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What's Going On at InterGen Advisors

INTERGEN ADVISORS LOCATION CHANGE

InterGen Advisors is pleased to announce that we’ll be moving our office to a new location in Fox Chapel, Pittsburgh on Monday, January the 30th . Our address and phone number will be changing. Our new contact information will be as follows:

InterGen Advisors
1370 Old Freeport Rd. Ste 2A
Pittsburgh, PA 15238
(P) 412-406-8070
(F) 412-406-8071

Please update your records and speed-dials to reflect the new changes to take place on January 30th. We will still be available at our current location/phone number until the close of business on January 27st. Updates will be made to our website’s “Contact Us” tab to reflect the changes.

Please keep in mind this is only an office location change for us. This move will have no effect on your current accounts and requires no action on your part.

Thank You
John and Sean

Editorial On Market Volatility
9/09/2011

Back in 2003 an aggressive young Manhattan D.A. named Elliot Spitzer decided he had a big problem with some members of the mutual fund industry. The D.A. uncovered a small number of investors who were selling shares of their own mutual funds one day and then buying them back the very next day. This type of short term fund trading was allowable in many funds but was clearly at odds with the longer term “buy and hold” strategy of the vast majority of shareholders. The short term traders learned they could frequently make profits by selling or buying their mutual fund shares based on how foreign markets had closed 12 hours earlier. The D.A. had no problem with them making profits. The problem was the increased costs and higher volatility the short term traders were creating for the other shareholders. So D.A. Spitzer became the champion of long term fund investors by forcing fund companies to limit and/or penalize short term trading in their funds.

Fast forward to August 2011. Millions of long term investors in mutual funds, 401k’s, pension funds college plans and IRA’s must now concern themselves with a new wave of short term trading. I’m not referring to mutual fund shares in one day and out the next like back in 2003. That’s a snail’s pace by comparison to the new practices. Now speculative trading takes place hour by hour, minute by minute and even over the course of seconds based on mathematical computer models designed for quick profits. On several days in August 2011 this type of trading helped swing the DJIA back and forth by hundreds of points in less than one hour!

Arguments for and against this type of ultra-short term trading depend on who you listen to. The “Quants” and others who direct this trading argue that their activity provides much needed liquidity which is good for markets. The other side, long term “buy and holders,” with serious life goals riding on their 401k’s and IRA’s, argue that this trading creates a casino-like atmosphere which undermines confidence in the market, making it a dangerous place to invest serious money.

Are there lessons to be learned from the earlier Spitzer crusade which forced many mutual fund companies in 2003 to protect long term shareholders from the frenzied activity of the short termers? The solution then was to reduce short term trading by making it costlier to perform. A typical penalty might be 2% charged by the mutual fund company from share proceeds that were bought and then sold within a 30 day period.
But who can police and impose charges on millions of trades made minute by minute across the whole market? The IRS, that’s who.

Here is a common sense suggestion to protect long term investors without chasing traders from the market.

1) Change the current two holding periods (short and long term) to three periods (short, long and full term) The current definition of a short term period is 12 months or less. Is there
anybody who still believes that a buy/ sell transaction that takes place over a period of say, 10 months, can still be called short term in a world where trades are bought and sold in minutes? Let’s get real. 1) Short term must be redefined to a much shorter period more reflective of today’s trading realities. How short? Let regulators and Congress decide how much shorter. 2) Keep the long term definition as it is now at greater than one year. 3) But then add a third period, let’s call it “full term,” defined as five years or longer.

2) Adjust capital gains rates and tax loss deductions according to the new holding periods.

Since we are getting real let’s quit rewarding rampant speculative trading by disallowing tax loss write offs on short term losses and raise the capital gains tax rate on short term gains while we are at it. None of this will chase short-termers from the market, but it will make it costlier for them to play. Keep long term rates the same and still allow loss write offs. Then for the new “full term” holding period drastically reduce the capital gain tax down to 5% to reward those who invest long term in the economy.

This suggestion concerning holding periods and capital gain rate adjustments is just one possible solution to today’s increasingly volatile market. Hopefully new crusaders will add their voices to the discussion that will lead to action steps to balance the interests of all market participants.

John Barbour, CFP

The July issue of Pittsburgh Magazine is now available at the newsstand. In this issue we were named to the list of “Five Star” Wealth Managers for the third consecutive year. We have attached an electronic link ( see below ) that will direct you to a reprint of our appearance in Pittsburgh Magazine. We are grateful and humbled by this recognition and thank you for your confidence in InterGen Advisors.

InterGen Advisors 2011 5-Star Wealth Manger Accolade

We are pleased to announce that InterGen Advisors has made the 2010 list of Five Star: Best in Client Satisfaction Wealth Managers as named in the upcoming (July 2010) issue of Pittsburgh Magazine. This is the second time we have been named. Fewer than 7% of wealth managers in the Pittsburgh area made this list.

We were selected based on survey responses from thousands of consumers and financial service professionals in the Pittsburgh area. We encourage you to pick up the July issue of Pittsburgh Magazine and thank you for your confidence in InterGen Advisors.

Five Star Wealth Managers do not pay a fee to be included in the research of the final list. The overall survey score reflects an average of all respondents and may not be representative of any one client’s evaluation.

http://www.thepittsburghchannel.com/money/22992115/detail.html

Michelle Wright of WTAE News visited the offices of InterGen Advisors to interview Sean Barbour concerning ideas to improve credit scores. The broadcast segment aired Monday, March 29th, 2010 on the 5:00pm newscast.

We are pleased to announce that InterGen Advisors has made the 2009 list of Five Star: Best In Client Satisfaction Wealth Managers as named in the current (July 2009) issue of Pittsburgh Magazine. Fewer than 7% of wealth managers in the Pittsburgh area made this list.

http://www.thepittsburghchannel.com/money/16427183/detail.html

On Thursday May 29th, 2009 Chief Market Strategist for Advanced Equities Asset
Management, Craig Columbus, visited the InterGen Advisors office to discuss
market strategy. We took the opportunity to introduce Craig to Michelle
Wright of WTAE Channel 4 so he could share his thoughts with investors in
the Pittsburgh area.

http://www.thepittsburghchannel.com/video/15785803/index.html

John Barbour stops by the WTAE studios to discuss how 401k’s work with Michelle Wright for her Net Worth segment.

http://www.thepittsburghchannel.com/money/16574988/detail.html

John Barbour stops by the WTAE station to talk about how investment decisions must be made in light of the rapidly changing world. Through the use of a simple acronym, John reminds investors of four important “lenses” through which each investment strategy should be viewed.