Weekend Reading: Cash and Cars

Dear Clients & Friends,

Two notes:  One is very important, and the other is too.

Why is there extra cash in my portfolio?

In the last week of 2017, some of you may have noticed several sales in your portfolio that resulted in a cash balance that is higher than normal. For the most part, these sales were part of our tax harvesting objective, which we perform each and every year during the month of December. This is an opportunity to lower your capital gains tax liability, and therefore increase the net returns of your investment portfolio.

Traditionally, the proceeds from these sales are immediately re-invested so as not to miss market performance. This year, however, the sales were mostly on the fixed-income side of your portfolio, rather than the “stock” side. Therefore, missing market performance for 20 trading days is not a concern. Short-term trading in fixed-income funds is problematic, and in some cases can result in an account being restricted by fund companies or regulators; thus, purchasing an alternative for only 20 days is not ideal. Therefore, we are carrying extra cash in many client’s portfolios for a short period of time. If we did engage in tax harvesting in your accounts, the extra cash will be re-invested shortly.

The short version of our message is: some of you have extra cash in your portfolio, we are aware of it, and it is intentional.

Why can this weekend’s weather damage my car’s engine?

We pilots have to deal with oil viscosity concerns during every flight because of dramatic differences in ambient temperature on the ground versus subzero temperatures at altitude in flight. This weekend, automobile drivers on the East Coast need to take caution as well!

Cars don’t mind sitting in the cold, and they don’t mind running in the cold.  But they hate being asked to wake up in the cold, and here’s why.

Oil is much thicker in cold temperatures than in the extremely hot temperatures inside your running car engine. But even though modern motor oil generally works well at temperatures as low as -30F, oil can look more like taffy than liquid when in the freezing cold. When you start your engine in freezing temperatures, this oil moves so slowly, and is so thick, that it won’t squeeze into all of the motor’s nooks and crannies. If you hop into your car and take off without letting it warm up, the result can be metal-on-metal contact, which can grind out minuscule, but extremely damaging, metal shavings. This is especially possible if you have not recently had your oil changed. If this happens, chances are that you’ll wind up with permanent damage to your engine or transmission.

All you have to do is let your engine idle for 3-5 minutes to allow the engine and oil to warm up before you drive away. Yes, its cold, but good things come to those who wait, right? Be patient and be prudent, or just don’t go out on Saturday, which is probably the best advice.

That’s it.  Have a lovely weekend, and for those of you on the East Coast, good luck!

Matthew Ramer, AIF®
Principal, Financial Advisor
MOR Wealth Management, LLC

1801 Market Street, Suite 2435
Philadelphia, PA 19103
P: 267.930-8301 | c: 215-694-4784 | f: 267.284.4847 |

601 21st Street, Suite 300
Vero Beach, FL 32960
P: 772-453-2810

matthew.ramer@morwm.com | www.morwm.com

The majority of this content was written and distributed MOR Wealth Management, all rights reserved. Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a registered investment adviser. Fixed insurance products and services offered through CES Insurance Agency.