Tuesday, December 22, 2015

Year-end Reminder Regarding your Health Flexible Spending Accounts (FSA)

Pathways Advisory Group, Inc.
Leslie Dermon, Paraplanner

Hello All,

If you have a Flexible Spending Account (FSA), you may want to empty it before December 31st if your employer has not implemented the $500 carryover rule, or 2 ½ months grace period. Otherwise, you will lose any money left over in the account.

More information regarding Flexible Spending Accounts: https://www.healthcare.gov/flexible-spending-accounts/

Happy Holidays!

 Find Leslie on

Monday, December 21, 2015

Happy Holidays!

 Wishing you a wonderful holiday and a happy new year!

-Your Team at Pathways

Find Pathways on

Friday, December 11, 2015

Second-Hand News

Jim Parker
Outside the Flags
Vice President

Why don’t the media run more good news? One view is bad news sells. If people preferred good news, the media would supply it. But markets don’t see news as necessarily good or bad, rather in terms of what is already built into prices.

One academic study appears to confirm the view that the apparent preponderance of bad news is as much due to demand as to supply, with participants more likely to select negative content regardless of their stated preferences for upbeat news.1

"This preference for negative and/or strategic information may be subconscious," the authors conclude. "That is, we may find ourselves selecting negative and/or strategic stories even as we state that we would like other types of information."

So an innate and unrecognized demand among consumers for bad news tends to encourage attention-seeking commercial media to supply more of what the public appears to want, thus fueling a self-generating cycle.

Insofar as consumers of news are investors, though, the danger can come when the emotions generated by bad news prompt them to make changes to their portfolios, unaware that the news is likely already built into market prices.

This is especially the case when the notions of "good or bad" are turned upside down on financial markets. For example, stocks and Treasuries rallied and the US dollar weakened in early October after a weaker-than-expected US jobs report. Some observers said the "bad news" on jobs was "good news" for interest rates.2

Conversely, a month later, stocks ended mixed, bonds weakened, and the US dollar rallied after a stronger-than-expected payrolls number. While an improving job market is good news, it was also seen by some as cementing the case for the Federal Reserve to begin raising interest rates. In both cases, the important thing for markets was not whether the report was good or bad but how it compared to the expectations already reflected in prices. As news is always breaking somewhere, expectations are always changing.

For the individual investor seeking to make portfolio decisions based on news, this presents a real challenge. First, to profit from news you need to be ahead of the market. Second, you have to anticipate how the market will react. This does not sound like a particularly reliable investment strategy.

Luckily, there is another less scattergun approach. It involves working with the market and accepting that news is quickly built into prices. Those prices, which are forever changing, reflect the collective views of all market participants and reveal information about expected returns. So instead of trying to second-guess the market by predicting news, investors can use the information already reflected in prices to build diverse portfolios based on the dimensions that drive higher expected returns.

As citizens and media consumers we are all entitled to our individual opinions on whether news is good or bad. As investors, though, we can trust market prices to assimilate news instantaneously and work from there.

In a sense, the work and the worrying are already done for us. This leaves us to work alongside an advisor to build diverse portfolios designed around our own circumstances, risk appetites, and long-term goals.

There’s no need to respond to second-hand news.

1. Marc Trussler and Stuart Soroka, “Consumer Demand for Cynical and Negative News Frames,” International Journal of Press/Politics (2014).
2. Mark Hulbert, “How Bad News on Wall Street Can Be Good News,” WSJ MarketWatch (October 5, 2015).


Dimensional Fund Advisors LP ("Dimensional") is an investment advisor registered with the Securities and Exchange Commission.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. This content is provided for informational purposes, and it is not to be construed as an offer, solicitation, recommendation or endorsement of any particular security, products, or services.

