ProVise Management Group

This month, we sing happy birthday to Apple. It was 30 years ago that Apple introduced its first Mac computer. What was novel then is commonplace today and far less clunky. For those old enough to remember what that boxy looking thing was like, its hard to believe how far weve come. Carl Icahn bought another $500 million more shares of Apple stock, bringing his total investment to $3.6 billion. As an activist shareholder he is trying to force Apple to buy up to $500 million in a stock buyback program.

In late December just before Christmas, the Postal Regulatory Commission delivered an unwanted present in the form of a "temporary" three cent rate hike for first class mail effective January 26th. It seems that the Post Office decided it lost $2.8 billion as a result of the Great Recession and convinced the Commission that it needed to make this loss go away. Well, in reality, the Post Office asked for a permanent hike, but was only given the opportunity to make up the loss and then have the rate go back down. We shall see.

To say that 2013 was an interesting year would be a bit of an understatement. We learned a long time ago not to make predictions about the stock market because no matter what is predicted, it is likely to be wrong. Even if we get lucky one year, we are not likely to even get close the following year. We do try to give guidance, however. Last year we suggested that, given the late run in the market in 2012 and its 15% return, investors should be happy with a return of 8 to 10% in 2013. Obviously, investors enjoyed much better returns.

For the 7th year in a row, the US Postal Service lost money. After setting a record loss last year of $15.9 billion, it pared the losses to $5 billion in the current year. The USPS showed its first growth in revenue since 2008, rising 1.2% to $66 billion. In no surprise, the USPS asked Congress for help. Wonder how that is going to work out for them?

Last month, a Wells Fargo/Gallup survey of non-retired investors showed just how lingering the hangover is from the financial crisis five years ago. Much like the Great Depression financially scared their great grandparents and grandparents, the Great Recession is impacting investors expectations about the future.

Last month, a Wells Fargo/Gallup survey of non-retired investors showed just how lingering the hangover is from the financial crisis five years ago. Much like the Great Depression financially scared their great grandparents and grandparents, the Great Recession is impacting investors expectations about the future. 41% indicated they were concerned about another global crisis during their retirement years, and 28% were convinced they would have a lower standard of living during retirement.

Effective October 1st, the health exchanges are open for business and enrollment can occur over the next 90 days. It will be interesting to see just how many people feel compelled to sign up under the individual mandate. While the premiums are not inexpensive for most of the eligible people, many will receive tax credits to help offset the cost. Nonetheless, others will find it a significant burden to the budget, and there is great debate over just how this will affect the economy long-term.

For those in college during the 60s the time of sex, drugs, and rock n roll its hard to believe that marijuana has become legal. It is currently legal in some form in about 20 states and more are considering it, at least for medical purposes. Even Florida has strong proponents for the medical use of marijuana. There are always people who are trying to take advantage of the situation and this is no exception.

The big news during the past two weeks has to be the employment numbers that came out about 10 days ago. Most economists were looking for about 165,000 jobs being added to the workforce, but the June number came in at 195,000 jobs. This was higher than even the highest estimates.

Six years ago, in 2007, the trustees of Social Security projected that Social Security would run out of money, i.e., have a negative balance, in the year 2041. At the end of last month the trustees updated this projection and indicated that the trust fund backing the payment of Social Security would be zero by 2033. A zero trust fund does not mean the payment of Social Security benefits would also go to zero, but would drop to 77% of their originally promised levels through 2087. Is any of this getting Congresss attention? (Source: Social Security Trustees)

As we approach 2014 and ObamaCare starts to kick in, many people are thinking that the healthcare issues in our country will be solved in short order. Only time will tell what the impact of ObamaCare will be. In spite of the Republican Partys continued talk about repealing the law, in the unlikely event repeal were to occur, the aspects of ObamaCare that have already been put in place would continue. In other words, its hard to go backwards.

When the President put forth his proposed budget for the 2014-15 fiscal year which begins October 1st, he went out of his way to offer an olive branch to the Republicans on entitlement programs - especially Social Security and Medicare. The President proposed changing the cost of living adjustments in such a way that, over time, there would be significant savings to the government, but of course, take the money away from the recipients.

With the passage of the American Taxpayer Relief Act of 2012, a lot of people felt that things were set as it related to estate taxes. Apparently everyone believed that except the President, who has proposed several changes to estate tax law in his fiscal 2014 budget.

