NEWS a life well planned is a life well lived
The Captain’s Log Fall 2019
“How did an apple change the world?” To most readers, the fall season is signaled by coloring leaves, cooler temperatures, prolific gourd crops, and shortening daylight hours. In Virginia, the onset of fall brings something more substantial and substantive – fall brings the beginning of “Apple Season”. For the uninformed skeptics, yes there is an extraordinary Apple season in Virginia and the annual blossoming brings us apple aficionados our seasonal ambrosial favorites such as pies, butters, preserves, boiled apples, and of course the all-time favorite “spiked” cider. It is virtually impossible to travel Virginia’s piedmont region during the fall and not amass an immediate appreciation for the many indulgent pleasures of this massively abundant crop. Throughout the Blue Ridge and surrounding areas, apple fever peaks in September with festivals, church fundraisers, community stomps,
and harvest pageants. This time of year, Virginia becomes apple crazy. Metaphorically, the Apple has a prodigious liturgical history representing together the good and evil in human culture. “In the Beginning” the Apple was offered as the perfect enticement for Adam & Eve and epitomized the “Fruit of Wisdom”. Our early biblical characters had no defense against the enticing bait and in the end the serpent delivered the Fruit which opened the gateway for all future Sin. Sir Isaac Newton’s study of Physics transformed our understanding of gravity when his alertness in the form of an Apple dropped on his bean. Provincially, there is another Apple which has proved to advance the world’s dialogue and for our purposes makes a great lesson in investment opportunity and behavior. For both good and evil, Steve Jobs’ Apple changed (continued on page 3)
JAMESTOWNE INVESTMENTS NEWS What’s Inside: Eight Mistakes That Can Upend Your Retirement Bad Money Habits Behaviors Worth Changing How Medigap Choices are Changing Trend and Momentum Investing Women's Health Recipe Corner
Newsletter Disclosures Securities and advisory services offered through Prospera Financial Services, Inc. Member FINRA, SIPC. 5429 LBJ Freeway, Suite 400 Dallas, TX 75240 This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. Our firm does not provide legal or tax advice. You should consult with legal and tax advisors before making any investment decisions that would have legal/tax consequences. Investments in securities and insurance products are: NOT FDIC-INSURED/NOT BANK-GUARANTEED/ MAY LOSE VALUE
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A MESSAGE FROM CLAYTON Your Trusted Advisor continued from 1st page
our world and changed the way we as investors perceive modern corporate architecture.
CLAYTON JAMES FINANCIAL ADVISOR
In 1976 Jobs and Wozniak began working together to construct the machine that would eventually develop into the world’s first mass produced personal computer. Over its 43-year history the Apple company has grown to became much more than a home computer manufacturing company – they have effectively matured into a life products company. We are all familiar with the catalogue of incredible Apple gadgets such as the pods, pads, phones, and watches; but today the Apple company is evolving into apps, health monitoring devices, self-driving cars, artificial intelligence supported wearable glasses, credit cards, and entertainment streaming networks. The company that launched as an unprecedented technology manufacturer has morphed into an industry changing entertainment, banking, music, transportation, and intelligence company.
One dollar invested in the Apple corporate IPO in 1980 continuously invested with reinvested dividends today is worth about $8900. Like their namesake fruit, this is an example of exceptional long-term investment performance and illustrates the opportunity afforded to individual investors who chose to participate unwaveringly in the American capitalist system. Constantly, today’s news is riddled with rumors of recessions, global economic weakening, low interest rates, and China tariff saber rattling. In the minds of investors, these distractions create confusion, bewilderment, and an overwhelming sense of doubt and anxiety. During times like this it is always helpful to take a step back and revisit the story of our favorite childhood hero - Johnny Appleseed. Investing is always an “act of differed gratification” and just as Johnny Appleseed learned, for investors today to have orchards full of fruit in the future, during the difficult times we must plow the soil, plant our seeds, and tend faithfully to our saplings. I hope you have a tremendous fall and I look forward to seeing and speaking to everyone individually as we approach the wonderful Holiday Season. My Very Best, Clayton W. James, CFM, AAMS Managing Director
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Eight Mistakes That Can Upend Your Retirement Avoid these situations, if you can.