Tuesday, November 17, 2015

Office Holiday Hours

Pathways Advisory Group, Inc.
The Pathways Advisory Group, Inc. office will be closed for the holidays on the following dates:

Thursday, November 26th, 2015

Friday, November 27th, 2015

Thursday, December 24th, 2015

Friday, December 25th, 2015

Friday, January 1st, 2016

Monday, January 18th, 2016

Monday, February 15th, 2016

Friday, March 25th, 2016

Monday, May 30th, 2016

Monday, July 4th, 2016

Monday, September 5th, 2016

In case of an emergency, please contact Schwab at 1-800-435-4000.

Happy Holidays!

Find Pathways on

Friday, November 13, 2015

Which Hat Are You Wearing?

Jim Parker
Outside the Flags
Vice President

Most of us have multiple roles—as business owners, professionals, workers, consumers, citizens, students, parents and investors. So our views of the world can differ according to whatever hat we’re wearing at any one time.

This complexity of people and their range of motivations, depending on their circumstances, highlight the inadequacy of cookie-cutter or automated investment solutions.

For instance, if you work for a taxi booking firm, you’re naturally going to take greater-than-usual interest in technology that allows consumers to book cabs directly. That’s because these new disintermediated services might affect how you make your living.

On the other hand, as a consumer you may welcome any initiative that increases competition, widens your choice and lowers prices.

As a taxpayer, you may look kindly on efforts to encourage user-pays systems in universities. But as a parent, you may be concerned about your teenage children taking on excessive debt to fund their education.

As citizens, we might champion a laissez faire approach to economic policy. But as investors, we may feel uncomfortable about certain policies and seek to express our values by placing limits on how our money is invested.

The point is everyone has the right to their own opinions and intelligent people can legitimately and respectfully disagree on many issues, including about what might happen in the world economy and about how policymakers should act.

The trick is in being clear with ourselves about which hat we are wearing when we make investment decisions and the trade-offs involved in reconciling our personal opinions with our desired investment outcomes.

For example, you may have an opinion on what central banks should do in normalizing interest rates. But do you really want to hang your decision about your portfolio allocation to longer-term bonds on your view of the interest rate outlook?

As a worker in an industry undergoing digital disruption, you may have an aversion to the technology putting you out of a job. But as an investor, do you want to forsake earning a share of the wealth from the new forces created by this disruption?

As a resident of a suburb near the airport, you may oppose on noise grounds a government decision to build a new runway, but as an investor and a worker you might benefit from the increased productivity generated by the investment.

The point is we have many roles in life and there often can be conflicts between our personal beliefs and opinions in one area with our desires in another.

Our strong view on the economic outlook may lead us to think the market will come around to pricing assets based on that opinion. But the power of markets is such that they reflect the views of millions of people, many of whom may hold contrary views.

Keep in mind, also, that competitors in those markets include professional investors with multiple sources of information and state-of-the-art technology. And even they have trouble getting these forecasts right with any consistency.

This isn’t to say we can’t invest based on our personal principles. But we first have to start from the assumption that in liquid markets competition drives prices to fair value. Prices reveal information about expected returns. That leaves us to diversify around known risks according to our own preferences and goals.

In short, life is full of trade-offs. It is the same in investment. We may pursue higher expected returns, but we want to do so without sacrificing diversification or cost.

The over-riding principle is to understand what we can and can’t control. We can have an opinion on government policy and we can express it through our vote, but we can’t control the investment outcome. We can have an opinion on what should happen to interest rates, but we can’t control what happens. So we diversify.

The role of a financial advisor is to help you understand these trade-offs and to separate opinion from fact, to balance your risk preferences with your desired wealth outcomes, and to accommodate your personal values within a diversified portfolio.

People with many hats require many different investment solutions. And that’s a good thing.


Dimensional Fund Advisors LP ("Dimensional") is an investment advisor registered with the Securities and Exchange Commission.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. This content is provided for informational purposes, and it is not to be construed as an offer, solicitation, recommendation or endorsement of any particular security, products, or services.

Friday, September 18, 2015

The Dreaded Budget

Pathways Advisory Group, Inc.
Dustin J. Smith, CFP®

In case you missed it from the September 2013 Newsletter...