There may still be people rushing to the Post Office this afternoon or evening to get tax returns in the mailbox. Of course, many others will file for an extension. The first extension is for six months and is automatic. However, when you file your extension, you have to send in the money you think you will owe and file form 4868. If you dont file an extension, there is a 5% per month late filing fee. An underpayment could also be charged interest, and if the amount is significantly under what is owed there could be penalties as well.

As we began 2013 America was looking ahead to President Obamas second term, the passage of a tax bill that raised government revenue significantly, discovering that fourth quarter growth was virtually flat, corporate earnings that had only a few mild surprises to the upside and several to the downside, and finally, an increase in Social Security taxes of 2%. Then the sequester kicked in in early March, a band aid was used to patch the government together until the end of September, and we saw the nervousness the European markets, highlighted by Cyprus.

With the battle over sequestration going on in Washington, the President has made it clear he wants to raise more revenue. Just what does he have in mind? First, he would like to limit itemized deductions beginning at the 28% tax bracket. This means that taxpayers in the top three brackets would lose some of the benefit of their itemized deductions. Of course, these deductions have a phase out, so the effect may not be as great as is perceived.

So, what is the top tax bracket next year? For couples with earnings over $450,000, it is 39.6%. Oh, no. We're sorry. It's potentially another 1.19% which is the amount that is added to the marginal rate due to the cut-backs in itemized deductions. Therefore, the top tax rate is 40.79%. Oh, no. We're sorry. You could also lose your personal exemptions, which will add as much as another 1.05%, so the top tax bracket is 41.84%. Oh, no. We're sorry. We forgot the Medicare surtax on high wage earners of 0.9%, making the top tax bracket 42.74%. Oh, no. We're sorry.

By now you may have read more than you care to about the changes to income taxes. We avoided rushing to get you something as so many others did, so that we could provide you with some comprehensive and practical information. It is a long read, but we hope you find it to be worth your time.

HAPPY NEW YEAR EVERYONE!We don't know what you did on Monday night to ring in 2013, but the U.S. Senate was in session as they were attempting to avoid the so-called "fiscal cliff".At 2:07 a.m. on New Year's Day the Senate passed a bill, 89 to 8, which does a number of different things.Then late that same morning, the House also passed the bill.We are going to touch on a few of the highlights in this opening Bullet and promise to give a more detailed analysis in our mid-month Bullets.

So help us understandwhere did 2012 go? While we know time really fly, it sure feels like it does when we think that 12 months have almost passed. We want to wish you and your family the happiest of holidays! Please remember the women and men serving in our Armed Forces, especially those overseas.

Last year the post office lost almost $15 billion. You would think that postal rates would be going up, and they are. Effective January 27, 2013, the price of a first class stamp will increase to 46 while a postcard will increase to 33. Both are a one penny increase. Does the post office really think this will make a difference? We hope you have a lot of those "forever" stamps.

With the elections behind us, we must now look ahead to the next six weeks of a Lame Duck Congress. Given the fact that the President was re-elected, the Republicans maintained control of the House, and the Democrats gained in the Senate, we know there will either be collaboration or chaos in Washington. The positioning has already started. The more things change, the more they stay the same.

Hurricane Sandy rocked the East Coast on Sunday, Monday, and Tuesday, causing the stock exchange to be closed on Monday and Tuesday. It has re-opened today, October 31st. More importantly, however, given the strength and size of the storm, the loss of life was not nearly as great as it could have been. To all of our clients, colleagues, friends, family, and others in the region, we had you in our thoughts and prayers and we hope everyone is safe and that any inconveniences caused by the storm are not significant in nature.

Some recent research by InvesTech Research shows that the performance of the Dow Jones Industrial Average can indicate who will win the White House. James Stack, President of InvesTech recently released a study that showed in elections since 1900 90% of the time the Dow has correctly predicted the outcome of the election based on its returns from Labor Day until Election Day. If the Dow posts a positive return during this time period, the party in power keeps the White House and if the return is negative, they do not

The median household income adjusted for inflation is now around $50,000 for a "typical" American family. This is 8% below the all-time high, which was set in 2007. Driving these results, as reported by the Census Bureau, was the fact that 80% of Americans saw their household incomes decline, or at a minimum, remain the same, while the top 20% saw their incomes increase by 1.6%. Depending upon which side of the political spectrum you are on, an argument could be made for the policies of either President Obama or Governor Romney.

