The firm of Bernard Herold & Co., Inc. was started 45 years ago by my father. In 1975 we added Herold Advisors…our asset management subsidiary…to our listing of services. In later years through to the present, we are providing buy/sell execution services to a growing number of other brokers.

We believe that the year 2017 will set some im-

We accept the challenge to keep you informed and to address your needs.

In this newsletter, we look at the markets, taxes and ETFs. We believe that keeping you informed on selected topics is part of our educational role. Our Advisors have been trained and have the ex-

can discuss these topic in more depth with you.

Although I cannot predict what’s next, be assured that we are anxious to continue developing ser-vices that will enhance the potential for growth in income and capital over the intermediate and longer term.

Best wishes.

Larry HeroldPresident

IN THIS ISSUE

P2 Financial Markets

Remain Unconcerned

P3 Let’s Talk Taxes 'Tis the

Season to be Giving…

P4 Exchange Traded Funds

[ETFs] Friend or Foe?

Bridging the Future

THE BERNARD HEROLD & CO., INC. newsletter

INVESTMENTS ADVISORY INSURANCE

Q32017

Although the “swamp” that is Washington is

Trump/Republican agenda, virtually everyone else continues to go about their business as if nothing of consequence is wrong. Despite legis-lative gridlock, the stock market experienced its

Jones Industrial Average rose 8% through June while the S & P 500 gained 8.2%. Led by the internet-related issues, the NASDAQ Composite was up 14%. Moreover, the advance continued

during the month of July.

the politics of a new administration had played

did “common wisdom” fare in this process? Not too well! Consider the following:

• price of about 2360 for the S & P 500 for a gain of 5.5%. That average stood at 2475 by the end of July, up 10.5% from its 2016 closing price.

• Stock market volatility has been noticeably absent for a long time. Instead of rising in anticipation of a market setback, the Volatility Index has been plumbing its lowest levels in more than two decades.

• Expectations that the Federal Reserve would be tightening interest rates throughout the year led analysts to issue dire forecasts for the bond market. The result: The yield on 10-year Treasuries declined to as low as 2.135% in late June.

• The U. S dollar was expected to strengthen in 2017 as the so-called Trump agenda spurred economic growth. As of this writing, the value of the dollar is down about 7% and over 10% in euro terms.

The 3rd quarter has begun on an upbeat note

toward double digit gains. Nevertheless, it is a fact that stock prices have outpaced the gain in earnings. Thus it is that Price:Earnings Ratios for many stocks…and for the market as a whole…are approaching all-time highs. As a prudent strategy, we continue to recommend the retention of a reasonable amount of cash reserves.

Financial Markets Remain Unconcerned

Q3 2017

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Inc. is a registered broker dealer founded in 1972 by Bernard Herold. It is a mem-ber of FINRA and SIPC and

to Institutional and Individual

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HEROLD ADVISORS, INC. was founded in 1975 also by Bernie Herold. It is an Investment Adviser regis-

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Let’s Talk Taxes 'Tis the Season to be Giving …

THE BERNARD HEROLD & CO., INC. newsletter

Q3 2017

Face it, you’ve been putting it off all year. Maybe you have to turn sideways to get in the storage room or have given up on parking your car in the garage. Well, the year 2017 is winding down and thus you have an even bigger incentive to clean out all that stuff. And you could earn a tax deduction for the effort.

If you itemize your deductions (use Schedule A), Uncle Sam will give you a bonus – a deduction on your tax return for donating all that stuff to a charity. This could result in a larger refund for you, but there are a few simple rules you must

First, the charity must be recognized as an ex-empt charitable entity. Qualifying are churches, schools, Red Cross, Amvets, Scouts, Salvation Army, Disabled American Vets, public libraries, etc. If in doubt, ask the organization or check the IRS website at IRS.gov.

Second, make sure you get a receipt from the charity for the donation. You’ll need it as proof of your donation. If your total non-cash donations are less than $500, you can list the amount on Schedule A. If more than $500, you are required to attach Form 8283 with the following information:

Make a list of the items you are donating to at-tach to your receipt. (Keep this receipt with your records – do not send in). Form 8283 asks for date of purchase (can be various) and the date of

the gift, the name of the charity and a list of the items donated. Additionally, you must indicate how you determined fair market value. Cost is what you originally paid for the items and value is what you could have sold it for at a thrift shop or garage sale.

Think of all those kitchen appliances no longer used; old toys the kids have outgrown; clothes that

furniture and anything else you no longer want. It is fairly easy to rack up $1000 in fair market value resulting in an additional refund of $250 if you are in the 25% tax bracket. Remember that clothing must be in above average condition – no old socks, underwear and soiled clothes you used for painting! So, get busy – get rid of the extra

The author is an enrolled agent, licensed by the US Department of the Treasury to represent taxpayers before the IRS for audits, collections and appeals. Only enrolled agents are federally licensed and have unlimited rights of represen-tation. To attain the enrolled agent designation, candidates must demonstrate expertise in taxation,

a stringent code of ethics.

Bernard Herold & Co. Inc.

CONTACT US ANY TIME

TO SET UP A MEETING

THE BERNARD HEROLD & CO., INC. newsletter

Achieving your

investment

objectives while

providing superior

customer service

LARRY HEROLD

New York, NY 10022Tel: 212-371-3950

MARIO GIAMMARCO

1190 Hylan Blvd.Staten Island, NY 10305Tel: 718-720-1600

New York, NY 10022

the dollar value of their trading activity last year was almost equivalent to one another.

There is little argument that ETFs in general have a place in today’s securities market. However, what could become problematic is if they “become the market!” As money pours into indexed ETFs, these passive funds buy securities in the same proportion as the indexes being tracked. Little or no regard is paid to company fundamentals or

work in buoyant markets, it remains to be seen

ETFs. Some analysts have issued dire forecasts about the possible outcome.

We invite clients and friends of Bernard Herold & Co., Inc. to discuss ETFs with one of our as-sociates to determine whether they have a place within the framework of their respective accounts.

Most of us consider today’s stock market still to be a market of stocks. But the reality is quite different. Despite a vibrant market for initial pub-

foreign company listings, the number of securities listed on the NYSE and NASDAQ exchanges has remained relatively static. In contrast, there are about 6,000 index funds currently in existence, a figure that compares with less than 1,000 a decade ago.

Passive index funds have been accumulating assets at rates approximating 60% annually. Hence their impact on stock trading is large and growing quite

traded securities were ETFs. Moreover, despite the fact that the market capitalization of the 100 largest ETFs is a mere fraction of the total value of a comparable number of large cap companies,

Exchange Traded Funds [ETFs] Friend or Foe?