You hate it.  I hate it.  We all hate it.  But it’s not that bad…

We ask all clients to quantify their lifestyle at some point.  It’s an important part of our process.  We might call it a “spending plan” or simply ask clients to “categorize expenses”.  We do not use the “B-Word”.  The responses vary but we often meet resistance.  Why is that?

It’s painful.  It’s stressful.  And it’s time consuming.  Perhaps it feels better not to know.  There are simply more enjoyable ways to spend an afternoon.  But it doesn’t have to be that way!

You can make it easier by changing your approach. Simply start with a strong foundation and build from there…

Step one:  Review total monies in and out of your household (3 months, 6 months, etc.) until you understand monthly and annual spending.  Don’t judge it, understand it.  Separate expenses into categories (household, transportation, health, recreation, etc.) for greater understanding.  There are helpful websites (www.mint.com), software packages (www.quicken.intuit.com) and/or spreadsheets (see below for our spreadsheet).  The old “notepad” works too.

Click for a larger view... 

If you understand spending in each category, then you have a strong foundation.  And if 1) your lifestyle fits comfortably within your resources 2) you feel good about the spending in each category and 3) you are on pace to meet your future goals – then you do not have to keep building.

If not, then there is some work to do.  But you can work smart, not hard…

Step two:  Review each category for discretionary spending.  Leave the non-discretionary (“needs”) spending out of it.  If married, discuss discretionary spending carefully with your spouse - no finger pointing. The first step is to prioritize among discretionary categories.  If married, work together to identify common priorities – there will be differences.  What discretionary spending do you enjoy most?  What do you want to spend money on?  What don’t you want to spend money on?  Does your checkbook agree with you?  I know, nobody has a checkbook anymore…

Don’t forget to include future discretionary spending in the discussion.  Today’s goals and tomorrow’s goals need to be considered.  Hopefully, our periodic life goals projections provide context for this portion of the discussion.  If necessary, minor sacrifices today are easier than major sacrifices tomorrow.  Relying on “Powerball” tickets is not a financial plan...

Goals:  The primary goals are conscious spending and financial clarity.  It’s much easier to assess your overall financial security if you have an awareness of spending.  Additional spending goals will vary with each stage of life.  Sometimes “budgeting” will be a necessary tool.  But it always starts with awareness.

The discussion above is, of course, simplified – no two households are exactly alike.  Some households may discover that awareness leads to more questions than answers.  Whatever goals emerge, it’s worth the effort.  Let us know if we can help…

Find Dustin on

Monday, August 31, 2015

The Patience Principle

Jim Parker
Outside the Flags
Vice President

Global markets are providing investors a rough ride at the moment, as the focus turns to China’s economic outlook. But while falling markets can be worrisome, maintaining a longer term perspective makes the volatility easier to handle.

A typical response to unsettling markets is an emotional one. We quit risky assets when prices are down and wait for more “certainty.”

These timing strategies can take a few forms. One is to use forecasting to get out when the market is judged as “overbought” and then to buy back in when the signals tell you it is “oversold.”

A second strategy might be to undertake a comprehensive macro-economic analysis of the Chinese economy, its monetary policy, global trade and investment linkages, and how the various scenarios around these issues might play out in global markets.

In the first instance, there is very little evidence that these forecast-based timing decisions work with any consistency. And even if people manage to luck their way out of the market at the right time, they still have to decide when to get back in.

In the second instance, you can be the world’s best economist and make an accurate assessment of the growth trajectory of China, together with the policy response. But that still doesn’t mean the markets will react as you assume.

A third way is to reflect on how markets price risk. Over the long term, we know there is a return on capital. But those returns are rarely delivered in an even pattern. There are periods when markets fall precipitously and others when they rise inexorably.

The only way of getting that “average” return is to go with the flow. Think about it this way. A sign at the river’s edge reads: “Average depth: three feet.” Reading the sign, the hiker thinks: “OK, I can wade across.” But he soon discovers the “average” masks a range of everything from 6 inches to 15 feet.

