun.com/?guid=eac3934b546a3442dece32af9da96559 For the past three months, the Standard & Poor’s 500 has churned sideways. Is that a bad portent? Not at all. The outlook is for higher prices, if you look at three indicators: the relationship between inflation and market value (known as the Rule of 20), the S&P 500’s earnings/price yield and energetic merger activity.

Yes, stock prices in aggregate have been trendless and choppy. On down days, it feels as if a bear trend may have started. On up days, optimism takes over. This type of market offers active investors an excellent opportunity to overtrade and lose money.

Do not anticipate how the game will end, even if it feels like there are only seconds left on the clock (especially if you are in the last seconds of the Super Bowl). Allow your disciplined, rules-based approach to guide you through the short-term volatility.

1. The Rule of 20. This involves subtracting the current rate of inflation from the number 20 to determine the potential price/earnings of the S&P 500. If inflation is 2% or less, the potential P/E is 18-plus. At an 18 P/E multiple on $125 – the 2015 consensus for S&P 500 earnings – the index could potentially move 10% higher. 

Inflation rose 0.2% in January, not counting food and energy. If we substitute that rate in place of the Federal Reserve target rate of 2%, the potential P/E jumps to 19.8, implying roughly 17% potential appreciation from current levels.

In the late 1970s, inflation ranged from 12% to 14% annually. During this time, the S&P 500 P/E was in single digits. The Rule of 20 worked.

Generally, if we assume no deflation, the Rule of 20 implies the market is overvalued if the P/E exceeds 20. At the moment, the S&P’s P/E is 19.

In 2000, the S&P 500 P/E reached 26 with inflation running at an average of 3.4%. A two-and-a-half-year bear market then followed. At the peak in November 2007, inflation was 4.3%. The inflation rate implied a multiple potential for the S&P 500 of 15.7%. This is roughly the maximum P/E level achieved at the high in 2007 before the 2008-2009 bear market. 

Macintosh HD:Users:aiqinc:Desktop:unnamed.jpg

2. Earnings yield. Another long-term indicator for where the market is headed comes from dividing S&P 500 earnings by its price (E/P) to determine the earnings yield of the market. Since 1963, the S&P 500 average real earnings yield (that’s adjusted for inflation, which we estimate at 1.5% yearly) is 2.5%, according to JP Morgan Asset Management’s Market Insights. On that basis, the index’s current real earnings yield is roughly 4.5%. The S&P 500 would have to increase about 35% to reach its long-term average real yield – meaning the denominator would need to increase that much.

Both the Rule of 20 and the real earnings yield of the S&P 500 suggests the bull market has not yet reached its valuation potential. The implication from these rules is the sideways trading pattern of the market for the past three months could be just a healthy consolidation before another leg higher in this bull cycle.
 
3. M&A. Meanwhile, company managements give off a bullish sign with their robust plans for mergers and acquisitions. When companies buy other companies, the acquisition should be accretive - meaning the purchase price should be sufficiently low to allow for the future earnings stream to make a good return on investment. 

The latest evidence of ebullient M&A activity came when pharma giant Pfizer (PFE) announced the acquisition of Hospira (HSP) for $90 per share or $17 billion, roughly a 40% premium over the prior-day closing price.

Pfizer would pay the 40% premium on top of a large run-up for Hospira, the biggest provider of injectable drugs, over the past couple of years. The stock was not distressed and this is not a bargain basement acquisition. Justifying the acquisition premium with cost/revenue synergies and strategic objectives is tough to do. Essentially, Pfizer management believes the market has significantly undervalued Hospira.
 
After a long hiatus, M&A bounced back last year. Most of the purchase activity is coming from corporate buyers, rather than financial buyers (e.g., private equity firms, leverage buyout firms, etc.). Because corporate buyers know and live their industries, market observers consider them a better indicator of business health and valuation than financial buyers.

Follow AdviceIQ on Twitter at @adviceiq.

Nicholas Atkeson and Andrew Houghton are the founding partners of Delta Investment Management, a registered investment advisory firm in San Francisco, and authors of the new book, Win by Not Losing: A Disciplined Approach To Building And Protecting Your Wealth In The Stock Market By Managing Your RiskAdditional market commentary and investment advice is available via their websites at www.deltaim.com and www.deltawealthaccelerator.com

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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For the past three months, the Standard & Poor’s 500 has churned sideways. Is that a bad portent? Not at all. The outlook is for higher prices, if you look at three indicators: the relationship between inflation and market value (known as the Rule of 20), the S&P 500’s earnings/price yield and energetic merger activity.

