Archive Page 2

Outlook 2019

The crystal ball is a little cloudy this year.

With the market and politics seeing more than the normal volatility, predicting what happens in 2019 is not an easy task. In order to take some guesswork out of it, I’ll share a bit of the process I use to assess the economy and markets.

But first, a quick look at how I faired for 2018. From my 2018 Outlook post:

The big worry at the beginning of 2018 was that the market valuation was too high, and a crash was inevitable. I was one of the few writers that pointed out that P/E ratios were going down not up. Specifically:

2018 Prediction 1: Below are the projected P/E ratios based on a level 2700 for S&P 500 and consensus projected earnings and earnings growth rates from http://www.YCharts.com.

  • 2017 – 20.54 P/E
  • 2018 – 18.46 P/E    
  • 2019 – 16.80 P/E 

Actual numbers from the WSJ: 2018 P/E (which is only through 2018 3rd Qtr.) 20.03 with Zacks full-year estimate at 17.5. 2019 end of year estimate 15.86:

2018 Prediction 2: In 2018 expect at least one 10% decline through the year, if not more. Do not be scared out. Remember that historically 10% declines are normal every year!

Actual: Two 10%+ declines for the year.

2018 Prediction 3: My feeling is that the yield curve will continue to flatten in the first half of the year with short term rates rising and long term rates flat or falling. But by the end of the year, the curve will start to normalize with long term rates reversing course and heading up

Actual: At the beginning of the year most feared rising interest rates. I was one of the minority that saw rates declining.

Now onto 2019

The first thing I always do is try and take in the big picture. A great website to do this is http://www.econpi.com. Econ P.I. looks at numerous indicators (go to their website for a full list and explanation), and plots where in the economic cycle we are based on those indicators. Below is a graph from October 2018.

Each indicator is plotted in a quadrant relative to its reading and the economic cycle. The red MOC box is the mean or average of all co-ordinates. The Green box is important as it highlights those indicators that are considered leading or predictive October of 2018 all looked good. But…

In the box above both the MoC and LD boxes have moved from the expansion to the decline quad. While still very solidly in the positive range, further movement toward the contraction quad will likely coincide with another 10% drop.

Earnings

The second step is to see if, what appears to be a slowing economy is impacting the economy. My favorite source for earnings information is from http://www.Zacks.com. Here is what the say:

“The (earnings) growth pace is on track to decelerate even further in the current and coming quarters, as we will show a little later…”

That is not good news for the stock market.

The Market

Below is a 1-year graph of SPY, the S&P 500 tracking ETF.

You can see the big drop that started in October, highlighted by the white declining line. The two parallel white lines highlight a trading range created between October and mid-December. We’ve since crashed and recovered, but seem to be heading for more movement within that earlier range. A sideways market is an indecisive market. At this point (01.25.2019) it is a coin flip as to whether the next trend will develop to the up or the downside.

What’s it all Mean?

I’ve said it before and I will continue to say it, “It is all about earnings”. Until I see forward earnings estimates adjusted up, and not down, I just see market volatility as the program traders whipsaw the market. Looking at the economic data, it is moving in the wrong direction overall. We won’t hit contraction/recession levels in 2019, but a slow growth environment is not typically one where we see rising earnings expectations either.

Bottom line: This is not a strong growth environment. Wherever the market goes during the year, at best a see a modest low double-digit return for the year, with all or most of the gain coming in the fourth quarter. Buy dividends and income until we see growth get back on track…and fasten your seat belts for more volatility. And remember,

Strategy matters – predictions do not.

Mr. DeShurko is a registered representative of Ceros Financial Services, Inc, (Member FINRA/SIPC). Ceros is not affiliated with 401 Advisor, LLC or Fund Trader Pro. The views expressed are those of Mr. DeShurko and do not necessarily reflect those of Ceros Financial Services, Inc., its employees or affiliates.

