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Prognostication2016 may go down in history as the poster child for the axiom that it is impossible to magically predict how the stock market will perform.  Of course, that makes much of the print you read, or gurus you watch or listen to, meaningless.  But don’t take our word for it.  At a presentation at the University of California on April 15, 2003, Steve Forbes, publisher of Forbes Magazine said:             “You make more money selling advice than following it. It’s one of the things we count on in the magazine business—along with the short memory of our readers.”Forbes is basically saying most investors would be better off if they covered their eyes and ears when any predictive information on the stock market appears on a screen or in written communication. Contrary to this meaningless daily dribble, our advisors consistently share with clients the empirically proven investment truths backed with fina...
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Trumping the MarketHow will the market react if Donald Trump wins the election?  That is the most popular question our advisors have been hearing over the past few months, especially as more states appear as “toss-ups” and their Electoral College votes going in either candidates’ direction.  Some investors think the market would tank were Trump to be elected.  Some think the opposite.  Most have no idea what will happen.  All are concerned.    Here is a partial list of items that could affect the economy and/or the stock market’s direction if Trump wins with a Republican-controlled Congress. Taxes – Trump’s desired lowering of individual and corporate income and federal estate taxes would put more money in people’s pockets.  This could result in a high degree of productivity gains, or leave the country with a multi-trillion dollar increase in the US deficit.   Either of those results would ...
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It’s Been Two Years and I’m Still Not Rich(er)!?Perhaps you’ve noticed that your portfolio’s value hasn’t been doing anything special for several quarters.  And if you are paying attention to the Dow or S&P 500, you may be wondering why your portfolio hasn’t kept up.  To get some idea of what is happening, review Chart 1 below, which shows some cumulative asset class returns over the last two years.  (All charts courtesy of Yahoo! Finance.)Chart 1The blue line represents US Large Cap stocks, the red line shows US Small Cap stocks, and the green line shows all Global stocks not in the US (Global ex US).  In fact, from their high in 2014, Global stocks ex-US have been down over 25%, which of course means they have experienced a bear market (defined as at least a 20% pullback) over that time period.  It helps to look at the bigger picture to fully understand what is happening.  See Chart 2 below.Chart 2Again, the b...
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And Lady Liberty Wept...Politics has always been a rough and tumble business. This year’s Presidential Primary season has proved no exception, and has been both hostile and humorous at the same time.    Certain candidates’ policy platforms include various proposals which would exclude certain groups of foreigners.    Without taking sides in this issue, it seems as though a meaningful percentage of voters agree with at least some of these proposals. You don’t have to be a xenophobe to think that the US might be safer, or stronger, if it isolated itself from certain groups of people.  At the same time, how can you argue with the inscription at the bottom of our most famous statue? “Give me your tired, your poor, your huddled masses yearning to breathe free.” It is at least a two pronged issue, dealing with both financial (taking our jobs) and physical (taking our lives) security.  Only time will tell who will be e...
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Cheap and PopularFirst Lady Kim Kardashian West. It has a nice ring to it, don’t you think?  A few months ago, Kim’s husband Kanye West -- a rapper, record producer and clothing designer, announced that he would be running for U.S. President in 2020.  Before you snicker, don’t forget about a current poll-leading, ultra-wealthy Republican candidate with huge ego and no political experience. Back to Kim. Her popularity was immense even before her third marriage and two children, before her $200 million video game smart phone app and her fashion magazine covers, and before her family’s reality TV show and retail stores.  Her fame started when her bombastically-enhanced hourglass figure was viewed in an erotic rendezvous that was “leaked” onto the internet over a decade ago.  Add a very suggestive wardrobe to the mix and you have that perfect combo – cheap and popular. In a somewhat different vein, cheap and popular is...
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Chicken Little or Zeus?Last month the market fell out of the sky. It caused quite a stir. Or not. It all depended on who was watching, and from what vantage point.Chicken Little freaked out.   She scurried about in the dirt, with clouds of dust swirling around her. She could barely make out Jim Cramer’s image on CNBC’s beloved Mad Money. All the noisy bells and buzzers and rifle shots and shrieking crowds didn’t allow her to really hear much of what he was saying. But she knew it must be bad. When the market was down 10%, Chicken Little decided there was no more hope, and sold her equity positions. This is what really bothered her:Zeus, on the other hand, wasn’t paying much attention to the commotion. From Mt. Olympus, things on Earth tended to look fairly small and unimportant. He viewed his investments from a distance, literally.   Zeus is clearly a long term investor. In fact, he actually looked forward to major market dislocations, when h...
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Most investors do not plan to act in a foolish manner. In fact, most probably think they do have a plan when they purchase an investment. In the light of day, when the sun is shining and birds are singing and children laughing, it is fairly easy to feel you can withstand whatever the market can throw at you. But when the weather changes and the pleasant noises stop, things change. When the markets plunge and the news is horrible and the monthly brokerage statements are getting worse and worse, many investors seem to forget whatever plan they may have had.
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Investors are no strangers to cycles. Seasons of the year, business cycles, presidential cycles, tax seasons, holiday shopping, and military engagements are all examples of cyclical types of behavior that are often predictable and definitely influence the markets. What time of the year does the most money flow into retirement plans? What quarter do toy companies earn 70%+ of their profits?
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The Pit and the PendulumJanuary 21, 2015In the above titled short story, an unfortunate prisoner has to endure two different types of torture. Readers who search for symbolism may likely view this tale as a figurative journey into the psychological depths of decision-making during stock market tumult. Unfortunately, after hundreds of seconds of internet research, I was able to confirm that Edgar Allan Poe died young (age 40) and poor. It is therefore questionable whether Poe intended to write an allegory about Wall Street with his macabre tale. But intended or not, the connection is clear.As a quick review, the story is about a prisoner, during the Inquisition, who wakes up bound and laid beneath a large razor sharp pendulum that lowers with each back and forth stroke, assuring death by slicing. He ingeniously rubs food on his binds, which are eaten by rats, thereby freeing him before the pendulum kills him. Unfortunately, trouble continues when the walls of the prison become red hot a...
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Watch What They Do, Not What They SayOctober 08, 2014High school football is in full gear. But for the best players -- those who will be receiving major college scholarships for their prowess on the gridiron, the journey is all but over. For the seniors, it started two or three years ago. During that time, these teenagers have been making grown men (coaches) kowtow – calling, texting, visiting their high schools and homes, and begging these youngsters to visit their universities and hopefully commit to their team. But the coaches are not the only ones. High school recruiting is big business. At least four national online recruiting sites, many connected with university alumni and major television sports outlets, cover these recruits, rating them with numbers and stars to signify their skill level and predicting their college choice. Rabid college football fans hang onto every word from both these adolescent stars and the “analysts” that cover them. Vibrant message boa...
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