Likewise, financial products are frequently advertised as offering “average” returns of, say, 8%, without the promoters acknowledging in a prominent way that individual year returns can be many multiples of that average in either direction.

Now, there may be nothing wrong with that sort of volatility if the individual can stomach it. But others can feel uncomfortable. And that’s OK too. The important point is being prepared about possible outcomes from your investment choices.

Markets rarely move in one direction for long. If they did, there would be little risk in investing. And in the absence of risk, there would be no return. One element of risk, although not the whole story, is the volatility of an investment.

Look at a world stock market benchmark such as the MSCI World Index, in US dollars. In the 45 years from 1970 to 2014, the index has registered annual gains of as high as 41.9% (in 1986) and losses of as much as 40.7% (2008).

But over that full period, the index delivered an annualized rate of return of 8.9%. To earn that return, you had to remain fully invested, taking the unsettling down periods with the heartening up markets, but also rebalancing each year to return your desired asset allocation back to where you want it to be.

Timing your exit and entry successfully is a tough task. Look at 2008, the year of the global financial crisis and the worst single year in our sample. Yet, the MSCI World index in the following year registered one of its best ever gains.

Now, none of this is to imply that the market is due for a rebound anytime soon. It might. It might not. The fact is no one can be sure. But we do know that whenever there is a great deal of uncertainty, there will be a great deal of volatility.

Second-guessing markets means second-guessing news. What has happened is already priced in. What happens next is what we don’t know, so we diversify and spread our risk to match our own appetite and expectations.

Spreading risk can mean diversifying within equities across different stocks, sectors, industries, and countries. It also means diversifying across asset classes. For instance, while stocks have been performing poorly, often bonds have been doing well.

Markets are constantly adjusting to news. A fall in prices means investors are collectively demanding an additional return for the risk of owning equities. But for individual investors, the price decline, if temporary, may only matter if they need the money today.

If your horizon is five, 10, 15, or 20 years, the uncertainty will soon fade and the markets will worry about something else. Ultimately, what drives your return is how you allocate your capital across different assets, how much you invest over time, and the power of compounding.

But in the short term, the greatest contribution you can make to your long-term wealth is exercising patience. And that’s where your advisor comes in.

Global markets are providing investors a rough ride at the moment, as the focus turns to China's economic outlook. But while falling markets can be worrisome, maintaining a longer-term perspective makes the volatility easier to handle.


Past performance is not a guarantee of future results. Diversification does not eliminate the risk of market loss. There is no guarantee investment strategies will be successful. International investing involves special risks such as currency fluctuation and political instability. Investing in emerging markets may accentuate these risks. Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks, including changes in credit quality, liquidity, prepayments, and other factors.

Dimensional Fund Advisors LP ("Dimensional") is an investment advisor registered with the Securities and Exchange Commission.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. This content is provided for informational purposes, and it is not to be construed as an offer, solicitation, recommendation or endorsement of any particular security, products, or services.

Monday, August 24, 2015

Market Volatility

Pathways Advisory Group, Inc.
Jeff Karst, CFP®

Today (Monday, August 24, 2015) the S&P 500 closed at 1893.21 (down 237.61 from its peak close of 2130.82 on May 21, 2015).  That’s a drop of more than 11% this year.  How “normal” is it for the S&P 500 to drop this much during the year?  It turns out that over the past 35 years, the average intra-year decline is 14.2%.  See chart below.  Turns out that significant drops are normal.

If this sounds familiar to you, it’s because we first wrote about it in Are Market Declines Normal? in September 2011.

Prior to the past couple of weeks, the stock market has been somewhat quiet.  There have been small ups-and-downs but it’s been slightly positive (before the last couple of weeks).  This recent volatility may have you thinking that we should do something.  But, we cannot predict the future.  This is why our advice has always been (and will always be) to just stay invested.

The following chart shows the importance of staying invested.  For the 20-year period ending 12/31/14, the S&P 500 returned 9.85%.  By missing the 10 best days during that time period, your return would be cut by almost 40%!