Pursuing your retirement dreams is challenging enough without making some common, and very avoidable, mistakes. Here are eight big mistakes to steer clear of, if possible. No Strategy Yes, the biggest mistake is having no strategy at all. Without a strategy, you may have no goals, leaving you no way of knowing how you’ll get there – and if you’ve even arrived. Creating a strategy may increase your potential for success, both before and after retirement. Frequent Trading Chasing “hot” investments often leads to despair. Create an asset allocation strategy that is properly diversified to reflect your objectives, risk tolerance, and time horizon; then, make adjustments based on changes in your personal situation, not due to market ups and downs. (The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost. Asset allocation and diversification are approaches to help manage investment risk. Asset allocation and diversification do not guarantee against investment loss. Past performance does not guarantee future results.) Not Maximizing Tax-Deferred Savings Workers have tax-advantaged ways to save for retirement. Not participating in your workplace retirement plan may be a mistake, especially when you’re passing up free money in the form of employer-matching contributions. (Distributions from most employer-sponsored retirement plans are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 70½, you must begin taking required minimum distributions.)
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Prioritizing College Funding over Retirement Your kids’ college education is important, but you may not want to sacrifice your retirement for it. Remember, you can get loans and grants for college, but you can’t for your retirement. Overlooking Health Care Costs Extended care may be an expense that can undermine your financial strategy for retirement if you don’t prepare for it. Not Adjusting Your Investment Approach Well Before Retirement The last thing your retirement portfolio can afford is a sharp fall in stock prices and a sustained bear market at the moment you’re ready to stop working. Consider adjusting your asset allocation in advance of tapping your savings so you’re not selling stocks when prices are depressed. (The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost. Asset allocation is an approach to help manage investment risk. Asset allocation does not guarantee against investment loss. Past performance does not guarantee future results.) Retiring with Too Much Debt If too much debt is bad when you’re making money, it can be especially harmful when you’re living in retirement. Consider managing or reducing your debt level before you retire. It’s Not Only About Money Above all, a rewarding retirement requires good health. So, maintain a healthy diet, exercise regularly, stay socially involved, and remain intellectually active. Citations. 1 - theweek.com/articles/818267/good-bad-401k-rollovers [1/17/18]
"Creating a strategy may increase your potential for success, both before and after retirement."
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Bad Money Habits Behaviors worth changing.
Do bad money habits constrain your financial progress? Many people fall into the same financial behavior patterns, year after year. If you sometimes succumb to these financial tendencies, now is as good a time as any to alter your behavior. #1: Lending money to family & friends. You may know someone who has lent a few thousand to a sister or brother, a few hundred to an old buddy, and so on. Generosity is a virtue, but personal loans can easily transform into personal financial losses for the lender. If you must loan money to a friend or family member, mention that you will charge interest and set a repayment plan with deadlines.Better yet, don’t do it at all. If your friends or relatives can’t learn to budget, why should you bail them out? #2: Spending more than you make. Living beyond your means, living on margin, or whatever you wish to call it – it is a path toward significant debt. Wealth is seldom made by buying possessions; today’s flashy material items may become the garage sale junk of the future. #3: Saving little or nothing. Good savers build emergency funds, have money to invest and compound, and leave the stress of living paycheck to paycheck behind. If you are not able to put extra money away, there is another way to get some: a second job. Even working 15-20 hours more per week could make a big difference. #4: Living without a budget. You may make enough money that you don’t feel you need to budget. In truth, few of us are really that wealthy. In calculating a budget, you may find opportunities for savings and detect wasteful spending. #5: Frivolous spending. Advertisers can make us feel as if we have sudden needs; needs we must respond to, or ones that can only be met via the purchase of a product. See their ploys for what they are. Think twice before spending impulsively. #6: Not using cash often enough. No