Mr. DeShurko is a registered representative of Ceros Financial Services, Inc, (Member FINRA/SIPC). Ceros is not affiliated with 401 Advisor, LLC or Fund Trader Pro. The views expressed are those of Mr. DeShurko and do not necessarily reflect those of Ceros Financial Services, Inc., its employees or affiliates.  Past performance is no guarantee of future results. 
All investing involves risk.

Advertisements

It Really is All About Dividends

All was not lost in 2018, if you had the proper plan.

2018 was brutal. 10% up and 10% down in the spring followed by an upward trending summer and early fall. Then Bam! The third quarter set near term records, and not in the right direction, culminating in a 15% drop in a month. What happened Santa?

Suddenly all the new market geniuses created since the election weren’t so smart after all. Simple trend followers were forced to consider that things like earnings and valuations really do matter.

Worse, everything was down. Every S&P 500 sector was negative. Bonds were negative. With seemingly no place to hide, what is an investor to do?

I recently had a conversation with a client that is going to retire this summer. Their concern was that they couldn’t afford the portfolio loss right before retirement. My response was that even with a loss on their net worth, the income, the dividends paid by their portfolio actually increased substantially in 2018. An investor will not go broke if they can live off their dividends and income.

But that is theory. How did it actually work? I did a quick analysis for this client. He owns 24 stocks, with about 30% of the account value in a money market – opportunity money. As the markets decline yields increase, so I have the cash to pick up higher-yielding quality investments later at lower prices to increase his income. Of the 24 stocks held 21 increased their dividend payout in 2018 over their 2017 payout. Two lowered their dividend and one kept it the same. Pretty good batting average. The average unweighted increase in dividends was 11.87%. Meaning the 11.87% assumes equal weighting of all holdings. Since his portfolio is not equally weighted he saw an increase proportional to his holdings, his change in income could have been more or less than 11.87%. So let’s just say +/- 10% on the year. That is a pretty good gain in income anyway you slice it.

This why I always talk about having a plan and sticking to it. Plans may not be needed in raging bull markets, but they are the key to survival in bear markets. Our plan looks something like this: Identify high-quality dividend-paying stocks; Identify those selling for under intrinsic value; Identify those with substantial free cash flow to enable them to increase their dividends annually. Part II is to follow our defined macro signals to raise cash as a market declines to create a war chest for buying more at better prices.

If you don’t have a plan, if you don’t know where your retirement income will come from, feel free to give me a call or drop me an email. We’ll show you how to navigate these markets without having to dust off the resume in retirement.

Happy New Years, and Wishes for Good Returns in 2019!

Bill DeShurko Ofc: 937-434-1790 or Bill@401Advisor.com

Mr. DeShurko is a registered representative of Ceros Financial Services, Inc, (Member FINRA/SIPC). Ceros is not affiliated with 401 Advisor, LLC or Fund Trader Pro. The views expressed are those of Mr. DeShurko and do not necessarily reflect those of Ceros Financial Services, Inc., its employees or affiliates.  Past performance is no guarantee of future results. 
All investing involves risk.

Bad Santa

December 5, 2018

As certain as Turkey on Thanksgiving, ugly Christmas sweaters, and carolers at the door, we have come to expect the “Santa Rally.” Unfortunately, this December is starting off to be the “Bad Santa” decidedly not a rally, rally.

Maybe because expectations are so high for a December rally investors seem more panicked then usual from the months rough start. For a little perspective let’s take a look at what history says about our rally prospects.

Since “Bad Santa” first appeared on movie screens in 2003, December has been the 3rd best month of the year, with an average monthly return of 1.47%. But Mr. Market Bad Santa has appeared more often than movie Bad Santa with 4 negative Decembers vs. 3 Bad Santa movies. Since 1950 Decembers have been positive 75% of the time. Good odds, but not something to bet on…or base investment decisions on. 

Let’s take a closer look at this year’s market as well, to see where we really are in terms of a correction. Below is a year-to-date graph of SPY, the iShares S&P 500 Index ETF.