In order to obtain what is rightfully yours as an investor (market returns), you must stay invested.  If you attempt to make adjustments, research has shown that the average investor will lose.  We wrote about that research study in Investment vs Investor Returns.

We have the same story all the time – stay invested, think long-term.  If you think it’s boring, you’re right!  We like to be boring.  See Dustin’s article How Boring!

Find Jeff on

Friday, August 14, 2015

The China Syndrome

Jim Parker
Outside the Flags
Vice President

The recent severe volatility in China’s share markets has raised questions among many investors about the causes of the fall and the wider implications for the global economy and markets.

The Shanghai Composite Index—the mainland stock market barometer and one dominated overwhelmingly by retail investors—more than doubled during the year from mid-2014, only to lose more than 30% of its value between mid-June and mid-July this year.

The volatility was much less in Hong Kong, where foreign investors tend to get their exposure to China. The Hang Seng Index fell about 17% from April’s seven-year high, though it had a more modest run-up in the prior year of about 25%.

Nevertheless, the speed and scale of the fall on the Chinese mainland markets unsettled global markets, fuelling selling in equities, industrial commodities, and allied currencies like the Australian dollar and buoying perceived safe havens such as US Treasuries and the Japanese yen.

The decline in Chinese stocks triggered repeated interventions by China’s government, which has been seeking to transition the economy from a long-lasting, export-led boom toward more sustainable growth based on domestic demand.

Investors naturally are concerned about what the volatility in the Chinese market means for their own investments and what it might signify for the global economy, particularly given the rapid growth of China in the past 20 years.


Measured in terms of purchasing power parity (which takes into account the relative cost of local goods), the Chinese economy is now the biggest in the world, ranking ahead of the US, India, Japan, Germany, and Russia.1

Yet China’s share market is still relatively small in global terms. It makes up just 2.6% of the MSCI All Country World Index, which takes into account the proportion of a company’s shares that are available to be traded by the public.

The Chinese market is also not a large part of the local economy. According to Bloomberg, it is capitalized at less than 60% of the country’s GDP. By comparison, the US total equity market is capitalized at more than 100% of US GDP as of July 2015, according to Bloomberg.

China is classified by some index providers as an emerging market. These are markets that fall short of the definition of developed markets on a number of measures such as economic development, size, liquidity, and property rights.

China’s stock market is still relatively young. The two major national exchanges, Shanghai and the southern city of Shenzhen, were established only in 1990 and have grown rapidly since then as China has industrialized.

With foreign participation in mainland Chinese markets still heavily restricted, many foreign investors have sought exposure to China through Hong Kong or China shares listed on the New York Stock Exchange.

As a consequence, domestic investors account for about 90% of the activity on the Chinese mainland market. And even then, the participation is relatively narrow. According to a China household finance survey, only 37 million, or 8.8% of Chinese families, held shares as of June 2015.2 As a comparison, just over half of all Americans own stocks, according to Gallup. In Australia, the proportion is 36%.

While the Chinese stock market is about 30% off its June highs, it nevertheless was still about 70% higher than it was 12 months before, as of late July 2015. As such, much of the pain of the recent falls will have been felt by people who entered the market in the past year.

A final point of perspective is that while the Chinese economy has been slowing, it is still expanding at around 7% per annum, which is more than twice the rate of most developed economies.

The IMF in April projected growth would slow to 6.8% this year and to 6.3% in 2016. Still, it expects structural reforms and lower oil and commodity prices to expand consumer-oriented activities, partly buffering the slowdown.3

While such forecasts are subject to change, markets have priced in the risk of a further slowdown to what was previously expected, as seen in the renewed fall in the prices of commodities like copper and iron ore, which recently hit six-year lows.


The Chinese share market boom of the past year cannot be attributed to a single factor, but certainly two major influences have been the Chinese government’s promotion of share ownership and investors’ increased use of leverage.

The government has been seeking to achieve more sustainable, balanced, and stable economic growth after nearly four decades of China notching up heady annual growth rates averaging 10% on the back of an official investment boom.

