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At Pennsylvania Capital Management, we recognize there is no single path to building wealth.  Your life experiences, goals and dreams are unique.  And you need people you can trust to provide personalized financial advice and expert guidance.  We create financial solutions that combine who you are with how you invest to help you get what you want out of life.


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2012 1st Quarter Newsletter
January, 2012

As we exit the holiday season, and focus on 2012, we continue to face new global surprises at every turn.  By now, investors are well acquainted with record-breaking market volatility in both directions, as well as the related influence of European woes. It is no surprise that the U.S. faces many of the same challenges as Europe, including political dysfunction, excessively high debt, unsustainable pension and healthcare systems, dependence on foreign energy and, of course, competition from Asia.  Additionally, developing countries, such as Brazil and India, have substantial capacity to increase personal debt and, therefore, consumption, supporting long-term growth in their respective economies.

The global markets are still hyper-focused on Europe, and the volatility we experience day to day in the market is consistently off the charts. In fact, our expectation at PCM is that the European economies may be growing very little, if at all, in 2012. We remain watchful of the lack of consumer confidence and the possibility of economic recession.  The odds of a recession are increasing, and both American business leaders, as well as the American public, are eagerly looking for stronger political leadership to encourage business spending.

In the Eurozone crisis, we continue to have major concerns about the countries that will likely need more financial support in 2012, including Portugal, Greece, Italy, France and Spain.  Due to these Eurozone concerns, we will be over-weighting the U.S. and reducing international equity exposure in your portfolios.  The biggest news for 2012 and beyond may not be related to Europe, the U.S. deficit, or even the U.S. presidential election, but how… many investors endured markets with higher volatility. Patience and persistence have always been essential to successful investing. Successful investors, including Warren Buffett and John Templeton, depend on this investment principle. PCM continues to focus on companies with superior business opportunities and to invest with money managers who demonstrate a commitment to global high-quality companies.

On the regulatory front, cost basis reporting is changing for 2012.  Custodians and broker-dealers will be required to report the adjusted cost basis of sold securities, including whether the gain or loss is short- or long-term, to the IRS on Form 1099-B.  This tax reporting requirement change shifts responsibility to custodians, including Schwab, Fidelity and TD Ameritrade. 

The requirements, which will be phased in over three years, 2011-2013, apply to:

  • Equities acquired on or after January 1, 2011.
  • Mutual funds, ETFs and dividend reinvestment plans (DRIPs) acquired on or after January 1, 2012.
  • All other securities, including fixed income and options, acquired on or after January 1, 2013.

Other requirements for custodians/brokers extend well beyond reporting cost basis. These include, but are not limited to, the following:

  • Ensure that the custodian/brokers can send and receive the cost basis for all types of security transfers;
  • Ensure that data from the cost basis system is compliant and reconciled with the existing 1099-B tax proceeds reporting system; and
  • Educate and communicate relevant impacts to clients (for example, FIFO is PCM’s chosen method of reporting cost basis for all client portfolios).  You will notice changes to the format which we currently use in reporting your cost basis in 2012.

On the home front at PCM, we are growing your team! In November 2011, Jason Ginenthal joined PCM, bolstering the client education and media development effort, where he is working diligently to take our articles and intellectual capital developed at PCM and bring timely, up-to-date insights to national and local communities.  He looks forward to helping you keep abreast of how the world is changing and up to date on our most recent literary creations.  Please contact PCM if you would like to receive each of the new articles by email as they are published.

In our assessment of opportunities and risks throughout the global markets, reality shows us we cannot control the outcome; we must therefore manage the risks and invest your portfolios based on the strongest probabilities that we can identify, to preserve your capital and build successful results over time.  The purpose of our ongoing meetings is to continue to inspire your thinking, review with you our insights and understanding of the global events that affect your portfolios and make appropriate recommendations to assist you in attaining your desired family and investment goals.

I am including two of my most recent articles for your reading pleasure.  We thank you for your ongoing trust and confidence in your PCM Team, and would welcome any comments you have on ways we can better serve you in the coming year.

We wish you and your family a Happy and Prosperous New Year!

Warmest regards,


Irvin G. Schorsch III and Glaucoma Service Foundation

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Follow Irvin’s blog on Huffington Post. He shares his perspectives on timely and relevant financial topics such as tax laws, estate planning, spending and saving in the current economy, raising fiscally responsible children and more. Click here to view his blog profile on Huffington Post: http://www.huffingtonpost.com/irvin-g-schorsch

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Follow Irvin’s blog on DoctorOz.com as he explores issues and topics related to financial health and well-being each month. Irvin shares tips on navigating the financial aspects of life’s challenges and milestones, from marriage and raising children, to college and retirement planning and more. Click here to view his blog on Doctor Oz: http://www.doctoroz.com/expert/irvin-schorsch-cima-cfp-aif

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Follow Irvin’s periodic blog posts on Seeking Alpha. Irvin share’s his insight and perspectives on managing personal wealth and navigating the challenges of today’s economy. Click here to view his blog profile on Seeking Alpha: http://seekingalpha.com/user/807219/profile