Tag Archives: Wealth Management

Ray Higgins on The 3-Rules of Money

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!

Christoper Walken Dances on The Economy

The Economy: Economic numbers come in two broad categories: 1) Hard data such as trade balances or housing starts and 2) Soft data such as sentiment or confidence surveys. Hard data is based on numbers. Soft data is based on how the respondent is feeling at that moment in time. You can dispute the numbers but the argument will remain grounded in statistics. Surveys based on feelings are completely subjective and should be taken with a dose of skepticism. Numbers this week neatly fell into these two categories. Hard data was mixed with initial jobless claims up, existing home sales and durable goods down. Soft data and surveys were positive with optimism and odds of a December rate hike falling below 50%. Geopolitical concerns have continued to weigh on markets as NOKO, Iran and trade wars remain unresolved. Stocks swooned over the Italians … But it’s officially summertime so don’t worry be happy. Grab the beach toys and head for the water.

Food for Thought: In keeping with the never-ending 73-year old Italian Opera Buffa, check out the Video of the Week link below. Few know that Christopher Walken is an accomplished hoofer. Lighten your day and watch him here or there. Courage! The latest Sign of the Apocalypse is another Italian Meltdown. Financial markets are having a hissy fit. It’s almost as if traders are trying to stay relevant in a world where the only thing that matters is what the Central Banks are doing. … and that remains unchanged . The 2012 ECB vow that they will do “whatever it takes” to keep the punchbowl full of moonshine remains in force. With the exception of the Fed, global central banks remain committed to free-money, for all, forever. How this ultimately plays out is anybody’s guess. Many investors see asset bubbles in both stocks and real estate. Others see compelling bargains. Both have seen years of gains. But while we know that all trends reverse, we don’t see anything to indicate an inflection point. Pick your poison. … onward into the Summer Doldrums.

Music of The Week: Beegie Adair’s “Dancing in the Dark”

Video of The Week: Christopher Walken Dances

We Quarterback Money®

– Ray

Proverbs 9:16

Bide your time.

There’s no time like the present

Forgive and forget.

Revenge is a dish best served cold

Never put off till tomorrow what you can do today.

Don’t cross the bridge until you come to it.

You’re never too old to learn.

You can’t teach an old dog new tricks.

A word to the wise is sufficient.

Talk is cheap.

It’s better to be safe than sorry.

Nothing ventured, nothing gained.

Don’t look a gift horse in the mouth.

Beware of Greeks bearing gifts.

Do unto others as you would have others do unto you.

Nice guys finish last.

Hitch your wagon to a star.

Don’t bite off more that you can chew.

Many hands make light work.

Too many cooks spoil the soup.

Don’t judge a book by its cover.

Clothes make the man.

Rio Olympics & Ballast Point Brewing

The Economy: The economy continues on its path of slow expansion with regional pockets of weakness and strength. If you live in Detroit things are grim. Likewise for California’s Central Valley. If you live in San Diego, well, you’re living in Paradise and the Livin’ is Easy. San Diego’s economy rests on the 3-legs of military spending, tourism and hi-tech/med-tech. Add craft beer to that trifecta with Ballast Point Brewing having recently been sold in a billion dollar deal. Entrepreneurs and their young families are flocking to the county as the allure of sun, surf, schools and simoleons resonates across the rest of the country.

Food for Thought: Economic news has been brushed aside by the 3-Ring Circus known as the 2016 Presidential Election. Who woulda thunk it. The preeminent military and economic power in the history of the planet boogying like a banana republic on steroids. Plato’s Cave would tell us that this is the end of the world as savages leap and yelp around the bonfire. But as the rest of the world looks on in stunned disbelief, we Americans know that this is simply the best and most original entertainment that we’ve seen in decades. Thank the gods for the station-break provided by the Rio Olympics.