Each bar represents a days price change for SPY, red bars are down days, green bars up days. The blue middle line is added as a reference for the markets starting level in January to its close on December 4th. Important take-a-ways: The market is just hanging on to a positive return for the year, from the peak in October through the 4th the market decline is less than 10%, and most of the post-October decline has been from just two really nasty down days. From mid-October to the end, while volatile, the market has moved sideways. Sideways means uncertainty, and uncertainty means volatility.

What does this mean? As I have repeated nearly every post, the market is dependent on corporate earnings, and right now there is a great deal of uncertainty about where corporate earnings growth will be in 2019. There are just too many moving variables to do real number calculations. Overall, economic statistics are still coming in very strong. But headwinds and uncertainty are growing; tariffs, higher interest rates, new congress, and a growing probability of a european recession. Will the second year of lower tax rates keep the U S consumer buying while the world around us is slowing? 

What’s an investor to do?  The market is going to be volatile until we get some history behind us of how earnings will play out for 2019. Maybe a January rally if  4th quarter earnings strongly beat expectations. But odds are the market will be very news driven, gyrate a lot, but keep a sideways trend.

Our advice? Be diligent, be patient, but most of all relax and enjoy a wonderful holiday season with loved ones and friends. It’s still early in the month, good Santa still has a good chance of showing up!

Mr. DeShurko is a registered representative of Ceros Financial Services, Inc, (Member FINRA/SIPC). Ceros is not affiliated with 401 Advisor, LLC or Fund Trader Pro. The views expressed are those of Mr. DeShurko and do not necessarily reflect those of Ceros Financial Services, Inc., its employees or affiliates.

Correction?

**Client Note: The market has very quickly fallen to levels where our indicators are starting to flash. The fact that they are at this point with what is really a very small selloff is a testament to what can happen very quickly. For portfolio updates and changes please log into the Client Only blog at http://www.401Advisor.com. For a password either call the office for Michelle or send me an email at: bill@401advisor.com.

 

Since the market peak in September it has dropped about 9% through Wednesday October 24th. Remember that based on history, the market will drop 10% once a year, 20% once every three years and 40% or more every ten years. These are averages. The market did not see a 40% drop from 1980 through 1999, but then suffered two from 2000 to 2010. If this dip hits -10%, it will be for the second time this year.

Normally at this point I write about this being way too early to read anything into this drop more than the usual volatility, and as I termed it in the spring “a hissy fit”.

This time is a little different. While all the bull signs are still in place, there is one very big difference. There is only one thing that ultimately matters to stock investors and that is earnings. And more specifically the direction of earnings. While next year’s earnings will most certainly be positive, expectations are that growth will be about 1/2 of what we saw this year. That is expected and considering the massive boost corporations received from the tax cuts, 1/2 really isn’t so bad. But with reduced expectations comes legitimate worries.

At 17% earnings growth (expected for full year 2018), companies can absorb the hits from tariffs, higher wages, higher oil costs, higher interest rates…. But at 8% – 9% growth (expected in 2019) there is far less cushion to absorb the hits to earnings and maintain the growth that goes with current valuation levels. 2019 will be a tug of war between continued economic stimulus from individual tax cuts and the fore-mentioned negatives.  Volatility will be back.

What does this mean now? Normally I would brush this off. But times aren’t normal. I have alluded to before, and will try and devote a significant blog to the subject, liquidity is drying up. What this means is that when selling starts it can snowball fast. And we have seen a hint of this over the last couple of days. While I think a rebound is probable, if instead we see a continuation of the selling we could be at -20% or more very quickly. This can be a good test to any investment strategy.

News That Matters

At 401 Advisor, LLC our Broker/Dealer is Ceros Financial Services, whose main office is located in Germany. I received their monthly newsletter in today’s mail and thought I’d pass a part of it along. With all the political in-fighting dominating our US news, I thought it was interesting what Europeans are concerned about.