But the transition to a shareholding economy has created its own strains. The outstanding balance of margin loans on the Shanghai and Shenzhen markets grew to 4.4% of market capitalization by early July, according to Bloomberg.4

Under a margin loan, investors borrow to invest in shares or other securities. While this can potentially increase their return, it also exposes them to the potential of bigger losses in the event of a market downturn.

When prices fall below a level set by the lender as part of the original agreement, the investor is called to deposit more money or sell stock to repay the loan. These margin call liquidations can amplify falling markets.

Chinese regulators, mindful of the potential fallout from the stock market drop, have instituted a number of measures to curb the losses and cushion the impact on the real economy.

These have included a reduction in official interest rates, suspension of initial public offerings, and enlisting brokerages to buy stocks backed by cash from the central bank. In the latest move, regulators banned holders of more than 5% of a company’s stock from selling for six months.

The government also has begun an investigation into short selling, which involves selling borrowed stock to take advantage of falling prices. In the meantime, about half of the companies listed on the two major mainland exchanges were granted applications for their shares to be suspended.

While such interventionist measures may seem alien to people in developed market economies, they need to be seen in the context of China’s status as an emerging market where governments typically play a more active role in the economy.

Whether the intervention works in the long term remains to be seen. But the important point is that this is a relatively immature market dominated by domestic investors and prone to official intervention.


The re-emergence of China as a major force in the global economy has been one of the most significant drivers of markets in the past decade and a half.

China’s rapid industrialization as the population urbanized drove strong demand for commodities and other materials. Investment and property boomed as credit expanded and people took advantage of gradual liberalization.

Now, China is entering a new phase of modernization. The government and regulators are seeking to rebalance growth and bring to maturity the country’s still relatively undeveloped capital markets.

Nevertheless, China remains an emerging market with all the additional risks that this status entails. Navigating these markets can be complex. There can be particular challenges around regulation and restrictions on foreign investment.

We have seen those risks appearing in recent weeks, as about a third of the sharp rise in the Chinese mainland market over the previous year was unwound in a matter of weeks, prompting intense government intervention.

Markets globally are weighing the wider implications, if any, of this correction. We have seen concurrent weakness in other equity markets and falls in commodity prices and related currencies.

Yet it is important to understand that the stock market is not the economy. China’s market is only about 2.6% of global market cap and its volatile mainland exchanges are, for the most part, out of bounds for foreign investors anyway.

For individual investors, the best course in this climate, as always, is to maintain diversification and discipline and remember that markets accommodate new information instantaneously.

1. IMF World Economic Outlook, April 2015.

2. “China Households Raise Housing Investment in Q2,” Reuters, July 9, 2015.

3. IMF World Economic Outlook, April 2015.

4. “China’s Stock Plunge Leaves Market More Leveraged than Ever,” Bloomberg, July 6, 2015.

Dimensional Fund Advisors LP ("Dimensional") is an investment advisor registered with the Securities and Exchange Commission. 

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. This content is provided for informational purposes, and it is not to be construed as an offer, solicitation, recommendation or endorsement of any particular security, products, or services. 

Monday, August 3, 2015

The Financial Crisis in Greece

Weston Wellington
Down to the Wire
Vice President

  Last week we posted Jim Parker’s article “Greece is the Word”.  Mr. Parker focused on the relatively small size of Greece in economic terms.  The following video by Weston Wellington offers some additional insight on why we shouldn’t change our investment strategy based on Greece.

Source: https://www.dimensional.com/ 


Dimensional Fund Advisors LP ("Dimensional") is an investment advisor registered with the Securities and Exchange Commission.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. This content is provided for informational purposes, and it is not to be construed as an offer, solicitation, recommendation or endorsement of any particular security, products, or services.

Friday, July 31, 2015

Greece is the Word

Jim Parker
Outside the Flags
Vice President

In recent weeks, the world’s markets and media financial pages have focused intensely on the standoff between debt-laden Greece and its international lenders over the conditions of any further bailout.