one can deny that the world runs on credit, but that doesn’t mean your household should. Pay with cash as often as your budget allows. #7: Thinking you’ll win the lottery. When the headlines are filled with news of big lottery jackpots, you might be tempted to throw a few bucks at a lottery ticket. It’s important, though, to be fully aware that the odds in the lottery and other games of chance are against you. A few bucks once in a while is one thing, but a few bucks (or more) every week could possibly lead to financial and personal issues. #8: Inadequate financial literacy. Is the financial world boring? To many people, it can seem that way. The Wall Street Journal is not exactly Rolling Stone, and The Economist is hardly light reading. You don’t have to start there, however. There are great, readable, and even, entertaining websites filled with useful financial information. Reading an article per day on these websites could help you greatly increase your financial understanding. #9: Not contributing to retirement plans. The earlier you contribute to them, the better; the more you contribute to them, the more compounding of those invested assets you may potentially realize. #10: DIY retirement strategy. Those who save for retirement without the help of professionals may leave themselves open to abrupt, emotional investing mistakes and other oversights. Another common tendency is to vastly underestimate the amount of money needed for the future. Few people have the time to amass the knowledge and skill set possessed by a financial services professional with years of experience. Instead of flirting with trial and error, see a professional for insight. 6 /
How Medigap Choices are Changing
Plan F is fading away, and Plan G may gain more popularity.
Soon, two types of Medigap policies will no longer be sold. Seniors who enroll in Medicare in 2020 or later will be unable to buy Medigap Plan F or Plan C. These are the two Medicare Supplement policies that cover Medicare’s Part B deductible (currently $185).1,2 This change impacts new Medicare enrollees. If you already receive Medicare and you already have Plan F or Plan C coverage, you can keep that coverage after 2019.1 What if you are eligible for Medicare before January 1, 2020, but not yet enrolled? If that is the case, then “you may be able to buy one of these plans,” according to Medicare.gov.1 Some journalists and health care industry analysts are speculating that a high-deductible Plan G could appear in 2020, in response to the unavailability of the high-deductible Plan F.3 Why do people like Plan F? Plan F is basically a “Cadillac plan”: it is not cheap, but it lets you see any doctor or hospital that accepts Medicare patients, and the upfront cost is the total cost. With Plan F, you are not surprised by subsequent requests to pay a deductible, a copayment, or coinsurance.4 How does Plan G differ from Plan F? While both plans provide similar coverage, the major differences are about dollars and cents. Plan G asks you for the $185 Part B deductible; Plan F does not. Premiums also differ notably. According to Weiss Ratings Medigap, which tracks the cost of Medigap policies, the average 2018 premium for a Plan F policy was $2,204. The average 2018 premium for a Plan G policy? Just $1,786.5 What will happen to Plan F and Plan G premiums in the 2020s is hard to say. Plan F premiums may jump because the supply of 65-year-olds buying Plan F will be abruptly cut, leaving an older and less healthy population to cover. Plan G premiums could rise also because a Medigap plan must accept new enrollees by the terms of Medicare regardless of how healthy or ill they may be. The current Plan G deductible might significantly increase as well.4 Do you think you might switch out of one Medigap policy to another? That move may be harder to make once 2020 rolls around. If it has been more than six months since you enrolled in Medicare Part B and you want to switch Medigap plans or supplement traditional Medicare with one, some Medigap insurers in certain states may exercise their right to charge you more in view of pre-existing health conditions and even turn you down. As Kiplinger notes, some states may intervene and pass consumer protections for people who currently have Plan F policies.5 Citations. 1 - medicare.gov/supplements-other-insurance/how-to-compare-medigap-policies [6/24/19] 2 - kiplinger.com/article/retirement/T039-C001-S003-medicare-premiums-deductibles-2019-part-b-part-a.html [8/10/18] 3 - benzinga.com/general/health-care/19/01/13052659/whats-known-so-far-about-the-changes-coming-to-medicare-in-2020 [1/29/19] 4 - reuters.com/article/us-column-marksjarvis-medigap/medicare-supplement-plans-are-changing-what-you-need-to-know-idUSKCN1LZ18F [9/19/18] 5 - kiplinger.com/article/retirement/T039-C001-S001-two-medigap-plans-to-be-phased-out.html [8/10/18]
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Trend & Momentum Investing Should you consider these approaches?