It is a heads I wintails you lose - scenario for American farmers. Everyone has heard about the drought throughout the U.S. being the worst since the 50s. However, dont feel too badly for the farmers as their net income will hit a record $122 billion this year. How can that possibly be, given all of the crops drying up? Easy. Since the supply is down and demand remains the same, the price has jumped dramatically and has offset the loss of yield per acre.

At one time during the dotcom craze, the NASDAQ closed over 5000, but, as it tumbled downward, it last crossed the 3000 mark on December 11, 2000; that is until it crossed that mark on March 13, 2012, or 11.25 years later. My, how the times have changed! The income tax was introduced in the U.S. in 1913. This means that when we file our taxes on April 15, 2013 for the year 2012, it will be the 100th year that income taxes have been paid.

There are bears out there who are extremely disappointed that the U.S. has not entered another recession over the past three plus years. Certainly, the 18 months of downturn in the markets that began in October of 2007 and culminated in March 2009 gave them a lot to cheer about. But, since then, they have looked everywhere possible to come up with bad news.

One of the so-called potential benefits of a 401(k) plan is the ability of the participant to borrow money from the plan. Generally, a participant can borrow up to $50,000 from the plan and pay themselves interest. The loan must be repaid within a five year period of time.

President Obamas Affordable Care Act was deemed constitutional by the Supreme Court. This means that unless something happens between now and the end of the year, on January 1st, taxes will go up for certain taxpayers: A 3.8% Medicare contribution tax for single taxpayers making more than $200,000, and married couples filing jointly making more than $250,000. Interest, dividends, rents, and capital gains on these groups will see an additional 0.9% Medicare tax applied to income.

Much has been said and written about the expiration of the Bush tax cuts at the end of 2012. The assumption is that capital gain rates will go back to 20% and that dividends will rise to 39.6% without consideration of the Obama Care surtaxes. Since tax law would revert to what it was before the Bush tax cuts, we would revert to a special provision in the Taxpayer Relief Act of 1997 that established a preferential 18% capital gains rate.

If you listened carefully to the CEOs during their earnings announcements, they were tepidly upbeat but upbeat nonetheless, as they looked forward into the remainder of the year. On a day-to-day basis the markets will be driven by the headlines and emotions. We encourage you to refrain from getting caught up in that fray. At the end of the day it will be about an economy that moves forward creating jobs and not one built on the back of debt.

What part of leadership are our elected officials in Washington not getting? Last month the Supreme Court heard the case regarding the Affordable Care Act and a ruling is likely to happen sometime in late June. Regardless of how the Supreme Court rules, healthcare reform is a topic which is here to stay. First of all it is estimated that by 2020 healthcare will account for one in every nine jobs in the U.S., adding 4.2 million jobs during this decade. As the Baby Boomers move into retirement there will be a need for an ever-increasing number of physicians, nurses, home health aides, etc.

It seems all investors have dividends on their brains these days. Apparently this is also true of corporate boards. Even Apple, which during the second Steve Jobs era did not pay a dividend, decided to use some of its $97 billion of cash for a stock buy-back and for a dividend. Based on a $600 share price, the yield would be approximately 1.8% when it begins paying its $2.65 quarterly per share dividend. The first payment will begin July 1st. The dividend amounts to about $9 billion per year, which is the second largest dividend payment, behind AT&Ts $14 billion.

Lets take a few moments to talk about GDP, the economy in general, and investor psychology. the GDP figures for the fourth quarter were revised from 2.8% to 3%. This marks the tenth consecutive quarter of growth, and given everything we know at this point its likely that the first quarter of 2012 will also reflect growth. In other words, we will have 11 consecutive quarters of growth. Fortunately the concept of a double dip recession has faded. Make no mistakethere will be another recession at some time in the future, but it will clearly not be a double dip recession.

When helping people with retirement and cash flow planning, we often have some detailed conversations concerning the costs of health care. Some retirees have a misconception that somehow, because of Medicare, things are free. Anyone who is a part of Medicare knows that is simply not the case. Not only do you pay premiums for Parts B and D, but there are some significant co-payments and deductibles attributable to Medicare, as well. Health care costs are estimated to be over $325,000 over the course of retirement for a 65 year old couple.