How many of these events were you even aware of?

CEROS NEWSLETTER
EXECUTIVE SUMMARY OF POLITICAL AND ECONOMIC NEWS WITH REGARDS TO IMPACT ON ASSETS

Selection of global news events 2018

31 August 2018 –  Islamist motivated knife attack in Amsterdam, 2 seriously injured,
the Afghan perpetrator arrived via Germany
2 September 2018 –  British Prime Minister May prepares England for a hard Brexit,
there will be no second Brexit vote.
4 September 2018 – Typhoon ‘Jebi’ with wind speeds of over 200 km/h meets Japan
6 September 2018 – 7.8 magnitude earthquake in the Pacific Ocean
Assassination (knife attack) on the conservative Brazilian presidential candidate
Jair Bolsonaro
7 September 2018 – «Syria Summit» in Iran with Turkey and Russia
9 September 2018 – Stalemate following parliamentary elections in Sweden
Knife attack in Paris, perpetrator is Afghan
12 September 2018 – EU Parliament launches sanctions proceedings against Hungary

22 September 2018 – Islamist attack on a military parade in Iran with many dead
25 September 2018 – Merkel’s most important supporter, Volker Kauder, is voted out of office by the CDU/CSU parliamentary group as leader of the parliamentary group.
28 September 2018 – Tsunami in Indonesia, triggered by a severe earthquake measuring 7.5 on the Richter scale off the Sulawesi coast
30 September 2018 – USA and Canada agree on new free trade agreement
6 October 2018 – Donald Trump’s conservative candidate for Supreme Court,
Brett Kavanaugh, is confirmed by the US Senate
5.9 magnitude earthquake in Haiti
7 October 2018 – Conservative candidate Jair Bolsonaro wins the first round
of presidential elections in Brazil
14 October 2018 – Bavarian state elections, Christian Social Union (CSU) were handed their worst result since 1954

Why does it matter? Many market observers feel that one of the more likely scenarios that could cause a major market sell-off in the US would be a financial crisis emanating from Europe. If all your news is US-centric, you may want to broaden your reading list!

And a final thought from the legendary investor, Benjamin Graham:

What’s needed first is a definite rule for purchasing which indicates a priori that you’re acquiring stocks for less than they’re worth. Second… you need a very definite guideline for selling.

What are your rules and guidelines?

Happy investing.

Time to Worry?

The market selloff over the past week has left many pundits scratching their heads. While reasons abound; trade, tariffs, rising interest rates, soft global economy, Italy… none of them are new. They have all been on the horizon for months if not all year. The question that is more appropriate is not “Why?” but “Why now?”.

Every time the idea that this bull market is over comes to the forefront, I have been quick to remind that the bull market is based on one thing, and one thing only. The ability of this economy to continue to generate growing earnings for the majority of companies that have publicly listed stock. Period. Things like interest rates and tariffs do matter, but not in and of themselves. They only matter to the extent that they can impact and reduce corporate earnings. But the economy is affected by hundreds, if not thousands, of events on a daily basis. Adding millions of workers to the labor force has been a powerful stimulant that has offset much of the headwinds. The trick then is to determine the net affect that they all have in sum on corporate profitability. No easy task.

So why now? My guess is that with third quarter earnings season really kicking off today, investors just got nervous that a small hiccup could wipe out the years gains in many of their holdings. No one ever went broke taking a profit. No reason to turn paper gains into paper losses.

With solid earnings today, led by a solid beat by J P Morgan, a bit of rationality has returned. This economy is strong. A recession is not in the cards.

Does that mean more double digit returns for the market? Not necessarily. Zack’s estimates that this years earnings growth will be in the 17% range, dropping to under 10% for 2019. If the Fed keeps raising rates, Europe, Japan, the emerging markets can’t get their economies going, a trade war, maybe throw in a European financial crisis, and the result is that the U S market will be in far more jeopardy if growing at a 9% earnings clip than a 17% rate.

