Managing Director of DLG Wealth Management, Andy Guzzetti, and Senior VP and Advisor, Manuel Choy, discussed the Dow hitting the 13,000 point barrier on WNYT – NBC Affiliate in Albany on Tuesday.

Guzzetti and Choy explained that investors can start to feel some confidence in the market, taking a few risks as long as they have a protection plan in place, in case the market drops.

"With the Dow hitting 13,000, we're also cautioning our investors that they need to be careful and there are investments that can potentially go up when the stock market goes down," said Choy.

Check out the full interview with DLG Wealth Management on YouTube for more on what gains their clients are seeing in their portfolios. For more information on portfolio management or other financial planning questions, contact a wealth management advisor from DLG Wealth Management today.

Managing Director of DLG Wealth Management Discusses Tax Fairness 101

We are in the midst of tax season, but we are also in the midst of an election year very much focused on our country's current tax structure. With Obama’s proposed 2013 budget plan to increase tax rates for those who make $250,000 per year or more, it is important to know how the tax system works and what this will mean in sense of fairness and future of the economy. Important answers to questions we need to know when deciding on candidates to vote for include; Who’s paying what and what is the percentage? Who’s left to deal with the bulk? Is increasing taxes just?

As voters, we need to have the numbers broken down so it’s easy to understand our system. In our economy, everyone has a different situation. Some people make a very low income and can’t afford to pay taxes and then there are those who can afford it because of their higher income. In this article we discuss tax fairness 101 and put it into terms we can understand as consumers. Say we are in debt for $100,000 and we have 100 people to raise money to pay off the debt. Based on individual circumstances, it cannot be divided equally where each person pays $1,000 to the debt. So if we use the system our Government uses to collect taxes:

• The richest 10 percent in America pays 2/3 of the taxes. So for sake of this example, 10 of the 100 people will pay $67,000 or $6,700 per person on average.
• Forty percent of Americans don’t pay taxes, so in this example the 40 out of 100 people pay $0 to decrease the debt.
• The remaining 50 percent have to pay the rest, which totals $33,000 or $606 per person on average.

CHART #1 USING THE 10%/90% BREAKDOWN:
$67,000              10 PEOPLE              $6700/P AVG
$33,000              50 PEOPLE              $660/P AVG
$0                       40 PEOPLE              $0/P AVG 

We can also breakdown our example using the Occupy Wall Street 99%/1% method. The breakdown looks like this.
• The richest 1% in America pay 40% of the federal income taxes. In our example that means 1 person would pay $40,000
• The same 40% of Americans will pay $0
• The remaining 59% of Americans will pay $60,000 or $1,017 each on average

CHART #2 USING THE FAMOUS OCCUPY WALL STREET  99%/1% BREAKDOWN:
$40,000                  1 PERSON           $40,000
$60,000                59 PEOPLE            $1,017/P AVG
$0                         40 PEOPLE            $0/P AVG

In this election year, voters are going to have to decide if they believe that our tax system is unfair and the wealthy must pay more or our system is fair. The numbers above paint the picture, all voters have to make their decisions. The unfair/fair rhetoric is going to be the main theme of our Presidents election campaign. It doesn’t matter how many times the terms fair or unfair are used to describe our tax system, the numbers are the numbers. These numbers should help voters be more informed and hopefully make the right decision.

I have been watching the talking heads crucifying Bank of America (BAC) for a $5 per month fee on debit cards. Bank of America and other large banks have been hit by a new law that puts a limit on the amount they can charge a merchant to swipe their card. Congress has told the free enterprise system how much they can charge for their services. Why, is this matter of national security? Not likely. But it is a “sound bite” for illinois senator, dick durbin and his colleagues to show they are behind the consumer and against big business making money.

But in the end the consumer suffers. The banks have a shortfall of billions of dollars and like any company, need to make up the difference somehow. Thus the consumer is hit with this $5 extra fee. I have heard no one ask how this swipe fee limit has helped the consumer at stores like Wal-mart and Walgreens. Have prices come down to reflect the windfall profits that were given to these large companies by limiting the bank swipe fees?

Again we see unintended consequences from decisions made by politicos in Washington.

Another political decision made in Washington to “protect the consumer” has had and will continue to have detrimental unintended consequences. A few years ago the powers  to be in Washington  decided that by changing the pricing structure of our stock exchanges from 1/16th’s & 1/8th’s to pennies, the consumer would get better pricing and the evil wall street would not be able to make money on the spreads. Again the politicos trumpeted their fighting for the consumer (great sound bite), the small investor.

But, again, in the end the small investor has and will suffer. What has emerged with this change in pricing structure? The takeover of our equity markets by HFT's (high frequency trading). This type of trading by computers now accounts for an estimated 60% of the volume on our exchanges. It could not be done without penny pricing. We now have 60% of our trades being done by computers that do not care about long term investing. Computers couldn’t care less about a company’s balance sheet. The only things that matter are the algorithms they are programmed with.

What we now have is a market with extreme volitility that has scared the small investor out of the markets. This is a disaster waiting to happen. Computers trade at lightning speed and just like what happened on May 6th, we are headed for another major “flash crash” because these computers cannot be stopped once they hit their sell points.

The small investor is looking to participate in our economy, to save for retirement and put their kids through college. In this market, they are stymied by the unintended consequences of increased volitility and potential danger of an hft trading disaster.

The answers are simple. Stop making decisions in Washington based on how they will sound to voters. It almost feels like the politicos are trying for a 360 degree slam dunk so they can be on espn highlights. They are not interested in winning the game by making decisions that are well thought out and have no unintended consequences. It is unthinkable that Congress would tell American businesses how much they can charge for a product or a service. If they are actually interested in creating jobs, put back the old pricing structures in our equity exchanges and bring back the 5000 or more folks who worked at our exchanges. We might have slower trading, but we will have trading based on what our systems were set up for, not algorithms.

For more information on how to manage and protect your finances, check out DLG Wealth Management's News page or reach out to one of our financial advisors.

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