There was much to cheer about in the January jobs number, with unemployment dropping to 8.2% and 243,000 jobs being created; almost 90,000 more than was originally projected. On top of that, the government revised the November and December numbers, adding another 60,000 jobs to those two months, bringing the total number of people employed during 2011 to around 1.82 million. But, among all the good news that both sides of the political arena jumped all over, there remain some unpleasant facts.

If you dont think there is a huge disconnect between government spending and government revenues, perhaps some of the following facts will convince you. This information is important given discussions in Congress during the month of February regarding extending the payroll tax holiday to the end of the year, and how that will be paid for. For the fiscal year ending Sept 30, 2011 government spending equaled 24% of GDP, taxes collected were 15% of GDP. Combine the two and you can understand why the country is moving in the wrong direction.This cannot be sustained and it will require sacrifice.

The season for predictions is behind us and we thought it might be fun to come up with a few predictions that go out on a limb, both positively and negatively. Here are five semi-wild, but possible predictions for 2012. 1: Jobs, especially manufacturing jobs, return to America. 2: Switching from the economy to politics, the Republicans will hold a majority in the House, although they will lose some seats. 3: Turning to the world, the euro survives in spite of its being badmouthed over the past several months, and it strengthens late in the year. ...

The year 2012 is upon us and looms large for a number of different reasons. Within the next few days, the first of the Presidential primaries will begin and by early November we will know who our next President is and who controls Congress, along with many State Houses. Some astrologists believe this is the Age of Aquarius and according to the Mayan calendar, December 21st will be the end of time, or as some prefer to think of it (ourselves included) the beginning of a new age. Maybe the astrologists and Mayans have something going.

The third quarter of 2011 produced negative returns for just about every asset class in every country in the world. Although the markets have rebounded over the past two and a half months, the net worth of each American household fell, on average, by 4% during those 90 days. This was the largest drop since the fourth quarter of 2008 which marked the beginning of the Great Recession. While the bankruptcy of Lehman Brothers was the so-called catalyst for the decline in 2008, the decline from July 1st to September 30th this year was largely based on the fears of a default by the US government.

2012 may be the year that banks get back into the business of actually lending money. While some of the banks that avoided the real estate fiascos have been in a position to lend money to the most highly qualified borrowers, we should see a significant increase in lending by all banks during 2012. Like consumers, big banks spent the last few years repairing their balance sheets. They now need to find ways to deploy their capital other than using it for a write-off. Interest rates are about as low as they can go, especially for high quality borrowers.

October is a month that has provided much drama in the stock market through the years and this year is no exception. The S&P 500 was up over 11%, which is the second best October in history, and ended a five month losing streak. The S&P 500 was up 17.1% from October 3rdthrough October 28th. Those 19 days were better than 9 of the last 11 calendaryears. Do you see why market timing is virtually impossible?

Low interest rates have certainly hurt savers, even more so those who live on a fixed income. The current bubble in bonds will eventually pop, and many people will be surprised. But this ProVise Bullet is not about the risk in bonds today. Its more about the fact there is some good news as it relates to interest rates. First, mortgage rates are near an all-time low. A 30 year mortgage loan is available at an interest rate slightly above 4% and 15 year mortgage loans have been quoted at just a little under 3.57%. Even the IRS is getting into the act.

As the Congressional Committee of 12 meets to figure out what to do about spending and taxes, we thought you might find the following of interest: Again, some people think it would be a good idea to distribute purchasing power by taking more millions of citizens off the federal income tax rolls entirely. While everybody wants relief from high taxes, there are at least two things wrong with this proposal.

In our opinion, Congress and the President need to do two things. The first is to develop a long-term, permanent solution to the Tax Code and to remove regulations that are, at best, postponing the decisions of employers to hire, and in some cases, driving jobs overseas. Heres what we would do if we were leaders in Congress: we would identify each and every one of the parts of the package where there is common agreement and pass them as quickly as we possibly could.

In the widely anticipated comments from Federal Reserve Chairman Ben Bernanke at Jackson Hole, WY, he acknowledged that, for a number of reasons, the recession was deeper than originally thought. The recovery has been more modest than he would like, notwithstanding the fact that we have had nine months of economic growth since the recession ended, albeit anemic growth. Unfortunately, the media focused on more of the negative parts of his comments. Fortunately, investors heard optimism. Why did investors see something different than the media?

