Building Retirement Confidence

Same Old Crimes

Good Morning!


Just a snapshot in time.  That is what these periods where fears seem to overwhelm too many become.  As Kansas told us back in the 70’s, “All they are is dust in the wind…”


Another line from a great song is rattling around in my brain again as I review the data in your morning note today.  It’s a great line and one that marks us as humans – no matter how many events markets overcome.  It’s from Dire Straits.  The song is “Iron Hand”.  The line is:


“Same old fear and same old crimes, we haven’t changed since ancient times.”


What can we learn from this thought?  How about this:  It should be no secret by now that a vast amount of the media coverage about Trump has been, well, less than stellar.  It’s the strongest, most negative coverage I recall any politician ever being covered with for such a lengthy time.  Eventually, one of them will tire out.


The lesson?


Well as you might guess, the impression to most is that the market has come under selling pressure driven by these “trumped up” fears.  In reality, since February 17th, we have literally gone nowhere.




The Bulls Have Exited the Building


In the chart below, we have pasted in the latest reading of bullish sentiment on the part of individual investors.  Surprise – it has declined.


According to the weekly AAII survey, bullish sentiment declined to just 25.71% from an already paltry 28.97%.


That’s the lowest weekly print since the election and a record 120th straight week of sub-50% readings.


Check the chart below:  bullish sentiment has clearly broken its string of higher highs that had been in place since mid-2016.


Were you and I only given this data, we would safely assume that the markets […]

Wasted Energy

Good Morning!


Hoping you and yours were able to enjoy a nice Holiday Weekend.  The last days of Spring Break are dawning and parents are getting kids back to school – with fresh tans for most it appears.


Meanwhile back at the ranch –


Last week ended much like most weeks do these days – with the crowd being pushed along to worry about something.  Anything will do these days.  Thursday (markets were closed Friday) was defined as a “terrible” day in the markets due to fears being raised on the Korean peninsula.  Seems we are back in the Bay of Pigs days, fresh with a new President few are willing to give a break.


As it was, a few things did happen:


The major averages were down Thursday – yes – but by less than 1%.


They are roughly 2%-4% off most recent all-time highs.


North Korea did do something – they launched a new missile – it blew up shortly after take-off.


They did not perform a nuclear test as feared.


The Barbell Economy continues to roll forward under the mess.


The media?  Ah, well, there was no real bloody news about the event – so it passed. What they should have said would sound something like this:


“After watching 59 Tomahawk missiles rain down on Syria, a MOAB cratering into a hidden terrorist camp killing nearly 100 bad guys and staring out over his coast at the US carrier fleet, Kim took heed and noticed there was a new Sheriff in town – quietly canceling the threatened and widely-covered/feared nuclear test.”


But heck – that would have been too honest.


As to market weakness concerns last week?


Many reasons of course – as always.  Chatter of earnings concerns, weak data, robots, China, Trump, defense, Congress’ failures, etc., etc.  Recall […]


Good Morning!


First and foremost, we wish you and yours a wonderful, safe

and blessed Holiday Weekend.


So here we are – the perfect answer to the boredom we have all suffered through since February 14 – a long weekend break!


If you felt like you were standing still – well, you were.  Technically – the market has gone nowhere in the last 7 weeks.  Lots of chatter, plenty of reasons to go down – and yet, here we stand – at the same spot.


By the way – that’s really good news.


If 59 Tomahawk missiles into Syria and 382 setbacks in Congress can’t knock this bull off course in any significant manner – even for a pause – it is telling us all something.


The contrary view is positive.  Sentiment stinks again as we note below for you – and after a second week in the 20’s for bullish readings in the AAII, I cannot tell you how good it feels.


Enjoy The Break


I cannot recall a time when the media cycle was so thick with things designed to make you worry.


Trump this – Trump that.  It’s pretty clear – less than 100 days in – there will be nothing the media thinks will be good coming out of DC from Trump.


Now that we know that – hunker down and ignore the garbage – we still have about 2800 more days to go : )


Back to the good news.  Have you noticed on how contrary good news has become in recent years?  It is downright scandalous to suggest the horizon may indeed be bright.  I had a broker-dealer owner tell me the other day, and I quote, “Mike, I know your Barbell Economy portfolios are exceeding the results in the market, but […]

WJBK Manage Your Money Like a Baseball Team

Scott spoke with Derek Kevra from WJBK with some tips on how baseball can help you with your finances.

The Parade Begins

Good Morning!


So here it is – even though Q4 earnings data seems like it just finished flowing in, we are staring into the teeth of the Q1 ’17 Earnings season starting this week.


We have repeatedly covered how one often sees a guiding down of numbers and then results are better than expected.  This is likely setting up as the case again.  Let’s take a look at the hard numbers according to Thomson Reuters I/B/E/S data by the numbers:


Forward 4-quarter estimate is now $135.14, with the quarterly roll (a record)
PE ratio: 17.4(x)
PEG ratio: 2.10(x)
S&P 500 earnings yield: 5.74% vs last week’s 5.54%
Year-over-year growth of the forward estimate: fell back to +8.3% with the quarterly bump vs the +8.96% (multi-year high) from two weeks ago.


Note the earnings yield for stocks – where the 10-year is back into the 2.3% zone.  Quite a risk premium and still showing signs of significant fear related to stocks.


Financials will kick the parade this week.  Airlines are later in the week and play a critical role in the Transport Index.  Note the semiconductor group has been a real leader – but also note summer is a time of “digestion” often in the sector.  So, don’t be surprised to see a pause after big runs – even with out-sized earnings reports.


The Larger Picture Elements at Hand?