Helicopter Money

The Economy: The U.S. economy is continuing on its path of sluggish growth. Once you dial-out the incessant noise you find that there’s been little change in trajectory. The End-of-The-World spasm that we saw with Brexit has been replaced with the usual complacency that central banks will provide additional trillions in debt to keep the global economy moving forward. Yet the Central Bank Follies are dwarfed by the global political circus. It’s May Day in Great Britain as the first woman PM since The Iron Lady, takes the helm. The Chinese claim to the South China Sea was slapped down by The Hague; a first step to internationally sanctioned military action. Our apolitical Supreme Court has jumped into Presidential Politics with one Justice proclaiming that The Donald is unfit to be President. In short, it’s business as usual.

Food for Thought: We continue to advise you to trust your personal experience as a guide to the direction of the economy. From a top-down perspective, the global economy appears to be slowing. Global stock markets are rallying in anticipation of increased central bank stimulus. To us, this is akin to giving a heroin addict more heroin. Though some indices have rallied to new highs, we find it noteworthy that many individual stocks and mutual funds have not participated in the party. For example: Citigroup is down 28% from its 2015 high; Boeing down 18%; Walmart down 19%. We remain cautious and advise taking profits. Restructuring your portfolio may be a prudent move.

Brexit Volatility

1981_09_15 Official Navy Lt Photo Guam

GO NAVY! BEAT ARMY!

The Economy: BREXIT!?! … or did it? Our poor Cousins across The Pond continue to spasm in the wake of last week’s vote. The end of the world scenario has been replaced by confusion, second guessing and dismissal by the Brits themselves. Talking heads are reveling in mindless chatter. The EU’s reaction has gone from “OMG No!!” to “Ok, if this is what you want, then get out now. We don’t want you hanging around.” Nature abhors a vacuum so the vacuous nonsense we’re hearing will eventually end. The consensus is that Brexit is an additional headwind for a global economy that’s already struggling with deflation. As with all things in life, there will be winners and losers. Because of this, we continue to emphasize that your personal experience is paramount. If Brexit is another headwind, then you must ask yourself which side of these headwinds am I on … With the Wind or Against the Wind?

Food for Thought: Preserving capital should now be your primary concern at this point in the economic cycle. Stock market indices are mixed as we end the first half of 2016; some up some down … and despite all the noise, multiple attempts to move to new highs have repeatedly failed. Investors should be leery of this repeated failure to move above year-old highs. Ask yourself, “What do I hope to achieve in a 7-year old, long-in-the-tooth, bull market. Clint Eastwood famously asked, “ … you’ve gotta ask yourself one question: “Do I feel lucky?”

God Bless America. Land of the Free; Home of the Brave! We have the best and brightest future at the dawn of the American Century. Have a Great 4th of July!

BREXIT

The Economy: Fed Chair Yellen appeared before Congress this week; Tuesday before the Senate, Wednesday before the House. Hostility towards Yellen was palpable with House members reducing her to confusion and gestures of helplessness. Global distain for authority in general and Central Bankers in particular was evident in spades. But the Mother of All Events was the Brexit vote on Thursday. Pollsters and pundits got it all wrong with their incessant predictions of a landslide win for “Remain.” Flashing the Longbowman’s “V” the Brits moved to reestablish their national sovereignty and leave the EU. Financial markets crashed in shock and awe on Friday. (Only fools are going to buy this dip.) The uncertainty of Brexit was quickly on display. Though the process is supposed to take 2-years, British politicians began to call to immediately disregard many EU laws; particularly those on immigration and banking. Political parties throughout Europe began to call for Exit Referendums in their own countries. This is the death knell for the EU. Great Britain is the second largest economy in the EU. Saying the EU will survive is akin to saying that a marriage is still intact after one of the spouses has left after leaving an “I’m thru with U” note nailed to the front door. It’s gonna get messy.