Volatility set a record last week when, for the first time in the Indexs 115 year history, the Dow Jones moved by more than 400 points for four consecutive days. The Index was down 635 points on Monday, up 430 points on Tuesday, down 520 points on Wednesday, and up 423 points on Thursday. We all know that the value of the underlying businesses did not change drastically even day by day. Jason Zweig said it well in his book, Your Money and Your Brain: In the short run, a stocks price will change whenever someone wants to buy or sell it and whenever something happens that seems like news"

It isnt different this timeits simply a different story. On a fundamental level we believe there will be continued growth in the economy and thus in the market. Maybe the growth will not be as great as most of us would like, but there is still growth. Our crystal ball cant tell us when the market will find a bottom, but it will find it and then recognize the fundamentals in place. Only the investor who panics and sells will, at the end of the day, lose money.

Recently, the Tax Court affirmed a tax deduction a family had taken for the 24 hour supervision needed for an elderly family member. Caregivers were hired-even though they were not licensed healthcare providers-and the family took a tax deduction for the cost of these caregivers. The IRS denied the deduction, but the Tax Court affirmed it. The Court went further by stating that the costs of maintenance and personal care services could qualify as a medical expense if a healthcare professional certifies that at least two of the six activities of daily living cannot be done without assistance.

With all the conversation about healthcare reform, sometimes we lose focus on what law is currently in effect. For those with Health Savings Accounts (HSAs), the annual cap on deductible contributions will be slightly higher in 2012, going to $6,250 for an individual with family coverage and to $3,100 for those insuring a single life. Anyone born prior to 1958 can put in an extra $1,000. On the other side of the equation, the limit on out-of-pocket costs for deductions, co-payments, etc., will rise to $12,100 for family coverage and to $6,050 for individual coverage.

There are a little over 30 days left before the U.S. will technically default on its debt. Congress is still playing Russian roulette with the economy and the stock markets. We have seen what this type of Russian roulette has done to the stock market over the past eight weeks. The Republicans have talked about tax cuts and spending cuts, while the Democrats have pushed for increased taxes and smaller spending cuts. Although this would have been a perfect time for a serious debate on tax reform at both the individual and the corporate level, both of these seem to have been pushed to the side.

The more things change, the more they remain the same. That trite expression has been applied to many different things. We are applying it to what may be an early stage tech ?bubble?. Almost every investor is familiar with LinkedIn coming out at $45 per share then jumping to $120 per share in the first day of trading before settling in at $90 per share. Other examples abound. The very popular Facebook is estimated to be worth $76 billion. We have to admit that at least some of the tech companies are actually making money today with viable ideas, but the valuations still seem a bit absurd.

As the first of the Baby Boomers begin to turn 65, they are being greeted with some bad news concerning Medicare and Social Security, especially since they hope to enjoy a longer time in retirement. Social Security is now scheduled to be exhausted by 2036, a year earlier than was projected last year. In addition to longer life spans, the 2% reduction in Social Security tax this year was a major factor in this updated information. As bad as things are for Social Security, things are worse for Medicare, which is projected to be bankrupt by 2024, five years sooner than was projected last year.

The following topics are addressed: Social Security goes paperless; the Forbes list of largest companies; overdraft fees paid by depositors; taxes paid by top earners; valuations of Treasury bonds; and others.

The news of Osama bin Laden?s death was cheered around the world ? especially in the United States. Although it took 10 years to bring him to justice, his death brought a sense of victory in the war against terrorism. Our thanks go out to our intelligence gatherers, who diligently compiled leads from a variety of sources, and the team of Special Forces who carried out the risky mission inside Pakistan.

Herb Meyer said during tough economic times family size tends to shrink because people tend not to get married, and if they do they try to avoid having children because they can?t afford them. It was only a few days after this talk that we read that the birth rate in the U.S. from 2007 through 2009 fell 4%, which was the single largest drop in any two year period since the mid 1970s. The stock market declined by 50% in the mid ?70s and interest rates climbed to over 20%. That?s right ? 20%! In short, a thriving economy creates a growing population which in turn creates a thriving economy.