Yes, stock prices in aggregate have been trendless and choppy. On down days, it feels as if a bear trend may have started. On up days, optimism takes over. This type of market offers active investors an excellent opportunity to overtrade and lose money.

Do not anticipate how the game will end, even if it feels like there are only seconds left on the clock (especially if you are in the last seconds of the Super Bowl). Allow your disciplined, rules-based approach to guide you through the short-term volatility.

1. The Rule of 20. This involves subtracting the current rate of inflation from the number 20 to determine the potential price/earnings of the S&P 500. If inflation is 2% or less, the potential P/E is 18-plus. At an 18 P/E multiple on $125 – the 2015 consensus for S&P 500 earnings – the index could potentially move 10% higher. 

Inflation rose 0.2% in January, not counting food and energy. If we substitute that rate in place of the Federal Reserve target rate of 2%, the potential P/E jumps to 19.8, implying roughly 17% potential appreciation from current levels.

In the late 1970s, inflation ranged from 12% to 14% annually. During this time, the S&P 500 P/E was in single digits. The Rule of 20 worked.

Generally, if we assume no deflation, the Rule of 20 implies the market is overvalued if the P/E exceeds 20. At the moment, the S&P’s P/E is 19.

In 2000, the S&P 500 P/E reached 26 with inflation running at an average of 3.4%. A two-and-a-half-year bear market then followed. At the peak in November 2007, inflation was 4.3%. The inflation rate implied a multiple potential for the S&P 500 of 15.7%. This is roughly the maximum P/E level achieved at the high in 2007 before the 2008-2009 bear market. 

Macintosh HD:Users:aiqinc:Desktop:unnamed.jpg

2. Earnings yield. Another long-term indicator for where the market is headed comes from dividing S&P 500 earnings by its price (E/P) to determine the earnings yield of the market. Since 1963, the S&P 500 average real earnings yield (that’s adjusted for inflation, which we estimate at 1.5% yearly) is 2.5%, according to JP Morgan Asset Management’s Market Insights. On that basis, the index’s current real earnings yield is roughly 4.5%. The S&P 500 would have to increase about 35% to reach its long-term average real yield – meaning the denominator would need to increase that much.

Both the Rule of 20 and the real earnings yield of the S&P 500 suggests the bull market has not yet reached its valuation potential. The implication from these rules is the sideways trading pattern of the market for the past three months could be just a healthy consolidation before another leg higher in this bull cycle.
 
3. M&A. Meanwhile, company managements give off a bullish sign with their robust plans for mergers and acquisitions. When companies buy other companies, the acquisition should be accretive – meaning the purchase price should be sufficiently low to allow for the future earnings stream to make a good return on investment. 

The latest evidence of ebullient M&A activity came when pharma giant Pfizer (PFE) announced the acquisition of Hospira (HSP) for $90 per share or $17 billion, roughly a 40% premium over the prior-day closing price.

Pfizer would pay the 40% premium on top of a large run-up for Hospira, the biggest provider of injectable drugs, over the past couple of years. The stock was not distressed and this is not a bargain basement acquisition. Justifying the acquisition premium with cost/revenue synergies and strategic objectives is tough to do. Essentially, Pfizer management believes the market has significantly undervalued Hospira.
 
After a long hiatus, M&A bounced back last year. Most of the purchase activity is coming from corporate buyers, rather than financial buyers (e.g., private equity firms, leverage buyout firms, etc.). Because corporate buyers know and live their industries, market observers consider them a better indicator of business health and valuation than financial buyers.

Follow AdviceIQ on Twitter at @adviceiq.

Nicholas Atkeson and Andrew Houghton are the founding partners of Delta Investment Management, a registered investment advisory firm in San Francisco, and authors of the new book, Win by Not Losing: A Disciplined Approach To Building And Protecting Your Wealth In The Stock Market By Managing Your RiskAdditional market commentary and investment advice is available via their websites at www.deltaim.com and www.deltawealthaccelerator.com

AdviceIQ delivers quality personal finance articles by both financial advisors and AdviceIQ editors. It ranks advisors in your area by specialty, including small businesses, doctors and clients of modest means, for example. Those with the biggest number of clients in a given specialty rank the highest. AdviceIQ also vets ranked advisors so only those with pristine regulatory histories can participate. AdviceIQ was launched Jan. 9, 2012, by veteran Wall Street executives, editors and technologists. Right now, investors may see many advisor rankings, although in some areas only a few are ranked. Check back often as thousands of advisors are undergoing AdviceIQ screening. New advisors appear in rankings daily.