Thomson Reuters is looking for 10% S&P 500 earnings growth for Q1 ’17.  Factset on the other hand, using slightly different variations, is looking for 8% growth.  Now, the historical pattern for S&P 500 earnings, were one to crunch all the numbers, is that “actual” reported earnings tend to exceed “estimated, expected” S&P 500 earnings growth by about 4%.


As such, with Thomson expecting a 10% S&P 500 earnings growth at the start of […]

You Can’t Make This Stuff Up

The higher the averages move, the bigger the setbacks feel.  We have often referred to it as altitude sickness – and it is set to be with us for quite sometime.


What’s worse?  There will be days not too long into the distance where we will see days when 500-points down cane become the norm.  As I am typing – the market is currently up a little bit more than the red figures in the headline screenshot above.


Don’t miss the best news of the day at the end of this morning note!


Not Normal


Color me shocked.


Jeremy Grantham – a fine gentlemen who has been around the money management world for decades.  You might find his latest remarks at WSJ on where we are in the fear / greed cycle as interesting as I did:


“It doesn’t have the characteristics of a bubble. A simple way of defining a bubble is that it has to have nearly perfect fundamentals which have to be irrationally extrapolated with considerable euphoria. Remember the style from 2000, Japan in ‘89, or the US housing market (house prices will never decline), or 1929 in the old days was a classic. We have none of that euphoria. We also have very imperfect fundamentals.”


“It’s only the other day that people were lining up to commit 10, 20, 30 year money for a guaranteed no real return. This is not a real prescription of mad desire to invest in the stock market.”


All this continues – along with the constant chatter in the media designed to keep you on tilt – even as demand for “safety” keeps bond rates low while we set records in GDP, output, cash, earnings, net worth, etc., etc., etc:

Check the yield numbers on the 10-year bonds from […]

Churn and Burn

Good Morning,


Just in case you missed the weekend note sent out Sunday morning, make sure you take a look.  It has some great data and solid charts – along with a few interesting insights.


In case you were wondering – our economy is still moving along – even after 80 whole days of Trump being President.  Wow.  Could it get nasty?  You know me – I hope it does. Sadly, with so many investors sure that there will be a correction to buy soon, my gut tells me we might have to wait awhile.


Here is the thing:  markets have a long term structure.  Many may assume that the 2000-2010 period was the only period we ever called a “lost decade.”  That would be, well – a mistake.  We called the 70’s a lost decade too.


Indeed, I heard about that lost decade for most of the first two years I was in this business in the early 80’s.  I heard about our bad President, the cloudy outlook, the very difficult economic data and the unclear national pathway ahead.  I heard about it then – 35 years ago – almost as much as I hear about it today.


Note – I said almost as much.


Lost Decades?


Let me give you a feel what what I think we ought to learn from a “lost decade.”  It is a time of change – a baton of power is passing.  Technological shifts are being made – and, most important for you and me – they are parallel to demographic and generational shifts as well.


The 70’s lost decade took place the the Boomer was just getting their legs.  They were “losers” then – just like Generation Y is today.  They were slackers, lazy, […]

Head Spinning

Good Morning,


I am slightly numb to recognize that we are at the end of Q1 of 2017 already.  What a road we have traveled – and my oh my, note how much has changed in the last 5 quarters.


Or has it?


Think back for a moment:  5 quarters ago, the year of 2016 was getting under way.  Back then, even early assumptions were that the election would bring 4 more years of the then current processes underway.


Wall Street – and business – was not too happy about that. Throw in fretting over China, cheap crude il sure to collapse the world as we knew it – and backlashes from the all too feared Brexit concerns, and one can see the reasons behind the panic which started the year.


There it was – we were at the start of the worst beginning for a year in the markets for over 8 decades.  That’s 560 dog years.


The DOW folded in on itself all the way down to just below 16,000 – a shocking start indeed.  More shocking?  That was over 4,000 Dow points ago.


Yet, just 4 quarters ago at this very same time, we were being told what?  It was the best recovery (intra-quarter) seen in 83 years.  In essence, everything that terrified the crowd 6 weeks earlier was gone.


And then it started – the race to the election.  That nutty Trump fooled everyone.  The issue overlooked was not Trump – it was people.  If you spend 8 years taking from some and giving to others, you only get more people with less.  Sounds too simple and maybe it was – but a whole batch of voters in the country proved otherwise.


And all the while, the fighting and gnashing […]

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Good Morning,


As the calls for the “Trump Rally Over” fade into the dark shadows – only to be replaced by new media hype – markets continue their trek.  As much as I would like to think there are always excellent things to report and much new information to review, often there is not.  This is one of those periods.


The healthcare issue taking the attention of many for the last several weeks has been hyped beyond all reason.  Many in the media forgot, I presume, that it It took Obama nearly two years to cram this down everyone’s throat to start.  Ending it will take longer than a few weeks.  Were I a political player, I might suggest letting it die first is the better deal.  Only then will the masses understand the difference between media hype, political meanderings and real-life facts.  On to taxes and regulations which is likely more important to the country for now.


How Many “Red” Days?


Often you read here that our view is the crowd’s “bullishness” is only skin deep.  Scratch on that confidence a little bit and you will quickly see their fangs.   While we were well off the lows yesterday, it was heralded in negatively as “the 9th day iin a row for a down close in the DOW.”


Keep in mind, we are all of about 3% or so off the most recent highs.  The point?  When you get a string of down closes and a very shallow setback (3% to 7%), they often appear later as just resting points.  Politics continue to muddy the water.  Chatter about Q1 earnings season will hit the airwaves in the next two weeks and summer will be here before you know it.


Promise […]