Here we are at the end of the first quarter of 2011 and we watched the markets move basically upward for the first six weeks of the year, advancing as much as 8% in some cases.Then, uncertainty escalated around the world beginning in mid February.First, there was the fall of the Tunisian and Egyptian governments, along with unrest in other Arab countries. Then in mid March, Japan suffered its earthquake. Meanwhile, the U.S. government kept itself running by passing a series of continuing resolutions, while the politicians still could not come to grips with an approved budget and deficit.

Republican lawmakers may have gotten a PR boost for their attempt to cut $60 billion out of the budget. The Treasury Department announced last week that the largest monthly deficit in history was created in February, at $222.5 billion, surpassing the previous record set last February at $220.9 billion. As bad as it seems, the news wasn't all bad, as revenues were up 8.6% and spending was only up 4%. That's a move in the right direction. The biggest concern we have, and the one lawmakers have the least control over is rising interest rates.

Depending upon which survey and data you examine, the municipal bond market is arguably a $3 trillion investment opportunity and only $8 billion of those bonds defaulted during the past year. So, even if the defaults doubled, tripled, quadrupled, or were 10 times greater, it is still a very small percentage of all of the muni bonds out there.

Population growth is a key to any growing economy. When the population shrinks, so does the economy and conversely, when it expands, the economy not only has the opportunity to expand, but generally produces a better lifestyle. For all the problems that the U.S. faces, population growth is not one of them.

The November unemployment number rose to 9.8%. This means that 15.1 million people are out of work. Only 39,000 jobs were added in November, which was significantly below the expectations of most economists. There are two things to keep in mind. First, holiday season numbers fluctuate greatly and we believe the November number will be revised upward, although remaining weak. Second, the unemployment rate is a lagging indicator of the economy. In the early stages of a recovery, as more people begin looking for work, the unemployment rate actually goes up.

Is the new Congress going to be as wealthy as the current Congress? Why was there 1.3% less carbon deposited into the atmosphere worldwide in 2009 versus the prior year? These questions answered and more in this edition of Provise Bullets.

In the third quarter, America?s gross domestic product grew at a rate of 2%. While many so-called pundits talk about how ?sluggish? the recovery has been, at least we are not listening to anyone continue to spread fear by talking about a double-dip recession. When you consider that the construction industry, which is still in a recession, is an industry which normally helps lead the way out of a recession, it is not surprising that the economy is not growing faster. But it is growing.

If you still don't think a bubble exists in U.S. government bonds, then consider this: The Treasury just sold $10 billion worth of five-year Treasury Inflation Protected Securities at a negative yield for the first time ever. People buy TIPS to protect against inflation, and there is so much talk about inflation even though it isn't here yet, the yield on these five-year securities was -0.55 percent.

During the financial crisis and subsequent melt-down, many companies stopped paying dividends, while others reduced them substantially. In the third quarter of this year, however, out of 7,000 publicly traded companies, 299 increased their dividends while only 35 cut them. Given the very low yields on many other types of investments, especially bonds, dividends provide investors with another source of cash flow which can substantially aid them in retirement. Ray Ferrara also comments on the prospects for tax reform after the November elections, and the impact of health care reform.

A variety of topics are discussed, including market performance during September, the competition to be recognized as the top-rated college, Larry Summers' resignation, and the reaction to France's proposed austerity plan.

With 65 percent to 70 percent of our economy directly tied to the consumer, the 'simple' explanation to our current problems is that there is not enough consumer demand. Given that almost 10 percent of Americans who want a job can't find one, and there may be another 8 percent or so who don?t have any interest in getting a job or have simply given up looking, it should not be too surprising that demand is soft. Meanwhile, the 90 percent of people who are working are hunkering down and attempting to reduce their debt and/or build up savings.

Over the next 65 days it might be a bit rocky and it will therefore be important to look ahead six months from now rather than to get caught up in the moment. Investors are shunning equities for bonds, but one day not too far in the future, that trend will reverse. When it does, we could see a dramatic rise in the equity markets. ProVise also comments on Cisco's gloomy earnings report, U.S. GDP growth, falling consumer debt levels, the closing months of the campaign season and a possible real estate bubble in China.

Yields on 10-year Treasury bonds are hovering under 3 percent, which basically means that buyers anticipate inflation will only be 3 percent over the next 10 years. In spite of all the talk about deflation, however, can anyone really believe that inflation won't exceed 3 percent over the next decade given all the money the government has made available? That is why for the most part, ProVise is avoiding long-term bonds in their portfolios - remaining on the short to intermediate side of the yield curve.