 

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Bloomington college to host career fair http://current.mnsun.com/2015/03/bloomington-college-to-host-career-fair/ http://current.mnsun.com/2015/03/bloomington-college-to-host-career-fair/#comments Mon, 02 Mar 2015 14:38:35 +0000 http://current.mnsun.com/?p=143961 Rasmussen College of Bloomington will host a career fair this week.

The career fair will be split into two sessions. The morning session will focus on health care career opportunities, while the afternoon session will focus on career opportunities in business, technology, design, early childhood education and justice studies.

Job seekers will have the opportunity to network with potential employers, receive LinkedIn and resume consultations, participate in mock interviews, gain professional dress advice, develop a compelling elevator speech and identify career paths that fit their experience and skill sets.

The sessions are 10 a.m. to 1 p.m. and 5-7 p.m. Tuesday, March 3, at the Bloomington campus, 4400 W. 78th St.

Info: tr.im/rcfair

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The historical significance of fabric http://current.mnsun.com/2015/03/the-historical-significance-of-fabric/ http://current.mnsun.com/2015/03/the-historical-significance-of-fabric/#comments Sun, 01 Mar 2015 18:13:17 +0000 http://current.mnsun.com/?p=143944 Underground Railroad quilt

Pastor Deb Meyer of St. Paul’s United Church of Christ in Henderson, Minn., displays a quilt swatch and explains how the patterns of the swatches were believed to have been used to help guide slaves escaping captivity in the United States through the Underground Railroad. Her Feb. 22 presentation to a full house at Bloomington’s Old Town Hall was presented by the city’s Human Rights Commission and the Bloomington Historical Society in recognition of Black History Month. (Sun Current staff photo by Mike Hanks)

Underground Railroad quilt

Pastor Deb Meyer of St. Paul’s United Church of Christ in Henderson, Minn., displays a quilt swatch and explains how the patterns of the swatches were believed to have been used to help guide slaves escaping captivity in the United States through the Underground Railroad. Her Feb. 22 presentation to a full house at Bloomington’s Old Town Hall was presented by the city’s Human Rights Commission and the Bloomington Historical Society in recognition of Black History Month. (Sun Current staff photo by Mike Hanks)

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GOP seniors to learn future of public pensions http://current.mnsun.com/2015/02/gop-seniors-to-learn-future-of-public-pensions/ http://current.mnsun.com/2015/02/gop-seniors-to-learn-future-of-public-pensions/#comments Sat, 28 Feb 2015 18:40:39 +0000 http://current.mnsun.com/?p=143963 The chief operating officer and executive vice president of Center of the American Experiment will speak at next week’s Republican Seniors of Minnesota luncheon in Bloomington.

The meeting is 10 a.m. Tuesday, March 3, at Poor Richard’s Commonhouse, 8301 Normandale Blvd.

Kim Crockett will discuss “What we can expect for the future of public pensions (and debt).”

Also speaking will be Sen. Dave Osmek, (R-33). Osmek, who represents a portion of Chanhassen and several cities to the north and west, will speak about the activities and results of the current legislative session.                 

Lunch will be available at noon, following the meeting. The cost to attend the meeting without lunch is $3.

Info: 952-828-1943

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‘Opera Viva!’: How an opera comes to life scheduled March 10 http://current.mnsun.com/2015/02/opera-viva-how-an-opera-comes-to-life-scheduled-march-10/ http://current.mnsun.com/2015/02/opera-viva-how-an-opera-comes-to-life-scheduled-march-10/#comments Sat, 28 Feb 2015 15:00:12 +0000 http://current.mnsun.com/?p=144047 Minnesota Opera artists return to seven Hennepin County libraries this winter and spring to present free “Opera Viva!” events for children and adults, including an event at the Edina Library.

The events teach about opera through song, performance and conversation. They are part of Minnesota Opera’s 2014-15 season in residence at the library.

