Well, it's a good thing RED is a holiday color, stocks are showing plenty of red these days.

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     I hate to be repetitive but...."Ninety days ago there was a great deal of talk by many of the financial talking heads pertaining to the constant supply of the "all time highs" (ATHs).  Since the current ninety cycle started, all the discussions and interviews of ATHs seems to have vanished quietly away and rightly so. We are now seeing "lower highs and lower lows" as it is characterized in our industry.  This simply means, the markets have weakness.  This will likely not abate very soon."

As of Late.

     It has been a bit of a mess for stock/equity investors this month.  It's not very easy to put lipstick on this pig! 

So, based on the first 20 days of December and in reference to what many look for annually and known as the "Santa Claus" rally, we hope you have a great holiday AND get a little laugh from this cartoon!

We remain watchful for Santa and many other things.

Ken Graves, Chief Investment Officer
Capital Research Advisors, LLC


 We currently have holdings based on the following in the six models we use most;  

Small Cap Index/Russell 2000  This has been sold and this model is 100% in money market.

S&P 500 Index
SMid Cap Growth Index This was sold in early October and is 100% in money market.

Electronics Sector Index  This has been sold and is 100% in money market.
Real Estate Sector Index This was sold in early October and is 100% in money market
Utilities - Our newest Position

Japan Nikkei 225 Index Sold and in money market now.
Great Britain 
Long U.S. Dollar 

High Yield Bond Inverse Position
High Yield Bond Index

Long-Term U.S. Government Bond Index

Ultra Short Term Tax-Free Index
U. S. Government Long Term Bond Index 

Capital Research Advisors, LLC, 
4185 B Silver Peak Parkway, 
Suwanee, GA 30024 
800 -767- 5364 
All rights reserved




Mortgage rates seem to be dropping down just a little as of late.  Stay tuned.

Taxes are never fun. Reminder

Let's face it: Taxes are really not too fun. Will you really wake up the morning of Dec. 31 and finish all the year-end tax action items? Here are a few areas you might try to address this month before the 31st.
Switch hit years with your itemized deductions
Going forward, you will hear more about "alternating" or "bunching" expenses you have as a possible effective tax strategy. What the idea here comes down to is to incur more deductible expenses in one year then skip them the next, all going back and forth to save on taxes.

It works like this.  The tax changes of late 2017 give you a larger standard deduction each year but also makes it harder to reach higher limits for itemizing deductions if you think you can.  The strategy might be sensible if you won't normally have quite enough deductions to be able to itemize every year but if you could count two years into one year, you could get a bigger deduction.

The largest percentage of taxpayers will likely take the standard deduction ahead under the new code which is likely to be many more people than in the past according to Treasury Department projections. Some payers might be able to alternate between the two strategies year over year, itemizing and taking the standardized deduction.

With there being a $10,000 cap on state taxes and the elimination of the interest deduction on home equity loans sometimes, this makes itemizing harder to justify for many people, 

"By holding back on payment in one year or accelerating multiple years of payments into  one year, a taxpayer can alternate between itemizing and claiming the standard deduction, getting as much tax benefit for those actual expenses as possible.

Even though most deductible expenses in areas like state taxes and mortgage interest, aren't flexible enough to be switched from one year to the next, charitable contributions can be a perfect fit for this strategy."
Time works
A similar notion is the idea of corralling deductions can occur by either accelerating, or delaying, flexible expenses and even the receipt of income if you can.

Medical expenses are a great possibility. You might find that you can pay into your HSA the maximum one year and fund it to a lessor degree for certain medical costs either over the waning weeks of a current year or wait until the following year. Examples range from buying new glasses to taking elective procedures. Why try to get all of them in now? Because medical costs will be harder to write off next year. This is the last year medical expenses are deductible on federal returns to the extent they exceed 7.5 percent of adjusted gross income. In January of 2019 it rises to 10 percent, meaning it will be harder to meet the higher limit and possibly take you out of destructibility range next year. 

In other respects, timing deductible expenses won't work as well as it did in the past. For example, a common strategy in prior years was to accelerate state income-tax and property-tax payments before the year expired to lock in the tax benefit. With state taxes now capped at $10,000, there's less incentive to do that, or none at all.
Find deductible investment losses
"Tax loss harvesting" is another informal tax term that might gain in popularity, thanks to the stock market's recent sell-off.  Investors who realize or lock in trading gains or losses first need to sort through the pile, as short-term losses offset short-term gains, while long-term losses offset long-term gains. (Short-term gains and losses are those held one year or less.)

Then, if total losses exceed gains, up to $3,000 of the remaining loss can be used to offset other income, meaning they can be deducted, Losses above $3,000 can be carried forward to offset gains in the following year. Tax reform didn't change this format.

Amid the stock market swoon, a lot more investors now have losses that looked like gains just a few weeks ago, potentially bringing this strategy into play. Just note that it works only with investments held in taxable accounts — IRAs, workplace 401(k), 403(b) plans and other tax-sheltered vehicles.
Avoid 50-percent penalty
One of the nastiest tax penalties awaits people who fail to take required minimum distributions or RMDs from Individual Retirement Accounts before year-end. The penalty of 50 percent applies to the amount that was supposed to be withdrawn but wasn't. It pertains to people older than 70½. RMDs apply to traditional IRAs (including rollovers, Simple IRAs and SEPs or Simplified Employee Pensions) but not to Roths (while the owner is still alive).

People still working past 70½ can delay an RMD on a 401(k) account until  April 1 of the year after they retire, for those plans that allow this option. 
Give your withdrawals to charity
Last year's tax-reform legislation permanently preserved the option of donating RMDs to charity. Up to $100,000 a year can be transferred directly from an IRA account to one or more eligible charities.  Why consider this? Because the amount is excluded from taxable income and taxpayers don't need to itemize to do this, but you obviously would need other money to live on.

By using the charity-donation strategy on RMDs, taxpayers not only reduce their taxable income by the amount of the donation but also could shave or eliminate capital gains taxes they might incur if the IRA withdrawal had pushed them into a higher tax bracket
Tax reform retained the zero-percent tax on long-term gains for lower-income people — singles with taxable income below $38,600 and married couples below $77,200.  Some affluent seniors could find themselves in this group.

Happy deducting!!




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This report/summary is to be considered general in nature, reflects our opinions and is based on our best judgment at the time of writing. All information is deemed to be from reliable sources but we cannot guarantee its accuracy. No warranties are given or implied as to their promise of occurrence in the future or their accuracy. It is the readers’ responsibility to decide if any of our opinions are suitable for their own individual situation, and in what manner to use the information. No specific decisions should be made based on this report. These opinions should not be construed as a solicitation for any service. Past performance does not guarantee future results. The opinions expressed in this piece are those of the author and do not necessarily reflect the opinions of Ceros Financial Services, Inc.

Securities offered through Ceros Financial Services, (Not affiliated with Capital Research Advisors, LLC) 1445 Research Boulevard Suite 530 Rockville, MD

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All the information in our newsletter is believed to be reliable and much of it is based on the proprietary research of Capital Research Advisors, LLC itself. However, because of the volume of information we review and the frequency with which it changes the information can only be provided as is on a best efforts basis. The information is not intended to be actionable investment research and therefore should not be used as such. Sources for this information include, but are not limited to, CBS MarketWatch, Big Charts, Bloomberg, Streetscape, Money/CNN, Futuresource, Stock Chart, Yahoo Finance, AmiBroker and

Capital Research Advisors, LLC,
4185 B Silver Peak Parkway,
Suwanee, GA 30024
800 -767- 5364
All rights reserved

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