For investors everywhere, both of the large, institutional kind and individual participants, the story has been fast-paced and difficult to keep up with. More importantly, the speculation about possible outcomes has been intense.

Of course, no one knows the eventual outcome or whether there will even be a definitive conclusion. After all, this is a story that has been percolating now for six years—since Greece’s credit rating was downgraded by three leading agencies amid fears the government would default on its debt.

Since then, the Greek situation has faded in and out of public attention as rescue packages came and went and as widespread social and political unrest gripped a nation known as the birthplace of democracy.

But there are a few points to keep in mind. Despite the blanket media coverage of Greece, this is a tiny economy, ranking 51st in the world by GDP in purchasing power parity terms (which takes into account the relative cost of local goods).1

On this measure, Greece is a smaller economy than Qatar, Peru, or Kazakhstan, none of which currently feature prominently in world news pages. Its economy is about half the size of Ohio in the US or New South Wales in Australia and about a tenth of the size of the UK. Even within Europe, it is tiny, representing only about 2% of the GDP of the 19-nation euro zone.

As a proportion of global share markets, Greece is also a minnow. As of early July 2015, it represented about 0.32% of the MSCI Emerging Markets Index and just 0.03% of the MSCI All Country World Index.

And while its total debt is large in nominal terms and relative to its GDP at about 180%, this still represents only about a quarter of 1% of world debt markets.

Of course, what worries investors is not so much Greece itself but the wider ramifications of the debt crisis for its European bank lenders, the future of the single European currency, and the global financial system.

Yet many of these concerns are already reflected in market prices, such as Greek government bonds, the spreads of peripheral euro zone bonds, regional equity markets, and the single European currency itself.

While no one knows what will happen next, we can look at measures of market volatility as a rough guide to collective expectations. A commonly cited measure is the Chicago Board Options Exchange’s Volatility Index, sometimes known as the “fear” index. This has recently spiked to around 18, up from 12 in mid-June. But keep in mind the index was up around 80 during the peak of the financial crisis in 2008.

Of course, the human misery and dislocation suffered by the Greek people during this crisis should not be downplayed. Neither should the financial risks. But from an investment perspective, there is still little that individual investors can do beyond the usual prescription.

That prescription is to remain disciplined and broadly diversified across countries and asset classes and be mindful that markets accommodate new information instantaneously. So the risk in changing one’s portfolio in response to fast-breaking news is that you end up acting on events that are already built into security prices.

In summary, the events in Greece are clearly worrisome, but Greece is a very small economy and a tiny segment of the global markets. Events are moving quickly, and prices are adjusting as news breaks and investor expectations adjust.

For the individual investor, we believe the best approach remains diversifying across many countries and asset classes, remaining focused on your own goals, and, most of all, listening to your chosen advisor, who understands your situation best.

1. Source: World Bank rankings, July 1, 2015.


Past performance is not a guarantee of future results. Indices are not available for direct investment. Diversification does not eliminate the risk of market loss. There is no guarantee investment strategies will be successful. 

All expressions of opinion are subject to change. This article is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services.

Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission.

Friday, July 10, 2015

10 Steps to Protect Your Identity

Pathways Advisory Group, Inc.
Leslie Dermon, Paraplanner

Nervous about Identity Theft? You are not alone. After the reported mega-data breaches such as Anthem/Blue Cross or the IRS breach, an increasing number of clients have asked for help with Cyber Security and Credit protection.

Here are 10 steps you could take to improve your Identity protection:

1. Check your credit reports once per year. It’s often the first indicator that you are an identity theft victim. You are entitled to a free copy of your credit report from each of the 3 credit reporting companies once every 12 months. You may request the reports online or by phone. If you find names you don’t recognize, Social Security numbers that don’t belong to you, or accounts that aren’t yours, you might be a fraud victim. Please see: https://www.experian.com/assistance/free-annual-credit-report.html