In an Edina event for adult fans, Minnesota Opera artists and creators will give a special behind-the-scenes peek at how the upcoming production of “The Manchurian Candidate” is evolving, from commission to final performance.

An event featuring production designer Karen Quisenberry has been scheduled 6:30 p.m. Tuesday, March 10, at Edina Library, 5280 Grandview Square.

Register online at hclib.org/events or call the library at 612-543-6325.

Events are funded with money from Minnesota’s Arts and Cultural Heritage Fund. They are presented by the library in collaboration with Minnesota Opera, one of the nation’s largest and most distinguished opera companies, known for its world-class artistry and innovative productions.

Other “Opera Viva!” events are scheduled at other Hennepin County Libraries.

Visit hclib.org/events for more information.

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Orthopaedic center honored for building http://current.mnsun.com/2015/02/orthopaedic-center-honored-for-building/ http://current.mnsun.com/2015/02/orthopaedic-center-honored-for-building/#comments Sat, 28 Feb 2015 00:29:16 +0000 http://current.mnsun.com/?p=143921 TRIA Orthopaedic Center of Bloomington received the 2015 TOBY Award for outstanding building of the year in the medical office building category.

The award was presented earlier this month during the second annual Best of Building Owners and Management Association Gala.   

The TOBY awards honor properties with superior building quality and excellence in building management. Participants are judged on a range of criteria, such as community impact, tenant relations, energy management, emergency preparedness and training for personnel.

TRIA will be among competitors in a regional competing this spring.

The company is a comprehensive center for orthopaedic medicine. Its offices are at 8100 Northland Drive.

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Minneapolis park board ends dispute with Met Council over Southwest Light Rail issue http://current.mnsun.com/2015/02/144055/ http://current.mnsun.com/2015/02/144055/#comments Fri, 27 Feb 2015 21:36:45 +0000 http://current.mnsun.com/?p=144055 by Seth Rowe – Sun Sailor Newspapers

After Gov. Mark Dayton threatened to cut off state funds, the Minneapolis Park and Recreation Board agreed to back down from a demand that the Metropolitan Council build a light rail tunnel beneath a channel.

The agreement between the Met Council and the park board helps resolve a major sticking point in the controversial Southwest Light Rail Transit line, which would carry Green Line trains from downtown Minneapolis through St. Louis Park, Hopkins and Minnetonka before ending in Eden Prairie.

A tunnel is already planned in Minneapolis to accommodate a shared corridor for light rail and freight trains, but the Minneapolis Park and Recreation Board had demanded that the Met Council study a tunnel below a channel of water between Lake of the Isles and Cedar Lake as well. The board had approved about $500,000 for consulting work in preparation for a possible legal challenge.

However, the Met Council’s new chair, Adam Duininck, negotiated a deal with the board in which the board will drop its objection to building a bridge over the channel instead of tunneling beneath it.

In exchange, the Met Council will offer the park board a greater role in designing the bridge and will compensate the board for half of its consultants’ engineering costs, up to $250,000. The Met Council will use the study the park board commissioned in its Supplemental Environmental Impact Statement.

The Met Council also agreed to change its policy to allow the park board to have increased input regarding any other light rail project the council oversees that would impact land owned by the park board.

For example, the planned Bottineau light rail line would travel near Wirth Park, a major park in Golden Valley and Minneapolis that the Minneapolis Park and Recreation Board operates.

Dayton stepped up the pressure on the board after his budget recommended cutting off $3.6 million in state funding for regional parks in Minneapolis as a result of the dispute.

“The Governor recommends a reduction in funding to the Minneapolis Park Board due to the Board’s continuing efforts to obstruct progress on the Southwest Light Rail Transit project,” his budget states.

The budget document adds that the governor called for eliminating the park board as an eligible recipient for parks funding distributed by the Met Council from the state general fund and natural resources fund.

“If they have all of this additional money to throw around for consultants, then they don’t need all of the state money that’s being allocated,” Dayton said.

The remark prompted Senate Minority Leader David Hann (R-Eden Prairie) to call Dayton’s tactic “an interesting way to negotiate.”

In announcing the agreement between the Met Council and the park board Feb. 27, Duininck and Liz Wielinski, president of the board, released comments of solidarity.