The two most important aspects of the financial reform bill: (1) Congress told the SEC to come up with rules for a common version for a standard of care when providing personalized investment advice to individuals; making everyone (financial planners, stockbrokers, insurance agents, etc.) who provide these types of services do so with a fiduciary standard of care; (2) a mandate from Congress to the GAO to do a six month study about the regulation of financial planning as a distinct business. Recent data on retirement readiness is summarized and several other topics are covered.

Let's put into perspective one of the reasons our deficit is so high. In 1984, people with an income of $20,500 or less, the bottom 20 percent of earners, were paying 10.2 percent of their income in taxes; as of 2007 this rate was just 4 percent. Flip this and look at those with annual income of $74,700 or more, the top 20 percent of earners. They saw their tax rates go up from 23.8 percent in 1986 to 28 percent in 1996, and then back down again to 25.1 percent in 2007. The other 60 percent have seen a 4 percent to 5 percent drop in their average tax rate from the mid-80s through 2007.

Given all of the bad political and economic news, it could be argued that it is amazing that the markets have not done worse over the past six to eight weeks. Fundamentally, here in the U.S., it appears we are much better off than we were a year ago and significantly better off than where we were two years ago. There is a lot of long-term value in the market. On a year-to-date basis through June 15, the S&P 500 is up approximately 1 percent and, based on current economic data, a reasonable return of 8 percent to 10 percent is still realistic for the year.

Even though Social Security has built up a $2.5 trillion surplus over the past 25 years, it is projected that over the next 75 years the program will rack up a $5.3 trillion deficit. A new report from a special bipartisan Congressional committee recommends that we raise the Social Security tax, reduce benefits and increase the age of eligibility in order to make up the difference. ProVise also comments on Congressional salaries, a new scam targeting investors, taxes on IRA accounts, education and salary, primary elections, rising stamp costs and trust management.

Federal Reserve Chairman Ben Bernanke testified before Congress that he believes inflation will remain under control for the remainder of the year. He also talked about better retail sales and, perhaps as importantly, increased factory production, which could soon lead to the creation of more jobs. ProVise also comments on the hold on interest rates, lengths of historical bull markets, the ongoing health care debate, mortgage delinquency rates, home sales, nonprofit revenues, and the Forbes lists of the world's richest people and richest Americans.

While many investors feared that health care reform would hurt the market, the Dow Jones Industrial Average jumped 44 points just after the bill passed, and is now approaching 11,000. Some Wall Street experts predict the bill will boost demand for prescription drugs and medical care, offsetting the tens of billions that health care firms will pay to subsidize the plan. Provise also comments on the impact of the census, corporate budgeting for 2011, the weakness of the Tampa Bay economy, the rising savings rate, increasing Treasury bond yields, IRS audits and college basketball betting.

President Obama's budget for the upcoming year proposes some significant tax hikes, including a rate increase for the 33 percent income bracket to 36 percent, and an increase for the 35 percent bracket to 39.6 percent. This would affect married couples filing jointly with incomes above $250,000 and single people with incomes above $200,000. It would increase taxes by a total of $969 billion over the next decade. ProVise also examines consumer spending, healthcare reform and Warren Buffet's latest letter to investors, among other topics.

The euro zone and the International Monetary Fund, as well as the U.S. and other mature economies will likely intervene to prevent a Greek default. Too much help for Greece might keep Portugal and Spain from making their own necessary changes. Too many restrictions on aid, however, may lead Greece, Spain and Portugal to withdraw from the euro zone. Provise also comments on declining real estate prices, the 2009 fourth quarter earnings season, the discount rate, inflationary risks, U.S. debt held by China, stock market volatility and President Obama's new health care proposal.

Ray Ferrara of ProVise Management Group says state and local governments could face revenue shortfalls of $175 to $200 billion this year, and notes that tax increases to fill budget gaps may be counterproductive in the current economic climate. He also examines a number of other issues in policy and finance.

This client-oriented letter comments on a number of financial planning topics: the benefits of marriage (men now benefit more than women), the rise in scams due to low interest rates, the implications of volatility and how individual investors should view the market, new proposals for 401(k) plans, and a few others.