Bottom line: What we have seen so far in October might be the “new normal” for the market in 2019. Are you ready for that kind of ride?

Good luck.

bill@FundTraderPro.com

Outlook

As an investment advisor I make my living by investing on behalf of my clients. The better the economy, (more often than not) the better the stock market performs. The better the stock market the better off all of us investors are. From a social aspect, the bigger the economy the more money for the Federal budget – whatever your preferences may be; military spending, infrastructure, health care, trade… The more revenue generated through economic growth, the more we as a nation can accomplish.

Currently there is just no denying that economic growth is stronger than it has been in decades, and despite warnings to the contrary, it is showing signs of further acceleration. Bull markets can end for a number of reasons, but a recession is not one that we face in the near future.

Which brings me to the point(s) of this post.

Negative investment news persists regardless of economic reality. The market is going to crash because:  N. Korea, Iran, trade wars, tax cuts, rising interest rates, or just simply because it’s been going up for too long.

Where ever your politics lie, as an investor, I hope you have come to realize that following the media and their “bold” predictions is a sure way to prevent wealth creation.

Bull markets end because the outlook for earnings growth deteriorates. Period. Earnings can decelerate for a number of reasons. A cyclical economic slowdown (old fashioned recession), a financial crisis (worries are brewing), or an exogenous event (9/11, major natural disaster, war…). While an exogenous event is unpredictable, there are warning signs to watch for, for the first two. Let me address a couple of the theories that abound that we are heading for an economic slowdown.

Trade Wars.

We import more than we export. The US not buying goods from other countries will hurt them much more than other countries not buying goods from us. Virtually everything we import we can make ourselves, it might cost more, but also creates jobs. President Trump is counting on this very simple reality to reverse a trade policy that was created to address global reconstruction after WWII. By negotiating one on one with our trade partners, he feels we can “normalize” policy to one that puts us on a more equal footing with our partners. Do we really still need to be protecting German manufacturing by allowing tariff’s on our goods?

Bottom line is that agreements will be renegotiated because it is in everyone’s best interest to do so. China will come along slowly. If they want to play with the big boys (membership in the WTO) then they need to act like a grown up, not a 5 year old begging for a candy bar handout at the grocery store. Stealing intellectual capital is not a grown up world activity.

Mexico, as one of our most important allies has been at the forefront of negotiations. And the market rightly celebrated a new agreement with a 200+ point DOW day.

Yes there will be some disruptions, some winners and some losers but the overall economic effect will be nil. If you don’t want to read company reports and financial statements to determine the cost of higher tariffs, then just avoid individual stocks for now. There are plenty of ETF’s to offer enough diversification to circumnavigate the Harley Davidson’s (HOG -13.04% YTD, 8/28/2018). Try IYT, the iShares Transportation Average ETF, +7.33% YTD.

The bull market will end because this is one of the longest bull markets in history.

So what? Last I checked the stock market doesn’t understand the concept of a calendar.

Remember, the market comes to an end when earnings falter. So a better “time” gauge might be GDP. (“Nominal” GDP used)

  • Annual GDP bottomed in 1933 during the Great Depression, 10 years later it had grown by 356%
  • 10 years after the 1948 recession GDP had increased by 186%
  • In 1962 GDP was up 164% from the 1953 recession
  • In 1969 GDP had increased by 187%
  • Up 266% 10 years following the 1970 recession
  • Up 208% in 1990 after the 1980 recession
  • Up 171% from 1990 – 1991 recession

From 2009 to through 2017 GDP has risen by 134%

So how is it that this recovery is on its last legs? Yes, we could be getting close based on the 1962 recovery, but we could also only be ½ way there based on the 1970 recovery. Are you really willing to sit in cash knowing that historically GDP could still double from here?