Most people invest passively. That is, they direct money into an investment account or portfolio that is passively managed. Passive investment management, characterized by long time horizons and very little buying or selling, certainly has its merits. It can also have serious demerits in a bear market or within a poorly performing sector. Trend investing and momentum investing take different approaches. Both of these strategies involve active investment management. Both also involve some degree of market timing, a tactic that some investors reject outright. However, neither trend nor momentum investing rely on hunches. They are both disciplined approaches, based on technical analyses of the market’s direction and various market sectors. When things are going south (or north) in a sector or an industry, these approaches beg consideration as an alternative to a strict buy-and-hold (value investing) strategy. In fact, both trend and momentum investing are worth considering in all market climates. How do these two approaches differ? In trend investing (sometimes called trend following), you use technical analysis to buy or sell a security based on sustained price movement. How close is the share price to its 52-week high or low? What does analysis reveal about the stock’s short-term direction? If the direction is up, you buy and hang on; if the direction is down, you can short the position (or wait it out).1 Trend investing takes a distinct point of view about where the market is headed, and it is as much about when to sell as when to buy. A sensible trend follower will abide by a sell rule – which could consist of a trailing stop loss paired with a confirming indicator, for example.1 While trend investing centers on absolute price changes (changes in share prices weighed against changes in the market), momentum investing looks at share price changes relative to one another rather than relative to the state of the market. The goal of momentum investing is to find shares that are moving faster than the market.1,2 8 /
The momentum approach assumes that share prices that have outperformed others will continue to do so. It also assumes that poorly performing shares will continue to underperform. In other words, the winners will keep winning and the losers will keep losing. You may buy high through the momentum strategy, but you buy high with the belief that you can sell higher. Unlike a trend investing strategy, a momentum investing strategy takes no point of view about the direction of the market.1 These strategies are about playing not to lose as well as playing to win. They are also about taking advantage of the compound annual growth rate (CAGR), sometimes called the “time value of money.� A buy-and-hold investor rarely sells at a market top, or when particular shares peak. He or she just hangs on, perhaps far too long. A successful trend or momentum investor can take incremental gains and reinvest them in other shares headed in the right direction; market timing of the best sort. You may have heard the statement that a penny, doubled every day, becomes a sum greater than $10 million in 30 days. Even at a 25% daily growth rate, that same penny becomes $8.08 just 30 days later. These examples are perhaps extreme, but they highlight one objective of trend and momentum investing: the idea of capturing compounding growth through active investment management.1
(in which you buy and sell in contrast to prevailing market sentiment). Both strategies are not for amateurs. They embrace market timing, and fundamentally, market timing requires you to be right twice. You have to recognize the auspicious time to sell and the auspicious time to buy. The small investor who tries these tactics solo, absent of supervision from investment professionals, risks a great deal. Historically, both strategies have had merit versus the norm. A recent Institutional Investor article compared a simple trend following strategy versus a buy-and-hold strategy across the years 1900-2014. The trend strategy would have invested varying amounts into equities per month depending on the level of the cyclically adjusted priceearnings ratio (CAPE) for the S&P 500 at the start of each month. The variance would have been between a 50% equities position (moving money into cash) and 150% (borrowing from the cash position to buy more equities). When compared with an unchanging buy-and-hold strategy featuring 100% investment in large cap stocks, the trend strategy was actually less risky than buy-and-hold beginning in the 1960s and earned an average of 0.8% per year better than buy-and-hold over this 115-year span.3 Citations. 1 - onewealthyteam.com/momentum-investing-and-trend-following-thesecret-to-significant-portfolio-returns [1/6/16] 2 - quant-investing.com/blogs/general/2015/01/13/10-myths-aboutmomentum-investing-squashed [1/13/15]
These strategies need not be divorced from others. Momentum investing and buy-and-hold (value) investing are compatible; in fact, some investors adopt a blend of the two strategies for the long run. Some investors have been known to blend trend investing with contrarian investing