“Thanks to the diligent work of the Park Board and project engineers, we now have a path forward for this critically important transit investment, which is a vital link in the 21st century transit system we will build here in the greater Twin Cities metro,” Duininck said. “The Council is pleased to have the Park Board’s support for bridging the channel.”

Wielinski said the board’s consultants have provided the board with new information.

“The Park Board is very optimistic about the new, more collaborative efforts for the ongoing work on the Southwest Light Rail, the Bottineau Line and any future mass transit that may impact parkland in the metro area,” Wielinski said. “Our thanks go to Chair Duininck for his leadership in moving this forward.”

The Minneapolis Park and Recreation Board anticipated board members would approve the memorandum of understanding March 4. A Metropolitan Council vote has been set Wednesday, March 11.

Bridge concepts

The memo spells out the Met Council’s authority under state statute and its plans to develop the 15.8-mile Southwest Light Rail Transit line and the 13-mile Bottineau line, which would consist of an extension of the existing Blue Line to Brooklyn Park.

The memo also acknowledges the park board’s responsibility under federal law to protect its park and recreational areas. Under the memo, the Met Council and board agree to bridge concepts and to work together to facilitate the approval and construction of any light rail project while maintaining their respective legal rights.

The memo points out that a substantial amount of design, engineering, environmental review and funding commitments must occur before work on the line can begin. The agencies also agree that the memo does not limit alternatives or mitigation the Met Council may undertake as a part of the project.

The agreement provides criteria to consider during bridge design, including separation of freight, light rail and trail bridges, exploration of configurations that would reduce the number of piers in the channel and designs that would bring more light to the channel.

Bridges should reflect the design of other bridges in the Chain of Lakes area “without mimicry,” the agreement states. The parties also agree to recognize that the railroad bridge already in place over the channel does not match other nearby rail bridges and that no separate trail bridge currently exists.

New freight and rail bridges should have the same style, mass and detail, according to the agreement.

Other considerations include space for banks between the water and bridge abutments, symmetry, restoration of vegetation, more space for kayakers and other channel users, natural materials and dark colors and the reinterpretation of the existing bridge over the channel.

Last fall, the Met Council released three bridge concepts for the channel crossing. Under the designs, all concepts consist of three rows of peers, a reduction of the six rows in use on the existing wooden railroad bridge. Poles containing overhead wires would not be located on the bridge.

The arched pier concept would include a concrete deck with steel railings and is intended to recall the essence of existing rail bridges in the area, according to the Met Council.

Under the thin deck concept, concrete piers would support a thin deck of concrete with light steel railings, according to the council. This design would contain charcoal-tinted concrete as a way of reinterpreting the existing bridge.

A steel pier concept would include angled steel piers made of natural steel that would support a concrete deck with natural steel railings that would weather into a “warm brown patina,” the Met Council said.

The bridges would cost $4-7 million.

The Feb. 27 news release from the Met Council and park board noted that the board’s tunnel concept would have increased the cost of the project and the time to complete the line significantly.

If funding is obtained, the line is scheduled to open in 2019.

Support and opposition

In February, President Barack Obama included $150 million for the project in his budget for the federal governments 2016 fiscal year. Planners anticipate the federal government would pay half of the line’s $1.65 billion cost. The Federal Transit Administration also upgraded its prioritization for the line from medium to medium high. The agency named the line one of seven projects nationwide in consideration for a Capital Investment Grant Program.

“The ratings increase is a tremendous vote of confidence from the federal government regarding the project’s merits and bodes well for us to achieve our federal matching dollars,” Duininck said. “Our rating rose in large part due to the project’s ability to achieve municipal consent from all five corridor cities and the county last year, as well as total funding commitments from the Counties Transit Improvement Board and Hennepin County Regional Railroad Authority.”

Agencies have committed to 85 percent of the Minnesota-based funding necessary for the project, but the state has not fully committed to its share. Some key legislators have said the line is not a priority for them.

Additionally, attorneys presented arguments in federal court Feb. 25 regarding a lawsuit by a group of Minneapolis residents called the Lakes and Parks Alliance. The group has argued that the Met Council broke the law when it sought municipal consent from cities before the completion of the Supplemental Draft Environmental Impact Statement. Judge John Tunheim has said he will rule on a motion from the Met Council and Federal Transit Administration to dismiss the case as soon “as possible.”

Contact Seth Rowe at seth.rowe@ecm-inc.com.

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