  • Consider the Atlanta Fed raised their estimates for Q3 GDP to 4.6%. If that number were to hold up for 12 months; that would add $890 billion to GDP and approximately $179 billion in tax revenue. Now if we can only control spending…
  • Consumer confidence just blew away expectations coming in at 133.4
  • Richmond Fed manufacturing index beat expectations by 26%!
  • Unemployment well under 5%
  • ISM manufacturing index hit 14 year high

And the list goes on…..

What’s an investor to do?

Invest, because that is what investors do!

With one caveat…what’s your exit strategy?

I mentioned above that signs of a new financial crisis are starting to show….I’ll address those cracks in a future blog…I also said that an exogenous shock is unpredictable. I’ve also written about how a likely lack of liquidity could turn a relatively minor hiccup into a major sell off…

Understand the need for an exit strategy now? If you don’t have one be very certain that the day I say “I told you so” will come! Better idea – send us a message and we can help work some strategic planning into your retirement portfolio.

Good Luck,

Bill

wdeshurko@fundtraderpro.com

Outlook

While I try and avoid politics in my posts, let me just say this, about that. As an investment advisor I make my living by investing on behalf of my clients. The better the economy, (more often than not) the better the stock market performs. The better the stock market the better off all of us investors are. From a social aspect, the bigger the economy the more money for the Federal budget – whatever your preferences may be, (and this is what politicians should be debating) military spending, infrastructure, health care, trade, or maybe even paying down the deficit… The more revenue generated through economic growth, the more we as a nation can accomplish.

There is just no denying that economic growth is stronger now than it has been in decades, and despite warnings to the contrary, it is showing signs of further acceleration. Bull markets can end for a number of reasons, but a recession is not one that we face in the near future.

Which brings me to the point(s) of this post.

The stock market negative news hasn’t stopped since the day of the election. The market was going to crash and never recover, pick your reason: the election, N. Korea, Iran, trade wars, tax cuts, rising interest rates, or just simply because it’s been going up for too long.

Where ever your politics lie, as an investor, I hope you have come to realize that following the media and their “bold” predictions is a sure way to prevent wealth creation.

Bull markets end because the outlook for earnings growth deteriorates. Period. Earnings can decelerate for a number of reasons. A cyclical economic slowdown (old fashioned recession), a financial crisis (worries are brewing), or an exogenous event (9/11, major natural disaster, war…). While an exogenous event is unpredictable, there are warning signs to watch for, for the first two. Let me address the theories that abound that we are heading for an economic slowdown.

Trade Wars.

We import more than we export. The US not buying goods from other countries will hurt them much more than other countries not buying goods from us will hurt us. Virtually everything we import we can make ourselves, it might cost more, but it would also create jobs. President Trump is counting on this very simple reality to reverse a trade policy that was created to address global reconstruction after WWII. By negotiating one on one with our trade partners, he feels we can “normalize” policy to one that puts us on a more equal footing with our partners. Do we really still need to be protecting German manufacturing by allowing tariff’s on our goods?

Bottom line is that agreements will be renegotiated because it is in everyone’s best interest to do so. China will come along slowly. If they want to play with the big boys (membership in the WTO) then they need to act like a grown up, not a 5 year old begging for a candy bar handout at the grocery store. Stealing intellectual property is not a grown up world activity.

Mexico, as one of our most important allies has been at the forefront of negotiations. And the market rightly celebrated a new agreement with a 200+ point DOW day.

Yes there will be some disruptions, some winners and some losers but the overall economic effect will be nil. If you don’t want to read company reports and financial statements to determine the effects of higher tariffs, then just avoid individual stocks for now. There are plenty of ETF’s to offer enough diversification to circumnavigate the Harley Davidson’s (HOG -13.04% YTD, 8/28/2018). Try IYT, the iShares Transportation Average ETF, +7.33% YTD.

The bull market will end because this is one of the longest bull markets in history.

So what? Last I checked the stock market doesn’t understand the concept of a calendar.