Food for Thought: For over 70-years global bureaucrats and central bankers have pushed the secular, one-world agenda characterized by multiculturalism, globalization and the tyranny of the minority. These mostly unelected officials, while deriding the Divine Right of Kings, have ruled with the arrogance of dictators. They have ignored the social contract based on the consent of the governed. Brexit signals the beginning of the end of their failed reign. Despite the near universal, and very vocal, support of “Remain” by global politicians and despite the total support by the mainstream media for “Remain” the Brits revolted against the overlords and their propagandists. Political ramifications were immediate with British Prime Minister Cameron resigning. The ripples are beginning to roil outwards from ground zero with economic changes in the wind. If a slowing global economy, negative interest rates and the failure of global monetary policy weren’t enough, Brexit adds to the uncertainty that has so paralyzed Janet nd the Seven Dwarfs. However, we see opportunity in chaos. Contact us for how to protect your assets in the coming roller coaster ride.

Cognitive Biases by Mark Dow

1. We overestimate our abilities, our uniqueness, and our objectivity, even more so when under emotional strain. We have all seen the studies: 90% of people say they are above average drivers. Rarely do people think those around them work harder or better than they do. And so on…

2. We systematically understate the role of ‘random’. We crave order, and we are willing to torture the facts to get there. But sometime things just happen, and sometimes problems don’t have solutions. No fundamental cause, no guilty party, no concrete answers. Moreover, on the up side, when random does break our way it’s appropriated as skill. The investment world is shockingly bad at separating outcome and process—yes, even those who drone on and on to prospects about their processes.

3. People will find a way to believe what they are incented to believe. As the saying goes, “The most dangerous place to stand is in between someone and what they want to believe”. In my experience, it’s hard to overestimate the power of this statement. Starting with the conclusion and reverse-engineering the supporting arguments is central to the human condition and, surprisingly, serves and important role in our evolution.

4. When presented with points 1, 2, and 3, almost everyone recognizes their validity, but believes at some level that he/she is exempt. The typical reaction is “Yeah, for sure, of course that’s how [other] people act”. It is always easier to see others’ mistakes than one’s own. And this is one of the reasons we have a very hard time changing our cognitive biases. All of us.

7 Realities of Life

7 Realities Of Life from the Libertarian Republic

1. Your Feelings Are Largely Irrelevant

Seriously, nobody who has already graduated college cares about your feelings. That means that when you complain to your boss because your co-worker mis-gendered you, he’s probably not going to bend over backwards to bandage your wounds. Given feelings are entirely subjective in nature, it’s completely unreasonable to demand everyone tip-toe around you to prevent yours from being hurt. The reality is that people will offend you and hurt your feelings, and they won’t stop to mop up your tears because they shouldn’t have to. Learning to accept criticism, alternative viewpoints, and even outright insults will make you happier in the long run than routinely playing the victim card.

2. You Cannot Be Whatever You Want To Be

This is a comforting lie parents have started telling their children to boost their morale in school. Unfortunately, millennials are now convinced it’s true, especially as society has now decided to push this narrative as well. The reality is if you’re 17 years old and still can’t figure out basic division, you’re not going to be a rocket scientist. If you’re overweight and unattractive, you’re not going to be the quarterback’s prom date. If you lack fine motor skills, you’re not going to be a heart surgeon. It’s okay to accept that you cannot be whatever you want to be. In fact, once you accept this, you’ll be able to focus on the things you can be — the things you really are talented at.

3. Gender Studies Is A Waste Of Money

You heard me. While some millennials taking useless degrees will claim they’re beneficial for teaching or research positions, the reality is that they just put themselves several thousands dollars in debt to learn how to be a professional victim. While you’re struggling to make ends meet after graduation because nobody who pays more than minimum wage is interested in your qualifications and you’re drowning in student loan debt, be sure to check out the next harsh reality before you start complaining.

4. If You Live In America, You’re Already In The 1%

That’s right. Even though you work at McDonald’s for minimum wage because you got a useless, outrageously expensive college degree, you’re still far better off than the vast majority of the planet. Don’t believe me? Fly to Uganda and check out the living conditions there. Fly to China, Saudi Arabia, North Korea, Iran, Russia, and even European countries like Ukraine and Greece, and you’ll quickly discover just how well-off you really are. While it may be cool these days to dump on capitalism, it’s the only reason you aren’t already worse off.