2. Place a fraud alert on your credit reports. If you're concerned about identity theft, but haven't yet become a victim, this fraud alert will protect your credit from unverified access for at least 90 days. Ask 1 of the 3 credit reporting companies to put a fraud alert on your credit report. They must tell the other 2 companies. An initial fraud alert can make it harder for an identity thief to open more accounts in your name. The alert lasts 90 days but you can renew it. It is free. See: http://www.consumer.ftc.gov/articles/0275-place-fraud-alert

3. Place a credit freeze on your credit reports. This tool lets you restrict access to your credit report, which in turn makes it more difficult for identity thieves to open new accounts in your name.  Most creditors need to see your credit report before they approve a new account. If they can’t see your file, they may not extend the credit. No new credit can be opened in your name without the use of a PIN number (issued when you initiate the freeze). Creditors cannot access your credit report unless you temporarily lift the freeze. See: http://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs

4. Credit monitoring services. Some companies, including consumer reporting companies, offer subscriptions to credit monitoring services. These services track your credit report, and generally send you an email about recent activity, such as an inquiry or new account. The more frequent or more detailed the report, the more expensive the service.

5. Email alerts on Bank accounts. Most banks offer account alerts to inform you about activity in your account. It is usually customizable through your online banking website.

6. Create strong passwords.  Weak passwords are words that can be found in a dictionary, a series of letters or numbers (1234 or abcd for example), and your personal information such as birthday or graduation date. To create stronger passwords, spell a word backwards, use special characters, or substitute numbers for certain letters. Do not use the same password on different websites. This may allow someone who gains access to one of your accounts access to many of your accounts.

7. Don’t give personal information over the phone.
If you get a call from someone you don’t know who is trying to sell you something you hadn’t planned to buy, you should decline. And, if they pressure you about giving up personal information (your credit card, or Social Security number, etc.) it’s likely a scam. You can report it to the Federal Trade Commission. For more information: http://www.consumer.ftc.gov/articles/0076-phone-scams

8. Review your social media privacy settings.
Make sure to adjust your privacy settings on social media websites (such as Facebook, Twitter, etc.) to share your content solely with the intended people.

9. Remove your Social Security card, PIN number and blank checks from your wallet. To protect yourself, make sure that what you are carrying in your wallet does not pose a security risk if it were to end up in the wrong hands.

10. Protect your information when using Public Wi-Fi.
Wi-Fi hotspots in coffee shops, airports, hotels, universities, and other public places are convenient, but often are not secure. If you connect to a Wi-Fi network, and send information through websites or mobile apps, it could be accessed by someone else. To protect your information, send information only to sites that are fully encrypted, and avoid using mobile apps that require personal or financial information. To determine if a website is encrypted, look for https at the start of the web address (the “s” is for secure). Some websites use encryption only on the sign-in page, but if any part of your session isn’t encrypted, your entire account could be vulnerable. For more information: http://www.consumer.ftc.gov/articles/0014-tips-using-public-wi-fi-networks

Sources: Experian - http://www.experian.com/ and the Federal Trade Commission - https://www.ftc.gov/

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Friday, June 19, 2015

Time for an Adventure?!

Pathways Advisory Group, Inc.

What does “retirement” mean to you? What will it look like? What will you do? Will you continue to work? We encourage clients to come up with their own definition. To consider life today and tomorrow. To choose the proper “balance” that works for both. There is much to consider. It’s not easy.  But it’s worth it!

What does this have to do with our “Client Adventures”? Many of you have considered these questions. Many of you have come up with your own definition of “retirement”. Some of you have even shared your “Client Adventures” with all of us.

The Wades travelled to Europe in 2011. In 2012, the Buettners celebrated 30 years of marriage in Italy and the Flayers went cruisin’. In 2013, Virginia Roth returned to Africa. And more recently, the Ogdens shared a five-month road trip. We love these stories. We love these adventures. We love these pictures. It reminds us why we do what we do. It reminds us why we seek “clarity” in our meetings.

To surf these stories and others, visit the Client Adventures section of our website. Thank you for sharing these experiences with all of us. Keep them coming...

Do you have a client adventure you would like to share? If so, please email Katie at katie@pathwaysag.com.

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