3 - institutionalinvestor.com/article/3505321/asset-management-hedgefunds-and-alternatives/market-timing-is-back-in-the-hunt-for-investors. html [11/11/15]
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Women are diagnosed years later than men for same diseases, study finds
The study of 6.9 million people found that the same conditions were recognized in men when they were about four years younger than the age at which women were diagnosed. For a wide range of diseases, diagnosis comes later in life for women than for men, according to a large Danish study. Researchers don't know whether the later diagnoses are due to genetics, the environment, possible biases in the healthcare system - or some combination of reasons. The study of health data from 6.9 million Danish people found that across hundreds of diseases, women on average were diagnosed when they were about four years older than the age at which the conditions were recognized in men. "We're not just looking at one disease here, we're looking at all diseases and we are looking at an entire population, from cradle to grave," lead author Søren Brunak from the University of Copenhagen told Reuters Health by phone. On average, women received cancer diagnoses 2.5 years after men. They received diagnoses for metabolic diseases like diabetes 4.5 years later. "(This) actually surprised us quite a lot," Brunak said. "Men generally have a tendency to get to the doctor later... So presumably the difference in onset is even larger." Brunak and his team considered incidence rates of diseases in the 18 broad categories of the ICD-10 diagnosis system managed by the World Health Organization. The study wasn't designed to explain the causes of the differences. Another limitation is that researchers only looked at diagnoses made in hospitalized patients. Dr. Noel Bairey Merz, director of the Barbra Streisand Women's Heart Center at the Cedars-Sinai Smidt Heart Institute, who was not involved in the study, pointed out to Reuters Health that the study therefore lacks information on age at diagnosis for people who didn't require hospitalization. "On the other hand," she said, "being hospitalized is a sign of a serious illness, so (that) adds significance to the diagnosis and supports that disease onset may be later in women." Brunak's study, published in Nature Communications, showed that the bone-thinning disease osteoporosis was a notable exception to the trend. Here, women were typically diagnosed before they suffered a fracture, while the opposite was true for men. "I am fascinated by this study, which generally confirms all that I present in my Stanford course on Sex and 10 / 
Gender in Human Physiology and Disease," said Marcia Stefanick, Director of Stanford University's Women's Health and Sex Differences in Medicine Center. "When men get diseases that most healthcare professionals consider 'women's diseases,' they are diagnosed at later, more serious stages, and vice versa," Stefanick, who was not involved with the study, told Reuters Health in an email. "For example, women are diagnosed later for heart disease, not only because it is still largely considered a 'man's disease', but also because our diagnostic tests are male-biased, in terms in terms of 'typical' being the male presentation. All medical schools and healthcare training should emphasize both biological sex differences and gender biases so healthcare professionals are aware of unconscious biases." Bairey Merz agreed, adding that more research is needed to determine if the gender differences in age at diagnosis are "real" and whether they are linked to gender bias, actual biological sex differences or random error associations.
Recipe corner This is a favorite that Ginger’s mother made with Kathryn and Drake every time she visited in the fall.
Preparation Peel 4 or 5 tart apples. Take out the core and slice into ¼” slices. Place slices in a large bowl and add 1/2c sugar, 2 T. flour, 1 tsp. cinnamon. Stir apples and spices together until coated evenly. Pour apples into uncooked deep-dish pastry shell. Add pats of butter evenly spaced on top of the apples. Cover the pie with a second crust over the apples. Cut slits or make hole in the top crust to vent. Seal the 2 crusts together by tucking the top crust under the bottom edge of the bottom crust. Bake at 350 degrees until the crust is brown and apples are bubbling. (30-40 minutes)
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Each year, our broker-dealer, Prospera Financial, recognizes the firm’s top 25 advisors for their hard work and achievements. This year's celebration took place in Maui, Hawaii, in honor of the firm's 25th Director's Circle trip. While celebratory in nature, the conference also provides advisors with valuable information to help better serve thier clients. In addition to this honor, Clayton has been asked to join Prospera's President's Advisory Council.
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