5. You Don’t Have A Right To It Just Because You Exist

That includes healthcare, guaranteed income, and somewhere to live. Just because you’re here and breathing doesn’t mean society owes you anything. Like the billions of people who lived before you, working hard is a better guarantor of wealth and the ability to comfortably take care of yourself than begging society or the government to do it for you. Demanding healthcare be a right, for example, is equivalent to demanding government force the taxpayer to pay for it. While that may seem like a good idea in theory, it only leads to rationing of care when costs become unsustainable, which negatively impacts not just your health, but everyone else’s, too.

6. You DO Have The Right To Live As You Please — But Not To Demand People Accept It

By contrast, you do have the right to live however you please, so long as it’s within the confines of the law. If you want to cross-dress, smoke marijuana, drink lots of alcohol, have lots of sex, and, yes, even go to school for gender studies, then by all means, go for it. Government should not be allowed to legislate people’s behavior as long as it doesn’t infringe upon someone else’s rights, but that doesn’t mean society isn’t allowed to have an opinion. You don’t have the right to demand people keep their opinions about your lifestyle to themselves, especially if you’re open and public about it. I have as much of a right to comment on the way you live your life as you do to actually live it. Your feelings are not a protected right, but my speech is.

7. The Only Safe Space Is Your Home

No matter where you go in life, someone will be there to offend you. Maybe it’s a joke you overheard on vacation, a spat at the office, or a difference of opinion with someone in line at the grocery store. Inevitably, someone will offend you and your values. If you cannot handle that without losing control of your emotions and reverting back to your “safe space” away from the harmful words of others, then you’re best to just stay put at home. Remember, though: if people in the outside world scare you, people on the internet will downright terrify you. It’s probably best to just accept these harsh realities of life and go out into the world prepared to confront them wherever they may be waiting.

La Jolla Shores Bull Market

The Economy: The U.S. economy appeared to be motoring along in slow gear until last Friday. Then the abysmal jobs report was released and it cast uncertainty into the equation. Immediately, the odds of a Fed hike in June went to zero as investors recalibrated their tactics. Then on Monday of this week Fed Chair Yellen warned against putting too much emphasis on one report. She indicated that rate hikes were still in the cards for 2016. Yep … like a snow ball’s chance … . The bottom line is this: The Fed doesn’t believe that the U.S. economy is strong enough to allow for normalization of interest rates. We are stuck at the zero bound which is causing havoc for savers, banks and insurance companies. But the Fed lacks the confidence in the economy to end financial repression. How this plays out is anyone’s guess. The Battle of The Analysts is in full swing with some insisting that the end of the world is nigh. Others are equally vocal in calling for an end to cash so that governments can more accurately monitor the economy. The NSA must be salivating over the prospect of knowing where every nickel you spend is going. We’ve never been fond of Central Banks, run by academics, trying to impose economic theory on the real world. For a beautiful example of Central Banker Mindset, see Paxton Whitehead as economics Professor Philip Barbay, in Rodney Dangerfield’s 1986 comedy “Back to School.” He truly gets no respect.

Food for Thought: Global growth rates continue to be cut. This is occurring while global stock markets rebound from their first quarter swoon. Is this divergence evidence of The Greater Fool Theory or is it The Dawning of the Age of Aquarius? Your choice. We remain strapped to the rocket but have both hands on the ejection lever. The principals here at Higgins Capital have lived through several market crashes. The crashes follow the same script: Months of warnings culminate in a tipping point that seems to catch everyone by surprise. Far too many investors go from rompin’ stompin’ bulls to deer in the headlights unable to process the environment until they’re down 40%. Do not let this happen to you. Have an exit strategy. Know what you own and why you own it. Have real or mental stops on your portfolio. Trust your own personal experience over that of experts. Are things in your personal economic life or the economic life of your organization going so well as to justify new highs in a 7-year old bull market? Why do we continue to hear about new and more economic stimulus? Beware of Central Bankers bearing gifts.