Remember, the market comes to an end when earnings falter. So a better “time” gauge might be GDP. (“Nominal” GDP used)

  • Annual GDP bottomed in 1933 during the Great Depression, 10 years later it had grown by 356%
  • 10 years after the 1948 recession GDP had increased by 186%
  • In 1962 GDP was up 164% from the 1953 recession
  • In 1969 GDP had increased by 187%
  • Up 266% 10 years following the 1970 recession
  • Up 208% in 1990 after the 1980 recession
  • Up 171% from 1990 – 1991 recession

From 2009 to through 2017 GDP has risen by 134%

So how is it that this recovery is on its last legs? Yes, we could be getting close based on the 1962 recovery, but we could also only be ½ way there based on the 1970 recovery. Are you really willing to sit out knowing that historically GDP could still double from here?

  • Consider the Atlanta Fed raised their estimates for Q3 GDP to 4.6%. If that number were to hold up for 12 months; that would add $890 billion to GDP and approximately $179 billion in tax revenue. Now if we can only control spending…
  • Consumer confidence just blew away expectations coming in at 133.4
  • Richmond Fed manufacturing index beat expectations by 26%!
  • Unemployment well under 5%

And the list goes on…..

What’s an investor to do?

Invest, because that is what investors do.

With one caveat…what’s your exit strategy?

I mentioned above that signs of a new financial crisis are starting to show….I’ll address those cracks in a future blog…I also said that an exogenous shock is unpredictable. I’ve also written about how a likely lack of liquidity could turn a relatively minor hiccup into a major sell off…

Understand the need for an exit strategy now? If you don’t have one be very certain that the day I say “I told you so” will come! Better idea – give us a call and we can help work some strategic planning into your portfolio.

Good Luck,

Bill

bill@401advisor.com

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Mr. DeShurko is a registered representative of Ceros Financial Services, Inc, (Member FINRA/SIPC). Ceros is not affiliated with 401 Advisor, LLC or Fund Trader Pro. The views expressed are those of Mr. DeShurko and do not necessarily reflect those of Ceros Financial Services, Inc., its employees or affiliates

Happenings at 401 Advisor, LLC

While we are in the midst of the summer doldrums for the market, I thought the timing was good for an update on some changes at 401 Advisor, LLC.
First I’d like to introduce and welcome Jim Kilgore to the team. Jim served on active duty in the United States Air Force for 20 years and retired in 2014. His passion for investing has led him into the financial services industry. In a short span Jim has accumulated an array of skills in the financial services industry. He has spent time with an investment advisor that was also involved in the property and casualty insurance industry and will use this experience in working with Greg Fay, owner of Greg Fay Insurance who works here in our building on Franklin St. He will also complete his tax preparation certification that will enable him to work with and provide tax advice while working with the professionals at P&A Tax Services, (also located here at our location) and other tax advisors as well..
With Jim’s addition and skills we will be able to offer clients a values based financial/wealth planning service above what we have offered in the past. A special interest for Jim is a focus on families with a special needs family member. In Jim’s experience special needs financial planning is unlike the traditional “Money Magazine”-style financial planning where you buy a home, raise your children, plan four years of college education and retire. Special Needs Financial Planning is preparing for two generations. Once the planning is in place, 401 Advisor’s fiduciary commitment fits perfectly with the responsibility to properly manage financial assets in meeting both the parent’s goals and providing for the lifelong needs of their child with special needs.
If you are interested in a comprehensive financial evaluation, give either Jim or myself a call and we can discuss how we may be able to serve you best.

Jim currently holds series 6, 7, and 66 securities licenses. Additionally, Jim holds his life, accident & health as well as his property & casualty insurance licenses.
Jim is active in several non-profits and volunteers with his family in many community projects and activities. When Jim is not working, he enjoys fly fishing, hunting, and playing golf. Jim, his wife Laura and six children live in Springboro, Ohio.
Second, at the suggestion of a client, I have added a client only, password protected page to my website, http://www.401Advisor.com. The purpose of the private, client only section will be to offer specific commentary on our strategies, holdings, and rationale behind changes. More generic commentary will continue to be posted here at http://www.deshurkoblog.com. For those of you who have wondered about a holding or a strategy but didn’t want to call and ask or make an appointment, the new addition will hopefully be a welcome way to stay informed.

