The Economy: The economy appears to be expanding quite nicely and business optimism continues to rise as it approaches new records. The Left Coast, with its gateway to Asian trade, technology and Pentagon spending continues to boom along. Construction cranes fill the skies. New homes are stuffed into every nook and cranny. Roadwork and infrastructure projects are everywhere. New cars abound. Recently launched multi-million dollar yachts overwhelm the docks. Planes are jammed. Restaurants are packed. Exotic vacations are booked years ahead. The stock market confirms this rock ‘n roll fantasy narrative with many indices at or near their highs. Understand that only 3 tech stocks account for 70% of index gains this year. So the question is, “Can you be a cockeyed optimist and a contrarian at the same time?” The answer is yes. Now we’re entering earnings season with projections for year-over-year increases of 20%, Is this the beginning, the end of the beginning or the beginning of the end. Only Elon Musk knows for sure. China, Russia, North Korea, Syria, Turkey, UN, NATO, Trade Wars, Immigration Wars, SCOTUS Wars, Mid-Term Election Wars, Culture Wars, Religious Wars … and rising interest rates. Not to worry.
Food for Thought: Youth is wasted on the young and the wisdom of the ages is simply wasted. We will continue to emphasize the importance of interest rates and what the yield curve is telling us. While there will always be a bull market somewhere, most investors have a significant portion of their financial assets in fixed income. The old saw, “Stocks, bonds and cash.” The beginning point for most portfolio allocations is about 40% in fixed income; e.g. the bond market. So when I emphasize having an exit strategy, I’m particularly talking about having an exit strategy for fixed income. Contact me if you have questions on how to risk proof your portfolio.
The Economy: The economy continues to expand, the deficit continues to grow and the Fed continues to tighten. Sooner or later the tightening will bite … if Fed Chairman Powell can hold the line and not initiate QE-4 at the slightest hint of economic distress. What … worry? Every investor knows the Bull is long in the tooth. The question on everyone’s mind is, “When do I sell and what do I do next?” The bi-polar investment community continues to parse goat entrails, tarot cards, cloud formations and sentiment at the bottom of wine bottles in the age old quest to divine the future of the economy and financial markets. Glass half-full or half empty … when’s the next leg up or when does it implode? Do you care … or is catching that flight to Kauai more important than risk-proofing your assets? The 3 rules of Money are simple to understand: a) 1+1 will always = 2; b) If it sounds too good to be it is; c) Save it or spend it. The time of buy and hold may be nearing an end after almost 10-years. Passive investing as well. Every market crash has produced an altered investment landscape. ETFs may be the wild-card here. Do you have your next move or are you gonna ride this rocket back down and into the ground? If you’re doing it right, you should be sleeping soundly because you have a high probability of achieving your goals. Can you handle the truth?
Food for Thought: How to transfer investment or retirement accounts: Recently we’ve fielded questions from investors who want to transfer their investment or retirement accounts to a new advisor. Retirees in a 401k, people changing jobs and investors who just want a change have the same question, “How do I move my account?” The answer is a simple and easy 3-step process:
Step 1: Open an account with your new advisor; 30-minutes.
Step 2: Email your most recent account statement to your new advisor; 30-seconds.
Step 3: Have your new advisor initiate the transfer process; 0.
The transfer process is seamless, automated and does not require you to have contact with the advisor you are leaving. Most accounts transfer through an automated process called the Automated Customer Account Transfer Service (ACATS). In most cases, the transfer is complete in three to six days. No muss no fuss; no tearful exit interviews; no broken hearts. No more cousin Billy, your advisor for decades, knowing too much about your personal affairs. Move on to the land of milk and honey. Just Do It!