I’ll also be able to add any office related information that would be of interest to clients of the firm.

As always, if you have any questions or concerns please contact Michelle@401advisor.com, myself at bill@401advisor.com, and now Jim at jim@401advisor.com. Or call us at 937.434.1790.

 

 

Mid Year Market Insight

06/29/2018

The following article was written for subscribers to our 401k advice web site, http://www.FundtraderPro.com.

My marketing friends tell me I need to communicate more. My response is that I hate writing when I really have nothing new to say. And honestly, the last post on April 5th (below) is as true today as it was then. Tariffs are front and center and dominating trading. The market hates uncertainty.

Professional traders can make money when the market is up or down. Sideways markets are difficult for everybody. Eventually, the market will breakout, in one direction or the other. Below is a year to date chart of DIA, a Dow Jones tracking ETF, can’t get much more sideways than this!

 

SP500062018

We started rotating into more conservative investments and even getting out of the market entirely with a portion of some plans as early as February. That was a tough call. My “gut” said we would regain the January high before sliding into the sideways summer doldrums. And that is why it is important to have a rules-based, unemotional strategy as a guide to making investment decisions. Granted, in or out hasn’t made much of a difference in hindsight. But on the risk/return scale, you are always better off in a risk-free investment than a risky one, if the riskier investment isn’t making you any money.

(Note: For 401 Advisor, LLC clients in the more conservative strategies we moved out of high yield bonds, and have stayed focused on our “value” strategies.)

I have not yet run our model for July changes. But I feel pretty secure in predicting the outcome: holdings will be “bar belled” between cash/money market/fixed accounts and the riskier small-cap growth investments. Cash because the large caps are going nowhere, and small caps because they are less affected by tariffs.

What Keeps Me Up at Night

The media will latch on to a topic for a few days, get bored and move on to something new. While “insider” writings; blogs, newsletters, articles…by real money managers will tend to stay focused on topics until they either come to fruition or circumstances truly change. One such topic I read more and more about is “liquidity”. In short, liquidity refers to the ability of the market to absorb a wave of selling with buyers that will step in and stabilize prices. Between Dodd-Frank legislation and program trading (sell first, ask questions later) there is a very big fear that the next market sell-off will be very quick and very severe. Unfortunately, such analysis does not come with a “when”.

The strength of the Fund Trader Pro system (and 401 Advisor strategies)  is its backtested ability to limit portfolio damage in prior market sell-offs. (Past performance is not a guarantee of future results). However, if a big and fast sell-off were to come to fruition, it would certainly test our system.

I say this now, to let our subscribers know, that we are well aware of this possibility. And are vigilant in monitoring the market and market indicators.

Earnings for the second quarter and good results will temper tariff talk, and prepare the market to extend this rally after the fall election. However, anything can happen. Our FTP (and 401 Advisor) strategies use multiple signals to determine when to suggest moving funds to safety. While we can’t guarantee future results, I will stress that you will not be seeing recommendations based on a buy and hold strategy. We will make every effort to ensure that our strategy prudently recommends being fully invested or moving out of the market entirely as appropriate.

If you have any thoughts, questions or comments always feel free to email me directly at wdeshurko@fundtraderpro.com.

Thank you for your support.

Disclosure: 

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock or fund is mentioned in this article. Investing involves risk. Past performance is not a guarantee of future results.

 

 

 


bill@401advisor.com • 937.434.1790

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 475 other followers

Go to webpage:

Go to webpage:

Follow me on Twitter

on Amazon

Link to my weekly column.

Charles H. Dow Award Winner 2008. The papers honored with this award have represented the richness and depth of technical analysis.

Archives

Advertisements